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ivil Appeal No. 4160 of 1989.
From the Judgment and Order dated 24.3.1988 of the Karnataka High Court in W.A. No. 637 of 1985.
section Ganesh, A.C. Gulati and B .B.
Sawhney for the Appellants.
T.S. Krishnamurthy Iyer and N. Nettar for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Leave granted.
356 This is an appeal from the judgment and order of the Division Bench of the High Court of Karnataka dated 25th March, 1988.
There was a notification under section 98(2) of the City of Bangalore Municipal Corporation Act, 1949 dated 4th March, 1975 levying octroi, inter alia, on food drinks (including milkfood) brought into the municipal limits of Bangalore for sale, consumption or use.
On 8th October, 1976, representation was submitted on behalf of the peti tioners, HMM Limited, protesting against levy of octroi on "Horlicks" milkfood powder brought into the municipal limits in bulk containers (Large steel drums) for being packed at the packing station in Bangalore in Unit containers (glass bottles) and thereafter exported outside the municipal limits.
In respect of the quantity of the goods which were exported outside the municipal limits after being bottled, the petitioners sought refund of the octroi duty as there was no use or consumption or sale of the said milkfood within the municipal limits.
The respondent corporation rejected the claim on the ground that rule 24 of the Byelaw 45 framed by the Municipal Corporation had not been complied with and as such refund could not be given.
The petitioners again sought on 4th February, 1978, refund of octroi duty for the period 1974 75 to December, 1977 amounting to Rs. 13,39,652.92 enclosing computation of the duty collected for the aforesaid period.
Again, the ' refund was refused by the respondents in March, 1978.
Petitioners thereafter filed writ petition in the High Court of Karnataka challenging the levy/retention of octroi duty on "Horlicks" exported out of the municipal limits and seeking refund thereof.
From 1st April, 1979, levy of octroi on milkfood was totally abol ished in Karnataka.
Learned Single Judge of the High Court on 1st February, 1984, allowed the writ petition and direct ed that the amount of octroi duty collected for the period commencing three years prior to the filing of the writ petition be verified within 3 months and refunded within 45 days thereof.
Learned Single Judge noted that the case of the petitioners was that it was engaged in the manufacture and sale of a malted milk product marketed under the brand name "Horlicks".
The petitioner used to manufacture the said product in its two factories situated at Nabha in the State of Punjab and Rajahmundhry in the State of Andhra Pradesh and marketed these throughout the country through its bot tling and marketing centers situated in different parts of the country.
One such centre was situated in the city of Bangalore to which it brought its said product in bulk, then rebottled the same in small bottles of different capacities like 800 gms, 450 gms and 250 gms.
It was the case of peti tioners that small portion of the product, rebottled in small bottles, alone was sold within the city of 357 Bangalore to its dealers and the rest was exported to its agents situated in different parts of the State and other nearby places of the country also.
In this connection, it may be mentioned that rules 24 to 27 of the relevant Bye laws were as follows: "24.
On all articles on which octroi duty has been paid and which are subsequently exported beyond the octroi limits without breaking bulk, refunds shall, subject to the following rules, be granted at the rates originally charged at the time of import; provided that no such refunds shall, except in the case of timber imported and re exported in log be granted unless such goods are exported within three months from the date on which octroi was levied.
Any person claiming refund under the above bye laws shall produce the goods to be exported at the Central Octroi Office, togeth er with the Original receipt for octroi duty paid thereon, and an application for refund prepared in triplicate in the form prescribed in Schedule V. He shall fill up columns 1 to 10 of the application signing and dating the same, before he presents it at the Central Octroi Office.
He shall produce for record in office a certified copy of the invoice as per which duty was paid on the article at the time of its import.
Any person who has been exempted under bye law No. 10 from production of goods at the Central Octroi Office on import shall, subject to the same conditions, he exempted from the production of goods to be exported.
The Octroi Superintendent of the Central Octroi Office on being satisfied as to the identity of the goods produced with those for which the receipt has been granted or the validity of the claim, shall fill up columns 11 to 15 and also the coupon and handover the form to the exporter.
" There is no dispute that on the entire quantity of the goods brought within the municipal limits, octroi was col lected from the petitioner.
It claimed for refund only in respect of those quantities which were rebottled and export ed from the city to outside places.
This was refused.
The contention of the petitioners was that only that portion of the goods which was imported in drums and was rebottled in 358 bottles and exported outside the city was not liable to duty of octroi.
It was contended before the learned Single Judge that portion of the goods was not dutiable to octroi as these did not fall within the term "sale, consumption or use" within the local area of the city of Bangalore.
When the petitioner approached the High Court, rule 24 aforesaid of the Bye law 45 was in force.
Octroi was, however, abol ished with effect from Ist April, 1979.
The question that was canvassed before the learned Single Judge of the High Court was that when the product was imported in bulk in the city only for rebottling and rebottled in small bottles for the consumer requirements and marketed, there could not be consumption or sale of that product.
On the other hand, it was contended that in any event, it is a case of 'use ' to attract levy of octroi.
The Horlicks powder remains the same even after packing, as was held by Mittal, J. of the High Court of Punjab in C.W.P. No. 19873 of 1977.
In that case, the Horlicks powder in drums was sold direct to bulk consum ers.
It was held that the Horlicks powder remains the same after packing.
It does not become different commodity.
It also cannot be held that it acquired distinct commercial utility, according to Mittal, J. Therefore, in that context; Mittal, J. held that the packing of the Horlicks powder in small bottles does not fall within the ambit of the word 'use ' and, therefore, the petitioner in that case was not liable to the charge of octroi for its import within the limits of the city.
This decision was affirmed by the Divi sion Bench.
It was contended that in the judgment before Mittal, J, packing was entrusted to a separate agency, but it does not make any difference, according the learned Single Judge of Bangalore.
Therefore, the learned Single Judge in this case found that only on that quantity of milk product imported by the petitioner in bulk but rebottled in small bottles at its Bangalore bottling station and export ing from the city to other places for sale in those places and not using the same in Bangalore city, was not dutiable to octroi till that levy was in force.
The learned Single Judge, therefore, held that the amounts so levied and col lected as octroi for a period of three years prior to the presentation of the writ petition only and not beyond that are refundable by the respondents to the petitioner.
He directed refund and pursuant to this direction, the learned Single Judge further directed that the same may be verified.
We were informed that the same has been verified.
There was an appeal to the Division Bench of the High Court.
The question before the Division Bench was whether the Corporation was liable to refund that part of the amount of octroi duty paid by the petitioners on the quantity of the Horlicks powder imported into the city of Bangalore on the petitioners ' informing the Corporation that 359 they had despatched that part of the same from time to time by filing the same in bottles to places outside the city of Bangalore even though petitioners had not followed the procedure prescribed in rules 24 and 25 of Bye law No. 45 flamed by the Corporation and even though they had not even informed of such despatches as and when these were made? Item 17 of the notification dated 4th March, 1975, as mentioned before, so long as it continued, was as follows: "17.
Confectionary, biscuits, toffee, chocolates food essence, food coloured, aerated water and soft drinks, food drinks other than milk in condensed form bottled or canned arecounts both scomted or plain.
2% 0.06 ps.
ad valorem 10 Kg.
" The Division Bench noted that in terms of the aforesaid levy, the petitioners were paying octroi on the basis of the total quantity of Horlicks imported into the city of Banga lore.
Then a letter was addressed on the 8th October, 1975 to the Corporation of the city of Bangalore, which was set out in the judgment of the Division Bench.
In the said letter, it was, inter alia, stated that the petitioners were not bringing the goods within the municipal limits for use or consumption therein and as such the imposition of octroi was illegal and unwarranted and that the petitioners had paid under protest the amount and claimed the refund.
The petitioners claimed only the octroi paid on the goods which were exported outside the city of Bangalore and not used or consumed within the city.
The petitioners further stated, inter alia, as follows: "The petitioner is willing to differentiate the goods intended to be used consumed within the octroi limit of Bangalore and the goods which are exported out of the limits of Banga lore and not used or consumed therein appro priately in order to facilitate movements of goods and avoid difficulties to the octroi incharge." The Corporation turned down the demand.
The Division Bench noted that the petition was resisted by the respondent on to grounds: "1.
The transferring of Horlicks imported in bulk into the 360 city of Bangalore into bottles amounts to use of the Horlicks within the city of Bangalore notwithstanding the fact that a part of the total number of bottles were despatched out side the city of Bangalore.
The octroi collected on the Horlicks im ported into the city of Bangalore was in accordance with law and unless the procedure prescribed under rules 24 and 25 of Bye law 45 was followed, no obligation or duty was cast on the part of the Corporation to refund any part of the octroi collected.
" The Division Bench of the High Court in the decision under appeal observed that as far as the first ground raised was concerned, the learned Single Judge had rejected the claim and held that when the Horlicks powder was transferred into bottles of different sizes it did not use Horlicks within the city of Bangalore.
In this connection, the Divi sion Bench referred to the decision of Burmah Shell Oil Storage & Distributing Co. of India Ltd. Belgaum vs Belgam Borough Municipality, Belgaum, [1963] 2 Supp.
SCR 2 16.
This Court in that case held that mere transferring of a bulk product into small containers like packets or bottles for the purpose of sale does not amount to use of the goods in the sense the word is used in relation to levy of octroi.
On this aspect, the Division Bench agreed with the learned Single Judge.
So far as the second contention raised by the Corporation was concerned, the Division Bench noted that the relevant provision of the rules was not considered.
We have set out hereinbefore the said rules.
In the Schedule there is a form for refund.
The contention of the petitioners was that rule 24 did not apply.
Rule 24, as we have noticed hereinbefore, provided that in respect of articles on which octrio has been paid and which are 'subsequently exported beyond the octroi limits without breaking bulk ', refunds shall be subject to the rules indicated therein.
So, accord ing to the petitioners, after opening or breaking open the drums and putting the powder in the bottles, as in this case amount to breaking bulk, and as such there was no scope of applying for refund under Rule 24.
But the Corporation contended that it was not so.
The Division Bench, however, accepted the contention of the Corporation.
It is indubita bly true that the petitioners had not claimed the refund in accordance with the law because according to the petitioners the said rules would have no application as the bulk was broken.
The Division Bench, however, observed that the petitioners in their letter addressed to the Commissioner have specifically stated that the goods were subsequently exported outside the city of Banga 361 lore as envisaged by Bye law 24 of notification No. N.A.I(53) of 1952 53 dated 5th April, 1954.
Regarding the expression "without breaking bulk", the Division Bench of the High Court was unable to accept the contention that the bulk of the goods on which the octroi has been paid was transferred to containers of small sizes and despatched outside the city, the bulk was broken.
But the question was whether in such a situation, it can be said that it was done without breaking the bulk.
The Division Bench was of the view that having regard to the rule and having regard to the fact that it was imported into the city of Bangalore, and was to be despatched outside the city of Bangalore in the same form, i.e., without the same having been used or sold or consumed in the production or manufacture other goods, the person concerned can only claim refund in accordance with the rules.
Therefore, according to the Division Bench, no importance can be attached to the expression "without breaking bulk" on despatches of the goods.
Refund could be claimed only on despatches of the goods outside the city, for octrio is leviable only if the goods imported into the city are consumed, used or sold within the city.
Therefore, 'bulk ', in the view of the Division Bench, was, in fact, broken and the petitioner not having applied in accordance with rules 24 and 25, no amount could be refunded to the appellant.
In that view of the matter, the appeal was al lowed by the Division Bench and the judgment of the learned Single Judge was reversed.
It may be mentioned that there is no dispute that the Horlicks powder was brought in bulk in drums.
At the rele vant time, there was levy of octroi at the entry of such goods.
After being imported, it has been found that the entirety of the Horlicks powder had not been sold.
A part of the powder has been put in the bottles and exported outside the city of Bangalore.
It has been found by the Division bench that putting powder from the drums to the bottles inside the city, is not user or consumption as contemplated by the rule.
And on that no octroi duty was leviable.
In this case also, it has been found pursuant to the order of the learned Single Judge how much octroi will be refundable on account which has been paid by the petitioners.
The only ground on which the Division Bench had resisted the refund was that the petitioners did not apply in accordance with the procedure envisaged by rules 24 and 25 of the aforesaid Bye laws.
Mr. Krishnamurthi Iyer, learned counsel for the respondent, contended that the High Court was right in the view it took on the construction of rules 24, 25 and 26.
We are unable to agree with this submission.
As we have indi cated before, "without breaking bulk" is not an expression of art, nor is it an expression defined in the Act or the rules.
It has, therefore, to be construed 362 in its literal and ordinary sense to the extent possible, and construed as it is, in our opinion, transferring the product from the drums by breaking seal of the drums to bottles, cannot be said to be "without breaking bulk".
"Breaking bulk" is an expression not unknown to legal termi nology especially in England.
In the Cyclopedic Law Diction ary, 3rd Edn., "breaking bulk" has been stated to mean that for a bailee to open a box or packaging entrusted to his custody and fradulently appropriate its contents.
In Stroud 's Judicial Dictionary, 4th Edn., Vol 1, it has been stated that to 'break bulk ' is not now necessary to consti tute larceny or theft by a bailee.
It is stated that the cases were very numerous and turned on nice distinctions as to what amounted to "breaking bulk".
In the Dictionary of English Law by Earl Jowitt "breaking bulk" has been defined as that at common law there could be no larceny of goods which had originally been lawfully obtained by a person who subsequently wrongfully converted them to his own use, unless such conversion was preceded by some new act of taking.
It that is so, we are unable to agree with the construction suggested by the Division Bench.
It was con tended that the octroi was leviable on the entry of the goods in the municipal limits of the city but the Horlicks powder had not entered into the local limits of Bangalore for the purpose of use or consumption, as understood in the decision of the Burmah Shell 's case (supra) and as found both by the learned Single Judge and the Division Bench that putting the powder from the drums to the bottles for the purpose of exporting or for taking this out of the city, is neither use nor consumption of the Horlicks powder, attract ing the levy of octroi.
Certainly, the bulk was broken in the procedure followed.
The High Court was wrong in putting the construction on the expression as it did.
Mr. Iyer sought to raise before us the plea that in a case where refund is due in respect of the duties like this whether petitioners would be entitled to refund on the basis that refund cannot be given because there was possibility of undue enrichment of the claimant, is pending before the Seven Judge Constitution Bench in this Court.
Therefore, it was submitted that we should await the said decision or refer the matter to the Constitution Bench.
Octroi in this case is a duty on the entry of the raw materials for coming in.
It is the duty on the coming in of the raw materials which is payable by the producer or the manufacturer.
It is not the duty on going out of the finished products in re spect of which the duty might have been charged or added to the costs passed on to the consumers.
In such a situation, no question of 'undue enrichment ' can possibly arise in this case.
If that is the position then the pendency of the question before the Constitution Bench should not deter us from proceeding with this adjudication.
363 Shri Ganesh drew our attention to a decision of this Court in Kirpal Singh Duggal vs Municipal Board, Ghaziabad, ; There, the appellant had transported, between August 1953 and March 1955, certain materials in execution of a contract to supply goods for use by the Government of India.
The respondent Municipality collected toll while the appellant 's trucks were passing through the toll barrier.
The appellant, in that case, obtained in June, 1955, a certificate from the authority concerned that the goods transported were "meant for Government work and had become the property of the Government".
The appellant then applied to the Municipality for refund of the amount paid pursuant to the exemption granted by the Government of India under the U.P. Municipalities Act, 1916.
The respondent declined to refund the amount.
In an action against the respondent, the trial court decreed the claim.
The High Court affirmed the order of the Civil Judge.
Both the Civil Judge and the High Court took the view that by the rules framed under the Act an application for refund within six months from the date of actual payment is a condition prece dent for refund of the toll.
The party appealed to this Court.
This Court was unable to accept this contention Shah, 3, as the learned Chief Justice then was, speaking for this Court noted that the respondent therein had contended that the rules framed by the Government regarding the procedure constituted a condition precedent to the exercise of the right to claim refund and recourse to the civil court being conditionally strict, compliance to that procedure was necessary for obtaining any decree in civil court.
Allowing the appeal, this Court held that this contention was untena ble.
Shah, J. observed at p. 555 of the report as under: "The rules framed by the Government merely set up the procedure to be followed in preferring an application to the Municipality for obtain ing refund of the tax paid.
The Municipality is under a statutory obligation, once the procedure followed is fulfilled, to grant refund to the toll.
The application for refund of the toll must be made within fifteen days from the date of the issue of the certificate and within six months from the date of payment of the toll.
It has to be accompanied by the original receipts.
If these procedural re quirements are not fulfilled, the Municipality may decline to refund the toll and relegate the claimant to a suit.
It would then be open to the party claiming a refund to seek the assistance of the court, and to prove by evidence which is in law admissible that the goods transported by him fell within the order issued under section 157(3) of the Act.
364 The rules framed by the Government relating to the procedure to be followed in giving effect to the exemptions on April 15, 1939, do not purport to bar the jurisdiction of the civil court if the procedure is not followed.
In our judgment, the Civil Judge and the High Court exalted what were merely matters of procedure, which the Municipality was entitled to require compliance with in granting refund, into conditions precedent to the exercise of juris diction of the civil court.
It is impossible on a bare perusal of the order issued by the Government and the rules framed by it to give to the order and the rules that effect." These observations, in our opinion, in view of the contentions raised on behalf of the Municipality here are apposite in this case.
The aforesaid Rule 24 does not apply.
In that view, rules 25 and 26 have no scope of application.
Indubitably, amounts have been realised as octroi on the entry of the goods on which octroi was not leviable because these were not for use or consumption within the municipal limits.
Mere physical entry into the city limits would not attract the levy of octroi unless goods were brought in for use or consumption or sale.
In this case, putting the powder from the drums to the bottles for the purpose of exporting or taking these out of the city is neither use nor consump tion of the Horlicks powder attracting the levy of octroi.
Such amounts, therefore, cannot be retained by the respond ent Corporation.
There is no dispute as to the quantum in view of the fact that the amount has now been found to be certified to be credited pursuant to the direction of the learned Single Judge of the High Court.
We see no ground as to why amount should not be refunded.
Realisation of tax or money without the authority of law is bad under Article 265 of the Constitution.
Octroi cannot be levied or collected in respect of goods which are not used or consumed or sold within the municipal limits.
So these amounts become collec tion without the authority of law.
The respondent is a statutory authority in the present case.
It has no right to retain the amount, so far and so much.
These are refundable within the period of limitation.
There is no question of limitation.
There is no dispute as to the amount.
There is no scope of any possible dispute on the plea of undue en richment of the petitioners.
We are, therefore, of the opinion that the Division Bench was in error in the view it took.
Where there is no question of undue enrichment, in respect of money collected or retained, refund, to which a citizen is entitled, must be made in a situation like this.
We, therefore, hold that amounts should be refunded subject to 365 the verification directed by the learned Single Judge of the High Court of the amount of refund.
The appeal is, thus, allowed.
The Judgment and the order of the Division Bench of the High Court are, therefore, set aside.
In the facts and the circumstances, there will be no orders as to costs.
R.S.S. Appeal allowed.
| IN-Abs | The appellant company was engaged in the manufacture and sale of a malted milk product marketed under the brand name "Horlicks".
The appellant brought the product within the octroi limits of Bangalore in bulk containers, rebottled the same in small bottles and exported the major portion of the rebottled product beyond the octroi limits of Bangalore.
The appellants made representation protesting against the levy of octroi on Horlicks in respect of the quantity of the goods which was exported outside the municipal limits after being rebottled, and sought refund of the octroi duty on the ground that there was no use or consumption or sale of the said milkfood within the municipal limits, and that the imposition of octroi was illegal and unwarranted.
The re spondent Corporation rejected the claim.
Thereupon the appellant filed a writ petition in the High Court challeng ing the levy/retention of the octroi duty on Horlicks ex ported out of the municipal limits.
The petition was resisted by the Corporation on two grounds, namely, (i) the transferring the Horlicks imported in bulk into bottles amounted to use of the Horlicks within the city; and (ii) the octroi collected was in accordance with law and unless the procedure prescribed under rules 24 and 25 of Bye law 45 framed by the Municipal Corporation under the City of Bangalore Municipal Corporation Act, 1949 was followed no obligation or duty was cast on the part of the Corporation to refund any part of the octroi collected.
The learned Single Judge allowed the writ petition and held that when the Horlicks powder was transferred into bottles of different sizes, 354 the appellant did not use Horlicks within the city of Banga lore.
In the appeal, the Division Bench agreed with the learned Single Judge on the first point.
On the second point, however, the Division Bench rejected the contention of the appellant that opening or breaking open the drums and putting the powder in the bottles amounted to breaking bulk and as such there was no scope of applying for refund under rule 24 which provided for refund in the case of articles on which octroi duty had been paid and which were subsequently exported beyond the octroi limits without breaking bulk.
According to the Division Bench, no importance could be attached to the expression 'without breaking bulk ', and the appellant not having applied in accordance with rules 24 and 25, no amount could be refunded.
Before this Court, the Corporation sought to raise an additional plea that where refund was due in respect of the duties like this, the amount could not be refunded because there was possibility of undue enrichment of the claimant.
Allowing the appeal, this Court, HELD: (1) Octroi in this case is a duty on the coming in of the raw materials which is payable by the producer or the manufacturer.
It is not the duty on going out of the fin ished products in respect of which the duty might have been charged or added to the costs passed on to the consumers.
In such a situation, no question of 'undue enrichment ' can possibly arise.
[362G] (2) There is no dispute that the Horlicks powder was brought in bulk in drums.
After being imported, the entirety of the Horlicks powder had not been sold.
A part of the powder has been put in the bottles and exported outside the city of Bangalore.
[361E] (3) Octroi cannot be levied or collected in respect of goods which are not used or consumed or sold within the municipal limits.
[364F] (4) Indubitably, amounts have been realised as octroi on the entry of the goods on which octroi was not leviable because these were not for use or consumption within the municipal limits.
Mere physical entry into the city limits would not attract the levy of octroi unless goods were brought in for use or consumption or sale.
[364C D] (5) In this case, putting the powder from the drums to the bottles 355 for the purpose of exporting or taking these out of the city is neither use nor consumption of the Horlicks powder at tracting the levy of octroi.
Such amounts, therefore cannot be retained by the respondent corporation.
[362D E] C.W.P. No. 19873 of 1977 High Court of Punjab Burmah Shell Oil Storage & Distributing Co. of India Ltd. vs Bel gaum Borough Municipality, [1963] 2 Supp.
SCR 216, referred to.
(6) "Without breaking bulk" is not an expression of art, nor is it an expression defined in the Act or the rules.
It has, therefore, to be construed in its literal and ordinary sense to the extent possible, and construed as it is, trans ferring the product from the drums by breaking seal of the drums to bottles cannot be said to be "without breaking bulk".
Certainly the bulk was broken in the procedure fol lowed.
[361H; 362A E] (7) Rule 24 does not apply.
In that view, rules 25 and 26 have no scope of application.
[364C] Kirpal Singh Duggal vs Municipal Board, Ghaziabad, , referred to.
(8) Realisation of tax or money without the authority of law is bad under Article 265 of the Constitution.
Octroi cannot be levied or collected in respect of goods which are not used or consumed or sold within the municipal limits.
So these amounts become collection without the authority of law.
The respondent is a statutory authority in the present case.
It has no right to retain the amount, so far and so much.
These are refundable within the period of limitation.
[364E F]
|
it Petitions Nos. 627, 662,296, 27 1 & 452 of 1987.
(Under Article 32 of the Constitution of India).
WITH Civil Miscellaneous Petition No. 12733 of 1988.
M.K. Ramamurthy, M.A. Krishnamurthy and Mrs. Indira Sawhney for the Petitioners.
Ram Panjwani, Raj Panjwani and Vijay Panjwani for the Respondents.
The Judgment of the Court was delivered by AHMADI, J.
This batch of petitions brought under Arti cle 32 of the Constitution of India challenge certain ac tions taken by the officers of the Trade Fair Authority of India (TFAI) in exercise of their disciplinary jurisdiction whereby the services of certain regular workmen have been terminated and several casual or daily rated workers are rendered jobless.
Put briefly, the facts giving rise to these petitions are as under: The 'Trade Fair Authority Employees ' Union (Union here after) was demanding housing facilities, regularisation of atleast 50% of casual or daily rated employees and upward revision of the salaries and allowances of the workers of TFAI.
These demands were discussed with the Chief General Manager of TFAI on August 29, 1986 and thereafter from time to time but nothing concrete emerged.
The case 262 of the Union is that the Chief General Manager had assured the Union representatives that although it may not be possi ble to regularise the service of casual labour to.
the extent Of 50% some posts had already been identified and the Standing Committee of TFAI which was seized of the matter would take a decision at an early date.
On the question of upward revision of wages and allowances the Union 's case is that the Chief General Manager had given an assurance that pending final decision by the High Powered Committee of TFAI, the scales prevailing in MMTC and STC could be adopt ed.
The grievance of the Union is that despite these assur ances no action to implement the same was taken whereupon the Union wrote to the Chief General Manager on October 29, 1986 seeking implementation of the assurances at an early date and not later than November 15, 1986.It was also commu nicated that the workers belonging to the Union had decided to proceed on a token strike of one day on November 13, 1986.
At a subsequent meeting held on November 3, 1986 the General Manager of TFAI is stated to have assured the Union representatives that the Standing Committee will be request ed to take up the issue on priority basis so that the out come becomes known by the end of November, 1986.
No such decision was taken by the end of November, 1986; not even after the Union 's reminders of December 18, 1986 and January 9, 1987 whereupon the Union wrote a letter dated January 15, 1987 to the Chief General Manager to permit the Union to hold a General Body Meeting of the Union on January 19, 1987 during lunch hours.
In anticipation of such permission being granted, which had always been granted in the past, the Union despatched notices to its members to attend the meet ing.
However, the Chief General Manager informed the Union representatives that the permission was refused.
Within minutes of the receipt of this communication, the President of the Union sent a reply stating that it was not possible to cancel the meeting at such short notice.
The General Body Meeting was held as schedule and a decision was taken to strike work on January 21, 1987 to protest against the management 's failure to implement the assurances already given.
On the same day, January 19, 1987, the Union served the management with a notice informing it about the decision to strike work on January 21, 1987.
The management reacted by placing the President, Vice President and Executive Mem bers of the Union under suspension with immediate effect, i.e. with effect from January 20, 1987.
This angered the striking workmen who had gathered outside the precincts of TFAI on January 21, 1987.
They demanded the immediate with drawal of the suspension orders failing which they threat ened that the strike would continue indefinitely.
Intimation to this effect was served on the Chief General Manager.
The management however suspended all the re 263 maming office bearers, the executive members and leading activists of the Union w.e.f. January 23, 1987.
The strike was, however, called off w.e.f.
January 24, 1987, according to the Union in the larger interest of .TFAI and in national interest as the President of India was to inaugurate the AHARA '87 on January 25, 1987, while according to the man agement it continued for almost two weeks.
Writ Petition No. 296/1987 is by those 42 suspended workers.
Now, during the strike some of the casual workers at tended duty and their services remained unaffected, some others who reported for duty after the strike and were prepared to sign an undertaking in the prescribed form were given work while the remaining casual workers who did not sign such an undertaking or were late in reporting for work were denied employment.
The Union 's case is that out of a total work force of about 500 casual workers, 160 did not participate in the strike and about 90 signed the undertak ing and they have since been employed while the remaining casual workers are denied work.
The Union sought the inter vention of the Union Commerce Minister and also invoked the jurisdiction of the Labour Commissioner, Delhi Administra tion, with a view to finding an amicable settlement as the discharged workers were facing untold miseries.
However, contends the Union, the response of the management was not positive and hence the Union was left with no alternative but to invoke this court 's jurisdiction for an early solu tion of the unemployment problem faced by the workers.
Writ Petition No. 271/87 is by 243 casual laborers who have thus been rendered jobless.
Thereafter the management by their orders of March 3, 1987 terminated the services of all the 12 office bearers and Executive Committee Members who had been suspended earlier in exercise of their power under the special proce dure outlined in Rule 32 of the TFAI Employees (Conduct, Discipline and Appeal) Rules, 1977 ( 'The Rules ' hereafter).
This rule inter alia empowers the Board of TFAI to impose any of the penalties specified in Rule 25 (which includes penalties from Censure to Dismissal), without holding an inquiry if the Board is satisfied for reasons to be stated in writing that it is not practicable to hold such inquiry or in the interest of the security of the Authority it is not expedient to hold such inquiry.
This provision overrides the need to hold a departmental inquiry under Rules 27 to 29 of the Rules.
The Board in the impugned orders of dismissal has assigned three reasons in support of its decision that is not practicable to hold an inquiry, namely "(i) you by yourself and together with and through other associates have threatened, intimidated and terrorised the Disci 264 plinary Authority so that he is afraid to direct the inquiry to be held; (ii) you the employee of Trade Fair Authority of India particularly through and together with your associates have terrorised and threatened and intimidated witnesses who are likely to give evidence against you with fear of repris al as to prevent them from doing so; and (iii) as an atmos phere of violence and of general indiscipline and insubordi nation has been created by a group of suspended employees".
The board has also stated in the impugned order that it is not expedient in the interest of security of the TFAI to hold an enquiry in the manner provided by the Rules.
Annex ure I to each order sets out the reasons which impelled the Board to visit the 12 employees with the extreme penalty of dismissal.
These 12 dismissed workers have challenged the orders of dismissal by their writ petition No. 267 of 1987.
Writ Petition No. 452 of 1987 is by one Raju, an employ ee of TFAI.
He was a casual laborer of TFAI since 1982 and was selected on July 4, 1986 as a Mini Stiller Driver in the scale of Rs.260 400.
He joined the new post on the same day but his appointment was cancelled without assigning any valid reason on July 25, 1986 and he was reverted as a daily wager.
He too had joined the others for regularisation of his service and had taken part in the strike.
The management by office order dated March 2, 1987 terminated his service w.e.f. December 1, 1986.
No enquiry was held nor was any opportunity to explain his conduct given to the delinquent before his services came to be terminated.
He has, there fore, challenged the order dated July 25, 1986 and the subsequent order dated March 2, 1987 as violative of the principles of natural justice.
Writ Petition No. 662 of 1987 concerns two daily rated Security Guards of TFAI whose services came to be terminated by TFAI.
The service of Bansi Dhar came to be terminated on April 2, 1987 while that of his companion Vipti Singh came to be terminated on April 8, 1987.
Their allegation is that their services were dispensed with because they refused to give false evidence against their co workers who were active members of the Union and who had filed W.P. No. 271/87 challenging the mala fide action of TFAI terminating the services of 243 casual daily rated workers.
They contend that even though they had remained on duty during the strike, their services were terminated because they refused to falsely implicate their coworkers who had espoused their cause.
They, therefore, contend that their termination smacks of victimisation.
In all the writ petitions Mr. N.N. Kesar, Manager (Admn) TFAI 265 has filed his counter contending that as the.
petitions require collection of facts this Court should refuse to entertain these petitions and should relegate the petition ers to the industrial tribunal or the concerned High Court.
According to the deponent TFAI had to take action against the office bearers of the Union as they had created an atmosphere of violence and had paralysed the smooth func tioning of TFAI from November, 1986 onwards.
Instances of insubordination, threats, violence and lack of discipline have been enumerated to show that officers of TFAI found it difficult to carry out their functions and duties because of constant fear to themselves and their kith and kin.
Even though permission for holding a General Body meeting on January 19, 1987 within the precints of TFAI was refused, the meeting was held at which inflammatory and provocative speeches were made by the Union leaders.
Extracts from the speeches of the various Union leaders have been set out in the counter to acquaint the court to the type of atmosphere that prevailed at a point of time when several important foreign delegates and VIPs were attending the International Fair held by TFAI.
The secret reports which were received from the officers of TFAI at different levels also suggested that trouble was brewing and immediate firm action was necessary.
Therefore, when the management learned that the employees had decided to go on a token strike on January 21, 1987 it took action of suspending some of the office bearers of the Union.
After the strike was prolonged upto January 23, 1987, TFAI had to make alternative arrangements includ ing security arrangements to ensure that no untoward inci dent occurred during the visit of foreign VIPs and more particularly during the visit of the President of India who was to inaugurate the AHARA 1987 on January 25, 1987.
Even during the visit of the President certain employees posted themselves at the main gates along with the President, Vice President, General Secretary and Secretary of the Union for picketing.
Since certain other inaugurations by VIPs were to take place between January 28, 1987 and February 2, 1987, TFAI was constrained to file a suit No. 263 of 1987 in the Delhi High Court against the Union and seven office bearers to restrain them from preventing and obstructing the entry of delegates, guest, dignitaries, etc.
into the Pra gati Maidan where TFAI was having its fair.
An ex parte injunction was granted prohibiting picketing, slogan shout ing, etc.
within 75 meters of all gates leading to the Fair as shown in the map appended to the suit.
It will thus be seen that according to TFAI the workers ' agitation was not a peaceful one as is alleged by the petitioners.
It was in the backdrop of these facts that the Board decided to terminate the services of the 12 employees by virtue of the power conferred on it by Rule 32 of the Rules.
The reasons which impelled 266 the Board to take this drastic action have been set out in the annexure appended to each order of dismissal.
TFAI, therefore, contends that the action taken against the 12 erring workers is just, legal and proper and this Court should refuse to interfere with the same.
So far as the suspended employees are concerned TFAI contends that it has power under Rule 22 of the Rules to suspend erring delin quents pending inquiry.
Such suspended employees are enti tled to suspension allowance paid at 50% of salary and allowances.
It is denied that TFAI has used the power of suspension as a coercive measure.
It is however stated that the correct number of suspended employees is 34 as named in the Counter.
Out of these 34 employees, the suspension order of 33 workmen have since been revoked on acceptance of their explanation.
Hence the suspension order that survives is against Peon Umed Singh only, who is receiving suspension allowance as per rules.
Insofar as the casual labour is concerned, it is con tended that TFAI had taken over the maintenance of Pragti Maidan from C.P.W.D.w.e.f.
January 1983.
The Standing Com mittee had, therefore, sanctioned a certain number of posts of the Engineering staff for this purpose.
A number of daily wage posts on muster roll were created from time to time and were filled in by both skilled and unskilled labour.
A proposal for regularising such employees was pending before the Standing Committee which had called for information.
It was however tentatively decided that 85 posts may be consid ered urgently for regularisation.
This proposal was cleared in January, 1987.
The matter was pending with the Internal Works Study Unit in the Ministry of Commerce and their report was awaited.
It was, therefore, contended that TFAI was always sympathetic in its approach and yet the Union gave a call for a strike on January 19, 1987.
The TFAI denies that it did not provide work to casual labour when they reported on January 24, 1987 or thereafter or that they demanded any such undertaking as alleged.
As regards the termination of Raju 's service it is contended by TFAI that he was given a provisional appoint ment on July 4, 1986 but the same had to be terminated on July 25, 1986 firstly because it subsequently came to light that he was convicted on June 30, 1987 under Sections 87 and 113 of the Motor Vehicles Act and fined Rs.300 and secondly because of his outrageous behaviour with his dealing assist ant on July 22, 1986.
These two reasons 'formed the basis and the grounds and the administrative reasons ' for with drawal of the provisional offer made in the letter of July 4, 1986.
However, the letter of July 25, 1986 uses the words 'some administrative reasons ' for cancel 267 lation of the order and impugned order of March 2, 1987 gives no reason whatsoever.
It is, ' therefore, contended that since the offer was only provisional, the petitioner had no right to the post and hence the petition deserves to be dismissed.
So far as the termination of service of the two Security Guards is concerned it is contended that the allegation that their services were dispensed with because they refused to co operate with the management and give evidence against their co workers is denied.
It is, therefore, contended that their petition is without merit.
When these petitions reached hearing before this Court on October 13, 1987, this Court passed a common order di recting the Chief Secretary of Delhi Administration to spare the services of a Judge of the Labour Court to look into the facts of these cases and finalise its report so as to reach the Registry of this Court on or before December 18, 1987.
Since the inquiry could not be finalised within the time allowed the time was extended upto October 31, 1988.
Shri Bhola Dutt, Presiding Officer, Labour Court (VII) submitted his report on October 29, 1988.
Before finalising its report the Labour Court gave an opportunity to the contesting parties to file their pleadings.
Issues were framed thereaf ter, parties were permitted to lead oral and documentary evidence, counsel were heard on the evidence tendered and only thereafter the Labour Court recorded its findings.
It came to the conclusion that the 243 casual labourers had been doing conservancy work since several years and all of them were denied work when they reported for duty on January 24, 1987 and thereafter because the work of Safai Kamdars was handed over to M.C.D.w.e.f.
January 22, 1987.
It, howev er came to the conclusion that denial of work to all the 243 casual workers was not justified.
So far as the only sus pended employee Peon Umed Singh is concerned, the Labour Court opined that mere participation in the strike called by the Union would not furnish a sufficient cause to order large scale suspension of employees much less termination of their employment.
Since 33 of his colleagues similarly suspended were taken back in service there was no justifica tion to single out Umed Singh for different treatment, more so when no disciplinary action is initiated or contemplated against him.
With regard to the termination of Raju driver 's service, the Labour Court came to the conclusion that the management had acted in an illegal manner.
In the first place it was not possible to accept the reason that during the summer season there is paucity of work and hence the provisional offer made on July 4, 1987 had to be cancelled within twenty days on July 25, 1987.
It would it difficult to believe that 268 within such a short period there was a slump in work neces sitating cancellation of the order.
As to the second reason regarding his conviction under the Motor Vehicles Act it pointed out that the allegation that he had abused Amar Singh was not inquired into and the delinquent was not given an opportunity to explain his conduct.
Certain other allega tions by the management regarding his behaviour e.g. absence without prior intimation, etc., all amount to misconduct for which a departmental enquiry was necessary and in the ab sence of such an enquiry the order was unsustainable.
It therefore, held that the termination of Raju 's service was illegal.
The case of the two security guards has been dealt with in detail by the Labour Court.
The Labour Court points out that the management decided to refuse work to Bansi Dhar as his performance was not found to be satisfactory.
He was served with memos dated December 25, 1984, February 10, 1986 and February 20, 1987 with a warning to improve his perform ance failing which the management would be constrained to refuse work to him.
The note submitted by the Chief Security Officer on March 3, 1987 that his termination may be consid ered if he is found absent or indisciplined in future is indicative of the fact that the management desired to give him an opportunity to improve.
Nothing had happened between March 3, 1987 and April 2, 1987 to warrant the termination of his service.
The Labour Court, therefore, held that the termination of his employment by the order of April 2, 1987 was not sustainable.
As regards his companion Vipti Singh the management pointed out that apart from the fact that his service was not satisfactory as is reflected by the memos of August 14, 1985 and October 20, 1986, he was found to have signed the attendance register from March 23, 1987 to March 29, 1987 even though he was admittedly absent on those days.
The Labour Court examined this ground in detail and came to the conclusion that even though the workmen had signed his presence on those dates, some doubt arose on account of absence of cross marks in the register.
The Labour Court, therefore, came to the conclusion that the termination of the service was also not justified.
Taking note of the fact that the Union was demanding the upward revision of wages of non executive staff, housing facility and regularisation of casual labour and the manage ment 's failure to accede to the demands notwithstanding the meetings held on August 29, 1986, November 3, 1986 and January 19, 1987, the Labour Court came to the conclusion that the strike was legal and justified, peaceful and nonvi olent and for a duration of only three days.
The Labour Court also 269 came to the conclusion that there was no justification for resorting to the exercise of extraordinary powers under Rule 32 of the Rules.
In the view of the Labour Court participa tion in strikes and slogan shouting are part of trade union activity and hence it was not legal and proper to visit the twelve Union leaders with the extreme punishment of dismiss al from service.
It, therefore, held that their dismissal was illegal, unjustified and wholly arbitrary.
All the above findings of the Labour Court have been assailed by the TFAI in the objections to the report.
It is not necessary for us to indicate in detail the nature of the objections but suffice it to say that according to the TFAI the findings reached by the Labour Court are one sided, perverse and contrary to the evidence on record.
We have perused the objections as well as the reply filed thereto by the petitioners.
From the above resume it clearly emerges that the char ter of demands put forth by the Union was pending considera tion.
The main demands were three in number, namely, (i) for upward revision of wages (ii) for regularisation of services of casual labour and (iii) for providing housing facilities to the employees.
Efforts to settle these pending issues through negotiations were made at the level of the Chief General Manager and it appears that this response was not negative.
It appears that the question of regularisation of casual and daily rated workers was referred to the Standing Committee of the Board which had taken the tentative deci sion to create 85 posts on the regular establishment for regularisation.
This proposal was forwarded to the I.W.S. unit of the concerned Ministry for approval.
However since the final decision was delayed the union leaders become restive.
The Union representatives, therefore, decided to call a General Body Meeting to decide on the future course of action.
On January 15, 1987 it wrote to the management to permit it to hold a meeting on January 19, 1987.
Notwith standing the refusal of the permission the Union was com pelled to hold the meeting as it had informed its members and it was not possible to shift the venue at short notice.
The angered leaders who addressed the workers condemned the management 's action in refusing to solve the outstanding problems of the workers in strong language.
We have perused the extracts from their speeches on which TFAI relies.
The language used is no doubt harsh and it would have been proper if such language had been avoided.
Counsel for TFAI also strongly contended that since the strike was illegal the workers are not entitled to any relief.
We see no merit 270 in this submission.
The right to form association or unions is a fundamental right under Article 19(1)(c) of the Consti tution.
Section 8 of the Trade Unions Act provides for registration of a trade union if all the requirements of the said enactment are fulfilled.
The right to form associations and unions and provide for their registration was recognised obviously for conferring certain rights on trade unions.
The necessity to form unions is obviously for voicing the de mands and grievances of labour.
Trade unionists act as mouthpieces of labour.
The strength of a trade union depends on its membership.
Therefore, trade unions with sufficient membership strength are able to bargain more effectively with the managements.
This bargaining power would be consid erably reduced if it is not permitted to demonstrate.
Strike in a given situation is only a form of demonstration.
There are different modes of demonstrations, e.g., go slow, sit in, work to rule, absentism, etc., and strike is one such mode of demonstration by workers for their rights.
The right to demonstrate and, therefore, the right to strike is an important weapon in the armoury of the workers.
This right has been recognised by almost all democratic countries.
Though not raised to the high pedestal of a fundamental right, it is recognised as a mode of redress for resolving the grievances of workers.
But the right to strike is not absolute under our industrial jurisprudence and restrictions have been placed on it.
These are to be found in sections 10(3), 10A(4A), 22 and 23 of the (`I.D. Act ' for short).
Section 10(3) empowers the appropriate Government to prohibit the continuance of a strike if it is in connection with a dispute referred to one of the fora created under the said statute.
Section 10A(4A) confers similar power on the appropriate Government where the industrial dispute which is the cause of the strike is referred to Arbitration and a notification in that behalf is issued under Section 10(3A).
These two provisions have no application to the present case since it is no body 's con tention that the union 's demands have been referred to any forum under the statute.
The field of operation of Sections 22 and 23 is differ ent.
While Section 10(3) and Section 10A(4A) confer power to prohibit continuance of strike which is in progress, Sec tions 22 and 23 seek to prohibit strike at the threshold.
Section 22 provides that no person employed in a public utility service shall proceed on strike unless the require ments of clauses (a) to (d) of sub section (1) thereof are fulfilled.
The expression 'public utility service ' is de fined in Section 2(n) and indisputably TFAI does not fall within that expression.
Section 23 next imposes a general restriction on declaring strikes in breach of contract during pendency of (i) conciliation proceedings.
(ii) pro ceed 271 ings before Labour Court, Tribunal or National Tribunal, (iii) arbitration proceedings & (iv) during the period of operation of any settlement or award.
In the present case no proceedings were pending before any of the aforementioned fora nor was it contended that any settlement or award touching these workmen was in operation during the strike period and hence this provision too can have no application.
Under Section 24 a strike will be illegal only if it is commenced or declared in contravention of Section 22 or 23 or is continued in contravention of an order made under Section 10(3) or 10A(4A) of the I.D. Act.
Except the above provisions, no other provision was brought to our attention to support the contention that the strike was illegal.
We, therefore, reject this contention.
The next question is whether the material on record reveals that the office bearers of the union had given threats to officials of TFAI as alleged.
The Labour Court has negatived the involvement of office bearers of the union in giving threats either in person or on telephone.
We have perused the evidence on record in this behalf and we are inclined to think that there were angry protests and efforts to obstruct the officers from entering the precints of TFAI but there is no convincing evidence of use of force or violence.
From what we have discussed above we are of the view that although TFAI was sympathetic to regularisation of service of the casual workers, since the proposal had to pass through various levels it was not possible to take an early decision in the matter.
It was held up in the Ministry for which TFAI could not be blamed.
So also the proposal to revise the wages of non executive staff was under considera tion since some time.
However, the Union leaders lost pa tience and took a decision to proceed on strike on the eve of the President 's visit to TFAI.
This action of the Union impelled TFAI to make alternative arrangements.
It, there fore, dismissed the 12 union leaders invoking Rule 32 of the Rules.
On going through the material placed before the Labour Court, we feel that the criticism levelled by TFAI that it exceeded its brief and has betrayed a somewhat one sided approach cannot be said to be wholly misplaced.
We have, however, looked to the bare facts found by it.
We are howev er disinclined to analyse the evidence before the Labour Court because we are of the view that even though TFAI was not averse to the demands of labour it could not take a final decision at an early date for want of approval from the concerned Ministry.
This angered the Union representa tives more particularly because the 272 executive staff was granted upward revision of salary, allowances, etc., and hence they decided to call a meeting of the general body to decide on the future course of ac tion.
In their frustration they decided to put pressure by proceeding on strike.
During the strike period certain events happened which we wish were avoided.
But fortunately nothing destructive, meaning thereby damaging to the proper ty of TFAI, took place.
A few brushes and exchange of strong words appear to have taken place which are described as threats by the management.
The vast mass of labour was only responding to the call of the Union.
Even the union repre sentatives were acting out of frustration and not out of animoisity for the officers.
The facts of this case, there fore, demand that we appreciate the conduct of both sides keeping in mind the prevailing overall situation.
While the workers were frustrated for want of an early solution, the management was worried because of the impending visit of the President on January 25, 1987.
Instead of trying to lay the blame at the door of either party, which would only leave a bitter taste for long, we think we should resolve the crisis in the larger interest of the institution.
Taking an overall view of the facts and circumstances which emerge from the oral as well as documentary evidence placed on record, we are of the opinion that while some of the Union leaders acted in haste, they do not appear to have been actuated by any oblique motive.
The management also took action against the workmen not because it was unsympa thetic towards their demands but because of the anxiety caused to them on account of untimely action taken by the Union only a few days before the President 's scheduled visit to the fare.
The management also felt hurt as its reputation was at stake since several dignitaries from abroad were participating in the fare.
Its action must, therefore, be appreciated in this background.
The interest of the institution must be paramount to all concerned including the workmen.
At the same time this Court cannot be oblivious to the economic hardship faced by la bour.
We have already pointed out earlier how both parties reacted to the tense atmosphere that built up over a period of time.
The facts found by the labour court clearly show that while the labour was frustrated as its demands were outstanding since long and they were finding it difficult to combat the inflation without an upward revision in wages, etc., the management was worried about TFAI 's reputation likely to be lowered in the eyes of visiting dignitaries because of certain events that were happening due to the workers ' agitation.
In these circumstances it would be unwise and futile to embark upon a fault finding mission.
273 Keeping the interest of the institution in mind and bearing in mind the economic hardships that the labour would suffer if the impugned orders are not set aside, we think that it would be desirable to restore the peace by directing the re instatement of the workers.
However, so far as the case of the security guard Vipti Singh is concerned, we are constrained to say that the material on record does disclose that he had signed the attendance register showing his presence from March 23, 1987 to March 29, 1987 even though he was in fact absent on those days.
His explanation in this behalf is far from convincing.
We are, therefore, of the opinion that he deserves punishment, but not the extreme punishment of dismissal from service.
We think that the ends of justice would be met if we direct his reinstatement without back wages.
So far as the case of driver Raju is concerned, it must be pointed out that the management cancelled the offer of July 4, 1986 by the letter of July 25, 1986 because of his conviction under Sections 87 and 113 of the Motor Vehicles Act and his so called outrageous behaviour with the dealing assistant on July 22, 1986.
These being clearly acts of misconduct, the action of the management must be held to be penal in nature and cannot be sustained as it was taken without hearing the delinquent.
To hold an enquiry against him at this late stage is not desirable.
In the result all the writ petitions are allowed and the rule is made absolute in each case to the extent indicated hereinafter.
The management will prepare a list of casual daily rated workers who were its employees prior to the strike on January 21, 1987 in accordance with their seniori ty, if such a list does not exist.
TFAI will provide them work on the same basis on which they were given work prior to the strike.
After the seniority list is prepared TFAI will absorb 85 of the seniormost casual workers in regular employment pending finalisation of the regularisation scheme.
TFAI will complete the regularisation process within a period of 3 months from today.
TFAI will determine the .umber of casual employees who would have been employed had they not proceeded on strike.
The wages payable to such casual employees had they been employed for the period of 6 months immediately preceding the date of this order will be worked out on the basis of actual labour employed and the amount so worked out will be distributed amongst the casual employees who report for work in the next three months after TFAI resumes work to casual labour.
Peon Umed Singh, Securi ty Guard Bansi Dhar and Driver Raiu will also be reinstated in service forthwith.
They too will be paid 274 back wages (less suspension allowance, if any) for a period of 6 months immediately preceding this order.
So far as Driver Raju is concerned he will be absorbed in regular service as per the offer made in the letter of July 4, 1987 disregarding the subsequent communication of July 25, 1987.
The security guard Vipti Singh will also be reinstated in service but without back wages.
In the case of the 12 dis missed workers we are, on the facts placed before us, of the view the circumstances did not exist for the exercise of extraordinary powers under Rule 32 of the Rules.
The orders terminating the services of the 12 union representatives are therefore set aside and they are ordered to be reinstated in service forthwith with back wages coveting a period of 6 months immediately preceding the date of this order.
They should be reinstated forthwith.
In view of the above direc tions no further order is required on the C.M.P TFAI will pay Rs.5,000 in all by way of costs to the Union.
Y. Lal Petition allowed.
| IN-Abs | Trade Fair Authority of India Employees ' Union had been demanding from the management (i) housing facilities for the employees; (ii) regularisation of at least 50% of casual or daily rated employees and (iii) upward revision of the salaries and allowances of the workers.
These demands were discussed by the Union with the management from time to time but nothing concrete except assurances emerged.
On October 29, 1986, the Union wrote to the General Manager seeking implementation of the assurances not later than November 15, 1986.
It was also communicated that the workers would pro ceed on one day 's token strike on 13.11.86, if no action was taken.
In response thereto the General Manager only assured the Union representatives that the Standing Committee which was seized of the matter, would be requested to take up the matter on priority basis but things remained standstill till the end of November 1986 and the reminders sent thereafter also did not yeild the desired result.
Thereupon on January 15, 1987 the Union sought permission to hold the general body meeting on 19.1.87 during lunch interval and in antici pation of the grant of such permission issued notices of the meeting to the members.
The General Manager however declined to grant the necessary permission.
But the General Body Meeting of the Union was held as scheduled and a decision was taken to strike work on 21.1.1987 aS a protest.
The management was put on notice, which reacted by suspending the President, Vice President & other Executive Members of the Union.
WOrkers ' demand for withdrawal of the orders of suspension was rejected.
Instead all the remaining office bearers & leading activists were suspended.
These suspended employees have filed a writ petition 258 challenging their suspension.
During the strike some workers attended duty while some others gave undertaking in the prescribed form; all such workers were allowed to work but others who refused to sign the Undertaking but reported for work were denied employ ment Efforts to solve the unemployment problem of such employees having failed, they too have filed a writ petition seeking necessary relief.
By its order of March 3, 1987 the management terminated the services of all the 12 office bearers under Rule 32 of the Trade Fair Authority of India Employees (Conduct, Disci pline and Appeal) Rules 1977 without holding a departmental inquiry as contemplated by Rules 27 to 29 of the Rules.
According to the management the reason for not holding the inquiry was that the workers had terrorised & intimidated not only the Disciplinary Authority but also the witnesses and an atmosphere of violence, general in discipline and insubordination was created, as a result of which it was not practicable to hold the inquiry.
These dismissed employees have also filed a Writ Petition.
One Raju, a casual laborer of TFAI since 1982, was selected on July 4, 1986 as a Mini stiller Driver.
He joined the new post on the same day but his appointment was can celled without assigning any reason and he was reverted as a daily wager.
He too had joined the others for regularisation of his service and has taken part in the strike.
His serv ices were terminated on December 1, 1986 without any in quiry.
He too has filed a Writ Petition challenging the action of the management.
Another Writ Petition has been filed by two daily rated Security Guards of TFAI whose services were terminated, even though they had remained on duty during the strike.
Their contention is that they were dismissed as they refused to falsely implicate their co workers who had espoused their cause.
They urge their 's was a case of victimisation.
In the counter affidavit filed on behalf of the manage ment, it was urged that as the petitions require collection and adjudication of facts, the petitioners should be rele gated to the Industrial Tribunal or the concerned High Court.
On merits, it was contended that the office bearers of the Union had created an atmosphere of violence and had paralysed the smooth running of the TFAI from November 1986 onwards; the officials being terrified were unable to func tion; that the union held the meeting even though permission was refused for the purpose; that provocative speeches undermining discipline were made 259 at the meeting, and that the ultimate termination of the services was motivated, nor coercive.
As the strike neither was prolonged, the management was forced to make alternative arrangements including those of the security as the Presi dent of India was to inaugurate AHARA 1987 on January 25, 1987 and foreign VIPs were expected to visit the Pragati Maidan.
To ensure proper security, the management was even forced to file a suit and obtain an injuction from the High Court restraining the union members from preventing and obstructing the entry of delegates, guests & dignitaries into Pragati Maidan.
Likewise the management sought to defend its action in regard to casual labour by saying that 85 posts were consid ered necessary for regularisation and the matter was pending with the Standing Committee.
It was denied that the manage ment was not sympathetic.
On similar grounds the action taken by the management against Raju and the two security guards were sought to be justified.
When the Petitions reached hearing, the Court directed the Delhi Administration to spare the services of a Judge of the Labour Court to look into the facts of these cases and transmit his report to this Court.
The concerned Judge considered the facts of each case after giving full opportu nity of hearing and leading evidence to the parties and thereafter submitted his report to this Court.
On most of the issues involved the Judge found in favour of the work men.
Allowing the Writ Petitions with directions this Court, HELD: The right to form association or Unions is a fundamental right under Article 19(1)(c) of the Constitu tion.
The necessity to form unions is obviously for voicing the demands and grievances of labour.
The trade unionists act as mouthpieces of labour, [270A B] Strike in a given situation is only a form of demonstra tion, e.g. go slow.
sit in work to rule absentism etc.
Strike is one such mode of demonstration by workers for their rights.
The right to demonstrate and, therefore, the right to strike is an important weapon in the armoury of the workers.
This right is recognised by almost all Democratic Countries.
But the right to strike is not absolute under our industrial jurisprudence and restrictions have been placed on it by section 10(3), 10A (4A), 22 and 23 the Industrial Disputes Act.
These provisions, however, have no application to the present case since it is no body 's contention that the Union 's demands had been referred to any forum under the statute.
Though there were angry protests and 260 efforts to obstruct the officers from entering the precincts of TFAI there was no convincing evidence of use of force of violence.
[270C F] Although TFAI was sympathetic to regularisation of service of the casual workers, since the proposal had to pass through various levels it was not possible to take an early decision in the matter.
In their frustration workers decided to put pressure by proceeding on strike.
During the strike certain events happened which were avoidable but nothing destructive meaning thereby damaging the property of TFAI took place.
[271H; 272A] So far as the case of security guard Vipti Singh is concerned, we are constrained to say that the material on record does disclose that he had signed the attendance register showing his presence from March 23, 1987 to March 29, 1987, even though he was in fact absent on those days.
His explanation in this behalf is far from convincing.
The ends of justice would be met if his re instatement without back wages is directed.
[273B C] In the case of Raju, the action of the management must be held to be penal in nature and cannot be sustained as it was taken without hearing the delinquent, [273D] Keeping in view the interest both of the labour and the institution, the Court directed that the management will prepare a list of casual daily rated workers who were its employees prior to the strike on January 21.
1987 in accord ance with their seniority, if such a list does not exist.
TFAI will provide them work on the same basis on which they were given work prior to the strike.
After the seniority list is prepared TFAI will absorb 85 of the seniormost casual workers in regular employment pending finalisation of the regularisation scheme.
TFAI will complete the regulari sation process within a period of 3 months from to day.
TFAI will determine the number of casual employees who would have been employed had they not proceeded on strike.
The wages payable to such casual employees had they been employed for the period of 6 months immediately preceding the date of this order will be worked out on the basis of actual labour employed and the amount so worked out will be distributed amongst the casual employees who report for work in the next three months after TFAI resumes work to casual labour.
Peon Umed Singh, Security Guard Bansi Dhar and Driver Raju will also be re instated in service forthwith.
They too will be paid back wages (less suspension allowance, if any) for a period of six months immediately preceding this order.
So far as Driver Raju is concerned he 261 will be absorbed in regular service as per the offer made in the letter of July 25, 1987.
The Security Guard Vipti Singh will also be re instated in service but without back wages.
In the case of the 12 dismissed workers the circumstances did not exist for the exercise of extraordinary powers under Rule 32 of the Rules.
The orders terminating the service of the 12 union representatives are therefore set aside and they are ordered to be retained in service forthwith with hack wages covering a period of six months immediately preceding the date of this order.
They should be reinstated forthwith.
[273E H; 274A B] TFAI to pay Rs.5,000 by way of costs to the Union.
[274C]
|
vil Appeal Nos.
4068 70 of 1989 etc.
9 From the Judgment and Order dated 26.8.88 of the Cen tral Administrative Tribunal, Bangalore in Appln.
99 1 993 of 1988.
For the appearing parties: G. Ramaswamy, Additional Solicitor General, Anil Dev Singh, 277 U.R. Lalit, C.V. Subba Rao, T.C. Sharma, Ms. A. Subhashini, C.S. Vaidyanathan, S.R. Setia, S.R. Bhat, Mrs. V.D. Khanna, R. Ramachandran, N.B. Bhat, Altar Ahmed, and S.K. Bhattacha rya.
The Judgment of the Court was delivered by DUTT, J.
These special leave petitions have been heard at length and elaborate submissions have been made on behalf of the parties at the preliminary hearing and, accordingly, we grant special leave in all these matter and proceed to dispose of the same on merits.
These appeals have been preferred by the Union of India and some erstwhile Emergency Commissioned Officers (for short 'ECOs ') and Short Service Commissioned Officers (for short 'SSCOs ') and directed either against the judgment of the learned Single Judge of the Calcutta High Court or against the judgment of the Central Administrative Tribunal, Bangalore.
The Tribunal has struck down the impugned rules, namely, rule 3(2)(d) of the Indian Forest Service (Regula tion of Seniority) Rules, 1968, hereinafter referred to as 'IFS (Regulation of Seniority) Rules, 1968 ', and clauses (c) and (d) of sub rule (3) of rule 3 of the Indian Police Service (Regulation of Seniority) Rules, 1954, hereinafter referred to as 'IPS (Regulation of Seniority) Rules, 1954 ', as ultra vires Articles 14 and 16 of the Constitution of India and has directed the Government of India to assign fresh years of allotment to the ECOs and SSCOs, who were some of the respondents before the Tribunal.
Before the Calcutta High Court, rule 3(2)(d) of the IPS (Regulation of Seniority) Rules, 1954 was involved and the High Court on a construction of that rule allowed the writ petition of the respondents and set aside the impugned order relating to the year of allotment of ECOs and SSCOs.
The period between 1.11. 1962 and 10.1.
1968 is marked by three events, namely, Indo Chinese War followed by Indo Pakistan War and the proclamation of emergency.
These ECOs and SSCOs voluntarily entered the Armed Forces of the Union of India at a time when the security of the nation was in peril due to external aggression.
As they were engaged in defending the country by accepting the war service, they did not get any opportunity to enter into civil services.
The Central Government assured them that after the cessation of emergency, they will be rehabilitated in civil life so that they might not 278 suffer on account of their rendering services to the nation.
The grievance of the respondents who have been recruited to Indian Forest Service or the Indian Police Service from State Services is that although the ECOs or SSCOs, have been recruited in the said All India Services after the respond ents, yet their year of appointment has been fixed earlier than the year of allotment of the respondents.
At this stage, we may refer to the impugned rules.
Rule 3(2)(d) of the IFS (Regulation of Seniority) Rules, 1986 provides as follows: "3(2).
The year of allotment of an officer appointed to the Service shall be (a). . . . . . (b). . . . . . (c). . . . . . (d) Where an officer is appointed to the Service in accordance with rule 7A of the Recruitment Rules, deemed to be the year in which he would have been so appointed at his first or second attempt after the date of joining pre commission training or the date of his commission where there was only post commission training according as he qualified for appointment to the Service in his first or second chance, as the case may be, having been eligible under regulation 4 of the Indian Forest Service (Appointment by Competitive Examination) Regulations, 1967.
Explanation.
If an officer, who qualified himself for appointment to the Service in a particular year, could not be so appointed in that year on account of non availability of a vacancy and is actually appointed in the next year, then his year of allotment would be depressed by one year.
He shall be placed above all the officers re cruited under Rule 7A of the Recruitment Rules and who have the same year of allotment.
" Rule 3(2)(d) refers to rule 7A of the Recruitment Rules which provides, inter alia that till January 28, 1974, 20 per cent of the per 279 manent vacancies in the Indian Foreign Service to be filled by direct recruitment in any year shall be reserved for being filled by ECOs and SSCOs of the Armed Forces of the Union of India, who were commissioned after November 1, 1962 and who have been released from the Armed Forces after a spell of service.
Clauses (c) and (d) of sub rule (3) of rule 3 of IPS (Regulation of Seniority) Rules, 1954 provides as follows: "3(3)(a) . . . . . (d) . . . . . (c) The year of allotment of an offi cer appointed to the Service in accordance with rule 7A of the Indian Police Service (Recruitment) Rules, 1954, shall be deemed to be the year in which he would have been so appointed at his first or second attempt after the date of joining pre commission training or the date of his commission where there was only post commission training according as he qualified for appointment to the Service in his first or second chance, as the case may be, having been eligible under rule 4 of the Indian Police Service (Appointment by Competi tive Examination) Regulations, 1955.
Explanation.
If an officer, who qualified himself for appointment to the Service in a particular year could not be so appointed in that year on account of non availability of a vacancy and is actually appointed in the next year then his year of allotment would be depressed by one year.
He shall be placed above all the officers recruited under Rule 7A of the Recruitment Rules and who have the same year of allotment.
(d) The year of allotment of an offi cer appointed to the Service in accordance with rule 7A of the Indian Police Service (Recruitment) Rules, 1954, having been eligi ble under the second proviso to sub regulation (iii) of Regulation 4 of,the Indian Police Service (Emergency Commissioned and Short Service Commissioned Officers) (Appoint 280 ment by Competitive Examination) Regulations, 1971, shall be deemed to be the year in which he would have been so appointed at his first or second attempt, after the date of joining pre commission training or the date of his Commission where there was only post comission training and also after the lapse of as many years as would have been necessary for him to complete his studies, in the normal course, for the award of the educational qualifica tions prescribed for direct recruitment to the Indian Police Service according as he quali fied for appointment to the Service in his first or second chance as the case may be." Both the above rules, namely, IFS (Regulation of Senior ity) Rules, 1968 and IPS (Regulation of Seniority) Rules, 1954 have been framed under All India Services Act, 1954, hereinafter referred to as 'the Act '.
The Act, before it was amended, conferred power on the Central Government to make rules for the regulation of recruitment and the conditions of service of persons appointed to an All India Services.
No power was, however, conferred by the Act on the Central Government to frame rules with retrospective effect.
The impugned rules, namely, rule 3(2)(d) of the IFS (Regulation of Seniority) Rules, 1968 and clauses (c) and (d) of sub rule (3) of rule 3 of IPS (Regulation of Seniority) Rules, 1954 are admittedly retrospective in operation.
It is now a settled principle of law that if the statute under which a rule is framed does not confer on the authority concerned the power to make such a rule with retrospective effect, the authority will have no power to frame any rule with retro spective effect.
The impugned rules, with which we are concerned, have been made by the Central Government with retrospective effect, although there was no such power conferred by the Act in that regard.
The All India Services (Amendment) Act, 1975 has been enacted by Parliament for the purpose of validating the impugned rules.
By section 2 of the Amendment Act, a new sub section (1 A) has been inserted after sub section (1) of section 3 of the Act, which has been referred to as "the principal Act" in the Amendment Act.
Sub section (1 A) pro vides as follows: "(1 A).
The power to make rules conferred by this section shall include the power to give retrospective effect from a 281 date not earlier than the date of commencement of this Act, to the rules or any of them but no retrospective effect shall be given to any rule so as to prejudicially affect the inter ests of any person to whom such rule may be applicable.
" The provision for validation is contained in section 3 of the Amendment Act and it reads as follows: "3.
No rule made, or purporting to have been made, with retrospective effect, under section 3 of the principal Act before the commencement of this Act shall be deemed to be invalid or ever to have been invalid merely on the ground that such rule was made with retrospective effect and accordingly every such rule and any action taken or thing done thereunder shall be as valid and effective as if the provisions of section 3 of the principal Act, as amended by this Act, were in force at all material times when such rule was made or action or thing was taken or done.
" The ECOs and SSCOs, who are some of the appellants, after demobilisation of the military emergency service, have been appointed in the Indian Police Service and the Indian Forest Service in 1969.
In view of their past service in the army, which they had voluntarily joined for the defence of the country during the period between 1.11.
1962 and 10.1.
1968, the impugned rules were framed providing for the year of allotment of such officers appointed in the Indian Police Service or in the Indian Forest Service with retrospective effect from the date they would have been appointed at their first or second attempt after the date of joining pre com mission training or the date of their commission where there was only post commission training.
Thus, even if an officer has been appointed in an All India Service in 1969 in a regular manner after being selected on the basis of the result of the competitive examination in 1969, his year of allotment will be one or two years after his joining the pre commission training in the army service.
Suppose, an officer, after having been selected for the army service, joined his pre commission training in 1963.
In 1963 he was, therefore, eligible for taking a competitive examination for being recruited to an All India Service.
If he was not successful, he would get a second chance in the next year, that is, in 1964.
If, after his release from the army in 1968, he took the competitive examination and successfully competed in such examination and was selected for appoint ment in the first chance.
according to the impugned rules, his 282 year of all allotment would be 1963.
If he was either not successful in his first attempt or did not avail himself of the same, he would have another chance to compete in the examination for recruitment in an All India Service in the next year, that is, in 1969 and if he was successful and appointed, his year of allotment would be 1964.
In other words, and impugned rules give weightage to ECOs and SSCOs of the past services rendered by them in the emergency army service.
It has been already noticed that the Tribunal has struck down the impugned rules as ultra vires the provisions of Articles 14 and 16 of the Constitution.
According to the Tribunal, the impugned rules are discriminatory in nature without any reasonable justification therefore and thus offends against the provisions of Articles 14 and 16 of the Constitution.
The same contention has been advanced on behalf of the respondents before us.
It has not been disput ed before the Tribunal and also before us, that the ECOs and SSCOs formed a definite class, distinct from the respondents or other officers of Indian Forest Service and Indian Police Service.
In other words, it is the admitted position that the classification of ECOs and SSCOs is rounded on an intel ligible differentia which distinguishes them from the re spondents and other officers of Indian Police Service and Indian Forest Service.
It has, however, been strenuously 'urged that the differentia on which the classification is rounded is lacking in rational relation to the object sought to be achieved by the impugned rules and, as such, it does not satisfy the test of reasonable classification as contem plated by Article 14 of the Constitution.
This is also the view of the Tribunal.
We are unable to accept the contention.
The impugned rules have been framed with a view to giving weightage to the ECOs and SSCOs in recognition of their past services in the army during the period of emergency.
We fail to under stand why the classification has no rational relation to the objects sought to be achieved by the impugned rules.
The classification has been made only for the purpose of compen sating the ECOs and SSCOs for their lost opportunity because of their joining the army service and the impugned rules best subserve the purpose.
Accordingly, we do not think that there is any merit in the finding of the Tribunal and also in the contention of the respondents that the impugned rules are violative of the provisions of Articles 14 and 16 of the Constitution.
Both the High Court and the Tribunal have taken the view that although section 3 of the All India Services (Amend ment) Act, 1975 validates the impugned rules purporting to have been made with 283 retrospective effect, yet the impugned rules are invalid inasmuch as they prejudicially affect the interests of the respondents.
Much reliance has been placed by the respond ents on the provision of the new sub section (I A) of sec tion 3(1) of the Act as inserted by section 2 of the Amend ment Act, 1975.
Sub section (1 A) provides, inter alia, that no retrospective effect shall be given to any rule so as to prejudicially affect the interests of any person to whom such rule may be applicable.
The contention of the appel lants is that sub section (1 A) is itself not retrospective in operation and, as such, has no application to the im pugned rules which are retrospective in operation, that is, before sub section (1 A) was inserted in section 3.
It is, however, difficult to accept the contention of the appellants that sub section (i A) is only prospective and does not apply to the impugned rules which are retro spective in operation.
It has been already noticed that the impugned rules have been validated with retrospective effect by section 3 of the Amendment Act which, in validating any rule made with retrospective effect under section 3 of the Act, provides that no such rule shall be deemed to have been invalid or ever to have been invalid merely on the ground that such rule was made with retrospective effect and, accordingly, every such rule and any action taken or thing done thereunder shall be as valid and effective as if the provisions of section 3 of the Act (principal Act), as amended by the Amendment Act, were in force at all material times when such rule was made or action or thing was taken or done.
In view of section 3, it has to be deemed that provisions of Section 3, as amended by the Amendment Act, were in force at all material times when such rule was made.
In view of the provisions of section 3 of the Amendment Act, sub section (1 A) which has been inserted in section 3 of the Act by way of amendment, must be deemed to be in force at the time the impugned rules were made.
But the question is, even though sub section (1 A) is deemed to have been there at the time the impugned rules were framed with retro spective effect, whether the impugned rules prejudicially affect the interests of the respondents.
It is urged on behalf of the respondents that the im pugned rules take away the vested rights of the respondents and, consequently, prejudicially affect their interests.
Accordingly, it is submitted that the impugned rules are illegal and cannot operate retrospectively in the face of the provision of sub section (1 A).
This contention does not at all impress us.
The respondents have been given a partic ular seniority in accordance with the relevant rules.
The seniority of the respondents is not taken away or interfered with by the impugned rules.
The year of 284 allotment of the respondents remains the same and is not altered to their prejudice.
The impugned rules only provide for giving weightage to the ECOs and SSCOs for their past services in the army during the emergency period and their year of allotment will be determined in accordance with the impugned rules.
It is, however, complained that by giving the ECOs and SSCOs a year of allotment which is prior to the year of allotment of the respondents, the respondents have become their juniors and their (respondents) chances of promotion are seriously affected.
At this stage, we may also notice the contention of Mr. Raju Ramachandran, learned Counsel appearing on behalf of some of the respondents.
It is submitted by the learned Counsel that as the respondents have acquired a particular seniority, section 3 of the Act as amended, if read as suggested by the army officers, would contravene the funda mental rights of the respondents.
This extreme contention is not sustainable on the face of it, for even assuming that the seniority of the respondents or their chances of promo tion are affected by the impugned rules, surely it cannot be said that there has been a contravention of the fundamental rights of the respondents.
Nobody has any fundamental right to a particular seniority or to any chance of promotion.
It is not the case of respondents that because of the impugned rules their cases for promotion will not be taken into consideration by the authorities.
The decision in A. Janard hana vs Union of India; , has no manner of application to the facts and circumstances of the instant cases.
In that case, this Court has laid down that it is open to the Government to retrospectively revise service rules, it the same does not adversely affect vested rights.
Further, it has been observed as follows: "After the promotee is promoted, continuously renders service and is neither found wanting nor inefficient and is discharging his duty to the satisfaction of all, a fresh recruit from the market years after promotee was inducted in the service comes and challenges all the past recruitments made before he was born in service and some decisions especially the ratio in Jaisinghani 's case as interpreted in two B.S. Gupta 's cases gives him an advantage to the extent of the promotee being preceded in seniority by direct recruit who enters service long after the promotee was promoted.
When the promotee was promoted and was render ing service, the direct recruit may be a schoolian or college.
going boy.
He emerges from the education institu 285 tion, appears at a competitive examination and starts challenging everything that had hap pened during the period when he has had noth ing to do with service.
" We have already pointed out that the impugned rules do not affect the vested rights of the respondents adversely.
In Janardhana 's case, this Court was dealing with the ques tion of seniority of promotees vis a vis fresh recruits from the market and observed that when the promotee was promoted and was rendering service, the direct recruit might be a schoolian or college going boy.
In the instant cases before us, the dispute is not between promotees and direct re cruits, the latter having no past services to their credit.
The ECOs and SSCOs are not in the position of direct re cruits, for they have a record of past services in the army which have been taken into consideration for fixing their year of allotment in accordance with the impugned rules.
So, Janardhana 's case has no manner of application to the facts and circumstances of the instant case before us.
It is not that for the first time by impugned rules, the past services of the ECOs and the SSCOs have been taken into consideration for the purpose of giving them their year of allotment with retrospective effect, that is to say, on a date earlier than their actual appointment in the Indian Police Service or in the Indian Forest Service, as pointed out by Mr. G. Ramaswamy, learned Additional Solicitor Gener al appearing on behalf of the Government appellants.
The learned Additional Solicitor General has drawn our attention to the notings in the Government files for the purpose of showing the Government policy to rehabilitate the ECOs and SSCOs in All India Services, Central Services and State Services in order to ensure good response and to provide sufficient incentives for those who offered themselves for emergency commissions.
These, notings start from November 17, 1962.
It is not necessary for us to make a particular reference to the notings in the Government files.
Suffice it to say that in view of the voluntary offer of services by the of youngmen our country to defend the country against foreign aggression, the Government took a very sympathetic view and took steps to compensate them after their discharge from the Emergency Commission Service, for the opportunity lost by them in joining the All India Services.
One thing which is very significant to be mentioned here that although their past services were taken into consideration, the Government did not relax the minimum qualifications required for the All India Services.
These ECOs and SSCOs had to appear in the competitive tests held by the Union Public Service Commission and they were appointed only 286 after they become successful in such tests.
In this connection, we may refer to the Office Memoran dum dated January 29, 1966 providing for the rehabilitation of the ECOs and SSCOs recruited since November 1, 1962, after their release from the Armed Forces.
The contents of the Memorandum are in the nature of executive instructions, but such executive instructions were followed and were given effect.
Paragraph 6 of the Memorandum which deals with seniority and pay reads as follows: "6.
Seniority and pay.
Seniority and pay of those candi dates who are appointed against the reserved vacancies in the All India and Central Serv ices would be determined on the assumption that they entered service/post at the first opportunity they had after joining for pre Commission training.
The principles regarding fixation of pay and seniority laid down in this Ministry 's Office Memorandum No. F. 35/11/62 Ests.
(E) dated the 6th August, 1963 read with Office Memorandum of even number dated 15th February, 1965 (copy enclosed) will apply mutatis mutandis to determine the pay and seniority of ex Emergency Commissioned Officers/Short Service Regular Commissioned Officers appointed against the reserved vacan cies.
" Thus, although the impugned rules were not in existence in 1966, the executive instructions as contained in the Office Memorandum conferred the same benefit as conferred by the impugned rules.
In other words, it is apparent that the executive instructions have now been adopted as rules framed under the Act.
Even otherwise, the Released Emergency Com missioned Officers and Short Service Commissioned Officers (Reservation of Vacancies) Rules, 1967, framed by the Presi dent of India under the proviso to Article 309 and clause (5) of Article 148 of the Constitution of India, contained similar provisions as to the seniority and pay of ECOs and SSCOs.
Indeed, the provision of rule 6 relating to seniority of pay of ECOs and SSCOs is somewhat similar to paragraph 6 of the Office Memorandum.
The date of commencement of the said rules is significant to be noticed.
Under subrule (2) of rule 1, the said rules shall be deemed to have come into force with effect from January 29, 1966 which is the date of the said Office Memorandum.
It is, therefore, manifestly clear that the executive instructions, as contained in the Office Memorandum, have been 287 incorporated in the form of rules framed under proviso to Article 309 and clause (5) of Article 148 of the Constitu tion of India.
It is, however, submitted on behalf of the respondents that in view of the All India Services (Conditions of Serv ice Residuary Matters) Rules, 1960 (for short 'Residuary Rules '), the said rules framed under the proviso to Article 309 and clause (5) of Article 148 of the Constitution of India will not apply to persons appointed to an All India Service.
The contention, in our opinion, is not correct, for clause (a) of rule 2 of the Residuary Rules provides that the Central Government may make regulations to regulate any matters relating to conditions of service of persons ap pointed to an All India Service for which there is no provi sion in the rules made or deemed to have been made under the Act and until such regulations are made such matters shall be regulated in the case of persons serving in connection with the affairs of the Union of India, by the rules, regu lations and orders applicable to officers of the Central Services Class I.
Admittedly, no rules under the Act were then framed in regard to the seniority of ECOs and SSCOs and/or granting them weightage for their past war service and, accordingly, the rules framed under the proviso to Article 309 and clause (5) of Article 148 of the Constitu tion of India applicable to Class I Officers of the Central Government were also applicable to ECOs and SSCOs relating to their seniority in the All India Services.
It is urged on behalf of the appellants that while the benefit of weightage is being conferred on the discharged ECOs and SSCOs way back from 1966, the writ petitions of the respondents should have been dismissed on the ground of inordinate delay and laches.
In support of this contention, some decisions have been cited by the appellants.
Similarly, the respondents have also placed reliance on some other decisions of this Court.
We do not think that after the writ petitions were entertained by the Calcutta High Court and by the Tribunal and disposed of on merits, it will be proper at this stage to dismiss the writ petitions on the ground of inordinate delay or laches.
At the same time, it should be borne in mind that when a particular rule conferring bene fits on a particular group of Government servants in recog nition of their past services in the army, has been in operation for over twenty years, this Court will be very slow to interfere with the rule and deprive such group of Government servants of the benefits so conferred on them.
This, however, does not mean that this Court will shut its eyes even though such rules are illegal and are violative of the provisions of Articles 14 and 16 of the Constitution.
He have, however, held that the impugned rules do not offend against or infringe the provi 288 sions of Articles 14 and 16 of the Constitution.
Now, we may consider the contention of Mr. Lalit, learned Counsel appearing on behalf of the respondents in the appeal arising out of S.L.P. (C) No. 10105, of 1988.
These respondents were in the State Forest Service before 1966 and, subsequently, absorbed in the Indian Forest Serv ice under the Central Government.
It is not disputed that unlike Indian Police Service, the Indian Forest Service was constituted much later in the year 1966.
It is also not disputed that the respondents were the first batch of incum bents or entrants in the Indian Forest Service.
It is sub mitted on.behalf of the respondents that the Indian Forest Service was constituted with the respondents as the initial recruits.
We may now refer to some of the provisions of Indian Forest Service (Recruitment) Rules, 1966, hereinafter re ferred to as 'IFS Recruitment Rules '.
Rule 3 of the IFS Recruitment Rules relates to the constitution of the Serv ice.
It provides as follows: "3.
Constitution of the Service.
The Service shall consist of the following persons, name ly: (a) Members of the State Forest Service recruited to the service at its ini tial constitution in accordance with the provisions of sub rule (1) of rule 4; and (b) Persons recruited to the service in accordance with the provisions of sub rules (2) to (4) of Rule 4." So, under rule 3, the Service consists of members of the State Forest Service recruited to the Service at its initial constitution and persons recruited in accordance with the provisions of sub rules (2) to (4) of rule 4.
The next relevant provision is rule 4.
Sub rules (1) and (2) of rule 4, which are relevant for our purpose, are extracted below: "4.
Method of recruitment to the Service. (1) As soon as may be after the commencement of these rules, the Central Government may re cruit to the Service any person from amongst the members of the State Forest Service ad judged suitable in accordance with such regu lations as the Central Government may make in consultation with the State Governments and the commission; 289 Provided that no member holding a post referred to in sub clause (ii) of clause (g) or rule 2 and so recruited shall, at the time of recruitment, be allocated to any State cadre other than the cadre of a Union Territo ry.
(2) After the recruitment under sub rule (1), subsequent recruitment to the Serv ice, shall be by the following methods, name ly; (a) by s competitive examination; (aa) by selection of persons from amongst the Emergency Commissioned Officers and Short Service Commissioned Officers of the Armed Forces of the Union who were commissioned after the 1st November, 1962, but before the 10th January, 1968 and who are released in the manner specified in sub rule (1) of rule 7A; (b) by promotion of substantive members of the State Forest Service.
" It appears from sub rules (1) and (2) that there are four methods of recruitment.
The first method is as con tained in rule 4(1), that is, the initial recruits from the State Forest Service.
The other three methods of recruitment have been provided for in sub rule (2) including the re cruitment of ECOs and SSCOs who were commissioned during the period of emergency and released in the manner specified in sub rule (1) of rule 7A.
It is ', however, clear that the recruits under sub rule (2) including the ECOs and SSCOs are recruited after the initial recruits under rule 4(1).
Anoth er thing to be noticed is that the first examination for recruitment in the Indian Forest Service was held by the Union Public Service Commission in 1967.
It is strenuously urged by Mr. Lalit that as the re spondents were the initial recruit or, in other words, the Indian Forest Service having been constituted with them, no person recruited under rule 4(2) of the IFS Recruitment Rules can be given seniority over the respondents who are the initial recruits.
As the Indian Forest Service itself was constituted in 1966, there is no question of giving seniority to any recruits beyond 1966.
It is urged by the learned Counsel that the first 1967 after the constitution of their service, there is also no question of lost opportu nity so far as the ECOs and SSCOs are concerned.
It is submit 290 ted that if such examinations had started to be held from 1962, then it could be said that the ECOs and SSCOs had lost the opportunity of competing in such examinations in view of their joining the army.
Accordingly, it is submitted that so far as the Indian Forest Service is concerned, the consider ation for giving weightage to the ECOs and SSCOs on the basis of their past services in the army does not apply.
Attractive though the contentions are, we are unable to accept the same.
It is true that the respondents were the initial recruits when the Indian Forest Service was consti tuted in 1966 and that the other recruits including the ECOs and SSCOs entered the service after the respondents, but this fact has very little bearing on the question of fixing the year of allotment having regard to the past services of such recruits.
The respondents themselves were 'appointed to the Indian Forest Service in 1966, but they have been given the year of allotment as '1964 1/2 ', that is to say, long before the Service came into existence.
If it is possible in the case of the respondents, we fail to understand why it is not possible in the case of other recruits including the ECOs and SSCOs.
The grievance of the respondents is that the ECOs and SSCOs having been appointed subsequent to their appointment or, in other words, they having entered service after the respondents, they could not be given a year of allotment prior to that allotted to the respondents.
This contention is again misconceived.
So far as the respondents are concerned, the year of allotment has been granted to them on the basis of certain principles, as contained in rule 3 of IFS (Regulation of Seniority) Rules, 1968.
The ECOs and SSCOs are, however, governed by the impugned rules and their year of allotment has been fixed as '1964 ' which is prior to the year of allotment of the respondents and, accordingly, the ECOs and SSCOs are senior to the respond ents in the Indian ForeSt Service.
In the Indian Police Service also the year of allotment of the ECOs and SSCOs is prior to that of those respondents who are in that Service.
We do not think that any invidious discrimination has been made between the ECOs and SSCOs on the one hand and the respondents on the other, both in regard to Indian Forest Service and Indian Police Service, as contended on behalf of the respondents.
As soon as it is found that the ECOs and SSCOs have been classified into a distinct and separate class, and that such classification is reasonable, no objec tion can be taken to the year of allotment given to them in accordance with the impugned rules.
After giving our anxious consideration to the respective contentions of the parties and after considering the different rules and regulations and also the fact that the ECOs and SSCOs had 291 voluntarily offered their services for the defence of the country during the period of emergency, disagreeing with the High Court and the Tribunal, we are of the view that no illegality has been committed by the Government in framing the impugned rules with retrospective effect.
We hold that the impugned rules are quite legal and valid.
For the reasons aforesaid, the impugned judgments of the High Court and of the Tribunal are set aside and all these appeals are allowed.
There will, however, be no order as to costs in any of these appeals.
R.N .J.
Appeals allowed.
| IN-Abs | The grievance of the respondents who have been recruited to Indian Forest Service and the Indian Police Service is that although the Emergency Commissioned Officers & Short Service Commissioned Officers in Short ECOS & SSCOS respec tively have been recruited after the respondents yet their year of appointment has been fixed earlier than the year of allotment of the respondents under rule 3(2)(d) of the IFS (Regulation of Seniority) Rules, 1968 & Clauses (c) & (d) of sub rule (3) of Rule 3 of I;P.S. (Regulation of Seniority) Rules, 1954 which is retrospective in operation.
The Tribu nal struck down the rules as ultra vies of Articles 14 & 16 of the Constitution.
Both the High Court and the Tribunal have taken the view that although Section 3 of the All India Services (Amendment) Act, 1975 validates the impugned rules purporting to have been made with retrospective effect, yet the impugned rules are invalid in as much as they prejudi cially, affect the interests of the respondents.
While allowing the appeals and disagreeing with High Court and the Tribunal, this Court, HELD: The Tribunal has struck down the impugned rules, namely rule 3(2)(d) of the Indian Forest Service (Regulation of Seniority) Rules, 1968 and clauses (c) and (d) of sub rule (3) of Rule 3 of the Indian Police Service (Regulation of Seniority) Rules, 1954 as ultra vires Articles 14 and 16.
Office Memorandum dated January 29, 1966 provides for the rehabilitation of the ECOS and SSCOs recruited since 276 November 1, 1962 after their release from the Armed Forces.
The contents of the Memorandum are in the nature of execu tive instructions.
[277D: 282B; 286B] Although the impugned rules were not in existance in 1966 the executive instructions as contained in the Office Memorandum conferred the same benefit as conferred by the impugned rules.
In other words, it is apparent that the executive instructions have now been adopted as rules framed under the Act.
[286E] The Released Emergency Commissioned Officers and Short Service Commissioned Officers (Reservation of Vacancies) Rules, 1967 framed by the President of India under the proviso to Article 309 and clause (5) of Article 148 of the Constitution of India, contained similar provisions as to the seniority and pay of ECOS & SSCOs.
[286F] No invidious discrimination has been made between the ECOs & SSCOs on the one hand and the respondents on the other, both as regard the Indian Forest Service and Indian Police Service, as contended.
[290E] As soon as it is found that the ECOs and SSCOs have been classified into a distinct and separate class and that such classification is reasonable, no objection can be taken to the year of allotment given to them in accordance with the impugned rules.
Disagreeing with the High Court and the Tribunal, this Court is of the view that no illegality has been committed by the Government in framing the impugned rules with retrospective effect.
Held that the impugned rules are quite legal and valid.
[290G H; 291A] It is now a settled principle of law that if the statute under which a rule is flamed does not confer on the authori ty concerned the power to make such a rule with retrospec tive effect, the authority will have no power to frame any rule with retrospective effect.
[280F] A. Janaradhana vs Union of India, ; , referred to.
|
N: Criminal Appeal No. 603 of 1989.
From the Judgment and Order dated 8.6.1989 of the Bombay High Court in Crl.
Application No. 995 of 1989.
B .R. Handa and A.M. Khanwilkar for the Appellant.
Ram Jethmalani, P.K. Dey, Ms. Rani Jethmalani (N.P.) and D.M. Nargolkar for the Respondents.
The Judgment of the Court was delivered by 317 ABMADI, J.
Special leave granted.
Heard counsel on both sides.
The facts leading to this appeal are as under: On May 30, 1988, the respondent, a retired Naval Officer of the rank of Captain was apprehended at the Bombay Inter national Airport (Sahar Airport) when he was about to take the Air India Flight from Bombay to New York.
On search of his luggage certain highly sensitive documents marked se cret/confidential were found.
A complaint was lodged against him for the breach of the provisions of the Official Secrets Act, 1923 and the .
Soon after his arrest he filed an application dated 22nd September, 1988 for bail.
That application was rejected by the High Court on 29th September, 1988.
Thereafter, he filed a writ petition challenging the validity of Sections 3 and 5 of the Official Secrets Act, 1923 but that writ petition was dismissed by a Division Bench of the Bombay High Court on 8th December, 1988.
In the meantime, he had preferred an application dated 21st November, 1988 for transfer of his case to another learned Judge and for grant of bail.
While granting the prayer for transfer the Division Bench refused to enlarge the respondent on bail by its order dated 19th December, 1988.
Soon thereafter on 18th January, 1989, the respondent filed the third application for bail which too was rejected by Suresh, J. Having thus failed to secure enlargement on bail the respondent approached the learned Sessions Judge, Bombay for a direction to the jail authorities that he be produced before the Head of the Orthopaedic Department of J .J.
Hospital as he had some spinal pain.
The respondent also moved a separate application for being admitted to the Naval Hospital.
The learned Sessions Judge acceded to his request and got him examined by Dr. Dongaonkar who submitted his report on 3rd February, 1989.
On 10th February 1989, the respondent moved another application complaining of viola tion of Court 's order and for enlargement on bail.
This was followed by yet another application for bail dated 16th February, 1989 and in the alternative for a direction to admit him to a suitable hospital where he may be served meals cooked at his home.
On the said application certain directions were given and the respondent was shifted to the general ward of G.T. Hospital, Bombay.
The Trial Court flamed charges against the respondent on 27th February, 1989.
On 24th April, 1989, the respondent filed yet another application for grant of bail on medical grounds and in the alternative for being admitted to a hospital or any other place where he can conveniently receive instructions in yogic exercises.
All his pending applications made for bail etc. were rejected by Puranik, J. by a common order dated 6th June, 1989, except Criminal Application No. 995 of 1989 preferred in April, 1989 318 for enlargement on bail on medical grounds.
Possibly the fact that he had referred this application was not brought to the notice of Puranik, J. Two days after the rejection of the group of bail applications by Puranik, J., application No. 995 of 1989 was disposed of by Suresh, J., who directed that he be enlarged on bail for a period of two months on his furnishing security in the sum of Rs. 10,000 with one surety on the terms and conditions catalogued at (a) to (g) of the order.
The learned Judge felt that by permitting him to be kept in virtual house arrest the State 's grievance that he meets visitors including mediamen and gives inter views at the G.T. Hospital open ward will not survive.
He was also of the view that having regard to his spinal disor der it was necessary that he had proper facilities for yogic exercises under expert guidance.
It is this order of the learned Judge that is assailed before us by the State of Maharashtra.
When this matter came up for admission before Shetty, J., during vacation, the learned Judge, after taking note of the fact that respondent was suffering from disc prolapse for which he was treated by Dr. Dongaonkar and had shown considerable improvement and after evaluating the opinion of Dr. Khadilkar who had certified that the respondent was fit to attend court, observed as under: "Having regard to the nature of the offences charged, the sickness or disability complained of, the nature of the treatment required, the certificates given by the Doctors, I am of the opinion that the bail order made by the High Court appears to be a bit out of the ordinary.
" The learned vacation Judge then directed notice to issue and stayed the operation of the High Court 's Judgment of 8th June, 1989.
While doing so, he observed that the respondent should be given necessary treatment of Yogic exercises in the Jail.
Therefore, since the passing of this order on 15th June, 1989, the operation of the High Court 's order enlarg ing the respondent on bail and placing him in virtual house arrest on the terms and conditions set out in the court 's order, is stayed.
The learned counsel for the State of Maharashtra con tended that the learned Judge in the High Court while pass ing the impugned order of 8th June, 1989 ought to have realised that only two days before his colleague Puranik, J. had rejected all the pending bail applications (except Criminal Application No. 995/89) preferred at intervals by the respondent.
In Criminal Application No. 375/89 one of the prayers 319 made in paragraph 7(e) was as under: "That the applicant may, pending his illness be ordered and directed to be placed under house arrest and/or be released on bail on such terms and conditions as may be Puranik, J. considered this request of the respondent in paragraph 24 of his order of 6th June, 1989 and rejected the same.
Despite the rejection of the said application No. 375 of 1989 along with a group of applications seeking enlarge ment on bail and other directions, Suresh, J. granted almost the same request only two days later while disposing of the application No. 995/89.
That is what Shetty, J. described as 'a bit out of the ordinary ' when the matter came up for hearing before this Court on 4th August, 1989 a communica tion received from the respondent requesting that he be brought to Delhi by plane to enable him to argue the matter in person was placed before the Court.
This Court while rejecting his request for being brought by plane from Bombay to Delhi observed that he may inform the Court if he desired legal aid.
At the next hearing instead of informing the Court whether he desired legal aid, he repeated his request for personal appearance through his son which was rejected.
However, the Supreme Court Legal Aid Committee was requested to appoint an Advocate to appear and argue the case on his behalf.
The matter was listed for hearing on 8th September, 1989.
When the matter was called on for hearing, Mr. Jethmala ni, learned counsel for the respondent made a fervent plea that having regard to the age and the condition of the respondent, this Court should recall its earlier order staying the operation of the impugned order and should refuse to exercise its jurisdiction under Article 136 of the Constitution of India.
The submission of Mr. Jethmalani was that ordinarily bail should be granted to under trials and this Court should refrain from exercising jurisdiction under Article 136 to cancel bail granted by the High Court.
He made an endeavour to satisfy us that even on merits this was a fit case for grant of bail notwithstanding the fact that several bail applications, made by the respondent one after another.
were .rejected by the High Court.
We cannot accede to the submissions of Mr. Jethmalani.
It is evident from the facts stated above that after the respondent 's successive applications for bail were spurned, he requested for being admitted to the hospital on medical grounds, that is, on the 320 ground that he was suffering from spinal disorder.
He was first admitted to the J.J. Hospital and was later shifted to G.T. Hospital open ward on his request.
After improvement to the extent of 70% and above was reported by Dr. Dongaonkar who treated him and on Dr. Khadilkar declaring him fit to attend the court, he contended that he had consulted a yoga instructor who advised him a course in yogic exercises to get rid of his spinal disorder.
In the meantime he had filed a number of applications for being released on bail.
This batch of applications were put up before Puranik, J. for disposal.
The attention of Puranik, J. was not drawn to the pendency of one such application No. 995/89 till he disposed of the batch of such bail applications on 6th June 1989.
Even if the said application was filed after the hearing started before Puranik, J., the learned Judge could have been told about its pendency before he rendered his decision on 6th June, 1989.
This conduct of the respondent has given rise to the argument that the respondent desired to keep the question regarding his enlargement on bail alive.
We have pointed out that in one of the applications No. 375/89 he had sought precisely the same relief which came to be grant ed by the impugned order.
The question then is whether there was justification for releasing the respondent on bail to facilitate yogic exercises under expert guidance at his residence, albeit under conditions of surveillance, even though Puranik, J. had rejected a more or less similar prayer only two days before? Should this Court refuse to exercise jurisdiction under Article 136 of the Constitution even if it is satisfied that the jurisdiction was wrongly exercised? Liberty occupies a place of pride in our socio political order.
And who knew the value of liberty more than the rounding fathers of our Constitution whose liberty was curtailed time and again under Draconian laws by the coloni al rulers.
That is why they provided in Article 21 of the Constitution that no person shall be deprived of his person al liberty except according to procedure established by law.
It follows therefore that the personal liberty of an indi vidual can be curbed by procedure established by law.
The Code of Criminal Procedure, 1973, is one such procedural law.
That law permits curtailment of liberty of anti social and anti national elements.
Article 22 casts certain obliga tions on the authorities in the event of arrest of an indi vidual accused of the commission of a crime against society or the Nation.
In cases of under trials charged with the commission of an offence or offences the court is generally called upon to decide whether to release him on bail or to commit him to jail.
This decision has 'to be made, mainly in non bailable cases, having regard to the nature of the crime, the circumstances in which it was committed, the 321 background of the accused, the possibility of his jumping bail, the impact that his release may make on the prosecu tion witnesses, its impact on society and the possibility of retribution, etc.
In the present case the successive bail applications preferred by the respondent were rejected on merits having regard to the gravity of the offence alleged to have committed.
One such application No. 36 of 1989 was rejected by Suresh, J. himself.
Undeterred the respondent went on preferring successive applications for bail.
All such pending bail applications were rejected by Puranik, J. by a common order on 6th June, 1989.
Unfortunately, Puranik, J. was not aware of the pendency of yet another bail appli cation No. 995/89 otherwise he would have disposed it of by the very same common Order.
Before the ink was dry on Pura nik, J. 's order, it was upturned by the impugned order.
It is not as if the court passing the impugned order was not aware of the decision of Puranik, J., in fact there is a reference to the same in the impugned order.
Could this be done in the absence of new facts and changed circumstances? What is important to realise is that in Criminal Application No. 375 of 1989, the respondent had made an indentical request as is obvious from one of the prayers (extracted earlier) made therein.
Once that application was rejected there was no question of granting a similar prayer.
That is virtually overruling the earlier decision without there being a change in the fact situation.
And, when we speak of change, we mean a substantial one which has a direct impact on the earlier decision and not merely cosmetic changes which are of little or no consequence.
Between the two orders there was a gap of only two days and it is nobody 's case that during these two days drastic changes had taken place necessitating the release of the respondent on bail.
Judicial discipline, propriety and comity demanded that the impugned order should not have been passed reversing all earlier orders including the one rendered by Puranik, J. only a couple of days before, in the absence of any substan tial change in the fact situation.
In such cases it is necessary to act with restraint and circumspection so that the process of the Court is not abused by a litigant and an impression does not gain ground that the litigant has either successfully avoided one Judge or selected another to secure an order which had hitherto eluded him.
In such a situation the proper course, we think, is to direct that the matter be placed before the same learned Judge who disposed of the earlier applications.
Such a practice or convention would prevent abuse of the process of court inasmuch as it will prevent an impression being created that a litigant is avoiding or selecting a court to secure an order to his liking.
Such a practice would also discourage the filing of successive bail applications without change of circum stances.
Such a practice if adopted would be condusive to judicial discipline and would also 322 save the Court 's time as a Judge familiar with the facts would be able to dispose of the subsequent application with despatch.
It will also result in consistency.
In this view that we take we are fortified by the observations of this Court in paragraph 5 of the judgment in Shahzad Hasan Khan vs Ishtiaq Hasan Khan, [1987] 2 SCC 684.
For the above reasons we are of the view that there was no justification for passing the impugned order in the absence of a substan tial change in the fact situation.
That is what prompted Shetty, J. to describe the impugned order as 'a bit out of the ordinary '.
Judicial restraint demands that we say no more.
It is true that ordinarily this Court does not interfere with an order granting bail but in the facts of this case we feel judicial discipline will be sacrificed at the altar of judicial discretion if we refuse to exercise our jurisdic tion under Article 136 of the Constitution.
In the result we allow this appeal and set aside the impugned order dated 8th June, 1989 granting bail to the respondent accused.
R.S.S. Appeal allowed.
| IN-Abs | The respondent, a retired Naval Officer, was apprehended at the Bombay International Airport when he was about to take a flight to New York.
On search of his luggage certain highly sensitive documents were found, and he was arrested for breach of the provisions of the Official Secrets Act, 1923 and the .
The respondent filed a number of applications for being released on bail inter alia on medical grounds.
This batch of applications were rejected by Puranik, J.
The attention of Puranik, J. was, however, not drawn to the pendency of one more such application, in which the respondent had prayed for grant of bail to facilitate yogic exercises under expert guidance at his residence.
The respondent had sought precisely the same relief in an earlier application which had been rejected by Puranik, J. Two days after the rejec tion of the group of bail applications by Puranik, J., the pending application was disposed of by Suresh J., who di rected that the respondent be enlarged on bail, on certain conditions which amounted to virtual house arrest.
Before this Court the appellant State has assailed the propriety of the order granting bail passed by Suresh, J. just two days after Puranik, J. had rejected the batch of bail applications.
On the other hand, it was contended on behalf of the respondent that this Court should refrain from exercising jurisdiction under Article 136 to cancel bail granted by the High Court.
Allowing the appeal, this Court, HELD: (1) It is true that ordinarily this Court does not interfere with an order granting bail, but in the facts of this case the Court feels that judicial discipline will be sacrificed at the alter of judicial discretion if the Court refused to exercise its jurisdiction under Article 136 of the Constitution.
[322C] 316 (2) When the batch of bail applications were put up before Puranik, J., his attention was not drawn to the pendency of one more such application.
Even if the said application was filed after the hearing started before Puranik, J., the learned Judge could have been told about its pendency before he rendered his decision.
This conduct of the respondent has given rise to the argument that the respondent desired to keep the question regarding his en largement on bail alive, [320B C] (3) What is important to realise is that in the hail application before Suresh, J. the respondent made an identi cal request made earlier in an application placed before Puranik, J.
Once that application was rejected there was no question of granting a similar prayer.
That is virtually overuling the earlier decision without there being a change in the fact situation, which would mean a substantial change having a direct impact on the earlier decision and not merely cosmetic changes which are of little or no conse quence.
[321D E] (4) Judicial discipline, propriety and comity demanded that the impugned order should not have been passed revers ing all earlier orders including the one rendered by Pura nik, J., only a couple of days before, in the absence of any substantial change in the fact situation.
[321F] (5) In such a situation the proper course is to direct that the matter be placed before the same learned Judge who disposed of the earlier applications.
Such a practice or convention would prevent an impression being created that a litigant is avoiding or selecting a court to secure an order of his liking.
Shahzad Hasan Khan vs Ishtiaq Hasan Khan, [1987] 2 SCC 684, referred to.
|
vil Appeal Nos.
4209 10 of 1989.
From the Judgment and Order dated 10.4.1987 of the Kerala High Court in M.F.A. No. 291 and 304 of 1982.
K.N. Bhat and Mukul Mudgal for the Appellant.
M.M. Abdul Khader and T.T. Kunhikanan for the Respond ents.
The Judgment of the Court was delivered by RAY, J.
Special leave granted.
These appeals on special leave have been filed by the con tractor, 401 K.V. George against the judgment and order passed on 10th April, 1987 by the Kerala High Court in M.F.A. No. 291 and 304 of 1982 whereby the High Court set aside the judgment of the Sub Court, Trivandrum in O.P. (Arb.) No. 296 of 1981 as also the award of the Arbitrator in A.C. No. 276 of 1980 and directed that the Arbitrator will dispose of the Arbitration case No. 132 of 1980 in the light of the judgment of the Sub Court in O.P. (Arb.) No. 81 of 1981 in accordance with law considering the claim of the contractor appellant and the counter claim of the respondents.
The appellant who is a contractor entered into a con tract with the respondents on April 22, 1978 in connection with the construction of an embankment across Musaliyar Padom between Chaniage 2573.5 M to 2827 M of E.B. Main canal of Kallada Irrigation Project.
The work was required to be completed by 30th March, 1980 i.e. two years from the date of selection notice which was dated 30th March, 1978.
As the appellant failed to complete the work as per the terms of the contract, the respondents sent a notice dated April 26, 1980 to the appellant cancelling the contract at his risk and cost.
On July 2, 1980 the appellant filed a claim being arbitration case No. 132 of 1980 before the named Arbitrator i.e. the Chief Engineer (Arbitration), Vellayambalam, Tri vandrum claiming enhancement of rates in respect of the earth work involved in the contract, interest on delayed payments and costs.
The second respondent, the Superintend ing Engineer, K.I.P. Circle, Karnataka filed a defence statement stating inter alia in para 2(1) that the time of completion of the work was fixed as 24 months from the date of handing over site to the contractor and he could have anticipated all such variations before quoting rates.
As per agreement the rates once agreed will not be enhanced.
The department is not bound to pay the claimant a revision of schedule.
In para 2(m) it has also been pleaded that as per agreement the contractor is bound to carry out additional and extra items of works that arise during execution.
The additional and extra items of works done by the contractor are quite meagre when compared to the total volume of the work.
The extra and excess items were covered by supplemen tal agreement.
The contractor was not able to complete even 35% of the total work within the time of completion of the work and as such the claimant is not entitled to attributed delay on this account.
A counterclaim was filed by the Superintending Engineer, K.I.P. Circle, Kottarakkara, the respondent No. 2 wherein a claim of a sum of Rs.28,84,000 was made.
The Arbitrator by his order dated January 22, 1981 made the 402 award in regard to claim No. 1 directing the respondents to pay 35% increase in the agreed rate for the item of Earth work excavating and filling for forming the compacted em bankment with earth from barrow area.
Claim No. 1 was thus allowed.
Claim Nos. 2 and 3 regarding interest were disal lowed.
As regards counter claim Nos. 1 and 2, it was ordered that those issues will be considered separately and so no award was made.
The appellant thereafter filed O.P. (Arb.) No. 81 of 1981 in the court of Sub Judge, Trivandrum under section 14 of the Arbitration Act for making the award a rule of the court.
On objections being raised by the respondents, the Court of the Sub Judge after hearing the parties by order dated August 18, 1981 remitted the reference to the Arbitra tor for fresh consideration on the ground that the Arbitra tor did not consider the counter claims made by the respond ents.
The appellant thereafter filed I.A. No. 3780/81 in the court of Sub Judge praying that the order dated August 18, 1981 may be reviewed.
In the, meantime, the appellant filed another arbitration case No. 276 of 1980 before.
the same Arbitrator in respect of the wrongful termination of the contract and also raised 13 items of claims therein.
The Arbitrator after going through the objections of the re spondent made an award on October 29, 1981 whereby he or dered that the re arrangement of the work should not be at the risk and cost of the appellant.
As regards claim No. 2, he ordered 30% increase in rates (as per original and sup plemental agreement) for all items of work carried out by the appellant except on items covered by Award No. 132 of 1980 dated 22.1.1981.
Claim Nos. 3 and 5 were rejected.
As regards claim No. 4 an increase of 20 per cent in the agreed rates for these items was allowed.
Claim No. 11 regarding interest was disallowed.
It was also stated in the award inter alia that the claimant shall be entitled to the refund of the security amount as well as refund of the retention amounts, the claimant shall be entitled to his final bill in terms of the Award, the counter claim for recovery of costs of rearrangement of work and also the counter claims filed by the respondent dated April 8, 1981 were declined.
The appellant filed O.P. (Arb) No. 296 of 1981 for making the second award a rule of the court.
A statement of defence was filed by the respondents wherein,it has been stated inter alia in para 6 that: "The claims made in this petition under paras 6(ii), (iii), (iv), (v), (vi) (vii) and (viii) are barred by resjudicata and constructive resjudicata.
No work was done by the claimant after termination of the contract on June 24, 1980.
403 The claim petition in Arbitration case No. 132/80 was filed by the claimant before the Hon 'ble Arbitrator on 2.7.1980.
It was open to him to raise these claims in that Arbitration petition.
Having not done this raising of these claims now which are all bogus and imaginary is barred by constructive resjudica ta.
He had not raised these claims before Chief Engineer (next Superior Authority) and also before the Hon 'ble Arbitrator in his petition dated 27.10.1980.
Hence it is prayed that the above claims may not be taken up for arbitration and they may be rejected.
" It has also been stated in sub para (iv) of para 6 that: "(iv) As above.
Also there had been no error in the rates.
The claimant was paid at his agreed rates, and he had received it and also no dispute lies on it.
Claim may be rejected.
Work done was recorded as per item No. 7 of Appl.
of agreement and was paid as per agree ment.
" The Sub Judge by order dated March 18, 1982 made the award a rule of the court dismissing the plea of res judica ta raised by the respondents in O.P. (Arb.) No. 296 of 1981.
The respondents filed two appeals being FMA Nos. 291 of 304 of 1982 before the High Court of Kerala at Ernakulam which held that the Arbitrator could not review its order on the facts of the present case and so allowed F.M.A. No. 291 and 1982.
The High Court also allowed F.M.A. No. 304 of 1982 holding that principles of constructive res judicata would apply to the arbitration case.
Feeling aggrieved by the aforesaid judgment and order passed in F.M.A. Nos. 291 and 304 of 1982, the appellant contractor has preferred the instant appeals on special leave.
Mr. Bhatt, learned counsel appearing on behalf of the appellant has submitted in the first place that the High Court was wrong in reversing the judgment and order of the trial court without considering the provisions of Section 114 as well as Order 47, Rule 1 of the Code of Civil Proce dure in as much as Order 47, Rule 1 clearly provides that review of an order may be made either on account of some mistake or enor apparent on the face of the record, or for any other sufficient reason.
In the instant case, the first award was set aside by the Trial Court on the ground that the counter claim filed on behalf of the respondents was not considered by the Arbitrator and so it remitted the same for consideration afresh.
It has been held by the High Court that the refusal to consider the counter claims had rendered the prior 404 award liable to be set aside for mis conduct of the Arbitra tor and the proceedings.
It has been urged by the learned counsel that the counter claim has been fully considered in the second award made by the Arbitrator and as such the first award cannot be set aside on the ground of non consid eration of a counter claim and it cannot be treated as mis conduct of the Arbitrator/and the proceedings for nonconsid eration of the counter claim in the first award.
It has been further contended in this connection that the finding of the High Court to the effect that the subsequent award passed by the Arbitrator dealing with the counter claims did not have the effect of mitigating the mis conduct of the Arbitrator or of condoning the error on the face of the award, is also not sustainable in as such as the counter claim filed by the respondents was duly considered by the Arbitrator in the second award made by him.
It has also been submitted by the learned counsel for the appellant that the principles of res judicata and con structive res judicata are not applicable to the award made in Arbitration case No. 291 of 1981 in as much as the dis putes that were raised were not ripe for being referred to Arbitration in view of the terms of the contract that the contractor had to raise the dispute before the Superintend ing Engineer and thereafter before the Chief Engineer and had to wait till the end of the stipulated period.
It has been further submitted that since the period was not over, the claims that have been raised subsequently in the second claim petition before the Arbitrator could not be raised in the first claim petition before the Arbitrator and as such the second award made by the arbitrator cannot be said to have been barred by res judicata as provided in Section 11 of the Code of Civil Procedure or by the rules of construc tive res judicata.
The judgment and order of the High Court in allowing F.M.A. No. 304 of 1982 setting aside the award made in Arbitration case No. 296 of 1981 is unwarranted and as such it is not sustainable.
It has also been contended that the claim made in the second claim petition before the Arbitrator is not barred by order 2, rule 2 of the Code of Civil Procedure in as much as the disputes raised in the second claim petition before the Arbitrator were not ripe for reference as the appellant had to wait till the end of the stipulated period in accordance with the terms of the contract.
The judgment and order of the High Court in allow ing the F.M.A. No. 304 of 1982 is not legal and valid and is liable to be set aside.
Mr. Abdul Khadir, learned counsel appearing on behalf of the respondents on the other hand urged before this Court that the SubJudge acted legally in directing the Arbitrator to dispose of the arbitra 405 tion case No. 132/80 in the light of the judgment of the Sub Court in O.P. (Arb.) No. 81 of 1981 and in setting aside the order of review because no case for review nor any sufficient cause has been made out for exercising the power of review under Section 114 read with Order 47, Rule 1 of the Code of Civil Procedure.
The High Court, it has been submitted, was right in holding that the order of review was unwarranted and in setting aside the same and directing the Arbitrator to dispose of the reference in accordance with law considering the claim of the contractor appellant and the counter claim of the respondents.
It has been further submitted by Mr. Abdul Khadir that in view of the provisions of Section 41 of the Arbitration Act which specifically provides that the provisions of the Code of Civil Procedure shall apply to arbitration proceedings, the principles of res judicata or of constructive res judicata will apply to arbitration proceeding.
The appellantcontractor having not raised all his claims in his first claim petition made to the Arbitrator for decision and award having been made thereon, the second claim petition before the Arbitrator making certain other claims in Arbitration Case No. 276 of 1980 is barred by the principles of constructive res judica ta in as much as on the termination of the contract by order dated April 26, 1980 the contractor could have raised all his disputes arising out of the contract at that time, but the appellant chose to take only some of the issues arising from the said breach of contract before the Arbitrator.
The second claim petition raising some issues before the Arbi trator is therefore, hit by the principles of constructive res judicata and the High Court rightly allowed the appeal setting aside the award made in Arbitration Case No. 276 of 1980.
It has also been submitted that the provisions of Order 2, Rule 2 of the Code of Civil Procedure apply to the arbitration case and the appellant having not sought refer ence of all the issues, he should be deemed to have surren dered those issues and he is debarred from raising those issues in a subsequent claim petition made before the Arbi traror.
In this connection, he has cited the ruling in Muhammad Hafiz and Anr.
vs Mirza Muhammad Zakaria and Ors., AIR 1922 (PC) 23.
The learned counsel drew our attention to para 2(i) of the objections filed by the respondents in Arbitration Case No. 132 of 1980 wherein it has been stated that: " . .
As per agreement the rates once agreed will not be enhanced.
The department is not bound to pay the claimant a revision of schedule.
" It has been further submitted by the learned counsel on behalf of the respondents that the appellant was not enti tled to an increase in 406 the rates as he claimed increase with the agreement and the claim that has been made is untenable.
It has been lastly submitted on behalf of the respond ents that the Arbitrator has mis conducted himself and the proceedings by not deciding the counter claim filed by the Government while considering the claim filed by the appel lant and making a award.
The High Court has rightly held that the Arbitrator mis conducted himself and the proceed ings and allowed the appeal, setting aside the second award made by the Arbitrator in Arbitration Case No. 276 of 1980.
The first question that falls for consideration in this case is whether the finding of the High Court setting aside the order of review made in I.A. No. 3780 of 1981 and set ting arise the order made in O.P. (Arb.) No. 81 of 1981 dated August 18, 1981 whereby the case was remanded to the Arbitrator is sustainable or not.
Admittedly, the appellant filed a claim petition being Arbitration Case No. 132 of 1980 making certain claims before the Arbitrator.
The re spondents filed the counter claims.
The Arbitrator without considering the counter claims kept the counter claims for subsequent consideration and made an award.
The Trial Court set aside the award and remitted the same to the Arbitrator for making a fresh award considering the claims and counter claims filed by the parties.
On an application for review, the Trial Court set aside the order and passed a decree in terms of the award.
It is not disputed that the Arbitrator did not at all consider the counter claims and kept the same for consideration subsequently while making award in respect of the claims filed by the appellant.
Undoubtedly, this award made by the Arbitrator is not sus tainable in law and the Arbitrator has mis conducted himself and in the proceedings by making such an award.
It is the duty of the Arbitrator while considering the claims of the appellant to consider also the counter claims made on behalf of the respondents and to make the award after considering both the claims and counter claims.
This has not been done and the Arbitrator did not at all consider the counter claims of the respondents in making the award.
As such the first award dated January 22, 1981 made by the Arbitrator in Arbitration Case No. 132 of 1980 is wholly illegal and unwarranted and the High Court was right in holding that the Arbitrator mis conducted himself and the proceedings in making such an award and in setting aside the same and directing the Arbitrator to dispose of the reference in accordance with law considering the claim of the contractor and the counter claim of the respondents.
The order allowing the application for review by the Trial Court is also bad in as much as there was no mistake or error 407 apparent on the face of the order dated August 18, 1981 made in O.P. (Arb.
) No. 81 of 1981 nor any sufficient reason has been made out for review of the said order.
The order dated August 18, 1981 is legal and valid order and the order dated March 18, 1982 allowing the, application for review being I.A. No. 3780 of 1981 and setting aside the order in O.P. (Arb.) 81 of 1981 dated August 18, 1981 is, therefore, bad and unsustainable.
With regard to the submission that the issues that have been raised in the second claim petition before the Arbitra tor is barred under the provisions of Order 2, Rule 2 of the Code of Civil Procedure, it is convenient to refer to a passage in Mulla 's Code of Civil Procedure (Volume II, Fourteenth Edition) at page 894: " .
This rule does not require that when several causes of action arise from one trans action, the plaintiff should sue for all of them in one suit.
What the rule lays down is that where there is one entire cause of ac tion, the plaintiff cannot split the cause of action into parts so as to bring separate suits in respect of those parts.
" It is pertinent to refer in this connection to the decision in Muhammad Hafiz and Anr.
vs Mirza Muhammad Zaka riya and Ors.
, AIR 1922 (PC) 23 wherein a mortgage deed provided that if the interest was not paid for six months the creditor should be competent to realise either the unpaid amount of the interest due to him or the amount of principal and interest, by bringing a suit in court without waiting for the expiration of the time fixed, and the Plain tiff, more than 3 years after (i.e. time fixed), brought a suit for interest alone and got a decree.
It was held that the second suit for principal and arrears of interest was not maintainable as under Order 2, Rule 2, C.P.C. he must be deemed to have relinquished his claim for further relief, he having exercised the option of suing for interest alone.
It was further held that the cause of action referred to in the rule is the case of action which gives occasion to, and forms the foundation of, the suit, and if that cause enables a man to seek for larger and wider relief than that to which he limits his claim, he cannot afterwards seek to recover the balance by independent proceedings.
In the instant case, the contract was terminated by the respondents on April 26, 1980 and as such all the issues arised out of the termination of the contract and they could have been raised in the first claim petition filed before the Arbitrator by the appellant.
This having 408 not been done the second claim petition before the Arbitra tor raising the remaining disputes is clearly barred.
With regard to the submission as to the applicability of the principles of res judicata as provided in Section 11 of the Code of Civil Procedure to arbitration case, it is to be noted that Section 41.
of the Arbitration case provides that the provisions of the Code of Civil Procedure will apply to the Arbitration proceedings.
The provisions of res judicata are based on the principles that there shall be no multi plicity of proceedings and there shall be finality of pro ceedings.
This is applicable to the arbitration proceedings as well.
It is convenient to refer to the decision in Daryao and Ors.
vs The State of U.P. & Ors., ; at 582 83 wherein it has been held that the principles of res judicata will apply even to proceedings under Article 32 and 226 of the Constitution of India.
It has been observed that: "Now, the rule of res judicata as indicated in section 11 of the Code of Civil Procedure has no doubt some technical aspects, for instance the rule of constructive res judicata may be said to be technical; but the basis on which the said rule rests is rounded on considerations of public policy.
It is in the interest of the public at large that a finality should attach to the binding decisions pronounced by Courts of competent jurisdiction, and it is also in the public interest that individuals should not be vexed twice over with the same kind of litigation.
If these two principles form the foundation of the general rule of res judicata they cannot be treated as irrelevant or inad missible even in dealing with fundamental rights in petitions filed under article 32.
" In Satish Kumar and Ors.
vs Surinder Kumar and Ors,, AIR 1970 (SC) 833 it has been ob served that: "The true legal position in regard to the effect of an award is not in dispute.
It is well settled that as a general rule, all claims which are the subject matter of a reference to arbitration merge in the award which is pronounced in the proceedings before the arbitrator and that after an award has been pronounced, the rights and liabilities of the parties in respect of the said claims can be determined only on the basis of the said award.
After an award is pronounced, no action can be started on the original claim which had been the subject matter of the reference . . .
This con 409 clusion, according to the learned Judge, is based upon the elementary principle that, as between the parties and their privies, an award is entitled to that respect which is due to judgment of a court of last resort.
There fore, if the award which has been pronounced between the parties has in fact, or can, in law, be deemed to have dealt with the present dispute, the second reference would be incom petent.
This position also has not been and cannot be seriously disputed.
" Considering the above observations of this Court in the aforesaid cases we hold that the principle of res judicata or for that the principles of constructive res judicata apply to arbitration proceedings and as such the award made in the second arbitration proceeding being Arbitration Case No. 276 of 1980 cannot be sustained and is therefore, set aside.
The High Court has rightly allowed the F.M.A. No.304 of 1982 holding that the appellant contractor was precluded from seeking the second reference.
No other points have raised before us by the appellant.
In the premises aforesaid, we dismiss these appeals with costs quantified at Rs.5,000 and affirm the judgment and order dated April 10, 1987 made by the High Court.
Y. Lal Appeals dismissed.
| IN-Abs | The appellant, a contractor had entered into a contract with the Respondent on 22nd April 1978 for the construction of an embankment across Musaliyar Podom between chainage 2573.5 M to 2827 M of E.B. Main conal of Kallada Irrigation Project.
Under the contract agreement, the work was to the completed by March 30, 1980 i.e. two years From the date of selection notice which was dated March 30, 1978.
The appel lant having failed to complete the work as per the terms of the contract, the Respondent by a notice dated 26.4.80 cancelled the contract at his risk and cost.
Consequent there to the appellant filed a claim before the named Arbi trator (Case No. 132 of 1980), claiming enhancement of rates in respect of the earth work involved in the contract.
He also claimed interest on delayed payment and costs.
The respondent resisted the claim and urged that the appellant was not entitled to any enhancement, as the appellant should have visualised and assessed the position before entering into work contract which was to be completed within 2 years.
According to respondent the appellant had not even completed 35% of the work.
Respondent, No. 2, therefore, filed a counter claim for Rs.28,84,000.
The Arbitrator made the award on 22.1.1981 in respect of claim No. 1 thereby directing the Respondents to pay 35 per cent increase in the agreed rate for the item of earth work.
However claim regarding interest on delayed payment was disallowed.
As regards the counterclaim filed by the Re spondent, the Arbitrator ordered that those issues will be considered separately and thus no award in respect thereof was made.
The appellant thereupon filed O.P. (Arbitrator) 81 of 1981 before the Sub Judge Trivandrum for making the award a rule of the Court.
399 The Respondents having raised objection to the making of the award a Rule of the Court, the Sub Judge remitted the reference to the arbitrator by his order dated 18.8.81 for fresh consideration, as the arbitrator had failed to consid er the counter claim made by the respondent.
The appellant applied for review of the said order passed by Sub Judge.
Contemporaneously, the appellant filed another claim peti tion before the arbitrator (case No. 276 of 1980) in respect of the wrongful termination of the contract and made claim in respect of 13 items.
On 29th October 1981, the arbitrator made an award whereby he ordered that the re arrangement of the work should not be at the risk and cost of the appel lants.
He also ordered 30% increase in rates for all items of work carried out by the appellant, except however those items, which stood covered by his earlier award.
Some of the other claims were also allowed.
The appellant filed O.P. (Arbitrator) 296 of 1981 for making the second award a Rule of the Court to which the Respondents raised objections.
The Sub Judge by his order dated March 18, 1982 made the award a rule of the Court dismissing the plea of res judicata raised by the Respondents.
The Respondents being dissatisfied with the order passed by Sub Judge preferred two appeals before the Kerala High Court.
The High Court allowed both the appeals holding that the Sub Judge could not review his order of the facts of the present case.
The High Court also held that principle of constructive res judicata would apply to the arbitration case.
Accordingly the High Court set aside the orders of the Sub Judge as also the award and directed that the arbitrator shah dispose of the Arbitration case No. 132 of 1980 afresh in the light of the Judgment of Sub Judge in O.P. (Arbitrator) No. 81 of 1981 and in accord ance with law after taking into consideration the claim of the appellant and the counter claim of the Respondents.
Hence these appeals by the appellant by Special Leave.
Dismissing the appeals, this Court, HELD: It is the duty of the Arbitrator while considering the claims of the appellants to consider also the counter claims made on behalf of the Respondents and to make the award after considering both the claims and counter claims.
This has not been done and the Arbitrator did not at all consider the counter claims of the respondents in making the award.
As such the first award dated 22.1.81 made by the Arbitrator in Arbitration Case No. 132 of 1980 is wholly illegal and unwarranted and the High Court was right in holding that the Arbitrator misconducted himself and in the proceedings by making such an award, and in setting, aside the same and directing the Arbitrator to dispose of the reference in accordance with law con 400 sidering the claim of the contractor and the counter claim of the respondent.
[406F G] The order allowing the application for review by the Trial Court is also had inasmuch as there was no mistake or error apparent on the face of the order dated August 18, 1981 made O.P. (Arbitrator) No. 81 of 1981 nor any suffi cient reason has been made out for review of the said order.
[406H; 407A] In the instant case, the contract was terminated by the Respondents on April 26, 1980 and as such all the issues arose out of the termination of the contract and they could have been raised in the first claim petition fried before the arbitrator by the appellant.
This having not been done, the second claim petition before the arbitrator raising the remaining disputes is clearly barred.
[407H; 408A] Section 41 of the Arbitration Act provides that the provisions of the Code of Civil Procedure will apply to the Arbitration proceedings.
The provisions of res judicate are based on the principle that there shall be no multiplicity of proceedings and there shall be finality of proceedings.
[408B] Muhammad Hafiz & Anr.
vs Mirza Muhammad Zakaria & Ors., AIR 1922 (PC) 23; Darvao & Ors.
vs The State of U. P. & Ors., ; at 582 83; Satish Kumar & Ors.
V. Surinder Kumar & Ors., , referred to.
|
vil Appeal Nos. 182 1 to 1826 of 1971 etc.
From the Judgment and Order dated 11.8.1971 of the Madras High Court in Writ Petition Nos.
3818, 4019, 4020, 4254, 4566 of 1968 and 82 of 1969.
section Padmanabhan, K.R. Nambiar, A.T.M. Sampath for the Appellants and Appellant in person in C.A. No. 2062 of 1971.
K. Rajendra Chowdhary and V. Krishnamurthy for the Respondent.
The Judgment of the Court was delivered by SHARMA, J.
The question involved in these appeals relates to the vires of the Tamil Nadu Private Educational Institutions (Regulation) Act, 1966, hereinafter referred to as the Act.
The appellants are interested in running educa tional institutions, which are covered by the expression "private educational institution" within the meaning of section 2(f) of the Act.
The main challenge is directed against sections 2(c), 3(a), 3(b), 6, 7 read with sections 15, 22 and 28.
The High Court struck down section 28 and upheld the other sections.
That part of the judgment where section 28 374 has been declared to be invalid has not been impugned by the respondent State.
The provisions of the Act which are relevant for appreciating the ground urged by the appellants are as follows.
Section 3 mandatorily requires a private education al institution to obtain the permission of the competent authority for the purpose of running it.
The Manager of such an institution has to, as required by section 4, make an applica tion for permission in the prescribed form accompanied by a fee.
Section 6 lays down the power of the competent authori ty to deal with such an application in the following terms: "6.
Grant of permission.
On receipt of an application under Section 4 the compe tent authority may grant or refuse to grant the permission after taking into considera tion, the particulars contained in such appli cation: Provided that the permission shall not be refused under this Section unless the applicant has been given an opportunity of making his representation: Provided further that in case of refusal of permission the applicant shall be entitled to refund to one half of the amount of the fee accompanying the application.
The competent authority is empowered under section 7 to cancel the permission in certain circumstances.
One of the condi tions for exercise of power is contravention of any direc tion issued by the competent authority under section 15.
The power to exempt any institution from the provisions of the Act is vested in the State Government under section 22, which is quoted below: "22.
Power to exempt Notwithstand ing anything contained in this Act, the Gov ernment may, subject to which conditions as they deem fit, by notification exempt any private educational institution or class of private educational institutions from all or any of the provisions of this Act or from any rule made under this Act.
" Section 28, which has been declared invalid by the High Court, states that if any difficulty arises in giving effect to the provisions of this Act, the Government may "do any thing which appears to them to be necessary for the purposes of removing the difficulty.
" 375 3.
The Act is impugned on the ground that it does not lay down any guide line for the exercise of the power by the delegated authority, as a result of which the authority is in a position to act according to his whims.
The Act having failed to indicate the conditions for exercise of power, the decision of the competent authority is bound to be discrimi natory and arbitrary.
It has also been argued that the restrictions put by the Act on the appellants, who are running tutorial institutions are unreasonable and cannot be justified under sub clause (g) of Article 19(1) of the Constitution.
The learned counsel appearing for the respondent has attempted to defend the Act on the ground that sufficient guidance is available to the authority concerned from sub section (2)(c) of section 4 which enumerates the particulars required to be supplied in the application for permission.
They are 10 in number and are mentioned below: "4. Application for permission.
(1) . . . . (2) Every such application shall (a) . . . . . (c) contain the following particulars, namely: (i) the name of the private educa tional institution and the name and address of the manager; (ii) the certificate, degree or diploma for which such private educational institution prepares, trains or guides or proposes to prepare, train or guide its stu dents or the certificate, degree or diploma which it grants or confers or proposes to grant or confer; (iii) the amenities available or proposed to be made available to students; (iv) the names of the members of the teaching staff and the educational qualifica tions of each such member; 376 (v) the equipment, laboratory, library and other facilities for instructions; (vi) the number of students in the private educational institution and the groups into which they are divided; (vii) the scales of fees payable by the stu dents; (viii) the sources of income to ensure the financial stability of the private educational institution; (ix) the situation and the descrip tion of the buildings in which such private educational institution is being run or is proposed to be prescribed; (x) such other particulars as may be pre scribed.
The point dealing with legislative delegation has been considered in numerous cases of this Court, and it is not necessary to discuss this aspect at length.
It is well established that determination of legislative policy and formulation of rule of conduct are essential legislative functions which cannot be delegated.
What is permissible is to leave to the delegated authority the task of implementing the object of the Act after the legislature lays down ade quate guide lines for the exercise of power.
When examined in this light the impugned provisions miserably fail to come to the required standard.
The purpose of the Act is said to regulate the pri vate educational institutions but does not give any idea as to the manner in which the control over the institutions can be exercised.
The Preamble which describes the Act "for regulation" is not helpful at all.
Learned counsel for the State said that the Object and the Reasons for the Act are to eradicate corrupt practices in private educational insti tutions.
The expression "private educational institution" has been defined as meaning any college, school or other institution "established and run with the object of prepar ing, training or guiding its students for any certificate, degree or diploma", and it can, therefore, be readily in ferred that the purpose of the Act is to see that such institutions do not exploit the students; and while they impart training and guidance to the students of a standard which may effectively improve their knowledge so as to do well at the examination, they do not charge exhorbitantly for their services.
But the question is as to how this objective can be achieved.
Section 6 which empowers the competent 377 authority to grant or refuse to grant the permission for establishing and running an institution does not give any idea as to the conditions which it has to fulfil before it can apply for permission under the Act, nor are the tests indicated for refusing permission or cancelling under section 7 of an already granted permission.
The authority concerned has been left with unrestricted and unguided discretion which renders the provisions unfair and discriminatory.
It was argued on behalf of the State that since an application for permission has to supply the particulars as detailed in section 4(2)(c) (quoted above in paragraph 4), the Act must be deemed to have given adequate guide lines.
Special emphasis was given by the learned counsel on sub clauses (iii), (iv) and (v) of section 4(2)(c), which ask for information about the amenities for the students the equip ments, laboratory, library and other facilities for instruc tion and, the names of the teachers with their qualifica tions.
It may be noted that the Act, beyond requiring the applicant to make a factual statement about these matters, does not direct the institution to make provisions for them (or for any or some of them) as condition for grant of permission.
The maintenance of any particular standard of these heads are not in contemplation at all, although cer tain other aspects, not so important, have been dealt with differently in several other sections including section 4, 5, 9, 10 and 11.
Section 4(2)(b) mandatorily requires the appli cant to pay the "prescribed" fee; section 5 gives precise direc tion regarding the name by which the institution is to be called; and section 9 about the certificates to be issued by it; and section 11 makes it obligatory to maintain accounts in the "prescribed" manner.
But, there is no indication, whatsoev er, about the legislative policy or the accepted rule of conduct on the vital issue about the maintenance of academic standard of the institution and the other requirements relating to the building, library and necessary amenities for the students, as the Act is absolutely silent about the criteria to be adopted by the prescribed authority for granting or refusing permission.
The rules which were made under section 27 in 1968 and called the Tamil Nadu Private Educa tional Institutions (Regulation) Rules, 1968, are not called upon to lay down any norm on these issues and naturally do not make any reference to these aspects.
The result is that the power to grant or refuse permission is to be exercised according to the whims of the authority and it may differ from person to person holding the office.
The danger of arbitrariness is enhanced by the unrestricted and unguided discretion vested in the State Government in the choice of "competent authority" defined in section (2)(c) in the following words: 378 "(c) "competent authority" means any person, officer or other authority authorised by the Government, by notification, to perform the functions of the competent authority under this Act for such area or in relation to such class of private educational institutions, as may be specified in the notification;" The only safeguard given to the applicant institution is to be found in the first proviso to section 6 which says that the permission shall not be refused unless the applicant has been given an opportunity of making his representation, but that does not by itself protect the applicant from discrimi natory treatment.
So far section 7 dealing with power to cancel the permission granted earlier is concerned, no objection can be taken to the first part of the section, whereunder the permission may be cancelled in case of fraud, misrepre sentation, suppression of material particulars or contraven tion of any provision of the Act or the Rules.
But the other ground on which the authority can exercise its power being contravention "of any direction issued by the competent authority under this Act" again suffers from the vice of arbitrariness.
Section 15, the relevant section in this regard, states that "the competent authority may, from time to time issue such directions regarding the management of a private educational institution as it may think fit" (empha sis added).
The section is too wide in terms without indi cating the nature of such direction or the extent within which the authority should confine itself while exercising the power.
Similar is the situation in the matter of exemp tion from the Act.
The power to grant exemption is contained in section 22, quoted in paragraph 2 above.
The provisions of the Act indicate that the State Government has been vested with unrestricted discretion in the matter of the choice of the competent authority under section 2(2)(c) as also in picking and choosing the institutions for exemption from the Act under section 22.
Such an unguided power bestowed on the State Government was struck down as offend ing Article 14 in the case of the State of West Bengal vs Anwar Ali Sarkar; , A similar situation arose in Kunnathat Thathunni Moopil Nair vs The State of Kerala and Another, ; , where, under section 4 of the Travancore Kochin Land Tax Act, 1955, all lands were sub jected to the burden of a tax and section 7 gave power to the Government to grant exemption from the operation of the Act.
The section was declared ultra vires on the ground that it gave uncanalised, unlimited and arbitrary power, as the Act did not lay down any principle or policy for the guidance of exercise of the discretion in respect of the selection contemplated by section 7. 379 9.
Similar is the position under sections 6 and 7 of the present Act.
The learned counsel for the respondent State contended that by reference in section 4 to the particulars to be supplied.
in the application for permission, it can be easily imagined that the competent authority has to take into account all that may be validly relevant for the grant or refusal of permission.
We are afraid, the section cannot be saved by recourse to this argument in absence of any helpful guidance from the Act.
The position in this case cannot be said to be on a better footing than that of the Gold (Control) Act, 1968, which was challenged in Harakchand Ratanchand Ranthia and Others vs Union of India and Other, ; As is indicated by the judgment, the Gold (Control) Act had to be passed as gold was finding its way into the country through illegal channels, affecting the national economy and hampering the country 's economic sta bility and progress, and the Customs department was found unable to effectively combat the smuggling.
Section 27(6)(a) of the said Act stated that in the matter of issue or renew al of licences the "Administrator shall have regard to the number of dealers existing in the region in which the appli cant intends to carry on business as a dealer".
The expres sion "region" was not defined in the Act and section 27(6)(b) required the Administrator to have regard to "the anticipat ed demand, as estimated by him, of ornaments in the region".
The argument in support of the validity of the Act was that these provisions provided adequate guidance to the Adminis trator, which this Court rejected, holding that the expres sion "anticipated demand" was vague and not capable of objective assessment and, therefore, was found to lead to a great deal of uncertainty.
The other provisions mentioning "suitability of the applicant" in section 27(6)(e) and "public interest" in section 27(6)(g) were also held to have failed in laying down any objective standard or norm so as to save the Act.
The provisions of the act, with which we are dealing in the present cases, are far less helpful for the purpose of upholding its validity.
For the reasons mentioned above, the impugned sec tions of the Act must be held to be invalid.
These provi sions are inextricably bound up with the other parts of the Act so as to form part of a single scheme, and it is not possible to sever the other parts of the Act and save them.
In the result, the entire Act is declared ultra vires.
The appeal is accordingly allowed, but, in the circumstances, without costs.
G.N. Appeal allowed.
| IN-Abs | The appellants are interested in running educational institutions which are covered by the expression "private educational institution" within the meaning of Section 2(f) of the Tamil Nadu Private Educational Institutions (Regula tion) Act, 1966.
The vires of the Act especially sections 2(c), 3(a), 3(b), 6, 7, read with sections 15, 22 and 28, was challenged before the High Court, by way of a writ petition.
The High Court struck down section 28 and upheld the other sections.
This appeal by certificate is against the High Court 's judgment upholding the validity of the said sections.
As regards the striking down of section 28, it has not been impugned by the respondent State.
The appellants contended that the Act does not lay down any guideline for the exercise of power by the delegated authority and so the decision of the competent authority is bound to be discriminatory and arbitrary.
It was also con tended that the Act imposed unreasonable restrictions on the appellants in the running of tutorial institutions, and such regulations were violative of Article 29(1)(g) of the Con stitution of India.
On behalf of the respondent, it was stated that suffi cient guidance is available to the authority concerned, by virtue of subsection (2)(c) of Section 4 and hence the appellants ' contentions were not justified.
372 Allowing the appeal, HELD: 1.1.
It is well established that determination of legislative policy and formulation of rule of conduct are essential legislative functions which cannot be delegated.
What is permissible is to leave to the delegated authority the task of implementing the object of the Act after the legislature lays down adequate guidelines for the exercise of power.
Examined in this light, the impugned provisions of the Tamil Nadu Private Educational Institutions (Regulation) Act, 1966 miserably fail to come to the required standard.
These sections are held to be invalid.
They are inextricably bound up with the other parts of the Act so as to form part of a single scheme, and it is not possible to sever the other parts of the Act and save them.
Hence, the entire Act is declared ultra vires.
[376D E; 379G] 1.2.
There is no indication, whatsoever, about the legislative policy or the accepted rule of conduct on the vital issue about the maintenance of academic standard of the institution and the other requirements relating to the building, library and necessary amenities for the students, as the Act is absolutely silent about the criteria to be adopted by the prescribed authority for granting or refusing permission.
Even the rules which were made under Section 27 in 1968 and called the Tamil Nadu Private Educational Insti tutions (Regulation) Rules, 1968, are not called upon to lay down any norm on these issues and naturally do not make any reference to these aspects.
The result is that the power to grant or refuse permission is to be exercised according to the whims of the authority and it may differ from person to person holding the office.
The danger of arbitrariness is enhanced by the unrestricted and unguided discretion vested in the State Government under Section 2(c) of the Act in the choice of competent authority.
[377E G] 2.1.
Section 6 which empowers the competent authority to grant or refuse to grant permission for establishing and running an institution does not give any idea as to the conditions which it has to fulfil before it can apply for permission under the Act, nor are the tests indicated for refusing permission or cancelling under Section 7 of an already granted permission.
[376H; 377A] 2.2.
The only safeguard given to the applicant institu tion is to be found in the first proviso to Section 6 which says that the permission shall not be refused unless the applicant has been given an opportunity of making his repre sentation, but that does not by itself protect the applicant from discriminatory treatment.
So far as Section 7 dealing with 373 power to cancel the permission granted earlier is concerned, no objection can be taken to the first part of the section, whereunder the permission may be cancelled in case of fraud, misrepresentation, suppression of material particulars or contravention of any provision of the Act or the Rules.
But the other ground on which the authority can exercise its power being contravention "of any direction issued by the competent authority under this Act" again suffers from the vice of arbitrariness.
[378B D] 2.3 Section 15 is too wide in terms and does not indi cate the nature of the direction or the extent within which the authority should confine itself while exercising the power.
Similarly under Section 22, the State Government has been vested with unrestricted discretion in picking and choosing the institutions for exemption from the Act.
[378D E] State of West Bengal vs Anwar Ali Sarkar, ; ; Kunnathat Thathunni Moopil Nair vs The State of Kerala and Anr., ; ; Harakchand Ratanchand Banthia and Ors.
vs Union of India & Ors.
, ; , relied on.
|
o. 1 of 1989.
IN Civil Appeal No. 3334 of 1982.
From the Judgment and Order dated 16.9.1982 of the Calcutta High Court in Appeal No. nil.
Kapil Sibal, R.F. Nariman and Vineet Kumar for the Petition er.
Dr. Shankar Ghose, H.N. Salve, G. Joshi, A.K. Sil, Ms. Urmil Narang (N.P.), C.S. Vaidyanathan, Vivek Gambhir (N.P.) and Praveen Kumar for the Respondents.
The following Order of the Court was delivered by MISRA, J.
This civil appeal by special leave is at the instance of a builder who had entered into a contract with the Board of Governors of the La Martiniere School at Cal cutta in respect of certain immovable property of the School to be taken by the builder on permanent lease.
Christopher Martin Desgranges Martin left behind a will which stipulated the setting up of a school for the benefit of the city of Calcutta and upon his death the will was probated and the executors 447 set up the school.
The Board of Governors of the School (hereinafter 'Board ') among others has the reverend Bishop of the city of Calcutta as its Chairman and a retired Major General of the Indian Army as a member.
The Old Mar tinians Association (hereinafter 'Association ') being a body of the old students of the School resisted the request of the School before the High Court when it applied for accept ance of the agreement of lease of 1981.
A learned Single Judge while agreeing on principle to accord sanction asked for further details.
The Division Bench made certain direc tions in an appeal taken to it by the builder and the inter im directions form the basis of subject matter of this appeal.
During the pendency of the appeal in this Court the builder and the School entered into a fresh agreement on 12.9.1986 to which the Association is also a party.
Under the agreement more favourable terms for the School were stipulated, such as (1) annual payment of ground rent of Rs.22,000 during the period of lease; (2) as against a one time payment of Rs.31 lakhs in the 1981 agreement, a recur ring annual payment of about Rs.50 lakhs; and (3) built in area of 60,000 square feet to enable extension of the School and earning of rental income.
Apart from these, it is stated that under the 1981 agreement the School had entered into arrangements with prospective lessees and had received a substantial sum of money by way of advance from them in respect of approximately 53,000 square feet to be construct ed.
The builder under the 1986 agreement took the responsi bility of dealing with the prospective lessees either by refunding the money or providing leasehold area from out of its share.
It is not disputed that a total area of about 1,80,000 square feet would be available as a result of the construc tion agreed to be raised by the builder under the 1986 agreement.
Parties decided to file an application for com promise before this Court in the pending appeal and the petition was duly drawn up on 12.9.1986.
It was signed on behalf of the Board by the Chairman and Major General B.M. Bhattacharya ', Anjan Dey in his personal capacity and as President of the Association and the builder.
Mr. Anjan Dey 's signature in his personal capacity was duly attested by Mr. P.L. Agarwal, his Advocate and his signature as President of the Association was duly witnessed by Mr. Bhankar Kar, Secretary of the Association.
This application was, however, not presented in this Court until some time in May, 1989, for difficulties which have been attempted to be explained by the School.
After this application was made the Association represented by Mr. Amit Bikram Roy resisted it.
Rejoinders have been filed on behalf 448 of the School and the builder to the objection.
The original compromise petition has been produced.
The builder has also placed on record the proceedings of the Board of the Associ ation dated 11th September, 1986 a day before the compro mise was signed.
The resolution of the Association 's Board reads thus: "RESOLVED that in view of finalisation of pending case at Supreme Court of India regard ing dispute arising out of Property Develop ment at La Martinique for Boys, Calcutta as petitioned by Developer/Contractor Damodar Ropeways & Construction Co. Pvt. Ltd. with one of the parties being Mr. Anjan Dey and Old Martinians Association, Mr. Anjan Dey be and is hereby authorised to act on behalf of the Association for the compromise solution as drawn up by the Association 's Solicitors M/s. Khaitan & Co. and as already approved by all parties concerned subject to permission by the Hon 'ble Supreme Court.
" The proceedings were signed by Mr. Shankar Kar, General Secretary, Ms. Joyita Sen, Treasurer, Messrs Amit Bikram Roy, Vice President, Ashoke Paul, Anjan Dey, President and Ms. Raktima Dutt.
Objection of the Association to the petition of compro mise is mainly on two grounds (1) lapse of three years between the date of signature of the petition by the parties and its filing; and (2) want of authority of Mr. Anjan Dey to enter into the compromise.
The delay in filing the compromise petition in Court has been attempted to be explained on behalf of the School and the builder.
If the compromise is genuine and lawful, the delay in presentation in Court could at the most, if at all, be in the realm of equity and would not be otherwise materi al.
The resolution of the Board of the Association of 11th September, 1986, extracted above is a complete answer to the second ground as it clarifies the position that all parties had agreed to the compromise and it was intended to be presented before this Court for permission to enter into compromise.
Mr. Anjan Dey had been authorised to associate himself for the purpose.
It is not the contention of the Association that the whole or any part of the agreement is unlawful; nor is it the contention of any of the parties that the petition has not been signed by him or them.
The compromise is, therefore, in accordance with the provisions of Order XXIII, rule 3 of he Code of Civil Procedure and can be acted upon.
449 Before the compromise is accepted it is for the Court to be satisfied that the terms are in the interests of the Trust.
Dr. Ghosh for the Association strenuously contended that the property was very valuable even as vacant site in view of the recent escalation of price of land in Calcutta and if a genuine attempt is made there was possibility of a higher offer being made and the interest of the School should, therefore, not be sacrificed by allowing it to enter into the compromise.
When we suggested to Dr. Ghosh that the Association could provide a guarantee to accept and work out the ten, as in the compromise in the event of the response to the advertisement not being as favourable, he was not willing to do so.
We do not think that it is in the interest of the School to reject the agreement on the representation of Dr. Ghosh that there was scope of receiving better offers if advertisement was made.
A solemn agreement has been entered ' into.
The builder has already spent substantial sums of money on the property.
The plan has been sanctioned by the Corporation and we are told that under the changed regulations it would be difficult for the School to obtain a fresh sanction.
Three years have now been lost on account of the compromise not having been placed before the Court and following the course suggested by Dr. Ghosh involves an element of uncertainty to which the School should not be exposed.
Under the agreement forming the subject matter of compromise the School would ,have space available for expan sion in the near future.
Keeping these aspects in view, we have thought it appropriate that the compromise should be accepted but with certain variations.
As we have already stated, built in area of 1,80,000 square feet would be available under the agreement and excluding about 50,000 square feet of built in area which may be set apart for the purpose of meeting the prospective lessees (we express no opinion about the tenability of such claim) who had entered into arrangements with the School, 1,30,000 square feet would be available.
Out of it the School has been given 60,000 square feet and the builder is to take 70,000 square feet.
We suggested to Mr. Nariman for the builder that the constructed area of 1,30,000 square feet should be equally divided between the School and the builder and on instructions from his client (present in Court) Mr. Nariman has fairly agreed to do so.
Since the annual ground rent had been fixed at Rs.22,000 three years back, we indicated to Mr. Nariman that the sum should be escalated and he has agreed to have it enhanced to Rs.40,000 per year after receiving consent of his client.
We are of the view that there should be an escalation clause in regard to the ground rent and once in every ten years escalation of ten per cent in the annual ground rent beginning from 1990 450 should be provided.
These three terms in our view suffi ciently protect the interests of the School and the Trust.
We accordingly accord permission to the Board of Governors to enter into compromise on behalf of the School.
The civil appeal is disposed of and the terms of compromise with the three modifications indicated as to availability of extra area of 5,000 square feet to the School, escalation of the ground rent to Rs.40,000 from Rs.22,000 and provision for automatic escalation of ten per cent once on very ten years shall be incorporated in the decree while the other terms as agreed to by the parties shall also form part of the decree to be drawn up in the appeal.
We have not considered it in the interests of the par ties to transmit the matter to the Calcutta High Court as that would protract the matter and the order of the Single Judge might be challenged in appeal and ultimately the dispute may again be brought before this Court.
Another round of such litigation would be time consuming and would not at all be in the interest of anyone.
T.N.A. Appeal disposed of.
| IN-Abs | The Board of Governors of the respondent school entered into a contract for the grant of permanent lease of immova ble property of the school to the petitioner builder.
An association of the old students of the school resisted the agreement before the High Court but a learned Single Judge accorded sanction which was later stayed.
The petitioner preferred an appeal before the Division Bench of the High Court which made certain interim directions while disposing the appeal.
Hence this appeal by the petitioner.
During the pendency of the appeal, the parties entered into a compromise which was signed on behalf of all the parties, but the compromise deed was filed in this Court after a lapse of three years.
The Association of the old students resisted the compromise on the ground: (i) that there was a lapse of three years between the date of signing the compromise and its filing in the court; (ii) the Presi dent of the Old Association of students had no authority to enter the compromise.
Disposing the appeal, this Court; HELD: (1) If the compromise is genuine and lawful, the delay in presentation in court could at the most be in the realm of equity and would not be otherwise material.
In the instant case the resolution of the Board of the Association clarifies the position that all parties had agreed to the compromise and it was intended to be presented before this Court for permission to enter into compromise.
The President of the Old Association of Students had been authorised to associate himself for the purpose.
The agreement has been signed by the parties and is not unlawful.
The compromise is, therefore, in accordance with the provisions of Order XXIII, rule 3 of the Code of Civil Procedure and can be acted upon.
[448F H] 446 2.
Before the compromise is accepted it is for the court to be satisfied that the terms are in the interests of the Trust.
[449A] 2.1 In the instant case, under the agreement forming the subject matter of compromise the school would have space available for expansion in the near future.
It is not in the interest of the school to reject the agreement on the ground that there was scope of receiving better offers if adver tisement was made.
[449E C] 2.2 It is appropriate that the compromise should be accepted with certain variations viz. availability of extra area to the school, escalation of the ground rent and provi sion for automatic escalation of ground rent of 10% once in every 10 years.
The permission is accordingly accorded to the Board of Governors to enter into compromise on behalf of the school.
[449E & 449H; 450A B]
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TION: Criminal Appeal No. 624 of 1989.
From the Judgment and Order dated 31.7.
1989 of the Punjab and Haryana High Court in Crl.
W.A. No. 2365 of 1988.
K. Parasaran, Attorney General and R.S. Suri for the Appellant.
Kapil Sibal, H.S. Randhwa and Ms. Kamini Jaiswal for the Respondents.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
Special leave granted.
Heard learned counsel for the parties.
The State 's appeal is from the Judgment of the High Court of Punjab and Haryana dated 31.7.1989 passed in Crimi nal Writ Petition No. 2365 of 1988 quashing the detention order of Sukhjinder Singh, father of the respondent, under the .
Sri Sukhjinder Singh has been under detention pursuant to the Government of Punjab, Department of Home Affairs and Justice 's Order dated 28.5.1988, passed in exercise of the powers conferred by 424 sub section (2) of section 3 of the (No. 65 of 1980), hereinafter referred to as 'the Act '; read with section 14A as inserted by National Security (Amendment) Act, 1987, with a view to preventing him from indulging in activities prejudicial to the security of the State and maintenance of public order and interference with efforts of Government in coping with the terrorist with disruptive activities.
He was furnished with the grounds of detention contained in 9 paragraphs thereof and saying that on account of the said activities, the President of India was satisfied that he should be detained.
As no arguments have been based on the grounds themselves, we have not extracted them.
The detenu was also informed that he had a right to make representation in writing against the deten tion order and if he wished to make any such representation, he should address it to the State Government through the Superintendent of Jail, and that as soon as possible, his case would be submitted to the Advisory Board within the stipulated period from the date of his detention and if he wished to make a representation to the Central Government, he should address it to the Secretary, Government of India, Ministry of Home Affairs (Department of Internal Security) North Block, New Delhi through the Superintendent of Jail where he was detained.
It further stated that he had also a right to appear before the Advisory Board for representing his case, and if he wished to do so, he should inform the State Government through the Superintendent of Jail in which he was detained.
It appears that the detenu 's son Sukhpal Singh filed Criminal Writ Petition No. 1393 of 1988 in the High Court of Punjab and Haryana praying, inter alia, for a writ of habeas corpus; quashing of the detention order; for production of the detenu in court on the date of hearing; for directing the respondents to arrange the presence of the detenu at Chandigarh before the Advisory Board; and for directing the respondents to make arrangements and pay for the expenses required to be incurred for arranging the presence of dete nu 's witnesses to be produced before the Board at Agartala and also of the relatives and the counsel of the detenu so as to effectively assist him in regard to presenting his case before the Advisory Board.
The High Court by order dated 27.9.1988 dismissed the Criminal Writ Petition, but ordered that "the petitioner would approach the Advisory Board stationed at Chandigarh with the request for allowing the detenu to produce evidence before it at Agartala and in case his prayer was granted by the Board, the expenses for taking those witnesses to Agar tala would be borne by the respondent/State." 425 Sukhpal Singh later moved Criminal Writ Petition No. 2365 of 1988 in the High Court of Punjab and Haryana for quashing the detention order contending, inter alia, that the order of detention was passed on 28.5.1988 in a cursory and routine manner without application of mind, much less with subjective satisfaction inasmuch as no case at all was registered against the detenu for his alleged public utter ences as stated in the grounds of detention and, therefore, the detention order was liable to be quashed; that consider ation of the detenu 's representation filed with the State Government on September 1, 1988 was inordinately delayed for two months till October 31, 1988 and even thereafter the State took 8 long days to convey its rejection and the representation addressed to the detaining authority had neither been considered nor disposed of; and that detention was confirmed without affording the detenu any chance of appearing and producing witnesses before the Advisory Board in terms of the High Court 's order dated 27.9.1988 in Crimi nal Writ Petition No. 1393 of 1988.
The High Court upheld the above contentions of the petitioner, namely, lack of subjective satisfaction, delay in considering representation and the denial of opportunity to appear before the Advisory Board; and accordingly quashed the order of detention and ordered the detenu to be set at liberty forthwith unless required in connection with any other case.
The learned Attorney General of India for the appellant assailing the findings of the High Court submits that the High Court 's finding that there was no subjective satisfac tion of the detaining authority simply because no criminal case was registered against the detenu for his public speeches is erroneous both in law and facts.
The allegations were that during the period from November 19, 1987 to May 11, 1987 the detenu made 9 provocative speeches as stated in the grounds of detention inciting communal hatred and vio lence between Hindus and Sikhs, inciting Sikhs to armed violence against the Government established by law both in the State and in the Centre and making the offer of monetary and other assistance to the terrorists.
When the detention order was passed the detenu was already detained in Burail Jail and the detention order itself said that he was already in custody and was taking steps to get himself released and there was every likelihood of his being released from custo dy; and that in the event of his release he was likely to resume such prejudicial activities in future and there was thus compelling necessity to pass the order.
He submits that the subjective satisfaction of the detaining authority was based on pertinent materials and it had in mind the question whether the pro 426 secution of the detenu would be possible and sufficient.
Mr. Kapil Sibal, learned counsel for the respondents supporting the finding of the High Court reiterates that the fact that no criminal case was registered during the period of giving the alleged speeches clearly showed that there was non application of mind preceding the detention order.
We find force in the submission of the learned Attorney General.
The detention order itself said that the detenu was already in custody and was likely to be released wherefore it was necessary to order for his preventive detention.
It is not denied that the above relevant materials were placed before the detaining authority.
The act nowhere provides that the detaining authority cannot resort to preventive detention without first criminally prosecuting the detenu.
A clear distinction has to be drawn between preventive detention in which anticipatory and precautionary action is taken to prevent the recurrence of apprehended events, and punitive detention under which the action is taken after the event has already happened.
It is true that the ordinary criminal process of trial is not to be circumvented and shortcircuit ed by apparently handy and easier resort to preventive detention.
But the possibility of launching a criminal prosecution cannot be said to be an absolute bar to an order of preventive detention.
Nor would it be correct to say that if such possibility is not present in the mind of the de taining authority the order of detention would necessarily be bad.
The failure of the detaining authority to consider the desirability of launching a criminal prosecution before ordering preventive detention may in the circumstances of a case lead to the conclusion that the detaining authority had not applied its mind to the important question as to whether it was necessary to make an order of preventive detention but such is not the case here.
In this regard one has to bear in mind the relevant facts and circumstances of a case including the time and place concerned.
In this view we find support from the decision in Fazal Ghosi vs State of U.P. & Ors., ; AIR 1987 SC 1877: , wherein it was pointed out that the Act provided for preventive detention which was intended where it was apprehended that the persons might act prejudicially to one or more considerations speci fied in the statute, and the preventive detention was not intended as a punitive measure for curtailment of liberty by way of punishment for the offence already committed.
Section 3 read with Section 14A of the Act clearly indicated that the power of detention thereunder could be exercised only with a view to preventing a person from acting in a manner which might prejudice any of the situations set forth in the Section.
To apply what was said in Rex vs Halliday, Ex parte Zadig, ; , one of the most obvious means of taking precautions against dangers such as are enumerated is to 427 impose some restriction on the freedom of movement of per sons whom there may be any reason to suspect of being dis posed to commit what is enumerated in section 3 of the Act.
No crime is charged.
The question is whether a particular person is disposed to commit the prejudicial acts.
The duty of deciding this question is thrown upon the State.
The justification is suspicion or reasonable probability and not criminal charge which can only be warranted by legal evi dence.
It is true that in a case in which the liberty of such person is concerned we cannot go beyond natural con struction of the statute.
It is the duty of this Court to see that a law depriving the person of his liberty without the safeguards available even to a person charged with crime is strictly complied with.
We have, however, to remember that individual liberty is allowed to be curtailed by an anticipatory action only in interest of what is enumerated in the statute.
In actual practice the grounds supplied operate as an objective test for determining the question whether a nexus reasonably exists between grounds of detention and the detention order or whether some infirmities had crept in.
A conjoined reading of the detention order and the grounds of detention is therefore necessary.
It is, as was heldin Ujagar Singh vs State of Punjab, AIR ; [1952] SC 350: , largely from prior events showing tendencies or inclinations of a man that inference can be drawn whether he is likely in future to act in a prejudicial manner.
But such conduct should be reasonably proximate and should have a rational connection with the conclusion that the detention of person is necessary.
The question of relation of the activities to the detention order must be carefully consid ered.
Though the possibility of prosecution being launched is not an irrelevant consideration, failure to consider such possibility would not vitiate the detention order.
In Harad han Saha vs The State of West Bengal & Ors.
, ; the Court did not lay down that possibility of a prose cution being launched was an irrelevant consideration, not to be borne in mind by detaining authority but it laid down that the mere circumstance that a detenu was liable to be prosecuted would not by itself be a bar to the making of an order of preventive detention.
It did not follow therefore that failure to consider the possibility of criminal prose cution being launched could ever lead to the conclusion that a detaining authority never applied its mind and the order of detention was therefore bad.
Is it correct to say that if such possibility was not present in the mind of the detain ing authority, the order of the detention is necessarily bad? Unless it clearly appears that preventive detention is being resorted to as the line of least resistance where criminal prosecution would be the usual course, no fault can be found with it.
428 What is to be seen is whether the detaining authority has applied its mind or not to the question whether it was necessary to make preventive detention.
In the instant case there is evidence of application of mind.
The proximity between the date of commission of an offence and of deten tion order cannot also be said to be absent in this case.
As we have already seen the power of preventive detention is qualitatively different from punitive detention.
The power of preventive detention is precautionary power exercised reasonably in anticipation and may or may not relate to an offence.
It cannot be considered to be a parallel proceed ing.
The anticipated behaviour of a person based on his past conduct in the light of surrounding circumstances may pro vide sufficient ground for detention.
It cannot be said that the satisfaction of the detaining authority on the basis of his past activities that if the detenu were to be left at large he would indulge in similar activities in future and thus act in a manner prejudicial to the maintenance of public order etc.
shall not be based on adequate materials.
Public safety ordinarily means security of the public or their freedom from danger.
Public order also implied public peace and tranquility.
There is no escape from the conclu sion that the terrorists and disruptive activities disrupt public peace and tranquility and affect the freedom of the public from danger to life and property.
Disruption means the act of bursting and tearing as under.
Disruptive means producing or resulting from or attending disruption.
Terror ism means the act of terrorising; unlawful acts of violence committed in an organised attempt to over throw a Government or like purposes.
Terrorist means one who adopts or supports the policy of terrorism.
The terrorist and disruptive activ ities are naturally disruptive of public peace, tranquillity and development.
In Hemlata Kantilal Shah vs State of Maha rashtra and Ors.
; , , it was held that the prosecution or the absence of it is not an absolute bar to an order of preventive detention but the authority is to satisfy the court that it had in mind the question of possibility of criminal prosecution while form ing the subjective satisfaction by the detaining authority.
It may be based on inference from the past conduct and antecedent history of the detenu.
The High Court under article 226 and Supreme Court under article 32 or 136 do not sit in appeal from the order of preventive detention.
But the Court is only to see whether the formality as enjoined by article 22(5) had been complied with by the detaining authority, and if so done, the Court cannot examine the materials before it and, find that the detaining authority should not have been satisfied on the materials before it and detain the detenu.
In other words, the Court cannot question the sufficiency of the grounds of detention for the subjective satisfaction of the authority as pointed out in Ashok Kumar vs Delhi Admin istration 429 & Ors.
; , Those who are responsible for the national security or for the maintenance of public order must be the judges of what the national security or public order requires.
Preventive detention is devised to afford protection to society.
The object is not to punish a man for having done something but to intercept before he does it and to prevent him from doing.
The justi fication for such detention is suspicion or reasonable probability and not criminal conviction which can only be warranted by legal evidence.
Thus, any preventive measures even if they involve some restraint or hardship upon indi viduals, do not partake in any way of the nature of punish ment, but are taken by way of prosecution to prevent mis chief to the State.
There is no reason why executive cannot take recourse to its powers of preventive detention in those cases where the executive is genuinely satisfied that no prosecution can possibly succeed against the detenu because he had influence over witnesses and against him no one is prepared to depose.
However, pusillanimity on the part of the executive has to be deprecated and pusillanimous orders avoided.
It is submitted that in the instance case, there were sufficient materials to show that the detenu would act in the future to the prejudice of the maintenance of public order, security of the State and the Government 's effort to curb terrorism.
From the nature and contents of his speeches stated in the grounds of detention there was sufficient justification for the inference that he would repeat such speeches if not preventively detained.
Again when grievous crime against the community was committed it would surely be subject to the penal law and stringent sentences, but at the same time it could be considered unsafe to allow him the opportunities to repeat prejudicial acts during :the period the penal process was likely to take.
The learned Attorney General refers us to Giani Bakshish Singh vs Government:of India & Ors., ; , Smt.
Hemlata vs State of Maharashtra & Ors., (Supra) and Raj Kumar Singh vs State of Bihar & Ors., ; 4 SCC 407, submitting that the possibility of criminal prosecution was no bar to order any preventive detention and that the court should not substitute its decision or opinion in place of decision of the authority concerned on the question of necessity of preventive deten tion.
"Possibility of a prosecution or the absence of it is not absolute bar to an order of preventive detention; the authority may prosecute the offender for an isolated act or acts of an offence for violation of any criminal law, but if it is satisfied that the offender has a tendency to go on violating such laws, then there will be no bar for the State to detain him under a Preventive 430 Detention Act in order to disable him to repeat such of fences.
The detaining authority is not the sole judge of what national security or public order requires.
But neither is the court the sole judge of the position.
When power is given to an authority to act on certain facts and if that authority acts on relevant facts and arrives at a decision which cannot be described as either irrational or unreasona ble, in the sense that no person instructed in law could have reasonably taken that view, then the order is not bad and the Court cannot substitute its decision or opinion in place of the decision of the authority concerned on the necessity of passing the order.
" Following Hemlata (supra) it could be said that in this case of prosecution it may not be possible to bring home the offender to book as witnesses may not come forward to depose against him out of fear, or it may not be possible to col lect all necessary evidence without unreasonable delay and expenditure to prove the guilt of the offender beyond rea sonable doubt.
Considering the relevant facts and circumstances includ ing the time and place, the contents of the detention order and the allegations in the grounds of detention in this case, we are of the view that nonregistration of any crimi nal case could not be said to have shown non application of mind or absence of subjective satisfaction on the part of the detaining authority.
Assailing the finding as to delay in disposing of the detenu 's representation, the learned Attorney General sub mits that on 1.9.1988 the detenu filed representation against his detention addressed to the President of India through the Home Secretary, Government of Punjab and the Superintendent of District Jail, Agartala (Tripura).
The State Government was not aware of pendency of any such representation with it.
On 13.9.1988 the Central Government issued a teleprinter message which was duly received on 14.9.1988 in which the Central Government wanted to know the date on which the grounds of detention were supplied to the detenu and also sought parawise comments on the representa tion of the detenu.
However, the Central Government did not send any copy of the representation to the State Government.
Even so, it directed the police, vide letter dated 14.9.1988, to supply the required information to the Central Government.
It was intimated to the Central Government that parawise comments on the representation could not be offered as copy of the representation was not available with the State of Punjab.
The Central Government vide teleprinter message dated 6.10.1988 which was 431 received on 10.10.1988 intimated that the photostat copy of the representation had been sent along with the post copy of the teleprinter message.
The representation was duly re ceived on 19.10.1988 by the State of Punjab and it was examined at various levels on 19.10.1988 (20.10.1988 was a holiday), 21.10.1988 (22.10.1988 and 23.10.1988 were holi days), 24.10.1988 (25.10.1988 was again a holiday), 26.10.1988, 27.10.1988 and 28.10.1988.
The representation was duly put up before the competent authority who was pleased to reject the representation after due deliberation and consideration on 28.10.1988.
Thus, according to the learned Attorney General, the State of Punjab from the time of receiving the representation and till the time of its final disposal did not take more than 9 days, obviously excluding the aforesaid 14 holidays.
According to him this was a miraculous job done in disposing of the detenu 's representation and the intimation of the rejection was conveyed to the Superintendent of Jail, Agartala vide letter dated 31.10.1988, who informed the detenu on 8.11.1988.
Thus the detenu 's representation dated 1.9.1988 was disposed of by the State Government on 28.10.1988 and the detenu was informed only on 8.11.1988 i.e. after more than two months.
It was pointed out by Mr. R.S. Suri, learned counsel for the appellant, that excepting the photostat copy received from the Central Government no separate representation was at all received by the State Government of Punjab.
The Central GOvernment also rejected the representation before them after due consideration on December 21, 1988 and duly in formed the detenu.
Mr. Kapil Sibal, the learned counsel for the detenu states that two copies, one meant for the Central Government and the other meant for the State Government, were sent by the detenu on the same date.
The learned Attorney General contends that the delay was caused by the representation having been addressed to the President of India, wherefore, the copy went to the Central Government.
Mr. Sibal, however, assets that the detention order having said; "whereas the President of India is satisfied", the detenu was required under law to address the representation to the President of India and in view of the fact that it was routed through the Superintendent of the District Jail, Agartala (Tripura) and the Home Secretary, Government of Punjab, there was no reason why it should not have been delivered to the State Government of Punjab.
The learned Attorney General points out that the detention order itself having said that if the detenu wished to make such representation, he should address it to the State Government through the Superintendent of Jail as soon as possible and the grounds of detention having also similarly stated that the 432 detenu should address the representation to the State Gov ernment through the Superintendent of Jail, the delay caused up till the receipt of the photostat copy from the Central Government must be attributed to the detenu himself and the State Government could not be blamed and the detention order could not be said to have been vitiated by any latches, negligence or delay in disposing of the representation, under the facts and circumstances stated above.
The State of Punjab having been under the President 's rule at the relevant time and the detention order itself having stated that it was the satisfaction of the President in passing the detention order Mr. Sibal points out that it could not be said to have been a fatal mistake in the repre sentation to have been addressed to the President of India, Rashtrapati Bhawan, New Delhi and the same being routed through the Superintendent of the District Jail, Agartala (TRIPURA), and the Home Secretary of the State of Punjab, there was no reason why the same should not have been re ceived by the State Government of Punjab.
However it appears that the representation said to have been meant for the State Government was not received by the State Government at all.
The detenu cannot be said to have deliberately caused the delay.
Though we feel that in view of the clear instruc tions in the grounds of detention that he should address the representation to the State Government through the Superin tendent of the Jail where he was detained should have been followed.
May be this was due to the fact that Punjab was under President 's rule at the relevant time but Rashtrapati Bhawan, New Delhi was not the proper destination of the representation to the State Government, It is a settled law that in cases of preventive deten tion expeditious action is required on the part of the authorities in disposing of the detenu 's representation.
In Jayanarayan Sukul vs State of West Bengal, ; it was laid down that the consideration of the representa tion of the detenu by the appropriate authority was entirely independent of any action by the Advisory Board including the consideration of the representation by the Advisory Board.
There should not be any delay in the matter of con sideration.
It is true that no hard and fast rule can be laid down as to the measure of time taken by the appropriate authority for consideration but it has to be remembered that the Government has to be vigilant in the governance of the citizens.
A citizen 's right imposes correlative duty on the State.
In Frances Coralie Mullin vs W.C. Khambra and Ors., ; , it was reiterated that the detaining authority must consider the representation as soon as possi ble, and this preferably, must be before the 433 representation is forwarded to the Advisory Board before the Advisory Board makes its report and the consideration by the detaining authority of the representation must be entirely independent of the hearing by the Board or its report, expedition being essential at every stage.
The time impera tive cannot be absolute and the Court 's observations are not to be so understood, and there has to be lee way depending on the facts and circumstances of the case.
However, no allowance can be made for lethargic indifference or needless procrastination but allowance has to be made for necessary consultation where legal intricacies and factual ramifica tions are involved.
The burden of explaining the departure from the time imperative is always on the detaining authori ty.
The emphasis is on the constitutional right of a detenu to have his representation considered as expeditiously as possible and it will depend upon the facts and circumstances of each case whether or not the appropriate Government has disposed of the case as expeditiously as possible.
1n F.C. Mullin 's case the representation of the detenu made on December 22, 1979 was not communicated to the Advisory Board as it ought to have been, when the Board met on January 4, 1980 and the detaining authority awaited the hearing before the Advisory Board and took a decision thereafter.
Under the facts and circumstances of that case where the detenu re quested for copies of statements and documents collection of which took time, it was held that if there appeared to be any delay, it was not deemed due to any want of care but because the representation required a thorough examination in consultation with investigators of facts and advisors on law and as such though the Administrator considered the representation of the detenu after hearing by the Board, the Administrator was not entirely influenced by the hearing before the Board and the application for habeas corpus was, therefore, dismissed.
In State of Orissa and Anr.
vs Manilal Singhania and Anr., 2 SCC 808, it was held that the representation made by the detenu may be considered by the State Government as soon as possible i.e., with reasonable despatch and if that is not done, it would have the effect of vitiating the order of detention, but it is neither possible nor desirable to lay down any rigid period of time uniformly applicable in all cases within which the representation of the detenu must be considered by the State Government.
The Court would have to consider judicially in each case on the available material whether the gap between the receipt of the representation and its consideration by the State Government is so unreasonably long and the explanation for the delay offered by the State Government was unsatisfactory as to render the detention order thereafter illegal.
434 Article 21(5) of the Constitution enjoins that when any person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, as soon as may be, communicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a repre sentation against the order.
Since A.K. Gopalan vs The State of Madras, ; , there has been a catena of decisions of this Court taking the view that the representation of the detenu must be considered promptly by the State Government.
In John Martin vs State of West Ben gal; , it was observed that Article 22(5) does not say which is the authority to which the representa tion shall be made or which authority shall consider it.
By section 8(1) of the Act the authority making the order is re quired to communicate to the detenu his grounds of detention and to afford him the earliest opportunity of making a representation against the order to the appropriate Govern ment.
In Khudiram Das vs The State of West Bengal & Ors., ; it was explained that "the constitutional Imperatives enacted in Article 22(5) are two fold; (1) the detaining authority must, as soon as may be, that is, as soon as practicable after the detention, communicate to the detenu the grounds on which the order of detention has been made and (2) the detaining authority must afford the detenu the earliest opportunity of making a representation against the order of detention.
These are the barest minimum safe guards which must be observed before an executive authority can be permitted to preventively detain a person and thereby drown his right of personal liberty in the name of public good and social security.
" In State of Orissa & Anr. vs Manilal Singhania & Anr., (supra) the representation was made on October 21, 1974 and it was received by the District Magistrate on the same day.
The representation was processed through the different authorities.
The Chief Minister was absent from headquarters between November 7, 1974 and Novem ber 12, 1974 and immediately on return to headquarters the Chief Minister disposed of the representation and rejected it on November 12, 1974.
It was found that there was no delay at any stage in movement of the representation from one officer to another.
Every one having dealt with it promptly and after examining it submitted to the respective higher officer.
The Chief Minister was out of the Capital and as soon as she returned without any delay at all dis posed of the representation.
Accordingly this Court did not see any gap between the receipt of the representation and its consideration by the State Government which could be said to be unreasonably long and the period had been satis factorily explained in the affidavit of the State.
Accord ingly the order of detention could not be held to be invalid on that ground.
On 435 the other hand in Saleh Mohammed vs Union of India & Ors., a delay of 22 days in considering the representation of the detenu was held to have violated Article 22(5) and vitiated the detention order.
The repre sentation in that case was lying unattended in the office of the Superintendent of Jail or the Inspector General of prisons and accordingly it was held to have been a case of gross negligence and chilling indifference and on that short ground alone the detention order was quashed.
In Kamla Kanyalal Khushalani vs State of Maharashtra & Anr., ; where the disposal of detenu 's representation was delayed for 25 days it was held that the continued detention of the detenu was void and that it was of the utmost impor tance that all the necessary safeguards laid down by the Constitution under Article 21 or Article 22(5) should be complied with fully and strictly and any departure from any of the safeguards would void the order of detention.
In Rattan Singh vs State of Punjab and Ors., 1 the representation to the State Government and the Central Government were made by the detenu simultaneously though the Jail Superintendent who should either have forwarded the representation separately to the Governments concerned or else he should have forwarded them to the State Government with a request for the onward transmission of the other representation to the Central Government.
"Someone tripped somewhere and the representation addressed to the Central Government was apparently never forwarded to it" with the inevitable result that the detenu had been unaccountably deprived of a valuable right to defend and assert his funda mental right to personal liberty.
Chandrachud, C.J. speaking for the Court observed: "But the laws of preventive detention afford only a modicum of safeguards to persons de tained under them and if freedom and liberty are to have any meaning in our democratic set up, it is essential that at least those safeguards are not denied to the detenus.
Section 11(1) of COFEPOSA confers upon the Central Government the power to revoke an order of detention even if it is made by the State Government or its officer.
That power, in order to be real and effective, must imply the right in a detenu to make a representation to the Central Government against the order of detention.
The failure in this case on the part either of the Jail Superintendent or the State Government to forward the detenu 's representation to the Central Government has deprived the detenu of the valuable right to have his detention revoked by that Government.
The 436 continued detention of the detenu must there fore be held illegal and the detenu set free.
" In Youssuf Abbas vs Union of India & Ors., , the detenu claimed to have made a representation against his detention on October 1, 1981.
Government stated that an undated representation was received by it from the District Magistrate on October 23, 1981.
The Advisory Board met on October 23, 1981.
Thereafter the Government rejected the representation of the detenu on October 29, 1981.
Admit tedly the representation was not forwarded to the Advisory Board.
It appears that the representation was forwarded by the Superintendent Central Jail to the District Magistrate on October 20, 1981.
Why his representation was detained with the Superintendent, Central Jail from October 1, 1981 to October 20, 1981 was not explained.
On that ground alone the writ petition was allowed and the detenu was directed to be set at liberty forthwith.
In Asha Keshavrao Bhosale vs Union of India & Anr., ; , it was found that a representation was made by the petitioner on behalf of the detenu which was received in the office of the Chief Minis ter on November 28, 1984 and orders on that representation were passed on January 23, 1985 and the same orders were received on January 28, 1985.
In the representation made by the petitioner himself to the Chief Minister, the order of detention was casually impugned but lot of attention appears to have been bestowed on the necessity of keeping the detenu in a Bombay Jail instead of sending him to Nasik Road Prison as directed in the Order of detention.
A detailed represen tation was made by the Secretary of an association which espoused his cause and that representation was received on November 29, 1984 in the Secretariat of the Chief Minister and was forwarded to the Home Department on December 3,.
1984 and was finally disposed of on December 12, 1984 and the rejection thereof was communicated on December 13, 1984.
This Court held that the petitioner was not entitled to make tenable submission on the score of delay in disposal of the representation.
In Aslam Ahmed Zahire Ahmed Shaik vs Union of India & Ors., ; , the Superintendent of Central Prison of Bombay to whom the representation was handed over by the detenu on June 16, 1988 for more onward transmission to the Central Government has callously ignored and kept it unattended for a period of seven days and as a result of that the representation reached the Government 11 days after it was handed over to the Jail Superintendent without any explanation despite opportunity given by this Court.
Pandian, J. speaking for the Court observed: 437 "In our view, the supine indifference, slack ness and callous attitude on the part of the Jail Superintendent who had unreasonably delayed in transmitting the representation as an intermediary; had ultimately caused undue delay in the disposal of the appellant 's representation by the Government which re ceived the representation 11 days after it was handedover to the Jail Superintendent by the detenu.
This avoidable and unexplained delay has resulted in rendering the continued deten tion of the appellant illegal and constitu tionally impermissible." Similarly in T.A. Abdul Rahman vs State of Kerala & Ors., Jt.
Today , the representation was submitted originally on 25.1.1988, but was got back and resubmitted on 2.2.1988 and was received by the third respondent only on 16.2.1988 and took time upto 28.3.1988 in receiving the comments of the Collector of Customs.
Again there was a delay of seven days in forwarding the representation to the Minister of State for Revenue with the comments of the Joint Secretary, COFEPOSA section.
In the opinion of their Lord ships, the manner in which the representation had been dealt with revealed a sorry state of affair in the matter of consideration of the representation made by the detenu.
It was not clear why such a long delay from 16.2.1988 to 28.3.1988 had occasioned in getting the comments from the Collector of Customs.
Theft Lordships extracted what was said in Rama Dhondu Borade vs Shri V.K. Saraf, Commissioner of Police & Ors., [1989] 1 Scale Vol.
1 p. 22: "The detenu has an independent constitutional right to make his representation under Article 22(5) of the Constitution of India.
Corre spondingly, there is constitutional mandate commanding the concerned authority to whom the detenu forwards his representation questioning the correctness of the detention order clamped upon him and requesting for his release, to consider the said representation within rea sonable dispatch and to dispose the same as expeditiously as possible.
This constitutional requirement must be satisfied with respect but if this constitutional imperative is observed in breach, it would amount to negation of the constitutional obligation rendering the con tinued detention constitutionally impermissi ble and illegal, since such a breach would defeat the very concept of liberty the highly cherished right which is enshrined in Article 21 of the Constitution.
" 438 " . .
What is reasonably dispatch depends on the facts and circumstances of each case and no hard and fast rule can be laid down in that regard.
However, in case the gap between the receipt of the representation and its consideration by the authority is so unreason ably long and the explanation offered by the authority is so unsatisfactory, such delay could vitiate the order of detention.
" Their Lordships accordingly held that the representation of the detenu had not been given prompt and expeditious consid eration and was allowed to lie without being properly at tended to and secondly the unexplained delay in the disposal of the representation was violative of Article 22(5) of the Constitution of India, rendering the order of detention invalid.
In the instant case we are satisfied that after receipt of the Xerox copy from the Central Government, the State Government took only 13 .days including 4 holidays in dis posing of the representation.
Considering the situation prevailing and the consultation needed in the matter, the State Government could not have been unmindful of urgency in the matter.
But the facts remain that it took more than two months from the date of submission of the representation to the date of informing the detenu of the result of his repre sentation.
Eight days were taken after disposal of the representation by the State Government.
The result is that the detenu 's constitutional right to prompt disposal of his representation was denied and the legal consequences must follow.
Assailing the finding of the High Court that opportunity was not afforded to the detenu to appear and produce his witnesses before the Advisory Board, the learned Attorney General submits that the finding is not correct inasmuch as in spite of the best endeavour on the part of the detaining authority to produce the detenu and his witnesses before the Board in terms of the High Court 's order dated 27.9.1988, the detenu himself on a lame excuse avoided appearing and producing his witnesses before it and thereby left no other alternative than to tender its opinion to the State Govern ment on 17.11.
1988 whereupon the State Government confirmed the order of detention vide its order dated 22.11.1988.
It appears that it was decided to hold the sitting of the Advisory Board at Indore on 12.11.1988 which was admit tedly a week before the mandatory last date for submitting the report.
On 8.11.1988 the 439 detenu at Agartala prayed for postponement of the Board sitting.
The State Government informed the Board on the basis of Teleprinter message dated November 8, 1988 received from Agartala that the detenu was unable to undertake the journey from Agartala to Indore.
Thereafter, the arrange ments made to carry the detenu and his witnesses to Indore by plane, were also cancelled by the State Government of Punjab and the detenu was told through the Inspector General of Prisons, Tripura by communication dated 11.11.1988 as follows: "In response to this office message dated 8.11.1988, Government of Punjab has informed me that next date of hearing as fixed by the NSA Board, Punjab, will be intimated.
This is in connection with his prayer dated 8.11.1988 for postponement of hearing by the NSA Board, Punjab on 12.11.1988 in the District Jail, Indore.
This may kindly be noted.
" Admittedly, the detenu was arrested on 28.5.1988.
The total period for Advisory Board 's report under section 14A (2)(d)(i) was five months and three weeks.
Reference to Advisory Board was made on 26.8.1988.
So the period would expire on or about 19.11.1988.
The Board fixed 12.11.1988 for its sitting.
The detenu prayed for adjournment as be cause of frozen joint he was unable to perform ablution and tie his turban.
Whether that was a lame excuse or not need not be decided.
The fact remained that he was told of anoth er sitting of the Board.
Having a week in hand it would perhaps have been possible to hold another sitting of the Board and give the detenu an opportunity which however, did not come.
Of course the decision was that of the Advisory Board and not of the State Government.
The High Court right ly observed that there was a communication gap.
It is true that the Advisory Board is not a judicial body.
It is charged with the responsibility of advising the Executive Government.
But when it advises in favour of the detenu, namely, that there was no sufficient cause for detention, it would be binding upon the Government under section 12(2) of the Act to release the detenu forthwith.
The detenu in this case did not have that opportunity to show that there was no sufficient cause for this detention.
Expressing inability to appear once could not have been treated as the detenu 's not desiring to be heard under section 11(2) of the Act.
In fact he desired to be heard and to produce his witnesses.
The result was that despite the State Government 's communication he was deprived of this opportunity.
What then would be the result? As was observed in Dr. R.K. Bhardwaj vs The State of Delhi & 440 Ors.
; , preventive detention is a serious invasion of personal liberty and such meagre safeguards as the Constitution has provided against the improper exercise of the power must be jealously watched and enforced by the Court.
Following D.S. Roy vs State of West Bengal, it can be said that Article 22(4) provides that no law providing for Preventive Detention shall authorise the detention of a person for a longer period than three months unless the Advisory Board has reported within that period that there is in its opinion sufficient cause for such detention.
Law therefore mandates a reference to a Board and for it to report on the sufficiency or otherwise of the detention which should be within three months from the date of detention.
It this case it is for this reason that after the Constitution every legislation dealing with Preventive Detention has made specific provision for confirmation and continuance of detention in view of the constitutional mandate in Article 22(4).
In this case, section 11 of the Act prescribes 5 months 3 weeks.
Unless the Board has made a report to the effect that there is a sufficient cause for such detention within that period from the date of detention there can be no detention of a person under any law for a longer period than that.
Relying on the observation of M.H. Beg, J. in P.D. Deorah vs The District Magistrate, Kamrup & Ors., ; it can be said that the gravity of the evil to the community resulting from anti social activities can not furnish an adequate reason for invading the personal liberty of a citizen, except in accordance with the proce dure established by the Constitution and the laws.
The protection of personal liberty is largely through insistence on observance of the mandatory procedure.
In cases of pre ventive detention observance of procedure has been the bastion against wanton assaults on personal liberty over the years.
Social security is no doubt the most important goal of the State but it is not the only goal of a good society.
There are other important values in a society.
One of the foremost and fundamental right guaranteed in the Constitu tion is personal liberty and one cannot be deprived of it except by the procedure prescribed by law.
Libertas inesti mabilis res est.
Liberty is an inestimable thing above price.
Libertus omnibbus rebus favourabilier est.
Liberty is more favoured than all things (anything).
It would be ironic if, in the name of social security, we would sanction the subversion of this liberty.
When a certain procedure is prescribed by the Constitution or the laws for depriving a citizen of his personal liberty, we think it our duty to see that that procedure is strictly observed.
As long back as in N.P. Umrao vs B.B. Gujral & Ors., ; at page 321 it was held to be well settled that in case of preven tive detention of a citizen, the Constitution by article 22(5) as interpreted by this Court, enjoins that the obligation of the 441 appropriate Government is to afford the detenu the opportu nity to make a representation and to consider that represen tation and there is the Government 's obligation to consti tute a Board and to communicate the representation, amongst other materials, to the Board to enable it to form its opinion and to obtain such opinion.
It was also reiterated that when liberty of the subject is involved under a preven tive detention law it is the bounden duty of the court to satisfy itself that all the safeguards provided by the law have been scrupulously observed and that the subject is not deprived of his personal liberty otherwise than in accord ance with law.
Two of these safeguards under article 22 which relate to the observance of the principle of natural justice and which a fortiori are intended to act as a check on the arbitrary exercise of power, are to be found in Article 22(5) of the Constitution.
These safeguards might be desig nated as a regulative postulate of respect, that is respect for the intrinsic dignity of the human person.
The detention of individuals without trial for any length of time, howso ever short, is wholly inconsistent with the basic ideas of our Government.
As was pointed out in V.C. Jawantraj Jain vs Shri Pradhan & Ors., ; one of the two safe guards provided to a detenu is that his case must be re ferred to an Advisory Board for its opinion if it is sought to detain him for a longer period than three months and the other is that he should be afforded the earliest opportunity of making a representation against the order of detention and such representation should be considered by the detain ing authority as early as possible before any order is made confirming the detention.
Neither safeguards is dependent on the other and both have to be observed by the detaining authority.
It is no answer for the detaining authority to say that representation of the detenu was sent by it to the Advisory Board and that the Board has considered the repre sentation and then made a report expressing itself in favour of detention.
Even if the Advisory Board has made a report stating that in its opinion there is sufficient cause for the detention, the State Government is not bound by such opinion and it may still on considering the representation of the detenu or otherwise, decline to confirm the order of detention and release the detenu.
It is imperative for the State Government to consider the representation of the detenu before making the order confirming the detention.
Fazal Ali, J. emphasised in Bal Chand Choraria vs Union of India and Ors., ; that in matters where the liberty of the subject is concerned and a highly cherished right is involved, the representation made by the detenu should be construed liberally and not technically so as to frustrate or defeat the concept of liberty which is en grained in article 21 of the Constitution of India.
In Smt.
Kavita vs The State of Maharashtra & 442 Ors.
; , , it was emphasised that the Advisory Board is charged with the task of submitting the report within the prescribed period after hearing the detenu, specifying its opinion as to whether or not there is sufficient cause for the detention of the person concerned.
The Advisory Board, as was held in A.K. Roy vs Union of India, [1982] Vol. , is to consider the question whether there is sufficient cause for the detention of the person concerned and not where the detenu is guilty of any charge.
The detenu may therefore present his own evidence in rebuttal of the allegations made against him and may offer other oral and documentary evidence before the Advisory Board in order to rebut the allegations which are made against him.
If the detenu desires to examine any witnesses, he shall keep them present at the appointed time and no obligation can be cast on the Advisory Board to summon them.
The Advisory Board, like any other Tribunal, is free to regulate its own procedure within the constraints of the Constitution and the statute.
If report is submitted by the Advisory Board without hearing the detenu who desired to be heard it will be violative of the safeguards provided under Article 22 of the Constitution .and sections 10 and 11 of the Act.
Failure to produce the detenu, unless it is for wilful refusal of the detenu himself to appear, will be equally violative of those provisions.
In State of Rajasthan vs Shamsher Singh, [1985] Suppl.
1 SCR 83 the importance of the proceedings before the Advisory Board was highlighted.
In fact it is the only opportunity for the detenu of being heard along with his representation for deciding whether there was sufficient cause for his detention.
The increasing need for ensuring public safety and security in the State of Punjab and the Union Territory of Chandigarh has been reflected in the recent successive amendments of the (Act 65 of 1980) with which we are concerned.
The Act was amended by the National Security (Amendment) Ordinance, 1984, which was repealed by the National Security (Amendment) Act, 1984, (18th May, 1984) (Act NO.
24 of 1984) which was deemed to have come into force on the 15th day of April, 1984.
Section 2 of this amendment Act provided that the shall, in its application to the State of Punjab and the Union Territory of Chandigarh, have effect subject to the amendments specified in sections 3 to 5.
Section 3 was amended to the extent that in sub section (4) of section 3 of the Principal Act (detaining officer reporting to the State Government) in the proviso, for the words "10 days" the words "15 days" shall be 443 substituted and for the words "15 days" the words "20 days" shall be substituted.
Similarly in sub section (1) of sec tion 8 (communicating grounds of detention to the detenu) for the words" 10 days" the words "15 days" shall be substi tuted.
A new section namely, section 14A was inserted after section 14.
This was followed by the National Security (2nd Amendment) Act, 1984 and the National Security (Amendment) Act of 1985.
This was followed by the National Security (Amendment) Ordinance of 1987 which was repealed by the National Security Amendment Act, 1987 (Act No. 27 of 1987) which further amended the Act in its application to the State of Punjab and the Union Territory of Chandigarh.
The National Security (Amendment) Act, 1984, section 4 of the National Security (2nd Amendment) Act, 1984, the National Security (Amendment) Act, 1985 and the National Security (Amendment) Ordinance, 1987 were thereby repealed.
This was followed by the National Security (Amendment) Ordinance, 1988 which was repealed by the National Security (Amendment) Act, 1988 (Act No. 43 of 1988).
In Section 14A as inserted by the Amendment Act of 1984, the provision was "where such person had been detained with a view to preventing him from acting in any disturbed area, in any manner prejudicial to . . " It was by the National Security (Amendment) Act, 1987 (Act No. 27 of 1987) that the provision of detention without obtaining the opinion of the Advisory Board for a period longer than 3 months, but not exceeding 6 months, from the date of his detention where such person had been detained with a view to preventing him 'in any disturbed area ' (1) "from interfering with the efforts of Government in coping with the terrorists and disruptive activities", was insert ed.
We find that while sub section (2) of section 3 of the Act before the amendment of 1984 provided that the Central Government and the State Government may if satisfied with respect to any person that with a view to preventing him from acting in any manner prejudicial to the security of the State or from acting in any manner prejudicial to the main tenance of public order or from acting in any manner preju dicial to the maintenance of supplies and services essential to the community it is necessary so to do, make an order directing that such person be detained, section 14A as inserted by the Amendment Act of 1984 provided that notwith standing anything contained in the foregoing provisions of this Act any person in respect of whom an order of detention has been made at any time before the 3rd day of April, 1986 444 may be detained without obtaining the opinion of the Adviso ry Board for a period longer than three months but not exceeding six months, from the date of his detention where such person had been detained with a view to preventing him from acting, in any disturbed area, in any manner prejudi cial to (a) the defence of India; or (b) the security of India; or (c) the security of the State; or (d) the mainte nance of public order; or (e) the maintenance of supplies and services essential to the community.
The amendment Act of 1987 added of these the ground "from interfering with the efforts of Government in coping with the terrorist and disruptive activities." Thus as a result of these amendments applicable to the State of Punjab and the Union Territory of Chandigarh we find on one hand addition to the grounds of detention and on the other, extension of the period during which a person could be detained without obtaining the opinion of the Advisory Board.
There is, however, no amendment as to the safeguards provided under Article 22 and sections 9, 10 and 11 of the Act.
Indeed, there could be no such amendment.
This reminds us of what was said, of course in a slightly differ ent context. "Amid the clash of arms laws are not silent.
They may be changed, but they speak the same language in war and peace." Would laws speak in a different language in internal disturbance? Lex uno ore omnes alloquitur.
Law addresses all with one mouth or voice.
Quotiens dubia inter pretatio libertatis est secundum libertatem respondendum erit Whenever there is a doubt between liberty and bondage, the decision must be in favour of liberty.
So says the Digest.
The result in that this appeal fails and is dismissed.
As ordered by the High Court the detenu is to be set at liberty forthwith, if he is not required to be detained in connection with any other case.
R.N.J. Appeal dismissed.
| IN-Abs | Sri Sukhjinder Singh has been under detention pursuant to the order dated 28.5.1988 of the Government of Punjab, Department of Home Affairs and Justice passed in exercise of the powers conferred by sub section (2) of Section 3 of the hereinafter referred to as "the Act" read with section 14A as inserted by National Security (Amendment) Act, 1987 with a view to preventing him from indulging in activities prejudicial to the security of the State and maintenance of public order and interference with the efforts of the Govt.
in coping with the terrorists and disruptive activities.
The detenu 's son Sukhpal Singh filed Criminal Writ Petition No. 1393 of 1988 in the High Court praying inter alia for a writ of Habeas Corpus, quashing the detention order, production of the detenu in the Court on the date of hearing, directing the authorities to arrange for the presence of the detenu before the Advisory Board at Chandi garh and also to make arrangements & pay for the expenses required to be incurred for arranging the presence of dete nu 's witnesses to be produced before the Board at Agartala and also his relatives and counsel so as to effectively assist him in regard to the presenting of his case before the Board.
The High Court by order order 27.9.88 dismissed the Writ Petition but ordered that the petitioner would approach the Advisory Board at Chandigarh with the request for allowing the detenu to produce evidence before it at Agartala and in case his prayer was granted by the Board, the expenses for taking those witnesses to Agartala would be borne by the respondent state.
Sukhpal Singh later moved Criminal Writ Petition No. 2365 of 1988 in the High Court of Punjab & Haryana for quashing the detention 421 order contending inter alia that the order of detention was passed on 28.5.88 in a cursory and routine manner without application of mind, much less with subjective satisfaction and there was an inordinate delay of two months in consider ation of detenu 's representation and that the detention was confirmed without affording the detenu any chance of appear ing and producing witnesses before the Advisory Board in terms of orders of the High Court dated 27.9.88 made in Crl.
Writ Petition No. 1393 of 1988.
The High Court upheld the above contention of the peti tioner and accordingly quashed the order of detention and ordered the detenu to be set at liberty for with unless required in any other case.
Aggrieved by this order the State has come up before this Court by way of special leave.
The Court while dismiss ing the appeal and directing the detenu to be set at liberty forthwith as ordered by the High Court.
HELD: A clear distinction has to be drawn between pre ventive detention in which anticipatory and precautionary action is taken to prevent the recurrence of apprehended events, and punitive detention under which the action is taken after the event has already happened.
It is true that the ordinary criminal process of trial is not to be circum vented and short circuited by apparently handy and easier resort to preventive detention.
But the possibility of launching a criminal proSecution cannot be said to be an absolute bar to an order of preventive detention.
Nor would it be correct to say that if such possibility is not present in the mind of the detaining authority the order of deten tion would necessarily be bad.
[426C E] It is true that the Advisory Board is not a judicial body.
It is charged with the responsibility of advising the Executive Government.
But when it advises in favour of the detenu, namely that there was no sufficient cause for deten tion, it would be binding upon the Govt under section 12(2) of the Act to release the detenu forthwith.
[439F] Expressing inability to appear once could not have been treated as the detenu 's not desiring to be heard under section 2(2) of the Act.
In fact he desired to be heard and to produce his witnesses.
[439G] The protection of personal liberty is largely through insistence on observance of the mandatory procedure.
In cases of preventive detention observance of procedure has been the bastion against wanton 422 assaults on personal liberty over the years.
[440E] One of the foremost and fundamental right guaranteed in the Constitution is personal liberty and one cannot be deprived of it except by the procedure prescribed by law.
Libertas Inestimabilis res est.
Liberty is an inestimable thing above price.
Libertus omnibus rebus favourabilier est.
Liberty is more favoured than all things (anything).
It would be ironic if, in the name of social security, we would sanction the subversion of this liberty.
[440F G] The increasing need for ensuring public safety and security in the State of Punjab and the Union Territory of Chandigarh has been reflected in the recent successive amendments of the .
[442F] As a result of these amendments applicable to the State of Punjab and the Union Territory of Chandigarh it is found on the one hand addition to the grounds of detention and on the other, extension of period during which a person could be detained without obtaining the opinion of the Advisory Board.
There is, however, no amendment as to the safeguards provided under Article 22 and sections 9, 10 and 11 of the Act.
Indeed, there could be no such amendment.
[444C D] Lex uno ore omnes alloguitur.
Law addresses all with one mouth or voice.
Quotaiens dubia interpretatio libertatis est secundum libertatem respondentum erit Whenever there is a doubt between liberty and bondage, the decision must be in favour of liberty.
[444E] Fazal Ghosi vs State of U.P. & Ors., AIR 1987 SC 1877:1987 (3) SCR 471; Rex vs Halliday, Ex parte Zadig, ; ; Ujagar Singh vs State of Punjab, ; SCR 756; Haradhan Saha vs The State of West Bengal Maharashtra & Ors.
, ; (1) SCR 1028; Ashok Kumar vs Delhi Administration & Ors., ; ; ; Giani Bakshish Singh vs Government of India & Ors., ; ; RajKumar Singh vs State of Bihar & Ors., ; ; ; Jayanarayan Sukul vs State of West Bengal, ; ; Frances Coralie Muffin vs W.C. Khambra & Ors., ; ; State of Orissa & Anr.
vs Manilal Singha nia & Anr., ; A.K. Gopalan vs The State of Madras, ; ; John Martin vs State of West Bengal, ; ; Khudiram Das vs The State of West Bengal & Ors., ; ; Saleh Mohammed 423 vs Union of India & Ors., ; Kamla Kanyalal Khushalani vs State of Maharashtra & Anr., ; ; Rattan Singh vs State of Punjab & Ors., ; ; YoussufAbbas vs Union of India & Ors., ; Asha Keshavrao Bhosale vs Union India & Anr., ; ; Aslam Ahmed Zahire Ahmed Shaik vs Union of India & Ors., ; ; T.A. Abdul Rahman vs State of Kerala & Ors., J.T. ; Rama Dhondu Borade vs Shri V.K. Saraf, Commissioner of Police & Ors., [1989] 1 Scale Vol.
1 22; Dr. R.K. Bhardwaj vs The State of Delhi & Ors., ; ; D.S. Roy vs State of West Bengal, ; P.D. Deorah vs The District Magistrate, Kamrup & Ors.
, ; ; N.P. Umrao vs B.B. Gujral & Ors., ; at p. 321; V.C. Jawantraj Jain vs Shri Pradhan & Ors., ; ; Bal Chand Choraria vs Union of India & Ors., ; ; Smt.
Kavita vs The State of Maharashtra & Ors., ; ; A.K. Roy vs Union of India, [1982] Vol.
88 Crl.
L.J. 340; and State of Rajasthan vs Shamsher Singh, [1985] Suppl.
I SCR 83, referred to.
|
Appeals Nos. 358 and 359 of 1957.
Appeals by special leave from the judgment and decree dated April 4, 1956, of the Patna High Court in M. J. C. Nos.
546 and 590 of 1955.
J. N. Banerjee and R. C. Prasad, for the appellant (In both appeals).
Basanta Chandra Ghose I and P. K. Chatterjee, for respondents Nos.
1 10 & 12 57 in C. A. No. 358/57.
M. C. Setalvad, Attorney General of India, Nooni Chakraverty and B. P. Maheshwari, for respondent No. 59 in C A. No. 358/57 and Respdt.
No. 1 in C. A. No. 359/57.
R.Patnaik, for respondent No. 63 in C.A. No. 359/57.
August 22.
The Judgment of the Court was delivered by 1193 GAJENDRAGADKAR J.
Where an industrial dispute has been referred to a tribunal for adjudication by the appropriate government under section 10 (1) (d) of the , (XIV of 1947), can the said government supersede the said reference pending adjudication before the tribunal constituted for that purpose ? That is the short question which falls to be considered in these two appeals by special leave.
The question arises in this way: On October 8, 1954, by Notification No. III/DI 1602 /54 L 15225, the government of Bihar referred an industrial dispute between the management of the Bata Shoe Co. Ltd., Digbaghat (Patna), and their 31 workmen, mentioned in annexure I A ', in exercise of the powers conferred on the said government by section 7 read with section 10(1) of the Act.
The dispute was whether the dismissal of the workmen in question was justified; if not, whether they were entitled to reinstatement or any other relief For the adjudication of this dispute, an industrial tribunal with Mr. Ali Hassan as the sole member was consti tuted.
This was reference No. 10 of 1954.
Then, on January 15,1955, by Notification No. III/DI 1601/55 L. 696, a similar industrial dispute between the same Bata Company and its 29 other workmen was referred by the government of Bihar to the same tribunal.
This was reference No. I of 1955.
While the proceedings in respect of the two references, which had been consolidated by the tribunal, were pending before it and had made some progress, the government of Bihar issued a third Notification No. III/Di 1601/55 L 13028 on September 17, 1955, by which it purported to supersede the two earlier notifications, to combine the said two disputes into one dispute, to implead the two sets of workmen involved in the two said disputes together, to, add the Bata Mazdoor 'Union to the dispute, and to refer it to the adjudication of the industrial tribunal of Mr. Ali Hassan as the sole member.
The dispute thus referred to the .
tribunal was, " Whether the dismissal of the 60 workmen, mentioned in annexure 'B ', was justified or unjustified; and to what relief, if any, those workmen are entitled ?" On receipt of this notification, the tribunal passed an 1194 order on September 19, 1955, cancelling the hearing of the two prior references which had been fixed for October 3, 1955, and directing that the files of the said references should be closed.
The Bata Company and its workmen then filed two separate applications before the High Court of Judicature at Patna under articles 226 and 227 of the Constitution and prayed that the last notification should be quashed as being illegal and ultra 'vires.
These.
two applications were numbered as M. J. C. Nos. 546 and 590 of 1955 respectively.
On April 4, 1956, the High Court held that the government of Bihar had no power or authority to supersede the earlier notifications, allowed both the applications and issued a writ in the nature of certiorai quashing the impugned notification of September 17, 1955, and also a writ in the nature of mandamus requiring the industrial tribunal to proceed expeditiously with reference cases Nos. 10 of 1954 and I of 1955 and to bring them to a conclusion in accordance with law.
Against this order the government of Bihar applied for and obtained leave from this court on June 26, 1956.
That is how the two present appeals have come for disposal before US.
In both the appeals, the appellant is the State of Bihar and.
the respondents are the Bata Company and its workmen respectively.
On behalf of the appellant, it is urged before us that the High Court at patna was in error in holding that the government of Bihar had no power or authority to set aside the two earlier notifications and to refer the dispute in question for adjudication to the industrial tribunal under section 10(1) of the Act.
In order to appreciate the background of the, impugned notification, it would be relevant, to mention some material facts.
It appears that the workmen of the company 's factory at Digha formed a, union at the close of the last World War.
The president of the said union was Mr. John and its general secretary was Mr. Fateh Narain Singh.
On June 22, 1947, the company entered into a collective agreement with the said union and by mutual consent the Standing Orders and 1195 Rules, certified under the Industrial Employment (Standing Orders) Act of 1946, were settled.
The union was recognised as the sole and exclusive collective bargaining agency for the workmen of the company.
Towards the end of 1954, two groups of the union were formed and rivalry grew between them.
One group was led by Mr. Fateh Narain Singh and other by Mr. Bari.
On January 22, 1954, the union ' through its general secretary Mr. Fateh Narain Singh served on the company a " slow down notice " with effect from February 24, 1954, and on February 6, 1954, Mr. Bari purporting to act as the president of the union asked his followers to go on strike as from February 23, 1954.
The demands made by Mr. Fateh Narain Singh gave rise to conciliation proceedings under the Act and ended in the settlement which was duly recorded on February 8, 1954.
In spite of the said settlement some workmen, including the sixty workmen in question who supported Mr. Bari, went on an illegal strike on February 23, 1954, although as members of the union they were bound by the ,settlement.
The majority of the workmen were opposed to the strike and in fact on February 16, 1954, a letter signed by 500 workmen who dis associated themselves from the strike, was received by the company.
The company was requested to make suitable arrangements to enable these workmen to attend their duties.
The strike succeeded only partially because out of 854 workmen employed in the company 's factory at Digha nearly 500 workmen attended the factory in spite of the threats of the strikers.
The strike was declared illegal by the appellant under section 23 (c) of the Act.
Subsequently, the company served the strikers with charge sheets and in the end, 274 workmen, including the sixty workmen in question, were dismissed from service by the company.
Thereafter the union entered into negotiations with the company, as a result of which it was agreed that 110 strikers would be employed by the company in the same manner in which 76 strikers had already been employed by it.
It was further 152 1196 agreed that 30 strikers were to remain dismissed and not considered eligible for employment or for any benefits.
In regard to the remaining 30 strikers, the company agreed to consider their cases later on for reemployment.
During these negotiations, the sixty workmen in question did not make any demand to the management for reinstatement either individually or collectively.
nor was their case raised by any other Organisation or body of workmen.
In the result, so far as the union was concerned the dispute regarding the whole body of strikers who had been dismissed by the company came to an end by virtue of, the agreement between the company and the union.
Notwithstanding this agreement, Mr. Sinha, the conciliation officer, wrote to the company on September 3, 1954, that he desired to hold conciliation proceedings inrespectof,some of the dismissed workmen.
The dispute raised by the sixty workmen was not sponsored by any Organisation or body of workmen.
In fact the secretary of the union wrote to the Commissioner of Labour on September 22, 1954, that he strongly objected to the alleged dispute of sixty workmen being referred to adjudication.
It was under these circum stances that the appellant issued the first two notifica tions on October 8, 1954 and January 15, 1955.
On May 30, 1955, the union made an application before the tribunal alleging that the ' majority of the workmen were opposed to the reinstatement of the sixty workmen in question and consequently it had interest in the proceedings before the tribunal.
Two applications were made before the tribunal by other workmen to be joined to the proceedings on the ground that they were opposed to the reinstatement of the workmen whose cases were pending before the tribunal.
All these applications were rejected by the tribunal.
It would appear that Mr. Fateh Narain Singh then moved the Department of Labour Government of Bihar, and it was apparently pursuant to the representation made by him that the third notification was issued by the appellant superseding the first two notifications and referring the whole dispute afresh to the 1197 industrial tribunal with the union of Mr. Fateh Narain Singh added as a party to the proceedings.
That in brief is the genesis of the impugned notification in the present case.
Dr Bannerjee for the appellant has urged before us that in dealing with the question about the powers of the appropriate government under section 10(1) of the Act, it would be necessary to bear in mind the facts which led to the cancellation of the first two notifications and the issue of the third impugned notification.
He contends that in issuing the third notification the appellant has acted bona fide and solely in the interests of fair play and justice ; it came to the. conclusion that it was necessary that the union should be heard before the disputes in question are.
adjudicated upon by the Industrial Tribunal and that it would be more convenient and in the interest of industrial peace and harmony that the dispute should be referred to .the tribunal 'in a more comprehensive and consolidated form bringing before the tribunal all the parties interested in it.
In our opinion, the bona fides of the appellant on which reliance is placed by Dr. Banerjee are really not: relevant for determining the appellant 's 'powers under section 10(1) of the Act.
If the appellant has authority to cancel the notification issued under section 10(1), and if the validity of the cancelling notification is challenged on the ground of mala fides, it may be relevant and material to inquire into the motives of the appellant.
But if the appellant has no authority to cancel or revoke a notification issued under section 10(1), the bona fides of the appellant can hardly validate the impugned cancellation.
That is why, we think, the appellant cannot base its arguments on the alleged bona fides of its conduct.
it is conceded by Dr. Bannerjee that the Act does not expressly confer any power on the appropriate government to cancel or supersede a reference made under section 10(1) of the Act.
He, however, argues that the power to cancel or supersede such a reference must be hold to be implied, and in support of his argument he relies on the, provisions of section 21 of the (X of 1897).
Section 21 provides 1198 that " where, by any Central Act or Regulation, a. power to issue notifications, orders, rules or bye laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any notifications, orders, rules or byelaws so issued ".
It is well settled that this section embodies a rule of construction and the question whether or not it applies to the provisions of a particular statute would depend on the subject matter, context, and the effect, of the relevant provision,% of the said statute.
In other words it would be necessary to examine carefully the scheme of the Act, its object and all its relevant and material provisions before deciding whether by the application of the rule of construction enunciated by section 21, the appellant 's contention is justified that the power to cancel the reference made under section 10(1) can be said to vest in the appropriate government by necessary implication.
If we come to the conclusion that the context and effect of the relevant provisions is repugnant to the application of the said rule of construction, the appellant would not be entitled to invoke the assistance of the said section.
We must, therefore, proceed to examine the relevant provisions of the Act itself.
It is clear that the policy of the Act is to secure and preserve good relations between the employers and their workmen and to maintain industrial peace and harmony.
It is with this object that section 3 of the Act contemplates the establishment of the Works Committees whose duty it is to promote measures for securing and preserving amity and good relations between the employers and the workmen.
If the Works Committee is unable to settle the disputes &rising between the employer and his workmen, conciliation officers and the boards of conciliation offer assistance to the parties to settle their disputes.
Sections 3, 4, 5, 12 and 13 refer to the working of this machinery contemplated by the Act.
It is only where the conciliation machinery fails to bring about settlement between the parties that the Act contemplates compulsory adjudication of the industrial disputes by labour courts and 1199 tribunals as the last alternative.
The appropriate government is authorised to constitute labour courts and tribunals under and subject to the provisions of a. 7 and section 7A respectively.
It is in respect of the compulsory adjudication that under section 10, the appropriate government is given wide discretion to decide whether or not the dispute between the employer and his employees should fie referred to the board, court or ' tribunal.
Section 10 (1) (d) provides inter alia that where the appropriate government is of opinion that any industrial dispute exists or is apprehended, it may at any time, by order in writing refer the dispute to a tribunal for adjudication.
The condition precedent for the reference to the industrial tribunal is that the appropriate government must be satisfied that an industrial dispute exists or is apprehended.
It is not in every case where the parties allege the existence of an industrial dispute that a reference would be made under section 10 (1); it is only where the test of subjective satisfaction of the appropriate government is satisfied that the reference can be made.
Thus it is clear that the appropriate government is given an important voice in the matter of permitting industrial disputes to seek adjudication by reference to the industrial tribunal.
But once an order in writing is made by the appropriate government referring an industrial dispute to the tribunal for adjudication under section 10 (1), proceedings before the tribunal are deemed to have commenced and they are deemed to have concluded on the day on which the award made by the tribunal becomes enforceable under section 17A.
This is the effect of section 20(3) of the Act.
This provision shows that after the dispute is referred to the tribunal, during the continuance of the reference proceedings, it is the tribunal which is seized of the dispute and which can exercise jurisdiction in respect of it.
The appropriate government can act in respect of a reference pending adjudication before a tribunal only under section 140(5) of the Act, which authorises it to add other parties to the pending dispute subject to the conditions mentioned in the said provision.
It would therefore be reasonable to hold that except for cases 1200 falling under section 10(5) the appropriate government stands outside the reference proceedings, which are under the control and jurisdiction of the tribunal itself.
Even after the award is made it is obligatory on I the appropriate government under section 17(1) to publish the said award within a period of thirty, days from the date of its receipt by the, appropriate government. 'Sub section (2) of section 17 says that subject to the provisions of section 17A, the award published under (1) of section 17 shall be final and shall not be called in question by any court in any manner whatsoever Section 19(3) provides that an award shall, subject to the other pro visions of section 19, remain in operation for a period of one year from the date on which it becomes emforceable under section 17A.
It is true that as.
17A and 19 confer on the appropriate government powers to modify the provisions of the award or limit the period of its: operation but it is unnecessary to refer to these provisions in detail.
The scheme of the provisions.
in Chapters III and IV of the Act would thus appear to be .
to leave the reference proceedings exclusively within the jurisdiction of the tribunals constituted under the :Act and to make the awards,of such tribunals binding between the parties, subject to the special powers conferred of the appropriate government under as.
17A and 19.
The appropriate government undoubtedly has the initiative in the matter.
It is only where it makes an order in writing refering an industrial dispute to the adjudication of the tribunal that the reference proceedings can commence but the scheme of the relevant provisions would prima facie seem to be inconsistent with any power in the appropriate government to cancel the reference made under section 10 (1).
The power claimed by the Happening to cancel a reference made unders.
10(1) seems also to be inconsistent with some other provisions of the Act.
The proviso to section 10 lays down that the appropriated government shall refer a dispute relating to the public utility service when a notice under section 22 has been given, unless it considers that the notice has been frivolously or vexatiously given, or that it would be inexpedient so to refer the dispute.
This proviso, indicates that in regard 1201 to a dispute relating to public utility concerns normally the government is expected to refer it for adjudication.
In such a case if ' the government makes the reference it is difficult to appreciate that it would be open to the government pending the proceedings of the said reference before the Industrial Tribunal to cancel the reference and supersede its original order in that behalf.
Section 10, sub section
(2) deals with the case where ' the parties to are industrial dispute apply to the appropriate government in the prescribed manner, either jointly or separately, for a reference of the dispute to the appropriate authority, and it provides that in such a case if the appropriate government is satisfied that the persons applying represent the majority of each party it shall make the reference accordingly.
ln such a case all that the government has to satisfy itself about is the fact that the, demand for reference is made by the majority of each party, and once this condition is satisfied, the government is under obligation to refer the dispute for industrial adjudication.
It is inconceivable that in such a case the government can claim power to cancel a reference made under section 10(2).
Indeed in the course of his arguments, Dr. Banerjee fairly conceded that it would be difficult to sustain a claim for an implied power of cancellation in respect of a reference made under section 10(2).
There is another consideration which is relevant in dealing with this question.
Section 12 which deals with the duties of the conciliation officer, provides in substance that the conciliation officer should try his best to bring about settlement between the parties.
If no settlement is arrived at, the conciliation officer has to make a report to the appropriate government, as provided in sub section
(4) of section 12.
This report must contain a full statement of the relevant facts and circumstances and the reasons on account of which in the opinion of the officer the settlement could not be arrived at.
Sub section (5) then lays down that if, on a consideration of the report, the appropriate government is satisfied that there is a case for reference to a board, labour court, tribunal or national tribunal, it may make such a reference.
Where the appropriate 1202 government does not make such a reference it shall record and communicate to the parties concerned its reasons therefor.
This provision imposes on the appropriate government an obligation to record its reasons for not making a reference after receiving a report from the conciliation officer and to communicate the said reasons to the parties concerned.
It would show that when the efforts of the conciliation officer fail to settle a dispute, on receipt of the conciliation officer 's report by the appropriate government, the government would normally refer the dispute for adjudication ; but if the government is not satisfied that a reference should be made, it is required to communicate its reasons for its decision to the parties concerned.
If the appellant 's argument is accepted, it would mean that even after the order is made by the appropriate government under section 10(1), the said government can cancel the said order without giving any reasons.
This position is clearly inconsistent with the policy underlying the provisions of section 12(5) of the Act.
In our opinion, if the legislature had intended to confer on the appropriate government the power to cancel an order made under section 10(1), the legislature would have made a specific provision in that behalf and would have prescribed appropriate limitations on the exercise of the said power.
It is, however, urged that if a dispute referred to the industrial tribunal under section 10(1) is settled between the parties, the only remedy for giving effect to such a compromise would be to cancel the reference and to take the proceedings out of the jurisdiction of the industrial tribunal.
This argument is based on the ,assumption that the industrial tribunal would have to ignore tile settlement by the parties of their dispute pending before it and would have to make an award on the merits in spite of the said settlement.
We are not satisfied that this argument is well founded.
It is true that the Act does not contain any provision specifically authorising the industrial tribunal to record a compromise and pass an award in its terms corresponding to the provisions of O. XXIII, r. 3 of the Code of Civil Procedure.
But it would be very 1203 unreasonable to assume that the industrial tribunal would insist upon dealing with the dispute on the merits even after it is informed that the dispute has been amicably settled between the parties.
We have already indicated that amicable settlements of industrial disputes which generally lead to industrial peace and harmony are the primary object of this Act.
Settlements reached before the conciliation officers or( boards are specifically dealt with by sections 12(2) and 13(3) and the same are made binding under section 18.
There can, therefore, be no doubt that if an industrial dispute before a tribunal is amicably settled, the tribunal would immediately agree to make an award in terms of the settlement between the parties.
It was stated before us at the bar that innumerable awards had been made by industrial tribunals in terms of the settlements between the parties.
In this connexion we may incidentally refer to the provisions of section 7 (2)(b) of the Industrial Disputes (Appellate Tribunal) Act, 1950 (XLVIII of 1950), which expressly refer to an award or decision of an industrial tribunal made with the consent of the parties.
It is true that this Act is no longer in force; but when it was in force, in providing for appeals to the Appellate Tribunal set up under the said Act, the legislature had recognised the making of awards by the industrial tribunals with the consent of the parties.
Therefore, we cannot accept the argument that cancellation of reference would be necessary in order to give effect to the amicable settlement of the dispute reached by the parties pending proceedings before the industrial tribunal.
In this connexion it may be relevant to refer to some other provisions of the Act, which impose restrictions on the parties (luring the pendency of the reference proceedings.
Under section 10(3), where an industrial dispute has been referred to an industrial tribunal, the appropriate government may by order prohibit the continuance of any strike or lock out in connexion with such dispute which may be in existence on the date of the reference.
Similarly, under section 33, during the pendency of the proceedings before an industrial tribunal, no employer shall (a) in regard to any matter connected with the dispute, alter, to the prejudice 153 1204 of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceedings or (b) for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workmen concerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending.
Failure to comply with the provisions of section 33(1) is made punishable under section 31 of the Act.
These provisions show that during the pendency of the proceedings before the industrial tribunal the parties to the dispute are expected to maintain status quo and not to take any action which would disturb industrial peace or prejudice a fair trial before the industrial tribunal.
If the power to cancel a reference made under section 10 (1) is held to be implied, the proceedings before the industrial tribunal can be terminated and superseded at any stage and obligations and liabilities incurred by the parties during the pendency of the proceedings would be materially affected.
It is because all these provisions are intended to operate as a self contained Code governing the compulsory adjudication of industrial disputes under the Act, that section 15 enjoins upon the industrial tribunals to hold their proceedings expeditiously and to submit their awards as soon as it is practicable on the conclusion of the proceedings to the appropriate government.
Thus time is usually of essential importance in industrial adjudications and so the Act imposes an obligation on the industrial tribunals to deal with their proceedings as expeditiously as possible.
If the appropriate government has by implication the power to cancel its order passed under section 10(1), the proceedings before the industrial tribunal would be rendered wholly ineffective by the exercise of such power.
Apart from these provisions of the Act, on general principles it seems rather difficult to accept the argument that the appropriate government should have an implied power to cancel its own order made under section 10(1).
If on the representation made by the employer or his workmen the appropriate government considers the matter fully and reaches the conclusion that an 1205 industrial dispute exists or is apprehended and then makes the reference under section 10(1), there appears to be no reason or principle to support the contention that it has an implied power to cancel its order and put an end to the reference proceedings initiated by itself In dealing with this question it is important to bear in mind that power to cancel its order made under section 10(1), which the appellant claims, is an absolute power; it is not as if the power to cancel implies the obligation to make another reference in respect of the dispute in question ; it is not as if the exercise of the power is subject to the condition that reasons for cancellation of the order should be set out.
If the power claimed by the appellant is conceded to the appropriate government it would be open to the appropriate government to terminate the proceedings before the tribunal at any stage and not to refer the industrial dispute to any other industrial tribunal at all.
The discretion given to the appropriate government under section 10(1) in the matter of referring industrial disputes to industrial tribunals is very wide; but it seems the power to cancel which is claimed is wider still; and it is claimed by implication on the strength of section 21 of the .
We have no hesitation in holding that the rule of construction enunciated by section 21 of the in so far as it refers to the power of rescinding or cancelling the original order cannot be invoked in respect of the provisions of section 10(1) of the .
It would now be necessary to refer to the decisions to which our attention was invited in the course of arguments.
For the appellant Dr. Bannerjee has strongly relied on the decision of this court in Minerva Mills Ltd. vs Their Workmen (1).
He contends that Mahajan J. who delivered the judgment of the court, has expressly observed in his judgment that from the relevant provisions of the Act "It could not be held that it was implicit in section 7 that the government could not withdraw a dispute referred to a tribunal or make the appointment of a tribunal for a limited period of time.
" The argument is that this observation shows that the government can withdraw a pending reference from one tribunal and refer it to another tribunal, and, (1) ; 1206 according to the appellant, that is exactly what has been done by it in the present case.
In the case of Minerva Mills Ltd. (1), however, the question about the implied power of the appropriate government to cancel its order made under section 10 did not arise for consideration.
The point which was raised by the appellant was that the government had no power to appoint a tribunal for a limited duration ; and the argument was that if industrial disputes are referred to a tribunal, all the said disputes must be determined by the said tribunal and not by any other tribunal, notwithstanding that the appointment of the original tribunal was for a limited duration.
The first tribunal in the said case had been appointed on June 15, 1952, and some industrial disputes had been referred to it.
The tribunal was appointed for one year.
During its tenure the tribunal disposed of some of the disputes referred to it, but four disputes still remained undisposed of.
For disposing of these references, a second tribunal was appointed on June 27, 1952.
The validity of the constitution of the second tribunal was impugned by the appellant and it was urged that it is the first tribunal alone which can and must try the remaining disputes.
This argument was rejected by this court, and it was held that it was perfectly competent to the appropriate government to appoint a tribunal for a limited duration.
It would be noticed that in this case there was no question of cancelling an order made under section 10(1).
The said order remained in force, and the only step which the government took was to make an order constituting a fresh tribunal to dispose of the references which had not been adjudicated upon by the first tribunal.
It was on these facts that this court took the view that it was competent to the government to refer the said remaining disputes for adjudication to the second tribunal.
Strictly speaking there was no occasion to withdraw any dispute from the first tribunal; the first tribunal had ceased to exist; and so there was no tribunal which could deal with the remaining disputes already referred under section 10(1).
That is why the government purported to appoint a second tribunal to deal with the said dispute.
In our opinion, the decision in the Minerva Mills Ltd. (1) cannot be (1) ; 1207 cited in support of the proposition that the appellant has power to cancel the order of reference made by it under section 10(1).
The decision of this court in Strawboard Manufacturing Co. Ltd. vs Gutta Mill Workers ' Union (1), is then cited in support of the proposition that the appellant has implied power to cancel its order made, under section 10(1).
In this case, the government of the State of Uttar Pradesh had referred an industrial dispute to the Labour Commissioner on February 18, 1950, and had directed the Commissioner to make his award not later than April 5, 1950.
While the proceedings were pending before the Commissioner, two additional issues were referred to him.
Ultimately, the award was made on April 13, and it was sought to be validated by the issue of a notification by the Governor of Uttar Pradesh on April 26, by which the time for making the award was retrospectively extended up to April 30, 1950.
This court held that the notification retrospectively extending the period to make the award was invalid.
Since the award had been made beyond the period prescribed by the original notification, it was void.
It is, however, argued that in dealing with the (question of the validity of the award it was observed by Das J. (as he then was), " In the circumstances, if the State Government took the view that the addition of those two issues would render the time specified in the original order inadequate for the purpose it should have cancelled the previous notification and issued a fresh notification referring all the issues to the adjudicator and specifying a fresh period of time within which he was to make his award.
The State Government did not adopt that course." As we read the judgment, we are not inclined to accept the appellant 's assumption that the passage just cited expresses the view accepted by this court.
Read in its context the said passage appears to state the argument urged by Dr. Tek Chand on behalf of the appellant.
The appellant appears to have urged in substance that if the State Government thought that the addition of new issues referred to the Commissioner by subsequent notification made it difficult for him to submit his award (1) ; 1208 within the specified time, the local government should have cancelled the original reference, made a fresh comprehensive reference and given him requisite time for making his award.
Since that was not done, the position could not be rectified by the issue of the impugned notification retrospectively extending the time originally fixed.
It is in connexion with this argument that the statement on which reliance is placed was apparently made by the learned counsel for the appellant.
If that be the true position, no argument can be based on these observations.
It is conceded that the question about the power of the appropriate government to cancel an order of reference made under section 10(1) did not arise for discussion or decision in this case.
The third decision to which reference has been made in support of the appellant 's case is the decision of Bishan Narain J. in The Textile Workers ' Union, Amritsar vs The State of Punjab and others (1).
Bishan Narain J. appears to have taken the view that the power to cancel an order of reference made under section 10(1) can be implied by invoking section 21 of the , because he thought that by the exercise of such a power, the appropriate government may be able to achieve the object of preserving industrial peace and harmony.
The judgment shows that the learned judge was conscious of the fact that " this conclusion may have the effect of weakening a trade union 's power of negotiation and may encourage the individual firms to deal directly with its (their) own workmen but it is a matter of policy with which I have nothing to do in these proceedings.
" In dealing with the present question, we would not be concerned with any questions of policy.
Nevertheless, it may be pertinent to state that on the conclusion which we have reached in the present case there would be no scope for entertaining the apprehensions mentioned by the learned judge.
As we have already indicated, the scheme of the Act plainly appears to be to leave the conduct and final decision of the industrial dispute to the industrial tribunal once an order of reference is made under section 10(1) by the appropriate government.
We must accordingly hold that Bishan Narain J. was (1) A.I.R. 1957 Pun.
1209 in error in taking the view that the appropriate government has power to cancel its own order made under section 10(1) of the Act.
The decision of the Kerala High Court in Iyyappen Mills (Private) Ltd., Trichur vs State of Travancore Cochin (1), is not of much assistance because in this case the learned judges appear to have taken the view that the first tribunal before which the industrial dispute was pending had ceased to exist at the material time when the dispute was referred by the local government for adjudication to the second tribunal.
If that be the true position, the conclusion of the learned judges would be supported by the decision of this court in Minerva Mills Ltd. (2).
Then, in regard to the observations made by Sinha J. in Harendranath Bose vs Second Industrial Tribunal (3), it is clear that the learned judge was in error in seeking to support his view that the appropriate government can cancel its order made under section 10(1) by the observations found in the judgment of this court in Strawboard Manufacturing Co. Ltd. (4).
We have already stated that the said observations are really a part of the arguments urged by the appellant before this court in that case and are not obiter observations made by the learned judge.
The last case to which reference must be made is the decision of Rajamannar C. J. and Venkatarama Aiyar J. in South India Estate Labour Relations Organisation vs The State of Madras (5).
In this case the Madras Government had purported to amend the reference made by it under section 10 of the Act and the validity of this amendment was challenged before the court.
This objection was repelled oil the ground that it would be open to the government to make an independent reference concerning any matter not covered by the previous reference.
That it, took the form of an amendment to the existing reference and not an additional reference is a mere technicality which does not merit any interference in the writ proceedings.
The objection was one of form and was without substance.
It would thus appear that the question before (1) (2) ; (3) (4) ; (5) 1210 the court was whether the appropriate government can amend the reference originally made under section 10 so far as the new matters not covered by the original reference are concerned, and the court held that what the appropriate government could have achieved by making an independent reference, it sought to do by amending the original reference itself.
This decision would not assist the appellant because in the present case we are not considering the power of the govern ment to amend, or add to, a reference made under section 10(1).
Our present decision is confined to the narrow question as to whether an order of reference made by the appropriate government under section 10(1) can be subsequently cancelled or superseded by it.
We must, therefore, confirm the finding made by the learned judges of the High Court at Patna, that the notification issued by the appellant cancelling the first two notifications is invalid and ultra vires.
That takes us to the question as to the form in which the final order should be passed in the present appeals.
The High Court has purported to issue a writ of certiorari against the State Government quashing the impugned notification.
It has, however, been held by this court in The State of Madras vs C. P. Sarathy (1) that in making a reference under section 10(1) tile appropriate government is doing an administrative Act and the fact that it has to form an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character.
That being so, we think it would be more appropriate to issue a writ of mandamus against the appellant in respect of the impugned notification.
We would also like to add that since the first two industrial disputes referred by the appellant under the first two notifications have remained pending before the tribunal for a fairly long time, it is desirable that the tribunal should take up these references on its file and dispose of them as expeditiously as possible.
In the result, the appeals fail and must be dismissed with costs.
Appeals dismissed.
| IN-Abs | Section 10(1) of the , does not confer on the appropriate Government the power to cancel or supersede a reference made thereunder in respect of an industrial dispute pending adjudication by the tribunal constituted for that purpose.
Nor can section 21 of the , vest such a power by necessary implication.
It is well settled that the rule of construction embodied in section 21 of the can apply to the provisions of a statute only where the subject matter, context and effect of such provisions are in no way inconsistent with such application.
So judged it is clear that that section cannot apply to section 10(1) of the .
Minerva Mills Ltd. vs Their Workmen, ; , held inapplicable.
1192 Strawboard Manufacturing Co. Ltd. vs Gutta Mill Workers ' Union, ; , explained.
The Textile Workers ' Union, Amritsar vs The State of Punjab and others, A. I. R. 1957 pun.
255 and Hayendranath Bose vs Second Industrial Tribunal, , overruled.
South Indian Estate Labour Relations Organisation vs The State of Madras, , distinguished.
Consequently, where the appropriate Government by two notifications, issued one after the other, referred two industrial disputes between two batches of workmen and their employer for adjudication to the industrial tribunal constituted for that purpose and, thereafter, by a third notification superseded the two earlier notifications and the High Court, on the applications of both the workmen and the employer under articles 226 and 227 of the Constitution, issued a writ of certiorari quashing that notification and by a writ of mandamus required the tribunal to proceed expeditiously with the two references and the State Government appealed: Held, that the impugned notification was invalid and ultra vires 'and the finding of the High Court must be affirmed.
Held, further, that since a reference under section 10(1) of the was in the nature of an administrative act, the more appropriate writ to issue would be one of mandamus and not one in the nature of certiorari.
The State of Madras vs C. P. Sarathy, , referred to.
|
ivil Appeal No. 1846 of 1974.
From the Judgment and Order dated 25.9.1972 of the Bombay High Court in Appeal No. 512 of 1965.
V.N. Ganpule and Mrs. Urmila Sirur for the Appellant.
V.A. Bobde, Uday U. Lalit and A.G. Ratnaparkhi for the Respondent.
The Judgment of the Court was delivered by SHARMA, J.
This appeal by the plaintiff appellant is directed against the decision of the Bombay High Court dismissing her suit for possession of the properties de tailed in the plaint.
The disputed properties belonged to a joint Hindu family governed by Mitakshara law of which one Bhiku and his son Balu were coparceners.
Bhiku died on June 6, 1942 leav ing behind his widow Parvati, the defendant No. 2 in the present suit and Balu who dies soon after his father 's demise on July 24, 1942.
In November 1942 Balu 's widow Lilabai gave birth to a posthumous daughter who is the present appellant.
Sometime later Lilabai remarried and thereupon Parvati 466 adopted Vithal, the first defendant in the present suit, in the year 1949.
After attaining majority, appellant Ashabai filed the present suit for a decree for possession of the properties with mesne profits and a decree for money for Rs.3,000 as expenses of her marriage.
She challenged the power of her grand mother to adopt the first defendant on the ground that her right to adopt was lost on the death of Balu leaving behind his widow Lilabai.
The trial court accepted the defence case, upheld the adoption of the defendant No. 1 as valid, and dismissed the suit.
The plaintiff, Ashabai, challenged the decision by an appeal which was heard by the Extra Assistant Judge, Poona, who allowed the same and passed a decree for possession of the suit properties along with mesne profits.
Now, it was the turn of the defendants to question the decree of the first appellate court before the High Court under section 100 of the Code of Civil Procedure.
After considering a number of Privy Council and Supreme Court decisions, the High Court ruled that a Hindu widow 's power to adopt is revived the moment there is nobody to continue the line, and since Lilabai incapacitated herself in doing so by her remarriage, the right of her mother in law to adopt a son to her husband revived.
The adoption of the first defendant was, thus, found legal and valid.
Accordingly the decree in favour of the plaintiff was set aside and her suit dismissed.
The appellant then moved this Court under Article 136 of the Constitution and special leave has been granted.
The case comes from Maharashtra where a Hindu widow may adopt even without any authority.
The contention of the plaintiff is that on the death of Balu his mother Parvati lost this power which vested in Balu 's widow Lilabai and on Lilabai 's remarriage Parvati 's power did not revive.
The adoption of defendant No. 1 was, therefore, illegal.
Reli ance was placed on several decisions of the Bombay High Court including that in Ram Chandra vs Murlidhar, In similar circumstances the Division Bench held that the mother 's power to adopt a son was permanently extinguished on the death of her natural son leaving a widow.
The High Court in the present case refused to follow the said decision on the ground that the same must be held to have been impliedly over ruled by the judgment of this Court in Gurunath vs Kamalabai, ; our view the High Court has not correctly appreciated the deci sion in Gurunath 's case.
The relevant facts in Gurunath vs Kamalabai, may be briefly put thus.
The disputed property belonged to Krishta rao who died leaving behind two widows Radhabai and Ganga bai and a son 467 Dattatraya.
Dattatraya died in 1913 leaving behind his widow Sundarabai and a son Jagannath.
Sundarabai died soon after the death of her husband and a year later Jagannath also died.
Gangabai, the junior widow of Krishtarao, adopted Gurunath, the appellant before this Court, who filed a suit claiming certain rights as the adopted son of Krishtarao.
One of the issues arising in the case related to the validi ty of Gurunath 's adoption.
A Bench of seven learned Judges of this Court examined several decisions of the Privy Coun cil including the judgment in Arnarendra Mansingh vs Sanatan Singh, [1933] L.R. 60 I.A. 242, and said that the rule, "That the interposition of a grand son, or the son 's widow, competent to continue the line by adoption brings the mother 's power of adoption to an end;" was being followed for a very long time and has become a part of Hindu law.
They also approved the observation of Chandavarkar, J., who delivered the judgment of the Full Bench of the Bombay High Court in Ramkrishna Ramchandra vs Shamrao, Bom.
526, to the following effect: "Where a Hindu dies leaving a widow and a son, and that son dies leaving a natural born or adopted son or leaving no son but his own widow to continue the line by means of adoption, the power of the former widow is extinguished and can never afterwards be revived.
" They also quoted with approval another part of the judgment of Chandavarkar, J., stating that when a son dies before attaining full legal competence and does not leave either a widow or a son or an adopted son then the power of the mother which was in abeyance during his lifetime revives but the moment he hands.
over that torch to another, the mother can no longer take it.
In view of these observations in the judgment in Gurunath 's case there does not appear to be any scope for holding that on the remarriage of the son 's widow the power of the son 's mother to adopt revives.
The matter does not stop here.
Reliance was placed by the appellant on the decision of the Nagpur High Court in Bapuji vs Gangaram, [1941] I.L.R. Nagpur 178, where the facts were identical to those in the present appeal.
The Nagpur High Court had held that the power of the mother revived on the remarriage of the son 's widow.
This Court discussed the Nagpur judgment at some length at pages 1148 and 1149 and disapproved it.
This part of the judgment does not leave any room for doubt that this Court in Gurunath 's case has affirmed the decisions of the Bombay High Court in Ramkrishna Ramchandra vs Shamrao, Bom.
526 468 and Ram Chandra vs Murlidhar, , as laying down the correct law and rejected the rule of law similar to the plea of the present respondent, recognised by Nagpur High Court in identical facts and circumstances.
We accordingly hold that on the death of Balu the responsibili ty for the continuance of the family line fell on his widow Lilabai by the power of adoption vesting in her, and the power of Parvati to adopt was extinguished permanently and did not revive even on Lilabai 's remarriage.
Consequently the adoption of first defendant was invalid in the eye of law and he did not get any interest in the suit properties.
Now remains the next question as to the relief which the plaintiff is entitled to get in this suit.
As has been observed earlier, the properties belonged to the joint family of which Bhiku was a coparcener.
On his death in 1942 his wife Parvati got under section 3(2) of the Hindu Women 's Rights to Property Act, 1937, the same interest as Bhiku had in the joint family properties.
If a partition had taken place Bhiku would have got half share in the properties, which on his death devolved on Parvati.
Parvati is still alive and is defending the claim of her grant daughter.
She cannot, therefore, be deprived of her half share in the properties.
The interest which initially devolved on Para vati, however, was the limited in nature known as Hindu Woman 's estate.
On the passing of the , she became full owner thereof.
Likewise the remaining half share of Balu in the properties, devolved on the appel lant on her mother 's remarriage and she got a Hindu Woman 's estate therein which ripened in full ownership under section 14(1) of the .
She is thus entitled to a decree for half share in the suit properties, as prayed for by way of an alternative relief in the plaint.
She has also asked for a decree for partition in case of a partial decree which she is entitled to get.
The first appellate court had also granted a decree for mesne profits, pendente lite and future, which should be restored but only in respect of her half share.
Accordingly, an inquiry shall be made under Order XX, Rule 12, CPC.
Her claim for a money decree for Rs.3,000 was not allowed even by the first appellate court and stands finally rejected.
In the result, the decision of the High Court is set aside and the plaintiff 's suit for half share in the suit properties with mesne profits as also for portion is de creed.
The appeal is accordingly allowed in part, but the parties are directed to bear their own costs throughout.
R.N.J. Appeal allowed.
| IN-Abs | The disputed property belonged to a joint Hindu family, governed by Mitakshra law of which one Bhiku and his son were coparceners.
Bhiku died leaving behind Parvati his widow and a son, Balu.
Soon after, Balu too died, leaving behind his widow Lilabai who gave birth to a posthumous daughter, the present appellant.
Sometime later Lilabai remarried.
Thereupon Parvati, Bhiku 's surviving wife adopted Vithal, the present respondent in this appeal.
The appel lant, Ashabai on attaining majority filed the present suit for a decree for possession of properties with mesne profits and a decree for money and challenged the power of her grand mother to adopt.
The trial court upheld the adoption of the defendant as valid and dismissed the suit.
The plaintiff Ashabai chal lenged the decision by an appeal.
The Appellate court al lowed the appeal and passed a decree in her favour granting the reliefs claimed.
Thereupon the defendants challenged the decree of the first appellate court in the High Court.
The High Court ruled that a Hindu widow 's power to adopt is revived the moment there is nobody to continue the line, and thus the adoption of the respondent was found legal and valid and the decree in favour of the plaintiff appellant was set aside and her suit dismissed.
Hence this appeal by special leave by the plaintiff.
Allowing the appeal in part by decreeing the suit for half share in the suit properties with mesne profits this Court, HELD: There does not appear to by any scope for holding that on the remarriage of the son 's widow the power of son 's mother to adopt revives.
[467F] In the instant case, on the death of Balu, the responsi bility for the continuance of the family line fell on his widow Lilabai by the power of adoption vesting in her and the power of Parvati to adopt was extin 465 guished permanently and is not revived even on Lilabai 's remarriage.
Consequently the adoption of the first defendant was invalid in the eye of law and he did not get any inter est in the suit properties.
[468B] The properties belonged to the joint family of which Bhiku was a coparcener.
On his death in 1942 his wife Par vati got under section 3(2) of the Hindu Women 's Rights to Property Act, 1937, the same interest as Bhiku had in the joint family properties.
[468C] The interest which initially devolved on Parvati, howev er, was limited in nature known as the Hindu Women 's estate.
On passing of the Hindu Succession Act, 1957 she became full owner thereof.
[468D] Ram Chandra vs Murlidhar, ; Gurunath vs Kamlabai, ; ; Amrendra Mansingh vs Sanatan Singh, [1933] L.R. 60 I.A. 242; Ramkrishna Ram chandra vs Shamrao, Bom.
526 and Bapuji vs Gangaram, [1941] I.L.R. Nagpur 178, referred to.
|
Petition (Civil)No. 338 of 1989.
(Under Section 25 of the Code of Civil Procedure, 1908).
Petitioner in person.
V.M. Tarkunde, P.K. Dey and Ms. Rani Jethmalani for the Respondent.
The Judgment of the Court was delivered by AHMADI, J.
Dr. Subramaniam Swamy, the defendant in Suit No. 945/89 pending on the original side of the Bombay High Court, has filed this petition under Section 25 of the Code of Civil Procedure, 1908 ( 'The Code ' hereafter) read with Order XXXVI B of the Supreme Court Rules, 1966, praying for the transfer of the aforesaid suit from the Bombay High Court to any Civil Court in Karnataka, preferably the City Civil Court at Bangalore, on the ground of forum non conven ience.
The respondent Shri Ramakrishna Hegde has filed the aforesaid suit in the Bombay High Court claiming a sum of Rupees one crore by way of damages for injury caused to his reputation by the publication/ imputation of certain alleged defamatory statements made by the petitioner at a Press Conference held in New Delhi on January 10, 1989 which was attended by several members of the Press and media specially invited to the said Conference.
The allegation in the plaint is that the petitioner levelled several accusations against the respondent at the said Press Conference which were widely circulated/reported in the newspapers of January 11, 1989.
These allegations have been catalogued in clauses (a) to (p) of paragraph 4 of the plaint.
It is also alleged that the petitioner had also issued a written statement contain ing allegations set out in clauses (q) to (y) of paragraph 5 of the plaint and followed it up by further similar allega tions made on January 12, 1989 and January 27, 1989, all of which are per se defamatory.
We need not set out the allega tions forming the basis of the suit as they are not relevant for the disposal of this petition.
Suffice it to say that the suit filed by the respondent in the Bombay High Court is for damages for injury caused to his reputation.
472 The petitioner is a politician who is serving his fourth term as a Member of Parliament and is presently a Member of the Rajya Sabha having been elected to that office on a Janta Party ticket sometime in March, 1988.
He claims to have served on various Investigative Committee of Parlia ment, to have received his Doctorate from the Harvard Uni versity in USA where he later taught for almost a decade and to have published more than 150 books, articles and research papers on various aspects of Indian policy including econom ic policy of the country.
On account of this background, contends the petitioner, he was able to understand, analyse and expose the details of the respondent 's various acts of corruption, favouritism and nepotism committed during his tenure as Chief Minister of the State of Karnataka, at the Press Conference of January 10, 1989.
In paragraph 8 of the petition the petitioner states that he "accepts the publica tion of the allegations complained of by the respondent.
" It is thus seen that the factum of publication of the allega tions is not in dispute.
The petitioner, however, contends that the most appro priate place for the trial of the suit filed by the respond ent is the State of Karnataka where the various acts com plained of were committed by the respondent from time to time during his tenure as the Chief Minister of the State.
The grounds in support of the petitioner 's contention may be summarised as follows: the petitioner 's father maintains a family house in Bangalore; all the events that provide the defence to the litigation took place in Karnataka at Banga lore; the entire documentary evidence touching the alleged acts being in official files and in private custody would be easily available in Bangalore; most of the witnesses who are in know of the respondent 's wrongs are residents of Karnata ka, more particularly Bangalore; the discovery and inspec tion of documents can be conveniently had in Bangalore where they are available; the evidence pertaining to telephone tappings done at the behest of the respondent would be available in Karnataka, Bangalore and since the people of Karnataka are vitally interested in the outcome of this litigation, it is essential that the suit should be tried in Karnataka and not in Bombay.
It is further alleged that if the respondent is keen on vindicating his honour he should have no objection to the transfer of the suit to a Civil Court in Karnataka where the suit can be disposed of more expeditiously than Bombay where the Court calendars are clogged because of heavy backlog and a similar suit filed by Shri A.R. Antulay, the Ex Chief Minister of Maharashtra in 1982 has still not reached heating.
According to him, having regard to the nature of the respondent 's suit, it is doubt ful if the Bombay High Court would permit it to jump its place in the queue.
It is lastly alleged 473 that since the respondent is admittedly a resident of Banga lore and usually divides his time largely between Delhi and Bangalore he should have no objection to the trial of the suit in the State of Karnataka.
On the other hand if the suit is not transferred as prayed the petitioner will be considerably handicapped in his defence as both oral and documentary evidence will not be easily available.
The petitioner, therefore, contends that it is necessary to order transfer of the case to meet the ends of justice.
The respondent has filed his counter opposing the peti tion.
He contends that the petitioner having aligned himself with the ruling party at the Centre is indulging in making intemperate, slanderous and false allegations against him with a view to maligning him and advancing the political interest of the ruling party at the Centre.
According to him the suit in the Bombay High Court is delayed as the peti tioner has failed to file his written statement to the suit.
After he files the written statement, a summons for direc tions can be taken out and a request to expedite the suit can be made to the High Court; if the petitioner is sincere in his profession, he should join the respondent in request ing the High Court for an early hearing of the suit.
He further states that this Court can also direct the Bombay High Court to hear and dispose of the suit within a period of six months from the date of the order.
According to the respondent it is not necessary to transfer the suit from the Bombay High Court to a Court in Karnataka merely on the ground that the latter court will be able to dispose of the suit more expeditiously having regard to comparatively less pressure of work.
As regards the allegation that the peti tioner 's father maintains a family house in the State of Karnataka, the respondent contends that the petitioner normally makes frequent visits to Bombay where his in laws have a comfortable home at Nepean Sea Road, Bombay.
The respondent further contends that being the dominus litis he was entitled to choose the forum and no valid grounds have been made out in the petition for the transfer of the suit.
The respondent, therefore, prays that the petition should be dismissed with costs.
The petitioner has filed his rejoinder to the respond ent 's counter.
He contends that the respondent has not made a serious attempt to counter the grounds on which the trans fer petition is founded.
He denies the allegation that he was aligned himself with the ruling party at the Centre and is deliberately making intemperate, slanderous and false accusations against the respondent with a view to advancing the political interest of the said party.
On the question of delay in filing the written statement to the suit he con tends that he 474 received the summons on April 7, 1989 requiring him to appear before the Judge in Chambers on July 25, 1989.
He states that on enquiry he discovered that there was a long queue of matters listed for directions on that date and he was told that his matter was not likely to reach even for preliminary directions in the current year.
He states that his written statement is ready but he has not filed it as his suit is not listed for directions.
He has denied the allegation that his visits to Bombay are more frequent that his visits to Bangalore.
While admitting the fact that he has a place to stay in Bombay he emphasises that his home is in Delhi and his father 's home is in Bangalore and since the events in question had taken place in Bangalore, he consid ers the Karnataka Courts to be the natural and proper forum for the trial of the suit.
According to him while the re spondent had made the choice of forum by instituting the suit at Bombay, Section 25 of the Code empowers this Court to transfer the suit to Karnataka to meet the ends of jus tice.
He, therefore, contends that this Court should exer cise its discretion in the interest of justice and transfer the case to Karnataka where the events complained of had taken place, where the documentary evidence is available in public records and where the witnesses of the alleged trans actions ordinarily reside.
The present Section 25 of the Code was inserted by Section 11 of the Code of Civil Procedure (Amendment) Act, 1976.
The relevant part of the Section with which we are concerned reads as under: "25(1) On the application of a party and after notice to the parties and after hearing such of them as desire to be heard, the Supreme Court may, at any stage, if satisfied that an order under this section is expedient for the ends of justice, direct that any suit, appeal or other proceeding be transferred from a High Court or other Civil Court in one State to a High Court or other Civil Court in any other State.
" Under the old section the State Government was empowered to transfer a suit, appeal or other proceeding pending in the High Court of that State to any other High Court on receipt of a report from the Judge trying or hearing the suit that there existed reasonable grounds for such transfer provided the State Government of the State in which the other High Court had its principal seat consented to the transfer.
The present Section 25 confers the power of trans fer on the Supreme Court and is of wide amplitude.
Under the present provision the Supreme Court is empowered at any stage to transfer any suit, appeal or 475 other proceeding from a High Court or other Civil Court in one State to a High Court or other Civil Court of another State if it is satisfied that such an order is expedient for the ends of justice.
The cardinal principle for the exercise of power under this section is that the ends of justice demand the transfer of the suit, appeal or other proceeding.
The question of expediency would depend on the facts and circumstances of each case but the paramount consideration for the exercise of power must be to meet the ends of jus tice.
It is true that if more than one court has jurisdic tion under the Code to try the suit, the plaintiff as domi nus litis has a right to choose the Court and the defendant cannot demand that the suit be tried in any particular court convenient to him.
The mere convenience of the parties or any one of them may not be enough for the exercise of power but it must also be shown that trial in the chosen forum will result in denial of justice.
Cases are not unknown where a party seeking justice chooses a forum most inconven ient to the adversary with a view to depriving that party of a fair trial.
The Parliament has, therefore, invested this Court with the discretion to transfer the case from one Court to another if that is considered expedient to meet the ends of justice.
Words of wide amplitude for the ends of justice have been advisedly used to leave the matter to the discretion of the apex court as it is not possible to con ceive of all situations requiring or justifying the exercise of power.
But the paramount consideration must be to see that justice according to law is done; if for achieving that objective the transfer of the case is imperative, there should be no hesitation to transfer the case even if it is likely to cause some inconvenience to the plaintiff.
The petitioner 's plea for the transfer of the case must be tested on this touch stone.
The learned counsel for the respondent invited our attention to the observations of this Court in Maneka Sanjay Gandhi & Anr.
vs Rani Jethmalani, [ ; In that case the petitioner figured as an accused in the prosecution launched against her and another by the respondent for an offence of defamation in the Court of Metropolitan Magis trate, Bombay.
This Court was approached for the transfer of the Criminal Case from Bombay to Delhi.
While declining the request for transfer this Court observed as under: "Assurance of a fair trial is the first imper ative of dispensation of justice and the central criterion for the Court to consider when a motion for transfer is made is not the hypersensitivity or relative convenience of a party or easy availability of legal services or like mini grievances.
Something more sub stantial, more compelling, more imperilling, 476 from the point of view of public justice and its attendant environment, is necessitous if the Court is to exercise its power to trans fer.
This is the cardinal principle although the circumstances may be myriad and vary from case to case.
We have to test the petitioner 's grounds on this touchstone bearing in mind the rule that normally the complainant has the right to choose any court having jurisdiction and the accused cannot dictate where the case against him should be tried.
Even so, the process of justice should not harass the parties and from that angle the court may weigh the circumstances.
" Counsel for the respondent pointed out that mere conven ience of the petitioner and absence of likelihood of preju dice to the respondent should not weigh with the court in directing the transfer of the suit from the Bombay High Court to a Civil Court in Karnataka.
We have already empha sised that the paramount consideration for transfer of the case under Section 25 of the Code must be the requirement of justice.
If the ends of justice so demand, the case may be transferred under this provision notwithstanding the right of dominus litis to choose the forum and considerations of plaintiff 's convenience, etc., cannot eclipse the require ment of justice.
Justice must be done at all costs, if necessary by the transfer of the case from one Court to another.
That is why in Union of India vs Shiromani Gurudwa ra Parbandhak Committee & Ors., ; this Court while sounding a note of caution that the power must be exercised with circumspection observed that the court should not hesitate to act if the ends of justice so demand in an appropriate case.
In the light of the principle enunciated above, we may now consider the case before us.
On a bare perusal of the allegations set out in clauses (a) to (p) of paragraph 4 and clauses (q) to (y) of paragraph 5 of the plaint, which form the basis of the suit, it is evident that the charges of corruption, favouritism and nepotism levelled against the respondent mainly concern the allotment of lands situate in Bangalore and other parts of Karnataka at throw away prices to his close relatives and favoured few besides non resident Indians.
In substance the allegation is that the respondent and his family members pocketed more than Rs.300 crores through fraudulent deals in lands situate in Bangalore and other parts of Karnataka.
There can, therefore, be no doubt that most of the oral as well as the documentary evidence regarding the alleged scandalous deals would be available in Karnataka, more particularly in Bangalore, and not at Bom bay.
If the trial proceeds at 477 Bombay, voluminous evidence will have to be carried to Bombay and several witnesses may have to travel to Bombay to give evidence.
Apart from the inconvenience likely to be caused to the witnesses, the petitioner would also be re quired to incur substantial travel expenses to secure the presence of the witnesses in view of Order XVI Rule 19 of the Code.
And yet, witnesses may be reluctant to travel the long distance to Bombay.
Considerable difficulty may also be experienced in securing discovery and inspection of docu ments.
As the petitioner does not deny the publication of the allegations complained of in the plaint, the burden of establishing his defence to the suit will be on him and he may be required to examine a number of witnesses to dis charge the same.
We have, therefore, no doubt that the petitioner would be handicapped in his defence to the suit if the suit is tried in Bombay.
The ends of justice, there fore, demand that the suit be transferred from the Bombay High Court to the City Civil Court, Bangalore, where most of the documentary evidence and the majority of the witnesses are available.
The respondent in paragraph 20 of the plaint states that since "the impugned allegations have been published through out the nation, including Bombay", the Bombay High Court has jurisdiction to, entertain and try the suit.
The jurisdic tion of the Bombay High Court is, therefore, invoked solely on the ground of publication of the impugned allegations.
It is not the respondent 's case that these allegations had not been published in Karnataka State or in Bangalore where the respondent ordinarily resides.
This also becomes clear from his address given in the cause title of his plaint.
It is not suggested by the respondent in his counter nor was it contended by his counsel that the transfer of the suit will result in substantial prejudice to the respondent.
Since the respondent ordinarily resides in Bangalore and was the Chief Minister of Karnataka during the period the var ious acts of which he is accused took place, the impact of the accusations would be as much if not more on the readers of Bangalore.
There would, therefore, be no dearth of read ers in Bangalore who may have read the offending matters.
We are, therefore, of the opinion that no prejudice, much less substantial prejudice, would be caused to the respondent if the suit is transferred as prayed.
It must however be mentioned that the learned counsel for the respondent argued that the petitioner is seeking transfer of the suit to Bangalore so that he may be able to further defame the respondent.
In this connection he laid stress on the averments in the petition that the 478 suit should be tried in Bangalore as the people of Karnataka are vitally concerned in the outcome of the litigation.
It cannot be denied that the people of that State are indeed vitally interested in the litigation besides the parties themselves but we do not think the petitioner 's request can be spurned on that ground.
Besides in these days of prompt publicity, the apprehension of the learned counsel in this regard appears to be misplaced.
We, therefore, do not see any merit in this contention.
In the result the petition succeeds.
Suit No. 945 of 1989 (Rama Krishna Hegde vs Dr. Subramaniam Swamy) pending on the original side of the Bombay High Court is hereby transferred to the City Civil Court, Bangalore for trial and disposal in accordance with law from the stage at which it is presently pending.
The Bombay High Court will transmit the record of the suit to the City Civil Court, Bangalore within four weeks from the receipt of the order of this Court.
Parties will bear their own costs.
Y. Lal Petition allowed.
| IN-Abs | The Respondent had filed a suit for defamation in the Bombay High Court against the petitioner, claiming Rupees one crore as damages for the injury alleged to have been caused to his reputation by the publication/imputation of certain alleged defamatory statements made by the petitioner at a Press Conference held at New Delhi on January 10, 1989.
The allegation in the plaint was that the petitioner le velled several accusations at the said Press Conference which were widely circulated/reported in the newspapers of January 11, 1989.
In substance the allegation was that the Respondent and his family members pocketed more than Rs.300 crores through fraudulent deals in lands situate in Banga lore and other parts of Karnataka, whereby the respondent favoured his relatives/friends, besides non resident Indi ans.
By the instant petition, filed by the petitioner under section 25.
Code of Civil Procedure, the petitioner prays for the transfer of the said suit pending in Bombay High Court to any Civil Court in Karnataka, preferably the City Civil Court at Bangalore on the ground of forum non conven ience.
In support of the petition it is urged by the peti tioner that: (i) the petitioner 's father maintains a family house at Bangalore; (ii) that all the events that provide the defence to the litigation took place in Karnataka at Bangalore; (iii) that the entire documentary evidence touch ing the alleged acts being in official files and in private custody would be easily available in Bangalore, (iv) that most of the witnesses who are in the know of respondent 's wrongs are residents of Karnataka, more particularly Banga lore; (v) that the discovery and inspection of documents can be conveniently had in Bangalore; (vi) that the evidence relating to telephone tappings done at the behest of the respondent would be available in Karnataka, and (vii) that the people of Karnataka State are vitally interested in the outcome of the litigation.
For these reasons, amongst oth ers, the petitioner prays for the Transfer of the suit from Bombay to Bangalore.
470 The respondent while opposing the transfer of the suit contends that the petitioner having aligned himself with the Ruling Party at the Centre was indulging in making intemper ate, slanderous and false allegations against him with a view to maligning him and advancing the political interest of the Ruling Party at the Centre.
According to him the hearing of the suit has been delayed as the petitioner has not filed his written statement.
The respondent further contends that being the dominus litis he was entitled to choose the forum.
Allowing the petition, this Court, HELD: The Supreme Court is empowered at any stage to transfer any suit, appeal or other proceeding from a High Court or other Civil Court in one State to a High Court or other Civil Court of another State if it is satisfied that such an Order is expedient for the ends of justice.
[474H; 475A] The question of expediency would depend on the facts and circumstances of each case but the paramount consideration for the exercise of power must be to meet the ends of jus tice.
[476C] Words of wide amplitude for the ends of justice have been advisedly used to leave the matter to the discretion of the apex court as it is not possible to conceive of all situations requiring or justifying the exercise of power.
[475D] If the ends of justice so demand, the case may be trans ferred under this provision notwithstanding the right of dominus litus to choose the forum and considerations of plaintiff 's convenience, etc.
cannot eclipse the requirement of justice.
Justice must be done at all costs, if necessary by the transfer of the case from one Court to another.
[476D E] The ends of justice in the instant case demand that the suit be transferred from the Bombay High Court to the City Civil Court, Bangalore, where most of the documentary evi dence and the majority of witnesses are available.
Since the respondent ordinarily resides in Bangalore and was the Chief Minister of Karnataka during the period the various acts of which he is accused of took place, the impact of the accusa tion would be as much, if not more, on the readers of Banga lore.
No prejudice, much less substantial prejudice would be caused to the respondent if the suit is transferred as prayed.
[477C & F G] 471 Sanjay Gandhi and Anr.
vs Rani Jethmalani, ; and Union of India vs Shrimani Gurdwara Prabandhak Committee and Ors.
, ; , referred to.
|
ivil Appeal No. 4195 of 1989.
From the Judgment and Order dated 16.2.1987 of the Andhra Pradesh High Court in C.R.P. No. 3750 of 1984.
B. Kanta Rao for the Appellant.
M.S. Ganesh for the Respondents.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
We grant special leave and proceed to dispose of the appeal.
In O.S. No. 821/1973, there was ex parte decree against the appellant for payment of Rs.2,000 and cost.
In execution of the decree, the appellant 's land section No.116 at Bayanguda village measuring 10 acres was brought to Court sale.
His small farm house was also located in the land.
In the auc tion held the respondent purchased the land for Rs. 17,000.
The sale was subject to the prior mortgage for Rs.2,000 in favour of the Land mortgage Bank Jangareddigudem.
On 31 May 1976 the sale was confirmed.
On 26 July 1976, the appellant filed application under Order XXI Rule 90 for setting aside the sale.
He impeached the auction sale broadly on three grounds namely: (i) that he was the owner of only one acre of land and the remaining 9 acres in the said survey number belonged to his father Siddaiah, (ii) that the land was worth about Rs.70,000 but it was sold for a very low price of Rs. 17,000 by fraudulent procedure followed by the au thorities, and (iii) that he was not served with notice before attachment or sale.
453 In support of the above allegations, the appellant entered the witness box as PW 2.
He has also examined four other witnesses besides producing documentary evidence marked as exhibit A 1 to A 13.
The auction purchaser in turn has examined three witnesses.
On appraisal of the evidence, the executing court the Principal District Munsif, Kovvur, rejected the application of the appellant.
He held that the sale was not vitiated by fraud or irregularity.
The appeal against that order was dismissed by learned Subordinate Judge at Kovvur.
Before the appellate court, one other contention was argued on behalf of the appellant.
It was contended that the executing court ought to have sold only such portion of the land as would satisfy the decretal dues and the sale of the entire 10 acres was illegal and without authority.
The appellate court rejected that contention for the reason that it is a single piece of land and could not have been divided into parcels.
The High Court of Andhra Pradesh also dismissed the appel lant 's revision, but expressed no opinion as to whether a portion of the land could have been sold to satisfy the decree.
Hence this appeal.
The principal question that has been highlighted before us relates to the legality of the sale of 10 acres of land without considering whether a portion of the land could have been sold to satisfy the decree.
It is said that the total sum claimed in the execution was Rs.2,395.50.
The relevant provision which has a bearing on the question is Rule 64 Order XXI of the Code of Civil Procedure and it reads as follows: "Order XXI Rule 64: Power to order property attached to be sold and proceeds to be paid to persons entitled Any Court executing a decree may order that any property attached by it and liable to sale, or such portion thereof as may seem necessary to satisfy the decree, shall be sold, and that the proceeds of such sale, or a sufficient portion thereof, shall be paid to the party entitled under the decree to receive the same.
" It is of importance to note from this provision that in all execution proceedings, the Court has to first decide whether it is necessary to bring the entire attached proper ty to sale or such portion thereof as may seem necessary to satisfy the decree.
If the property is large and the decree to be satisfied is small, the Court must bring only such 454 portion of the property, the proceeds of which would be sufficient to satisfy the claim of the decree holder.
It is immaterial whether the property is one or several.
Even if the property is one, if a separate portion could be sold without violating any provision of law only such portion of the property should be sold.
This, in our opinion, is not just a discretion, but an obligation imposed on the Court.
Care must be taken to put only such portion of the property to sale the consideration of which is sufficient to meet the claim in the execution petition.
The sale held without examining this aspect and not in conformity with this re quirement would be illegal and without jurisdiction.
In Takkaseela Pedda Subba Reddy vs Pujari Padmavathamma and Ors., at 340; this Court after examin ing the scope of Rule 64 of Order XXI CPC has taken a simi lar view: "Under this provision the executing Court derives jurisdiction to sell properties at tached only to the point at which the decree is fully satisfied.
The words 'necessary to satisfy the decree ' clearly indicate that no sale can be allowed beyond the decretal amount mentioned in the sale proclamation.
In other words, where the sale fetches a price equal to or higher than the amount mentioned in the sale proclamation and is sufficient to satisfy the decree, no further sale should be held and the court should stop at that stage.
" We may again hark back to the case of the appellant.
The amount claimed in the execution petition was about Rs.2,400.
To realize that amount the land measuring 10 acres was sold for Rs. 17,000.
The appellate court has stated that the land being one, could not have been divided.
Shri Ganesh, learned counsel for the respondent sought to justify that view.
But we find it difficult to appreciate that reason.
It seems to be against common sense.
The land is not indivisible.
Nor division is impracticable or undesirable.
Out of 10 acres, the Court could have conveniently demarcated a portion and sold it.
Unfortunately, no such attempt was made and it was not even thought of.
The Court has blind fold sold the entire property.
This is a usual feature which we have noticed in most of the execution cases.
We must deprecate this tendency.
There is a duty cast upon .the
Court to sell only such property or a portion thereof as necessary to satisfy the decree.
It is a mandate of the legislature which cannot be ignored.
We cannot, therefore, sustain the im pugned sale.
It must be set aside being in contravention of the provisions of Rule 64, Order XXI CPC.
455 In the result, we allow the appeal with costs.
In rever sal of the orders of the courts below, we set aside the impugned sale.
We direct the Executing Court first to put the appellant in possession of the land in question and then refund the sale amount to the auction purchaser if it is in deposit.
The Court, thereafter may proceed to execute the decree according to law and in the light of the observations made.
This order shah be complied with within two months from the date of receipts of this order.
P.S.S. Appeal allowed.
| IN-Abs | Rule 64, Order XXI CPC empowers the Court executing a decree to bring to sale any property attached by it or such portion thereof as may seem necessary to satisfy the decree.
The appellant 's land measuring 10 acres was brought to court sale in execution of a decree.
The respondent purchased the land for Rs. 17,000.
The sale was subject to a prior mort gage for Rs.2,000.
The appellant 's application under Order XXI, Rule 90 for setting aside the sale was rejected by the executing court on the ground that the sale was not vitiated by fraud or irregularity.
The appeal against the order was dismissed by the Subordinate Judge.
Before the appellate court the con tention taken on behalf of the appellant was that the exe cuting court ought to have sold only such portion of the land as would satisfy the decretal dues and the sale of the entire 10 acres was illegal and without authority.
The court rejected that contention on the ground that it was a single piece of land and could not have been divided into parcels.
The High Court also dismissed the revision.
Allowing the appeal by special leave, HELD: In all execution proceedings, the court has to first decide whether it is necessary to bring the entire attached property to sale or such portion thereof as may seem necessary to satisfy the decree.
If the property is large and the decree to be satisfied is small, the court must bring only such portion of the property to sale the proceeds of which would be sufficient to satisfy the claim of the decree holder.
It is a mandate of the legislature which cannot be ignored.
Any sale held without examining this aspect and not in conformity with this requirement would thus be illegal and without jurisdiction.
[453H; In the instant case, the amount claimed in the execution petition was about Rs.2,400.
To realize that amount the land measuring 10 acres was sold for Rs.17,000.
The land is not indivisible.
Nor division is impracticable or undesirable.
Out of 10 acres, the court could have conveniently demarcat ed a portion and sold it.
[454E F] The sale must, therefore, be set aside being in contra vention of the provision of Rule 64, Order XXI CPC.
[454H] Takkaseela Pedda Subba Reddy vs Pujari Padmavathamma & Ors., at 340, referred to.
|
: Criminal Appeal Nos.
600 601 of 1989.
From the Judgment and Order dated 13.3.1986 of the Punjab and Haryana High Court in Crl.
No. 434 and 1295 of 1984.
Ms. Geeta Luthra, Ms. Pinky Anand and D.N. Goburdhah for the Appellant.
R.L. Kohli and R.C. Kohli for the Respondents.
The following Judgments of the Court were delivered SABYASACHI MUKHARJI, J. Ravinder Kaur, daughter of Gurbachan Singh, resident of Amritsar, was married to Satpal Singh in November, 1982.
She died on 25th June, 1983 at about 2.30 p.m.
She, it was alleged, committed suicide because of the cruel behaviour of her in laws soon after her marriage.
She used to visit her parents ' at Amritsar occa sionally and during those visits she used to tell them that there was demand for dowry and also taunting of her by the members of the family of her in laws and also insinuation that she was carrying on illegitimate child.
There are sufficient, relevant and acceptable evidence to that effect.
It is alleged that provoked by the aforesaid conduct and behaviour , she committed suicide.
The father in law, moth er in law and the husband of the accused have been the abettors to the crime.
The evidence further established that she died of second to third degree burns on the body, and there was sprawling of kerosene oil on her body and the body was burnt by fire.
Accused No. 3 Smt.
Kamal Dip Kaur, the mother in law of the deceased and the mother of the accused Satpal Singh, stated in her statement under section 3 13 Cr.
P.C. that she was lying in her house at that time and the de ceased was 295 cooking food on a kerosene stove, and as such the deceased caught fire accidentally.
Learned Addl.
Sessions Judge held that there was absence of burn injuries on the fingertips of the mother in law and other members of the family.
As mentioned before, the de ceased was married in November, 1982.
After marriage, she used to stay in the house of her in laws at Raja Sansi.
The deceased used to visit the house of her parents at Amritsar occasionally, as noted before.
During these visits she used to tell them that her in laws were not happy with the dowry given to the latter.
It is further on evidence. that she complained that her in laws used to taunt her and insisted her tO bring more dowry.
It is stated that she complained that the in laws taunted her that at the time of the mar riage, her parents did not serve proper meals to the in laws and their guests.
It is further stated that the accused used to tell her that they had been offered by fridge etc.
by other parties for the marriage of the accused while she had not brought dowry expected from her parents.
It is also on evidence that she was often openly threatened that she would be turned out of the house in case she did not bring more articles.
These were all established by the evidence of Gurbachan Singh, father of the deceased and his two daugh ters.
It was insinuated of her by the accused that she was carrying an illegitimate child.
On the totality of these evidence on record, it was held by the learned Sessions Judge that the accused were guilty of abetment to suicide and as such punishable under section 306 of the I.P.C.
The High Court on appeal was of the view that the guilt of the accused had not been proved, and as such acquitted them.
The first thing that is necessary for proving the of fence is the fact of suicide.
Abetment is a separate and distinct offence provided the thing abetted is an offence.
Abetment does not involve the actual commission of the crime abetted; it is a crime apart.
See the observations of Baren dra Kumar Ghosh, It was contended on behalf of the accused that there was no direct evidence of the act of suicide by Ravinder Kaur.
There, indeed, could not be in the circumstances in which she died.
She was in the house of her in laws.
There is ample and sufficient evidence that she had complained that she was taunted for bringing meager dowry and that even insinuated that she was carrying 'an illegitimate child '.
The aforesaid facts stand established by cogent and reliable evidence.
These are grave and serious provocation enough for an ordinary woman in the Indian set up, to do 296 what the deceased is alleged.to have done.
There is also evidence that the persons in the house of her in laws in cluding the mother in law mother of the accused Satpal Singh, made no attempt to save her from the burn injuries.
The absence of any burn injury in the hands of the people around, indicates and establishes that there was no attempt to save the deceased though she was seen being burnt.
The evidence of attitude and conduct of the in laws the father in law, mother in law and the husband after Ravinder Kaur, the deceased, got burns in not informing the parents and not taking prompt steps to take her to hospital for giving medical assistance corroborate the inference that these accused connived and abetted the crime.
Criminal charges must be brought home and proved beyond all reasona ble doubt.
While civil case may be proved by mere preponder ance of evidence, in criminal cases the prosecution must prove the charge beyond reasonable doubt.
See Mancini vs Director of Public Prosecutions, , Woolmington vs The Director of Public Prosecutions; , It is true even today, as much as it was before.
There must not be any 'reasonable doubt ' about the guilt of the accused in respect of the particular offence charged.
The courts must strictly be satisfied that no innocent person, innocent in the sense of not being guilty of the offence of which he is charged, is convicted, even at the risk of letting of some guilty persons.
Even after the introduction of section 498A of the I.P.C. and section 113A of the Indian Evidence Act, the proof must be beyond any shadow of reasonable doubt.
There is a higher standard of proof in criminal cases than in civil cases, but there is no absolute standard in either of the cases.
See the observations of Lord Denning in Bater vs Bater, at 459 but the doubt must be of a reasonable man.
The standard adopted must be the standard adopted by a prudent man which, of course, may vary from case to case, circumstances to circumstances.
Exaggerated devotion to the rule of benefit of doubt must not nurture fancilful doubts or lingering suspicions and thereby destroy social defence.
Justice cannot be made sterile on the plea that it is better to let hundred guilty escape than punish an innocent.
Letting guilty escape is not doing justice, according to law.
The conscience of the court can never be bound by any rule but that is coming itself dictates the consciousness and prudent exercise of the judgment.
Reasonable doubt is simply that degree of doubt which would permit a reasonable and just man to come to a conclusion.
Reasonableness of the doubt must be commensurate with the nature of the offence to be investigated.
297 Having regard to the circumstances of the case, there is no direct evidence indicating the circumstances in which the death took place, the conduct of the accused and the nature of the crime with which the accused was charged, there cannot be any scope of doubt that the learned Sessions Judge was right and the conviction was properly made.
This is not a case where there could be two views possible on the facts found and on the facts which could not possibly be found because of i,the nature of the offence.
The fact the two view are reasonably possible, is not established by the fact that two different conclusions are reached by two adjudica tory authorities.
The factum of that may be only a piece of evidence, but whether two views at all are possible or not, has to be judged in all circumstances by the Judge, by the logic of the facts found in the background of law.
For the reasons aforesaid, I respectfully agree with the judgment and order proposed by my learned brother.
RAY, J. Special leave granted.
These appeals are at the instance of Gurbachan Singh, the complainant against the judgment and order passed in Criminal Appeal No. 434 SB of 1984 by the High Court of Punjab & Haryana at Chandigarh acquitting the accused re spondents of the charge under section 306 of the Indian Penal Code on setting aside the conviction and sentence passed by the Additional Session Judge on August 9, 1984 convicting and sentencing all the accused.
The appeal was allowed on holding that there was no evidence on record that the ac cused at the time of commission of suicide by Ravinder Kant, in any way instigated or abetted her to commit suicide and as such the prosecution failed to establish the charge against the accused and their conviction consequently can not be sustained.
The prosecution case is that the deceased, Ravinder Kaur, daughter of Gurbachan Singh, the complainant was married to Satpal Singh in November, 1982.
After marriage, Ravinder Kaur started living in the house of her in laws at Raja Sansi.
She used to visit the house of her parents at Amritsar occasionally and during these visits, she used to tell them that her in laws were not happy with the dowry given to her and they used to taunt her and insisted her to bring more dowry and that they even used to taunt her that her parents at the time of the marriage did not serve them with proper meals.
The accused also used to tell her that they were being offered Fridge etc.
by the other parties in the marriage of Accused Satpal Singh and that she has not brought the dowry expected from her parents.
She was often told 298 by them that she would be turned out of the house, in case she did not bring more articles.
In November, 1982, Gurbachan Singh visited the house of her in laws at Raja Sansi where his daughter complained that the behaviour of her in laws towards her was not cordial and that they were maltreating her for bringing insufficient dowry and they even taunted her that she was carrying an illegitimate child.
Hearing these complaints from her daugh ter, Gurbachan Singh brought her daughter to his house at Amritsar, one day prior to Baisakhi, 1983 and his daughter continued to remain at his house for about eight days.
There .
after Satpal Singh, his father Harbhajan Singh, accused and his mother Smt.
Kanwal Dip Kaur along with Harjit Singh, and Mohinder Singh, maternal uncles of Satpal Singh came to the house of Gurbachan Singh at Amritsar and pursuaded that he should send Ravinder kaur with them where upon Gurbachan Singh told them that his daughter complained against the ill treatment and cruel behaviour towards her for bringing insufficient dowry and they also taunted her for this as well as for her illegitimate child and put pressure on her to bring more dowry.
So he was reluctant to send her daughter back to her in laws.
Gurbachan Singh called Ved Prakash, President of the Mohalla Committee, Smt.
Raj Kumari, a social worker living in the neighbourhood of Gurbachan Singh and one Ramesh Kumar to his house and all these complaints and grievances were repeated in presence of these persons.
The accused assured him that in future they would not maltreat and taunt her and that he would not receive any complaint against them.
They also assured him that in future they would not ask her to bring more dowry.
On these assurances of the accused, Gurbachan Singh sent his daughter with the accused to Raja Sansi, the house of the accused.
For about two months, Gurbachan Singh did not receive any information from his daughter and so he sent his two daughters Surjit Kaur and Sajinder Kaur to Raja Sansi to the house of the in:laws of Ravinder Kaur to enquire about her welfare.
The said daughters of Gurbachan Singh went to the house of the in laws of Ravinder Kaur on June 23, 1983 that is, two days prior to the death of Ravinder Kaur.
The de ceased complained to them about the torture as well as cruel behaviour of her in laws, as before and they have not stopped maltreating her and torturing her and she was not happy there.
On June 25, 1983 at about 6.30 p.m., Mohinder Singh, maternal uncle of Satpal Singh came to the shop of Gurbachan Singh at Amritsar and informed him that his daugh ter committed suicide by sprinkling 299 kerosene oil on her body and then setting herself on fire and that she was lying at S.G.T.B. Hospital, Amritsar.
Gurbachan Singh immediately went to the hospital and found the dead body of her daughter lying in the dead house.
It has been alleged that Ravinder Kaur committed suicide on June 25, 1983 at 2.30 p.m. having fed up with the cruel behaviour of her in laws.
The appellant alongwith the mem bers of his family stayed in the hospital.
On June 26, 1983, Gurmeet Singh, A.S.I. Police Station, Ajnala came to the dead house at Amritsar at about 5 p.m. and examined the dead body of Ravinder Kaur.
He recorded the statements of Gurba chan Singh, Ved Prakash and Ramesh Kumar.
The statement of Gurbachan Singh was reproduced in the Roznamcha, and the statements of Gurbachan Singh and Ved Prakash, President of the Mohalla Sudhar Committee and Ramesh Kumar though disclosed the commission of a cognizable offence by the accused yet Gurmit Singn, A.S.I. and even Shri Iqbal Singh Dhillon, D.S.P., Ajnala Police Station did not register the case for extraneous reasons.
On June 27, 1983, Dr. Gurdip Kumar Uppal, Medical Offi cer, Police Hospital, Amritsar conducted the post mortem examination on the dead body of Ravinder Kaur and found 2nd to third degree burns on the body of deceased.
Gurbachan Singh alongwith his daughters and Raj Kumari, Ramesh Kumar, Ved Prakash and others met the S.S.P. Amritsar in this regard and the investigation of the case was then entrusted by S.S.P. to Shri Surjit Singh, S.P. (Head Quar ters) Amritsar who summoned Gurbachan Singh and other per sons and recorded their statements on July 23, 1983.
All the three accused were charged for an offence under section 306 of the Indian Penal Code and they pleaded not guilty to the charge framed against them.
The accused No. 3 Smt.
Kanwal Dip Kaur, the mother of the accused, Satpal Singh stated in her statement under section 313 Cr.
P.C. that she was lying in her house at the time and the deceased was cooking food in the kitchen on a kerosene stove and she caught fire accidentally.
The learned Additional Sessions Judge held that the absence of burn injuries on the fingertips of the mother in law or other members of the family as evident from the statement of D.W. 1, Jaswant Singh, 300 ruled out the story of accidental fire as set up by the defence.
He further held referring to the provisions of section 113A of the Evidence Act that having regard to the facts and circumstances of the case it may be presumed that the ac cused persons have abetted the suicide committed by the deceased and they fail to reverse this prosecution case by any evidence.
Accordingly, the Additional Sessions Judge, Amritsar convicted the accused under section 306 IPC and sen tenced them to suffer rigorous imprisonment for five years each and to pay a fine of Rs.2,000 each, in default of payment of fine the accused shall be further liable to rigorous imprisonment for four months.
The accused respondents preferred an appeal being Crimi nal Appeal No. 454 of 1984 in the High Court of Punjab and Haryana.
The appeal was allowed and the conviction and sentence was set aside on the ground that the prosecution failed to establish the charge against the accused persons.
Hence this appeal by special leave has been filed by the complainant.
It has been contended by the learned counsel appearing on behalf of the appellant that the cruel behaviour, mal treatment and taunts for not bringing sufficient dowry have been made to the deceased, Ravinder Kaur, soon after her coming to the house of her in laws.
It has also been urged that in November, 1982 she complained of her in laws ' iII treatment and taunts to his father and her father took her to his house.
It has also been urged that the accused Satpal Singh and his father accused Harbhajan Singh and other relatives of the accused met the deceased father at his house and requested him to send his daughter to the house of her in laws and assured them that they would not maltreat her or taunt her or torture her for not bringing sufficient dowry.
These assurances were given in the presence of Ved Prakash, the President of the Mohalla Sudhar Committee, and Raj Kumari, a social worker and one Ramesh Kumar.
Gurbachan Singh, father of the deceased on these assurances given by the accused and their relations sent his daughter, Ravinder Kuar to her in laws house.
It has also been urged that on June 23, 1983 the two daughters Surjit Kaur and Sujinder Kaur were sent by Gurbachan Singh to the house of the in laws of Ravinder Kaur to enquire about her welfare.
Surjit Kaur, PW 7 stated in her statement under section 161 Cr.
P.C. that her sister Ravinder Kaur complained them about the same iII treatment by her husband continuing in the same manner as before and as such she was not happy.
This was reported by them to their father at Amritsar.
It has also been urged that all the three accused taunted the deceased, Ravinder Kaur that she was carrying an illegitimate child.
Being 301 depressed with these taunts and iII treatment the deceased committed suicide by sprinkling kerosene on her person and setting her to fire.
The evidences of PW 4 Gurbachan Singh, father of the deceased and the evidence of PW 7 Surjeet Kaur as well as evidence of PW 6 Raj Kumari were duly considered by the trial court and the trial court clearly found the accused persons guilty of the offence of abetting the sui cide committed by the deceased.
The court of appeal below had wrongly found that the prosecution could not prove charge against the accused and set aside the order of con viction and sentence made by the trial court and acquitted the accused.
It has been urged in this connection that the defence that it was a case of accidental fire and not of suicide was also not believed by the trial court and the trial court gave very cogent and plausible reasons for not believing this story and holding that it was a case of suicide committed by the deceased Ravinder Kaur by the taunts and ill treatment made to her by her in laws and this forced her to take her own life by suicide.
It has been submitted that the accused have abetted the commission of suicide by Ravinder Kaur, deceased and the accused are, therefore, guilty of the said charge.
The order of acquittal made by the High Court is not sustainable in these circum stances.
The learned counsel, Mr. R.C. Kohli has made three fold submissions before this Court.
The first submission is that the case of suicide committed by the deceased Ravinder Kaur was not proved and as such the conviction on the charge of section 306 I.P.C. as made by the trial court was not sustain able.
He has further submitted that the prosecution has not proved beyond reasonable doubts that the deceased committed suicide.
The next submission made is that the evidences produced on behalf of the prosecution are meagre and do not prove that the accused had abetted the commission of suicide by the deceased Ravinder Kaur.
The prosecution did not prove that there was any instigation by the accused persons charged with the offence in this case.
The High Court has rightly held that the prosecution failed to prove the ingre dients of section 306 of the IPC and acquitted the accused of the charge under section 306.
This order of acquittal should not be interfered with by this Court in this appeal.
It has been lastly contended that if two reasonable views could be taken of evidences, one in favour of the accused and the other against them the appellate court should not interfere in such case and set aside the order of acquittal.
As regards the first submission that the case of suicide has not been proved, it is relevant to mention that in the FIR (exhibit PF) lodged by the complainant it has been specifi cally stated that due to constant 302 harassment of Ravinder Kaur by the accused persons for having brought less dowry in her marriage as well as due to constant taunts and also torture, the deceased committed suicide by pouring kerosene oil on her and burnt herself and afterwards she died.
It has been further stated in the FIR that the complainant apprehended that some quarrel must have happened on the day of the incident between his daughter, Ravinder Kaur and her husband Satpal Singh, father in law Harbhajan Singh and mother in law Kanwaldip Kaur before she took the extreme step.
P.W. 4, Gurbachan Singh has also stated in his deposition that his daughter used to tell them that her husband, father in law and mother in law always taunted her saying that her parents had not given sufficient dowry during the marriage and had not even served them with proper meals at the time of marriage.
He further stated that on 25th June, 1983 at 6.30 p.m. Mohinder Singh, maternal uncle of Satpal Singh came to shop and told him that his daughter had committed suicide by sprinkling kerosene oil on her body and then setting her on fire.
In his statement under Section 161, Cr.
P.C. recorded on 23rd July, 1983 he also stated that her two daughters namely Sajinder Kaur and Surjeet Kaur (P.W. 7) who visited Raja Sansi to meet their sister, Ravinder Kaur two days before the incident were told by her deceased daughter that her in laws often taunted her for not bringing sufficient dowry.
It has also been stated by him that the accused taunted her daughter saying that she was carrying an illegal child which is a great defame for them.
It has also been stated that "due to the bad treatment meted out towards his daughter Ravinder Kaur at the hands of her husband, Satpal Singh, her mother inlaw, Kanwaldip Kaur and her father in law, Harbhajan Singh that she had not brought scooter and fridge and had brought less dowry in her marriage they had forced her to put kerosene oil on her body and commit suicide and as they often taunted her saying that she had begotten immoral and illegal pregnancy and for this reason she had committed suicide and thus had lost her life." Furthermore, though the house of the accused persons is not far off yet the information was given not by his son in law or other members of the family promptly but it was given by the maternal uncle of the son in law, Satpal Singh at 6.30 p.m. to the appellant although the incident occurred at about 2.30 p.m.
It is also evident that the deceased, Ravinder Kaur who had second to third degree burns on her person was brought to the hospital in the evening and the doctor, P.W. I immediately examined her and declared that she was already dead.
Another most pertinent question which has been decided by the Trial Court is that the de fence story as stated by her mother in law, 303 Kanwaldip Kaur in her examination under section 3 13 Cr.
P.C. that it was a case of accidental fire and not a case of suicide, was falsified by the absence of burn injuries on the finger tips of the mother in law or other members of the family.
The Trial Court rightly held "that the intending circumstances show that she was not allowed to move till the process of burning had become irrecoverable and till she succumbed to her injuries.
" We do not find any infirmity in this finding and we also hold on consideration and appraisement of the evidences as well as the circumstances set out hereinbefore that it was not a case of accidental fire but a case of suicide commit ted by the deceased Ravinder Kaur being constantly abused, taunted for bringing less dowry and also being defamed for carrying an illegitimate child.
It is pertinent to mention that in the appeal before the High Court it was not urged on behalf of the accused that the case of suicide was not proved and as such there was no finding by the High Court on this score.
In such circumstances this argument is totally devoid of merit and as such it is not sustainable.
It is convenient to refer in this connection the deci sion cited at the bar in Wazir Chand and Another vs State of Haryana with State of Haryana vs Wazir Chand and Another, to which one of us (B.C. Ray, J) was a party, wherein it has been held that "a plain reading of this provision (section 306 I.P.C) shows that before a person can be convicted of abetting the suicide of any other person, it must be established that such other person committed sui cide.
" This decision is not at all applicable to the instant case in view of our specific finding that the evidence adduced on behalf of the prosecution clearly establish that the deceased Ravinder Kaur committed suicide at the instiga tion and abetment of the accused persons in the commission of the said offence.
The next argument advanced is that the evidences were too meagre and unreliable to sustain the conviction.
It has also been urged that the High Court considered the evidences and came to a reasonable finding that the prosecution could not prove the ingredients of Section 306, IPC as there was no instigation by the accused nor there was any conspiracy for the commission of that offence.
The High Court arrived at this finding on some contradictions in the statement of the evidences of P.W. 4, Gurbachan Singh, father of the deceased and of P.W. 7, Surjeet Kaur, sister of the deceased respectively with their statements made under Section 161 Cr.
P.C. 304 It is convenient to refer in this connection the obser vation made by this Court in the case of Sat Pal vs Delhi Administration, ; at 30 to the following effect: "It emerges clear that on a criminal prosecu tion when a witness is cross examined and contradicted with the leave of the court, by the party calling him, his evidence cannot, as a matter of law, be treated as washed off the record altogether.
It is for the Judge of fact to consider in each case whether as a result of such cross examination and contradiction, the witness stands thoroughly discredited or can still be believed in regard to a part of his testimony.
If the Judge finds that in the process, the credit of the witness has not been completely shaken, he may, after reading and considering the evidence of the witness, as a whole, with due caution and care, accept, in the light of the other evidence on the record that part of his testimony which he finds to be creditworthy and act upon it.
" We have already referred to the material portions of the FIR as well as all the statements made by P.W. 4 in his evidence as well as his statement under Section 161 Cr.
P.C. as well as the evidence of P.W. 7 and her statement under Section 161 Cr.
On a plain reading of these statements it will be crystal clear that the accused persons since the date when the deceased, Ravinder Kaur went to her in laws ' house after the marriage, was mal treated and was constantly taunted, harassed and tortured for not bringing sufficient dowry from her father and she was taunted for carrying an illegitimate child.
The appellant sometime in November, 1982 went to her in laws house.
His daughter, Ravinder Kaur complained to him about this torture and constant taunts for not bringing sufficient dowry.
On hearing this, her father brought her to his house and after eight days the accused persons, Satpal Singh, his father Harbhajhan Singh and two maternal uncles came to the house of the appellant and requested him to send his daughter with them assuring that there would be no further taunts or any iII treatment by the respondents.
The President of the Mohalla Sudhar Committee, Ved Prakash, P.W. 5 and a social worker, Smt.
Raj Kumari, P.W. 6 and another person Ramesh Kumar of the same village were called in by Gurbachan Singh and in their presence all these talks were held.
On the assurances given, Gurbachan Singh sent his daughter with them.
It is also in evidence that as no information of her was received, Gurbachan Singh sent his two other daughters namely Surjeet Kaur, P.W. 7 and Sajinder Kaur, to the 305 house of the in laws of the deceased Ravinder Kaur to en quire about her welfare.
Ravinder Kaur told them that there was no improvement in the treatment meted out to her and she was being taunted and tortured by her in laws in the same way and she was not happy.
Two days thereafter i.e. on 25th June, 1983 at 2.30 P.M. this unfortunate incident occurred.
P.W. 7, Gurjeet Kaur also stated in her deposition to the same effect.
In her statement under Section 161 Cr.
P.C. she also stated categorically that after about one month of the marriage whenever Ravinder Kaur met her she told that her in laws i.e. the respondents were not treating her well for bringing less dowry.
She was also told that the respondents were demanding refrigerator and a scooter.
They had also taunted that she was having illegitimate child.
She further stated that two days prior to the present occurrence she and her sister, Sajinder Kaur went to Raja Sansi to enquire about the welfare of our sister, Ravinder Kaur who told them weepingly that she was being beaten by the accused and again was mal treated for bringing less dowry and scooter and fridge etc.
She further stated that the respondents were leveling allegations that she had been carrying an illegiti mate child and that she should die.
It was also stated by her that her mother in law, Kanwaldip Kaur was present in the house and she was abusing Ravinder Kaur in their presence.
The learned Sessions Judge after carefully considering and weighing the evidences held that the witnesses P.W. 4, Gurbachan Singh, P.W. 5, Ved Prakash, President of the Mohalla Sudhar Committee, P.W. 6, Smt.
Raj Kumari, social worker and P.W. 7, Surjeet Kaur clearly proved that the respondents mal treated Ravinder Kaur for bringing less dowry and they even tortured her for carrying an illegiti mate child.
The said witnesses testified to the greedy and lusty nature of the respondents that they were persistently demanding more money.
It has also been held that the worst part of the cruelty was that she was even taunted for carry ing an illegitimate child.
The Trial Court also held that a respectable lady cannot bear this kind of false allegation levelled against her and this must have mentally tortured her.
Thus the persistent demands of the accused for more money, their tortures and taunts amounted to instigation and abetment that compelled her to do away with her life.
This finding was arrived at by the learned Sessions Judge on a proper appreciation of the evidences adduced by the prosecution.
The High Court without properly considering and weighing the evidences of the prosecution witnesses and on a wrong appreciation of the evidences found that the prosecution failed to prove the ingredients of 306 Section 306 of I.P.C.
It was also held that there was no evidence on record that the accused at the time of commis sion of suicide by Ravinder Kaur, deceased in any way insti gated or abetted her to commit suicide even though it has been brought but in evidences that the deceased was being maltreated by the accused continuously after her coming to the house of her in laws.
It was further held that the prosecution has singularly failed to establish the charge against the accused and their conviction and sentences were consequently unsustainable.
We have already stated hereinfore that P.W. 4, Gurbachan Singh, P.W. 7, Surjeet Kaur have clearly stated in their depositions about the ill treatment, torture and the cruel behaviour meted out to the deceased Ravinder Kaur which instigated her to take the extreme step of putting an end to her life by sprinkling kerosene oil on her body and setting fire.
We have also stated hereinbefore that though the incident occurred at 2.30 P.M. the information of the death of Ravinder Kaur by burning was given to her father, Gurba chan Singh at 6.30 P.M. in his shop at Amritsar.
Gurbachan Singh with members of his family immediately rushed to the hospital and found the dead body of her daughter in the dead house of the hospital.
It is also in evidence that Ravinder Kaur was brought to the hospital after much delay when she was already dead.
The Trial Court rightly held that in such cases direct evidence is hardly available.
It is the circumstantial evidence and the conduct of the accused persons which are to be taken into consideration for adjudicating upon the trust fulness or otherwise of the prosecution case.
We have already referred to hereinbefore the evidences of the prosecution witnesses who clearly testified to the greedy and lusty nature of the accused in that they persist ently taunted the deceased and tortured her for not having brought sufficient dowry from her father.
It is also in evidence that they also taunted her for carrying an illegit imate child.
All these tortures and taunts caused depression to her mind and drove her to take the extreme step of put ting an end to her life by sprinkling kerosene oil on her person and setting fire.
Circumstantial evidence as well as the evidences of the prosecution witnesses clearly prove beyond reasonable doubt that the accused persons instigated and abetted Ravinder Kaur, deceased in the commission of the offence by committing suicide by burning herself.
The find ings arrived at by the Trial Court after considering and weighing 307 the entire evidences are unexceptional.
The findings arrived at by the High Court without considering properly the cir cumstantial evidence as well as the evidences of the prose cution witnesses cannot be sustained.
As such the findings of the High Court are liable to be reversed and set aside.
The High Court drew an inference from the conduct of Gurbachan Singh, P.W. 4 in making a delay of about 24 hours after receipt of the information regarding her daughter 's death to make a statement to the police about the incident with lodging the F.I.R. on the same date, i.e. June 25, 1983 or on the following morning.
The High Court, therefore, held that all these circumstances would raise considerable doubt regarding the veracity of the evidence of these two witness es (P.W. 4 and P.W. 7) and point an infirmity in their evidence as would render it unsafe to base the conviction of the accused.
It is in evidence of P.W. 4 that he was intimate about the death of his daughter by committing suicide, by the maternal uncle of Satpal Singh, son in law on June 25, 1983 at about 5.30 p.m.
He immediately rushed to the hospital with members of his family where his daughter was brought.
It is also in his evidence that he stayed there the whole night with his wife and other members of his family near the dead body of his deceased daughter and also on the next day till the dead body was handed over to him after the comple tion of post martem in the afternoon.
The Assistant Sub Inspector of Police of Ajnala Police Station reached SGTB Hospital on the next day i.e. on June 26, 1983 and got his statement recorded there.
It has been rightly held by the Additional Sessions Judge that in the circumstances it cannot be said that there has been any delay in reporting the matter to the police.
We fully accept this finding of the Additional Sessions Judge and we also held that the delay in lodging the FIR in the above circumstances does not raise any doubt regarding the veracity of the said two witnesses and there is no infirmity in the evidences of P.W. 4 and P.W. 7 which would render them unsafe to base the conviction of the accused as wrongly observed by the High Court.
It is also convenient to refer to this connection to the provisions of Section 113A of which provide that: "113 A. Presumption as to abetment of suicide by a married women When the question is whether the commission of suicide by a woman had been abetted by her husband or any rela tive of her husband and it is shown that 308 she had committed suicide within a period of seven years from the date of her marriage and that her husband or such relative of her husband had subjected her to cruelty, the court may presume, having regard to all the other circumstances of the case, that such suicide had been abetted by her husband or by such relative of her husband." In the instant case the deceased Ravinder Kaur was married to the accused, Satpal Singh in November, 1982 and she committed suicide on June 25, 1983.
It has also been found on a consideration of the circumstantial evidence that she was compelled to take the extreme step of committing suicide as the accused persons had subjected her to cruelty by constant taunts, mal treatment and also by alleging that she has been carrying an illegitimate child.
The suicide having been committed within a period of seven years from the date of her marriage in accordance with the provisions of this Section, the Court may presume having regard to all the other circumstances of the case which we have set out earlier that such suicide has been abetted by the husband and his relations.
Therefore, the findings arrived at by the Additional Sessions Judge are quite in accordance with the provisions of this Section and the finding of the High Court that the accused persons could not be held to have instigate or abetted the commission of offence, is not sustainable in law.
It has been contended on behalf of the accused respond ents that Section 113 A of the was inserted in the Statutes Book by Act 46 of 1983 whereas the offence under Section 306, I.P.C. was committed on June 23, 1983 i.e. prior to the insertion of the said provision in the .
It has, therefore, been submitted by the learned counsel for the respondents that the provi sions of this Section cannot be taken recourse to while coming to a finding regarding the presumption as to abetment of suicide committed by a marriage woman, against the ac cused persons.
The provisions of the said Section do not create any new offence and as such it does not create any substantial right but it is merely a matter of procedure of evidence and as such it is retrospective and will be applicable to this case.
It is profitable to refer in this connection to Hals bury 's Laws of England, (Fourth Edition), Volume wherein it has been stated that: "The general rule as mat all statutes, other than those which are merely declaratory or which relate only to mat 309 ters of procedure or of evidence, are prima facie prospective, and retrospective effect is not to be given to them unless, by express words or necessary implication, it appears that this was the intention of the legislature It has also been stated in the said volume of Halsbury 's Law of England at page 574 that: "The presumption against retrospection does not apply to legislation concerned merely with matters of procedure or of evidence; on the contrary, provisions of that nature are to be construed as retrospective unless there is a clear indication that such was not the inten tion of Parliament." In Blyth vs Blyth, the wife left the husband in 1954 and lived with the co respondent until August, 1955, when she broke off the association.
In 1958 the husband and wife met by chance and sexual intercourse took place.
In December, 1962, the husband sought a divorce on the ground of his wife 's adultery.
During the pendency of the application section 1 of the Matrimonial Causes Act, 1963 came into force on July 31, 1963 which provided that any presumption of condonation which arises from the contin uance or resumption of marital intercourse may be rebutted on the part of a husband, as well as on the part a of wife, by evidence sufficient to negative the necessary intent.
The question arose whether this provision which came into force on July 31, 1963 can be applied in the instant case.
It was held that the husband 's evidence was admissible in that Section 1 of the Act of 1963 only altered the law as to the admissibility of evidence and the effect which the courts are to give to evidence, so that the rule against giving retrospective effect to Acts of Parliament did not apply.
In Herridge vs Herridge, similar ques tion arose, it was held that section 2(1) of the Act of 1963 was a procedural provision, for it dealt with the adducing of evidence in relation to an allegation of condonation in any trial after July 31, 1963; accordingly the subsection was applicable, even though the evidence related to events before that date, and the resumption of cohabitation in the present case did not amount, by reason of Section 2(1), to condonation.
On a conspectus of these decisions, this argument on behalf of 310 the appellant fails and as such the presumption arising under Section 113 A of The Evidence Act has been rightly taken into consideration by the Trial Court.
It has been urged by referring to the decision in Brij Lal vs Prem Chand & Anr., JT that where two views could reasonably be taken the appellate court should not interfere with the order of acquittal made by the Trial Court.
In the instant case on a proper consideration and weigh ing of the evidences the only reasonable view that can be taken is that the cruel behaviour and constant taunts and harassment caused by the accused persons while Ravinder Kaur, deceased was in her in laws house instigated her to commit suicide and in our considered opinion no other rea sonable view follows from a proper consideration and ap praisement of the evidences on record.
As such the decision cited above is not applicable to the facts and circumstances of the instant case.
For the reasons aforesaid we set aside the judgment and order of acquittal passed by the High Court and affirm the conviction of the accused of the offence under Section 306 I.P.C. and sentence imposed upon them by the Additional Sessions Judge, Amritsar.
The respondents will immediately surrender in the Court of Sessions Judge, Amritsar to serve out the remaining period of their sentence.
R.N.J. Appeals allowed.
| IN-Abs | Ravinder Kaur, daughter of Gurbachan Singh was married to Satpal Singh in November, 1962.
She died on 25th June, 1983 at about 2.30 P.M.
It was alleged, she committed sui cide because of the harassment, constant taunts and cruel behaviour of her in laws towards her and persistent demand for dowry and insinnuations that she was carrying an ille gitimate child.
It is alleged, provoked by the aforesaid conduct and behaviour she committed suicide.
The father in law, mother in law and the husband of the deceased have been the abetters of the crime and the deceased died of second to third degree burns.
The learned Additional Sessions Judge on the totality of evidence on record held that the accused were guilty of abetment to suicide and as such punishable under Section 306 of the I.P.C.
On appeal by the accused the High Court was of the view that the guilt of the accused had not been proved and as such acquitted them.
The complainant and father of the deceased aggrieved by the order of the High Court preferred these appeals by way of special leave to appeal.
This Court holding that the order of acquittal made by the High Court is not sustainable and affirming the conviction of the accused under section 306 of I.P.C. and the sentence imposed by the Additional Sessions Judge, Amritsar, HELD: (Per Sabyasachi Mukharji J. ) Abetment is a sepa rate and distinct offence provided the thing abetted is an offence.
Abetment does not involve the actual commission of the crime abetted; it is a crime apart.
[295G] Criminal charges must be brought home and proved beyond all reasonable doubts.
While civil case may be proved by mere preponderance of evidence, in criminal cases the prose cution must prove the 293 charge beyond reasonable doubt.
There must not be any 're asonable doubt ' of the guilt of the accused in respect of the particular offence charged.
The courts must strictly be satisfied that no innocent person innocent in the sense of not being guilty of the offence of which he is charged is convicted.
even at the risk of letting of some guilty per sons.
Even after the introduction of section 493A of the I.P.C. and section 113A of the Indian Evidence Act, the proof must be beyond any shadow of reasonable doubt.
There is a higher standard of proof in criminal cases than in civil cases, but there is no absolute standard in either of the cases.
[296C F] The standard adopted must be the standard adopted by a prudent man which, of course, may vary from case to case, circumstances to circumstances.
Exaggerated devotion to the rule of benefit of doubt must not nurture fanciful doubts of lingering suspicions and thereby destroy social defence.
Justice cannot be made sterile on the plea that it is better to let hundred guilty escape than punish an innocent.
Let ting guilty escape is not doing justice, according to law.
[296F] (Per B.C. Ray, J): Circumstantial evidence as well as the prosecution witnesses in the instant case clearly prove beyond doubt that the accused instigated and abetted Ravind er Kaur, deceased in the commission of the offence by com mitting suicide by burning herself.
[306G] The findings arrived at by the Trial Court after consid ering and weighing the entire evidences are unexceptional.
The findings arrived at by the High Court without consider ing properly the circumstantial evidence as well as the evidences of the prosecution witnesses cannot be sustained.
As such the findings of the High Court are liable to be reversed and set aside.
[306H; 307A] The suicide having been committed within a period of seven years from the date of her marriage in accordance with the provisions of Section 113A the Court may presume having regard to all the other circumstances of the case that such suicide had been abetted by the husband and his relations.
Therefore, the findings arrived at by the Additional Ses sions Judge are quite in accordance with the provisions of this section and the findings of the High Court that the accused persons could not be held to have instigated or abetted the commission of offence, is not sustainable in law.
[308C D] Section 113A of the Indian Evidence Act was inserted in the Statute Book by Act 46 of 1983 whereas the offence under Section 306, I.P.C. was committed on June, 23, 1983 i.e. prior to the insertion of the 294 said provisions in the Indian Evidence Act.
[308E] Bardendra Kumar Ghosh, Mancini vs Director of Public Prosecutions, Woolmington vs The Director of Public Prosecutions; , , Bater vs Bater, [1950] 2 AET 458 at 459.
Wazir Chand and Anr.
vs State of Haryana with State of Haryana vs Wazir Chand and Anr.
, [1989] I SCC 244, Sat Pal vs Delhi Administration, ; at 30.
Blyth vs Blyth, Herridge ' vs Herridge, [1966] I AER 93, Brij Lal vs Prem Chand & Anr.
, Halsbury 's Laws of England, 4th Edn.
& P. 574, refered to.
|
vil Appeal No. 2043 (NM) of 1989.
From the Judgment and Order dated 28.11.1988 of the Customs.
Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. E.A. No. 3302/87A in Order No. 558/88 A. K. Parasaran, Attorney General, A.K. Ganguli and P. Parmeshwaran for the Appellant.
Soli J. Sorabji, section Ganesh, R. Narain, P.K. Ram and D.N. Mishra for the Respondent.
The following Judgments of the Court were delivered SABYASACHI MUKHARJI, J. This is an appeal under section 35L(b) of the Central Excises & Salt Act, 1944 (hereinafter called 'the Act ') from the judgment and order of the Cus toms, Excise & Gold (Control) Appellate Tribunal, New Delhi, (hereinafter called 'the Tribunal ') date 28th November, 1988.
M/s. Ponds India Ltd., (hereinafter referred to as 'the respon 482 dent ') used to manufacture talcum powder and face powder falling under tariff item 14F of the Central Excise Tariff, which are now under sub heading No. 3304.00 and were clear ing the same on payment of duty.
The assessee claimed deduc tion of cost of packing for transportation in respect of small packings of 15, 18, 20, 30, 40 & 100 gms.
powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was approved provisionally by the office of the Asstt.
Collector of Central Excise, Pondicherry.
The said approval was by an order dated 10th December, 1985.
It is alleged that it was later noticed that the small packs were first packed in dozen and then packed in secondary packings for easy transportation to the wholesale dealer, and it was found that the secondary packings were a must for delivery to the wholesale dealers, (emphasis indicated).
The Asstt.
Collector came to the conclusion that the amount as claimed by the respondent was not deductible as per this Court 's decisions in respect of postmanufacturing expenses.
In the premises, a show cause notice was issued to the respondent on October 30, 1986 and a demand was made for the differen tial duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 for the period from December 2, 1985 to May 31, 1986.
The Asstt.
Collector by his order dated Febru ary 27, 1987 disallowed the respondent 's claim for exclusion of the cost of packing of transportation and thus rejected its claim.
He inter alia, observed as follows: "Therefore, I consider that the cost of sec ondary packings viz, card board cartons are rightly includible in the assessable value of items mentioned in PL No. 405/85 86 and 406/85 86 dated 10.12.85 under Section 4(4)(d)(i) of the , and the provisional assessments are to be finalised accordingly.
The assessees are also liable for payment of differential duty of Rs.3,46, 15 1.92 as demanded in the show cause notice cited under Section 11A of the read with rule 9B of the Central Excise Rules, 1944.
" There was an appeal to the Collector of Customs which was disposed of by an order dated 15th September, 1987.
It is necessary to set out the said observations of the Collec tor, in view of the contentions sought to be raised in these matters.
He, inter alia, observed as follows: "I have carefully considered the submission of the appellants made in their grounds of appeal and repeated during 483 personal hearing.
I find that the appellant 's claim is solely based on the judgment of the Hon 'ble Supreme Court in the case of Godfrey Philips and which has been followed by differ ent High Courts also from time to time.
First of all, it is necessary to consider whether the goods sold by the appellants viz. talcum powder and face powder required an outer carton packing for purpose of safety in trans it, which was the case before the Hon 'ble Supreme Court in case of M/s Godfrey Philips.
It cannot be disputed that talcum powder and face powder are packed either in metal con tainers or in plastic packing also of card board packings, which are inner cartons and contain one dozen.
The same are then put in the master carton for purpose of delivery to wholesale dealers.
In the Hon 'ble Supreme Court 's judgment, it is stated that the corru gated fibre board containers are employed only for purpose of avoiding damage or injury during transit.
But that is not as in the case of the appellants.
There is no likelihood of any damage or injury to the tins or the plas tic containers employed as a primary packing even if the goods are transported without the outer packing.
Unlike cigarettes, even damp ness is not going to affect the goods because they are hermetically sealed when put in the primary packing.
Therefore, the ratio of the judgment of Hon 'ble Justice Pathak which is quoted by the appellants is not available in the case of different goods which are not perishable aS cigarettes are.
The second point is that cigarettes are sold by carton of 200 cigarettes each, even in wholesale trade.
That is not the case in the appellant 's wholesale trade where the goods are sold by number of dozens and in some cases by numbers of tins or other packings which are primary packing (this was seen from the invoice produced during personal hearing).
Therefore, it cannot be said that the outer cartons are employed only for the purpose of avoiding damage or injury to the goods during transit.
In view thereof, the Hon 'ble Supreme Court 's decision in the case of MRF becomes applicable.
In case of talcum powder and face powder, it is necessary to put the dozen cartons inside the outer cartons, for giving delivery whether at the factory gate, or at a place of delivery other than the factory gate, because it is not convenient for the wholesale dealers to col lect the goods in dozens ' packing.
Wholesale trade is not generally in quantities less than a dozen.
Therefore, even while giving 484 delivery by the wholesale dealers, to other dealers, the outer carton is necessary as otherwise it will become difficult for him to give such delivery of 50 dozens or 100 dozens of the goods.
It is not disputed that the outer carton packing is the packing in which the goods are cleared from the factory, and are put into the stream of wholesale trade . . the ratio of the Godfrey Phi lips case is not applicable in the appellant 's case.
I find that the talcum powder and face powder are cleared in the master carton pack ing in the factory and it is in that packing the same are put in the stream of wholesale trade.
Further, I do not find that the master cartons are employed solely for purpose of protecting the goods during transit.
But the same are used for giving delivery in wholesale trade by the appellants.
Therefore, the order of the Asstt.
Collector, including the cost of master cartons in assessable value of the goods is correct and proper and needs no interference.
That being the only point for determination in appeal, the appeal is reject ed.
" There was an appeal to the Tribunal.
It was contended on behalf of the respondent herein before the Tribunal that the only question for determination was, whether the cost of third stage packing, the outer carton, intended for trans port can be included in the assessable value.
It was pleaded that all goods were cleared from the factory in the outer cartons with the smaller carton containing dozen containers of powder.
It was further contended that the facts of this case were same as in the case of cigarettes dealt with by this Court in Union of India & Ors.
vs Godfrey Philips India Ltd., ; It is contended that in view of the said decision of this Court, cost of cartons was included only if packing was necessary .for the sale of goods in the wholesale market.
It is submitted that it was not so necessary for sale.
The Tribunal noted that the question of inclusion of cost of secondary packing in Sec tion 4(4)(d)(i) of the Act, be it at the first stage, second or third stage of packing, has to be decided in each case depending upon the facts applicable.
The Tribunal found that so far as the smaller carton is concerned, the inclusion of the cost of the same in the assessable value was not in dispute and the appellants have conceded that the value is includible following the ratio of the judgment of this Court.
It also noted that it was nobody 's case that the number of tins contained in the smaller carton constitute retail packing rather than wholesale packing.
The Tribunal felt that the only question to be decided was, whether the goods packed in the smaller cartons could be sold to the wholesale buyer in the course of wholesale trade at the 485 factory gate without the outer carton in which the number of smaller cartons were packed.
It is important to emphasise this question in view of the contentions raised in this appeal.
The case of the revenue was that since the goods were sold in lots packed in the bigger outer cartons, the value of the same should be included for the purpose of assessment.
According to the Tribunal, there was however, no plea, raised by the revenue as to the capability or other wise of the sale of powder tins in the wholesale market in the smaller cartons described as the inner outer.
The Tribu nal noted that in the facts of the instant case, the talcum powder packed in tin containers is in no danger so far as the contamination of the powder is concerned and the pack ing, it was pleaded before them, was required for the pur pose of preventing damage to the tin containers which were sophisticated in nature taking into account the product being marketed, and it recorded that inner cartons contain 12 tins or so which is a wholesale packing and it was not made out that the smaller carton was not sufficient to protect the tins or that the sale could be made in the course of wholesale trade at the factory gate.
There was no plea on record that the smaller carton is flimsy and not sufficient for the purpose of marketing the tins and their storage in the course of wholesale trade.
the Tribunal referred to the observations of this Court in Union of India & Ors.
vs Bombay Tyre International Ltd., ; , and following the same came to the conclusion that the cost of outer or bigger cartons in which the smaller cartons containing powder tins are packed, is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade.
The outer cartons were held to be for the purpose of transport of the goods and were not required for the sale of the goods at the factory gate.
The revenue seeks to challenge this basis.
What is to be included in the value, has to be deter mined in terms of section 4(4)(d)(i) of the Act.
The ques tion has been examined from all points of views by this Court.
The question of secondary packing was examined by this Court in Bombay Tyres International 's case (supra).
There, this Court observed that for the purpose of determining the 'value ', broadly speaking both old section 4(a) and the new section 4(1)(a)speak of the price for sale in the course of whole sale trade of an article for delivery at the time and place of removal, namely, the factory gate.
Where the price con templated under the old section 4(a) or under new section 4(1)(a) is not ascertainable, the price is determined under the old section 4(b) or the new section 4(1)(b).
Now, the price of an article is related to its value (using this 486 term in a general sense) and into that value have poured several components, including those which have enriched its value and given to the article its marketability in the trade.
Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of deliv ery, are liable to be included.
Consequently, where the sale is effected at the factory gate, expenses incurred by the assessee upto the date of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely, after sales service and marketing and selling organ isation expenses including advertisement expenses marketing and selling organisation expenses and after sales service promote the marketability of the article and enter into its value in the trade.
Where the sale in the course of whole sale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred by the assessee upto the date of delivery under the aforesaid heads cannot, on the same grounds, be deducted.
This Court further observed that the new section 4(4)(d)(i) of the Act has made express provision for including the cost of packing in the determination of 'va lue ' for the purpose of excise duty.
The packing, of which the cost is included, is the packing in which the goods are wrapped, contained or wound when the goods are delivered at the time of removal, (emphasis supplied).
Therefore, the cost which is incurred for making the goods available in the wholesale market and in which the goods are generally avail able in such market, would be the 'value ' which is includi ble under section 4(4)(d)(i) of the Act.
There is no dispute that the cost of primary packing, that is to say, the packing in which the article is contained and in which it is made marketable for the ordinary consumer, must be regarded as failing within section 4(4)(d)(i) of the Act.
There is often, as in this case, secondary packing which consists of larger cartons in which a standard number of primary cartons (in the sense mentioned earlier) are packed.
The large cartons may be packed into even larger cartons for facilitating the easier transport of the goods by the wholesale dealer.
The question with which this Court was concerned in that case was: is all the packing, no matter to what degree, in which the wholesale dealer takes delivery of the goods to be considered for including the cost thereof in the 'value '? Or does the law require a line to be drawn somewhere? This Court observed that one must remember that while packing is necessary to make the excisable article, marketable, the statutory provision calls for strict construction because the levy is sought to be extended beyond the manufactured article itself.
Therefore, this Court observed that the 487 degree of secondary packing which is necessary for putting the excisable article in the condition in which it is gener ally sold in the wholesale market at the factory gate is the degree of packing whose cost can be included in the 'value ' of the article for the purpose of the excise duty.
To that extent, this Court observed, the cost of secondary packing cannot be deducted from the wholesale cash price of the exciseable article at the factory gate.
It was further held therein that if any special secondary packing is provided by the assessee at the instance of a wholesale buyer which is not generally provided as a normal feature of the wholesale trade, the cost of the such packing shall be deducted from the wholesale cash price.
Therefore, it is clear by virtue of that decision that the cost of 'packing which is neces sary to make the exciseable article marketable, that is to say, in which it is generally sold in the wholesale market at the factory gate ', is to be included.
Therefore, accord ing to the said decision and by virtue of the terms of the section, the cost of that much of secondary packing, which is necessary only to put the exciseable good in condition in which it is generally sold in wholesale market is the degree of packing which cost can be included and not beyond that.
In the application of this principle, about which there is no dispute, there has been some divergence of the empha sis put on by what criterion that cost should be determined.
This question came up for consideration in Union of India vs Godfrey Philips India Ltd., [1985] Supp.
3 SCR 123.
There, Chief Justice Bhagwati observed that whenever a question arises whether the cost of any particular kind of secondary packing is liable to be included in the value of the arti cle, ' the question to be asked is does the packed condition in which the article is generally sold in the wholesale market at the factory gate include such secondary packing? The learned Chief Justice observed that if it does, it would be liable to be included in the value of the article for the purpose of excise duty.
It, therefore, followed that if the packed condition in which the cigarettes manufactured by the respondents were generally sold in that case in the whole sale market at the factory gate included packing in corru gated fibre board containers, the cost of such corrugated fibre board containers was liable to be included in the value of the cigarettes for the purpose of excise duty.
The learned Chief Justice further observed that the condition for applicability of the inclusive definition of "value" in section 4(4)(d)(i) of the act is that the goods are delivered at the time of removal "in a packed condition" and where this condition is satisfied, the "value" of the goods would include "the cost of such packing" and "such packing" must obviously mean the packing in which the goods are when they are 488 delivered at the time of removal.
Therefore, according to the learned Chief Justice, the question to be asked is what is the packed condition in which the goods are when deliv ered at the time of removal? Whatever is the packing of the goods at the time when they are delivered at the time of removal, the cost of such packing would be liable to be included in the 'value ' of the goods.
The Explanation to section 4(4)(d)(i) of the Act provides an exclusive definition of the term "packing" and it includes not only outer packing but also what may be called inner packing.
The question that the Chief Justice posed was not for what purpose a particu lar kind of packing was done.
The test was whether a partic ular kind of packing was done in order to put the goods in the condition in which these were generally sold in the wholesale market at the factory gate and if these were generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includi ble in the value of the goods for assessment to excise duty.
Pathak, J. (as the learned Chief Justice was then) and Sen, J. gave separate judgments in the aforesaid case.
Setting out the passage from the Bombay Tyres International 's case (supra), which is referred to hereinbefore, Pathak, J. posed the question: is the packing necessary for putting the cigarettes in the condition in which they are generally sold in the wholesale market at the factory gate? And answering that question, Pathak, J. held it is not.
It is true that there is a divergence between the views of Bhagwati C J, Pathak, J and Sen, J.
But in my opinion, there is a unanimi ty in the test that is to be applied, that is to say, that much of the cost would be included only which is necessary for putting the article in the condition in which it is generally sold in the wholesale market.
The principle behind this is in order for manufacture to be taxable, article must become goods.
In order to become goods, these must come to the market or be capable of coming to the market as definite and identifiable goods.
So whatever expenses are necessary for making that possible, that much of the cost would be included in the "value".
But what is subsequent to that, that is to say, any cost merely facilitating transport or merely ensuring security in transit are costs which are post manufacture, i.e. after articles have become goods as a result of manufacture and are capable of becoming manufac tured and thereafter dealt with.
This, in my opinion, is the true test and read in that light, I do not find that there is really any divergence of opinion between Bhagwati, C J, Pathak, J. and Sen, J. of course, there is divergence of emphasis in the approach in which the question has to be looked into.
This aspect of the matter was also dealt with by this Court in M/s Hindustan Polymers vs The Collector of Central Excise, Appeals Nos.
4339 41 of 1986) judgment in 489 which was delivered on 23rd August, 1989, where one of us (Sabyasachi Mukharji, J) after analysing these several cases of this Court observed that: "In order, therefore, to be manufacture, there must be activity which brings transformation to the article in such a manner that different and distinct article comes into being which is known as such in the market.
If in order to be able to put it in the market, a certain amount of packing or user of containers or wrappers or putting them either in drums or containers, are required, then the value or the cost of such wrapper or container or drum must be included in the assessable value and if the price at which the goods are sold does not include that value then it must be so included by the very force of the terms of the section." Therefore, in all cases, according to that decision, the question must be examined whether packing, and if so, what packing is necessary to make the article marketable as such or could these goods be sold without the containers, drums or packing? This Court in that case took into account the fact that 90% of the goods were delivered in tankers belong ing to the assessee and only 10% of the goods were in packed condition at the time of removal.
This was taken as an indicia of in what condition of packing the goods are sold.
As mentioned hereinbefore, that principle has been clearly laid down in the Bombay Tyres International 's case (supra) in the sense that only that degree of secondary packing which is necessary for putting the assessable article in the condition in which it is generally sold in the wholesale market should be included in the 'value ' of the article.
The majority judgment in Godfrey Philips ' case (supra) also clarified this position.
It is true that Pathak, J. and Sen, J. made it clear that secondary packing does for the purpose of "facilitating transport and smooth transit of the goods to be delivered to the buyer in the wholesale trade would not be included in the value".
Chief Justice Bhagwati held in the said case that the fibre board containers in which the cigarettes were packed fell within the definition of 'packing ' in the Explanation to section 4(4)(d)(i) and if these formed part of the packing in which the goods were packed when delivered at the time of removal, then such cost of corrugated fibre board containers would be liable to be included in the value of cigarettes.
But Chief Justice emphasised that the test to determine whether the cost of any particular kind of secondary packing is liable to be included in the value of the article is whether a particular kind of packing is done in order to put the goods in the condition in which they 490 are generally sold in the wholesale market at the factory gate.
In my opinion, the views expressed by the majority of the Judges in Godfrey Philips ' case (supra) were in conso nance with the view of the this Court in the Bombay Tyres International 's case (supra).
The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is done in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty.
In the present case, it has been factually found as indicated hereinbefore, by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen.
The same are then put in the master carton for purpose of delivery to wholesale dealers.
But in Godfrey Philips ' case (supra), the corrugated fibre board containers were employed for the purpose of avoiding damage or injury during transit.
On the other hand, in this case, it was found that there was no damage or injury to the tins or plastic containers employed as a primary packing even if the goods are transported without the outer packing.
The second point is that cigarettes are sold in cartons of 200 cigarettes each, even in wholesale trade.
That is not the case in the appellants ' wholesale trade herein where the goods are sold by number of dozens and in some cases by numbers of tins or other packings which are primary packing.
Therefore, it cannot be said that the outer cartons are employed only for the purpose of avoiding damage or injury to the goods during transit.
But it may be indicative of the fact that the goods are so sold.
It may be mentioned in this connection that our atten tion was drawn to the unanimous order of three Judge Bench presided over by the Chief Justice Bhagwati of this Court in Civil Appeals Nos.
642 45 of 1982 in Geep Industrial Syndi cate Ltd. vs The Union of India & Ors.
There, the question that arose for determination was whether the cost of second ary packing in wooden boxes was liable to be added in deter mination of the value of batteries and torches for the purpose of excise duty.
The torches and batteries manufac tured by the appellants were first packed in polythene boxes and then these polythene boxes were placed in cardboard cartons.
There were certain varieties of batteries which were packed directly in cardboard cartons.
There was 491 no doubt that packing in polythene bags and cardboard car tons was includible in the determination of the value of batteries and torches for the purpose of levy of excise duty.
The question was whether the wooden boxes in which the cardboard cartons were placed at the time of delivery at the factory gate was to be includible in the value.
There was some dispute between the parties whether the cardboard cartons were packed in wooden boxes in all cases.
It was stated that when they were delivered in the course of the wholesale trade at the factory gate, they were not packed in wooden boxes as a matter of course but they were packed in wooden boxes only in those cases where delivery was taken by wholesale dealers outside the city of Allahabad in that case.
This Court found that it was not necessary to deter mine the disputed question of fact.
It was held that even if the cardboard cartons were packed in wooden boxes in all cases, it was clear that the cost of such secondary packing in wooden boxes was not includible in determination of the value of batteries and torches.
This Court agreed with the Godfrey Philips 's case (supra) that corrugated fibreboard containers were used as secondary packing only in order to ensure cartons or outers against injury or damage during transport and that it was not necessary for putting the cigarettes in the corrugated fibreboard containers for their sale in the wholesale market at the factory gate and the cost of such secondary packing was therefore not liable to be included in determination of the value of the cigarettes for the purpose of excise duty.
The Tribunal in the instant case observed as under: "We observe that in the facts of the present case, the rationale of the judgment of the Hon 'ble Supreme Court above is squarely ap plicable.
We hold following with respect to the ratio of the decision above that the cost of the outer or bigger carton in which the small cartons containing the powder tins are packed, is not includable in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade.
The outer carton have to be held to be for the purpose of transport of the goods and are not required for the sale of the goods at the factory gate." (emphasis supplied).
In my opinion, the correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the 492 value.
How much packing is necessary to make the goods marketable is a question of fact to be determined by appli cation of the correct approach.
Packing, which is primarily done or mainly done for protecting the goods, and not for making the goods marketable should not be included.
In the instant case, therefore, could the powder be sold in smaller cartons at the wholesale market? The fact that these were usually sold in the wholesale market would be a good pointer for this question.
Having considered the order of the Tribu nal, which I have set out hereinbefore, I am of the opinion that the Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller cartons are packed.
The question is not whether these goods could be so sold, but the question is whether these goods are so sold usually and as such used to become marketable in such man ner.
In my opinion, there has been a misdirection by the Tribunal on this aspect of the matter.
If the above be the true test, then the judgment and the order of the Tribunal must be set aside and the appeal must be allowed and the matter remanded back to the Tribunal to determine afresh this question from the stand point indicated above.
I accordingly allow the appeal, set aside the judgment and order of the Tribunal and remand the matter back to the Tribunal to decide it in accordance with the aforesaid directions.
In the facts and the circumstances of the case, there will be no orders as to costs.
RANGANATHAN, J. I agree.
But, as it has been contended by Sri Soli Sorabjee that the Tribunal 's conclusion in this case has to be upheld straightaway in view of the decision of this Court in Godfrey Philips, [1985] Suppl.
3 S.C.R. 123 and Geep, (C.A. Nos.
642 45 of 1982, I should like to add a few words.
section 4(4)(d)(i) of the Act lays down that where goods are delivered at the factory gate in a packed condition, the cost of the packing should be included in the assessable value.
The clause makes no distinction between primary packing and secondary or further subsequent packing.
Howev er, a restriction was read into the wide language of the clause by this Court in the Bombay Tyre International case; , Posing the question whether the cost of all packing, no matter to what degree, in which the whole sale dealer takes delivery of the goods, should be included in determining the assessable value or a line should be drawn somewhere, the Court indicated that while the 493 cost of primary packing was indisputably includible, the position would be different in regard to secondary packing.
The Court observed that "the degree of secondary packing which is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market at the factory gate, is the degree of packing whose cost can be included in the value of the article for the purpose of the excise levy.
"If any special secondary pack ing is provided by the assessee", the Court observed, "at the instance of a wholesale buyer which is not generally provided as a normal feature of the wholesale trade, the cost of such packing shall be deducted from the wholesale cash price." The exclusion indicated by these words is very limited and clearly does not extend to the cost of any packing in which the goods are generally sold by the manu facturer in the wholesale market.
However, the reference in Bombay Tyres, (supra) to secondary packing "which is necessary" led to a further refinement in Godfrey Philips and Geep.
In these cases, the conclusion of the Court was that the cost of packing of the goods in "corrugated fibre containers" and "wooden boxes" respectively was not includible in arriving at the assessa ble value.
Had the matter been free from authority, one might have been inclined to agree with the reasoning of Bhagwati, C.J., that the condition of packing in which the goods are usually placed in the wholesale market would be conclusive of the issue and that, the condition in which the goods are generally placed in the wholesale market notwith standing, a theoretical enquiry by the excise authorities into the purpose of such packing or as to whether such packing was "necessary" or not would be totally uncalled for.
Indeed, this was the test applied by one of us (Muk harji, J.) in Hindustan Polymers for holding that the cost of drums for packing fusel oil was not includible in the assessable value because the goods viz. fusel oil was gener ally sold in the wholesale market in the raw state, without any packing whatever, leaving it to the wholesale consumer to draw it from the manufacturer 's tanks into his trucks, containers or drums.
It will be appreciated that if this position were not to be accepted and an enquiry were to be made as to whether. such general packing is "necessary" or not, such an investigation might operate both ways.
For example, on that basis, it could be argued, in the Hindustan Polymers case, that though the goods were actually sold wholesale in a free condition, a container is "necessary" from a theoretical stand point to place the fluid goods on the market and that, therefore, the cost of the drums would have to be included in the assessable value.
But this was not the view taken by this Court.
There is, therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the 494 assessable value, one should go by the conduct of the par ties and the nature of the packing in which the goods gener ally are not, can be placed in the wholesale market.
It is, however, urged for the respondent that such an enquiry has been held necessary by Godfrey Philips.
But, as pointed out by my learned brother, even the majority deci sion in that case does not go to the length suggested on behalf of the appellant and justify an investigation as to the state of packing in which the goods could be placed in the market.
That would only be an exercise in theoretical speculation.
On that basis, for instance, in the present case, it could be said, for the same reasons as have been given by the Tribunal, that the goods could be collected from the factory even in units of tin containers, leaving it free to the purchasers to make their own arrangements to pack them in cardboard cartons to convey them to their place of business.
This would render even the cost of the first outer packing of cardboard containers irrelevant in the determination of the assessable value.
That was not the contention even of the respondents and indeed, if carried to its logical conclusion, would render the cost of all pack ing, other than primary packing, excludible from the assess able value.
It seems to me, therefore, that what is to be really seen is this: What is the condition of packing con sidered by the manufacturers, having regard to the nature of the business, the type of goods concerned, the unit of sale in the wholesale market and other relevant considerations, to be generally necessary for placing the goods for sale in the wholesale market at the factory gate.
In Godfrey Philips and Geep, this Court was concerned with a special type of packing which seemed intended more to protect the packed goods against injury or damage rather than to enable it being placed on the market.
Indeed, in Godfrey Philips, this was a factual position that had been accepted by the depart mental authorities earlier for a period of a little over six years which they later wanted to go back upon.
Can the same be said of the goods and the packing with which we are concerned here is a question to be decided on the facts, as the appellate controller did and not as a proposition of law settled by, or the automatic consequence of the decision in, the Godfrey Philips case, as seems to have been done by the Tribunal and as is being argued for the respondents.
I would, therefore, agree that the matter should be remanded to be reconsidered in the light of our observations.
Y. Lal Appeals allowed.
| IN-Abs | The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty.
The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction.
The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986.
The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim.
The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal.
The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.; , and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market.
The Tribunal however relying on the decision of this Court in Union of India & Ors.
vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade.
Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act.
Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act.
[485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty.
[490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen.
The same are then put in the master carton for purpose of delivery to wholesale dealers.
[490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value.
How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach.
Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included.
[491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed.
The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner.
[492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value.
The clause makes no distinction between primary and secondary packing or further subsequent packing.
[492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market.
[493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
|
ivil Appeal No. 2413 of 1989.
From the Judgment and Order dated 3.10.1988/12.10.1988 of the Central Administrative Tribunal, Hyderabad in O.A. No. 307 of 1987.
Anil Dev Singh, B. Parthasarthy, Hemant Sharma and C.V. Subba Rao for the Appellants.
Mrs. Kitty Kumaramangalam, Ms. Vijayalaxmi, Kailash Vasdev, P. Parmeshwaran and A.T.M. Sampath for the Respond ent.
The Judgment of the Court was delivered by AHMADI, J.
The Central Administrative Tribunal, Hydera bad by its order dated 3rd October, 1988 held that the Divisional Railway Manager (BG) SC Railway, Secunderabad was not competent to pass the impugned order dated 25th April, 1986 retiring the railway servant Shaik Ali from service under Rule 2046(h)(ii) of Indian Railway Establishment Code, Volume II Pension Rules (hereinafter called 'the Code ').
The Union of India feeling aggrieved by the said order has come in appeal to this Court by special leave.
The respondent Shaik Ali joined the erstwhile Nizam State Railway Service as Pointsman in 1953 or thereabouts and secured promotions from time to time in the course of his service, the last promotion being as Yard Master in the revised scale of Rs.550 750 on 31st January, 1986.
The facts show that he was on duty between 14.00 and 22.00 hours on 23rd February, 1986 at Sanatnagar Station.
As his reliever did not turn up at 23.00 hours, he was compelled to perform 459 duty from 22.00 hours to 08.00 hours of 24th February, 1986.
At about 23.15 hours, he permitted the staff working under him to have their meals and report for duty as soon as possible.
As the staff members did not return to duty within a reasonable time he went towards the cabin where they usually took their meals.
At that time the Divisional Safety Officer, A. Bharat Bhushan, came down from the cabin and inquired of the respondent 's identity.
The respondent coun tered by inquiring about the identity of the said officer.
It is the respondent 's say that as he did not know the said officer he asked for his identity before disclosing his identity.
The officer was annoyed at the behaviour of the respondent and threatened him with dire consequences.
It is the respondent 's case that immediately thereafter he was placed under suspension.
When he went to meet the officer at the suggestion of the Station Superintendent, the said officer behaved rudely and refused to listen to his explana tion.
By a subsequent order dated 19th March, 1986, the respondent was kept under further suspension w.e.f. 4th March, 1986.
He was not charge sheeted nor was any inquiry held against him but he was visited with the order of prema ture retirement dated 25th April, 1986, the relevant part whereof reads as under: "Whereas the Divisional Railway Manager (BG), Secunderabad is of the opinion that it is in the public interest to do so.
Now therefore, in exercise of the powers conferred by Clause (h)(ii) of Rule 2046 of Indian Railway Establishment Code, Volume II Pension Rules, the Divisional Railway Manager (BG), Secunderabad hereby retires Shri Shaik Ali, Assistant Ward Master, Sanatnagar with immediate effect that he having already completed 30 years of qualify ing service.
It was further directed that the respondent should be paid a sum equivalent to the amount of his pay plus allowances for a period of three months in lieu of three months notice calculated at the rate at which he was drawing salary imme diately before his retirement.
The respondent challenged this order of premature retirement by preferring an applica tion under Section 19 of the .
The Central Administrative Tribunal after reading the relevant Rule 2046(h)(ii) with Para 620(ii) of the Railway Pension Manual came to the conclusion that the Divisional Railway Manager who passed the impugned order of premature retirement was not competent to make such an order.
In taking this view the Tribunal relied on an earlier 460 decision of the Full Bench in AISLJ wherein it held that the highest authority among_ the appointing authorities alone was competent to impose any of the punish ments specified in Article 311 of the Constitution.
In this view that the Tribunal took, the Tribunal set aside the impugned order of premature retirement dated 25th April, 1986.
It is against the said order that the Union of India has preferred this appeal.
Under Rule 2046(a) of the Code ordinarily every railway servant would retire on the day he attains the age of 58 years.
However, notwithstanding the said provision, Rule 2046(h) entitles the appointing authority to retire him before he reaches the age of superannuation.
Rule 2046(h), insofar as it is relevant for our purposes, reads as under: "2046(h).
Notwithstanding anything contained in this rule, the appointing authority shall, if it is of the opinion that it is in the public interest to do so, have the absolute right to retire any railway servant giving him notice of not less than three months in writ ing or three months ' pay and allowances in lieu of such notice (i) if he is in Class I or Class II service or post and had entered Government service before attaining the age of thirty five years, after he has attained the age of fifty years.
(ii) in any other case after he has attained the age of fiftyfive years.
" Since the respondent was indisputably in Class III service at the time the impugned order came to be made his case was governed by the second clause of Rule 2046(h).
The impugned order recites that the respondent had already completed thirty years of qualifying service but it does not state that he had attained the age of fifty five years.
The re spondent 's contention was that he could not be prematurely retired under clause (ii) of Rule 2046(h) since he had not attained the age of fifty five years on the date of the impugned order.
According to him he was running 54th year on that date.
That obviously took his case out of the purview of the said rule.
Realising this difficulty an attempt was made by the department to fall back on paragraph 620(ii) of the Railway Pension Manual which reads as under: 461 "620(ii).
The authority competent to remove the railway servant from service may also require him to retire any time after he has completed thirty years ' qualifying service provided that the authority shall give in this behalf, a notice in writing to the railway servant, at least three months before the date on which he is required to retire or three month 's pay and allowances in lieu of such notice.
" Reliance was also placed on the decision of this Court in Union of India vs R. Narasimhan, ; in support of the contention that a railway servant governed by the Railway Pension Manual may be prematurely retired by 'the authority competent to remove him from service ' on his completing thirty years of qualifying service.
Under this rule, power is conferred on the authority competent to remove him from service to retire a railway servant who has completed thirty years of quarrying service regardless of his age.
The Tribunal took the view that although Rule 2046(h)(ii) would not be attracted in the absence of evi dence that the incumbent had attained the age of fifty five years, the department would be entitled to rely on para 620(ii) to support the order if it can show that the officer who passed the order was competent to do s0 under the said paragraph.
The Tribunal was however, of the opinion that since the power under paragraph 620(ii) could be exercised only by the authority competent to remove the railway serv ant from service, the Divisional Railway Manager not being such authority was not competent to pass the impugned order and hence the order was clearly void and inoperative in law.
In taking this view, the Tribunal relied on an earlier Full Bench decision referred to above.
We were told that as the said Full Bench decision of the Tribunal was under scrutiny by this Court, this Civil Appeal should be tagged on with similar matters pending in this Court.
However, the learned counsel for the respondent employee submitted that it was not necessary to tag on this matter with other matters arising out of the Tribunal 's Full Bench decision since in the instant case she proposed to support the Tribunal 's order on the twin grounds (i) that paragraph 620(ii) was ultra vires Article 14 of the Constitution and (ii) that the impugned order was punitive in nature and could not have been passed without a proper enquiry.
Insofar as the first contention is concerned she placed reliance on this Court 's decision in Senior Superintendent of Post Office & Ors.
vs Izhar Hussain; , wherein a similar Rule 2(2) of the Liberalised Pension Rules, 1950 was struck down as offending Article 14 of the Constitution.
So far as the second limb of her submission is concerned she stated that the respondent had been promoted to the post of Yard Master on 31st 462 January, 1986 and hence there was no occasion to prematurely terminate his service by the impugned order.
In Izhar Hus sain 's case the Court was concerned with F.R. 56(j) and Rule 2(2) of the Pension Rules.
F.R. 56(j) is substantially the same as Rule 2046(h)(ii) of the Code and Rule 2(2) is sub stantially the same as paragraph 620 with which we are concerned.
Since Rule 2(2) has been struck down as violative of Article 14 of the Constitution, paragraph 620(ii) would meet the same fate.
The learned counsel for the Railway Administration, realising this difficulty tried to support the impugned order on the ground that it was in public interest to retire the respondent.
Counsel for the respond ent contended that the railway administration has been shifting its stand, it first passed the impugned order under Rule 2046(h)(ii) of the Code and then relied on Rule 2(2) of the Pension Rules and when that was found to be of no as sistance switched over to paragraph 620(ii) of the Railway Pension Manual and is now trying to support the order on an extraneous ground which does not find a mention in the impugned order.
We think the criticism is well founded.
We are, therefore, of the view that apart from the competence of the Divisional Railway Manager to pass the order, the impugned order cannot be supported under paragraph 620(ii) for the aforesaid reason.
We next find that the learned counsel for the responden temployee is on terra firma so far as the second limb of her contention is concerned.
The facts clearly reveal that after the respondent joined the Nizam.
State Railway service in 1953 he secured promotions in due course and was appointed an Assistant Yard Master by an order dated 22nd August, 1984.
Thereafter, he was promoted to the next higher post of Yard Master by the order of 31st January, 1986.
While he was discharging duties as Yard Master On 24th February, 1986, the incident in question occurred which is said to be form ing the basis for the impunged order of 25th April, 1986.
We find from the facts that the Divisional Safety Officer was annoyed by the fact that the respondent had demanded that he disclose his identity before he (the respondent) did so.
The respondent was immediately placed under suspension and the said officer refused to listen to his explanation.
The suspension order was further extended by the order of 19th March, 1966.
This was followed by the impugned order of retirement dated 25th April, 1986.
The order was passed under Rule 2046(h)(ii) of the Code without verifying whether or not the incumbent had attained the age of fiftyfive years.
Even if the order was intended to be under Rule 2(2) of the Pension Rules, this requirement had to be satisfied.
The immediate and proximate reason for passing the impugned order was undoubtedly the unfortunate incident of 23/24th February, 1986.
But for that 463 incident there was no occasion for the Review Committee to examine the case of the respondent.
If the service record of the respondent was so bad as is now sought to be made out, he would not have been promoted to the post of Assistant Yard Master on 22nd August, 1984 and later to the post of Yard Master on 31st January, 1986.
We are, therefore, satis fied that the impugned order of premature retirement is punitive in nature and having been passed in flagrant viola tion of the principles of natural justice cannot be allowed to stand.
For the above reasons (different from the one on which the Tribunal rounded its decision), we are of the opinion that the ultimate order passed by the Tribunal does not require interference.
We, therefore, dismiss this appeal with costs.
Cost quantified at Rs.3,000.
Before we part we may observe that the concerned author ities will do well to amend Rule 2(2) of the Pension Rules and Paragraph 620(ii) referred to above so as to incorporate therein the requirement of public interest, that is to say, the premature retirement on completion of qualifying service of thirty years can be ordered in public interest only.
G.N. Appeal dismissed.
| IN-Abs | The respondent, employed as Yard Master in the South Central Railway, was on duty between 14.00 and 22.00 hours on 23rd February '86.
In the absence of a reliever, he was to continue his duty till 8.00 hours on 24th February '86.
He allowed his staff to take meals and since they did not return within a reasonable time, he went towards the cabin where the staff usually took their meals.
The Divisional Safety Officer who was coming down from the cabin, enquired of the respondent 's identity.
The respondent in turn asked for the identity of the said officer.
The officer was an noyed at this and threatened the respondent with dire conse quences.
Immediately thereafter the respondent was placed under suspension.
Further suspension followed and the re spondent was visited with the order of premature retirement under Rule 2046 of Indian Railway Establishment Code.
Respondent challenged the said order before the Central Administrative Tribunal and the Tribunal, relying on its decision in Shri Gafoor Mia & Ors.
vs Director, DMRL, AISLJ held that the Divisional Railway Manager who passed the impugned order of premature retirement was not competent to make such an order, and set aside the order.
This appeal, by special leave, is against the Tribunal 's order.
Though under sub clause (ii) of rule 2046(h), a class III employee cannot be retired prematurely after he has attained the age of 55 years, (unlike officers of class I & II) this clause was invoked in the case of respondent who was admittedly in class III service and did not attain the age of 55 years.
Appellant relied on para 620(ii) of the Railway Pension 457 Manual which gives the authority power to remove from serv ice a railway servant after he completed 30 years service.
On behalf of Respondent, it was contended that the appellant had been shifting its stand and trying to support the order on an extraneous ground which did not find a place in the order viz. unsatisfactory service record of the respondent; and there is no basis for it in view of the promotionS secured by the respondent, the last of which was just before the premature retirement.
Dismissing the appeal, this Court, HELD: 1.1 The order was passed under Rule 2046(h)(ii) of the Indian Railway Establishment Code without verifying whether or not the incumbent had attained the age of fifty five years.
Since the respondent was indisputably in class III service at the time the order came to be made, his case was governed by the second clause of Rule 2046(h).
The impugned order recites that the respondent had already completed thirty years of qualifying service but it does not state that he had attained the age of fifty five years.
According to the respondent he was running 54th year on that date.
That obviously took his case out of the purview of the said rule.
Even if the order was intended to he under Rule 2(2) of the Liberalised Pension Rules, 1950, this require ment had to be satisfied.
The immediate and proximate reason for passing the impugned order was undoubtedly the unfortu nate incident of 23/24th February, 1986.
BUt for that inci dent there was no occasion for the Review Committee to examine the case of the respondent.
If the service record of the respondent was so bad as is now sought to be made out, he would not have been promoted to the post of Asstt.
Yard Master an 22nd August, 1984 and later to the post of Yard Master on 31st January, 1986.
The order of premature retire ment is punitive in nature and having been passed in fla grant violation of the principles of natural justice, cannot be allowed to stand.
[426G H; 460F G; 463A B] 1.2 F.R. 56(j) of the Fundamental Rules is substantially the same as Rule 2046(h)(ii) of the Railway Establishment Code and Rule 2(2) of the Liberalised Pension Rules, 1950 is substantially the same as paragraph 620 of Railway Pension Manual.
Since Rule 2(2) has been struck down as violative of Article 14 of the Constitution, paragraph 620(ii) would meet the same fate.
Apart from the competence of the Divisional Railway Manager to pass the order, the order cannot also he supported under paragraph 620(ii).
[462B D] 458 Senior Superintendent of Post Office & Ors., vs Izhar Hussain, ; , relied on.
Union of India vs R. Narasimhan, ; , referred to.
The authorities concerned will do well to amend Rule 2(2) of the Liberalised Pension Rules, 1950, and paragraph 620(ii) of the Railway Pension Manual, so as to incorporate therein the requirement of public interest, making it clear that premature retirement on completion of qualifying serv ice of thirty years can be ordered in public interest only.
[463C D]
|
ivil Appeal No. 4407(NM) of 1989.
From the Judgment and Order dated 28.7.1989 of the Maharashtra High Court in Appeal No. 360 of 1984.
Anil B. Divan, A.J. Rana, section Ganesh, Ravinder Narain, P.K. Ram, Ms. Amrita Mittar, M.P. Bakshi and D.N. Mishra for the Appellant.
V.C. Mahajan, Hemant Sharma and P. Parmeshwaran for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
This special leave petition has been heard at length and both parties have made elaborate submissions on the merits of their respective cases and, accordingly, we proceed to dispose of the special leave petition after granting leave.
The appellant, Roche Products Limited, a public limited company has, by this appeal, challenged the propriety of the decision of the Division Bench of the Bombay High Court dismissing the appeal preferred by the appellant against the judgment of a learned Single Judge dismissing the writ petition of the appellant.
In the writ petition, the appel lant challenged the order of the Collector of Customs passed in exercise of his revisional jurisdiction under section 130(2) of the , hereinafter referred to as 'the Act ', directing confiscation of the goods imported by the appellant, but giving to the appellant an option to pay in lieu of such confiscation.
a fine of Rs. 19,00,000 and further imposing on the appellant a penalty of Rs.5,00,000.
The appellant is engaged in the business of manufacture of various pharmaceutical products including sulphamethoxa zole which is also known as 'SMX '.
One of the important ingredients or raw materials for the manufacture of SMX is a chemical known as 'isoxamine ', which is also known as '3 amino 5 mithyl isoxazole '.
On April 23, 1974, the Ministry of Industrial Develop ment of the Government of India issued to the appellant an industrial licence enabling it to manufacture 18 tomes of SMX per year.
Clause 4 of the industrial licence enjoins that the manufacture of "new articles" shall 499 be completed and commercial production established within a period of two years from the date of issue of the industrial licence.
The industrial licence also contains some addition al conditions of which the condition contained in clause 5(iv) is relevant for our purpose.
Clause 5(iv) provides as follows: "5.
The industrial licence will also be sub ject to the conditions stipulated in Annexure I.
It will be further subject to the following additional conditions: (i) . . . . . . (ii) . . . . . . (iii). . . . . . (iv) The undertaking should base the manufacture of sulphamethaxazole on M.A.I. (5 methyl 3 Amino in sale).
From the third year onwards, the manufacture of drugs will be based on T. Butyl alcohol hydroxylamine acid T. Butyl alcohol hydrexylamine said sulphates and methyl formulate.
The manufacture of formulations should be based on their own production of sulphamethaxazole and import of Tricathopria will be considered only for one year.
There after, it should be based on locally produced materials.
" Clause 10 provides that the industrial licence will be valid only for a period of two years within which commercial production is to be established.
It is apparent from the conditions of the industrial licence that the appellant was permitted to import the material, isoxamine, for a period of two years only from the date of the licence, that is to say, up to April 23, 1976 and that, thereafter, the product SMX was to be manufactured from indigenous materials.
On October 13, 1967, the Import Control Authority issued to the appellant an import licence for the import of various raw materials up to an aggregate value of Rs.53,31,000 including isoxamine.
The licence was valid for a period of 24 months from the date of issue of the same.
It, however, contained a condition that all the goods that would be imported under it should only be used in the factory of the appellant.
500 By its letter dated September 20, 1978, addressed to the Under Secretary, Government of India, Ministry of Petroleum, Chemicals and Fertilisers, the appellant stated their diffi culties in manufacturing SMX from indigenous materials and made a request that it might be allowed to import isoxamine until the middle of 1979.
The appellant also wrote another letter dated September 29, 1978 to the said Under Secretary, again pointing out to him, inter alia, the difficulties which the appellant had to face in developing the manufac ture of isoxamine from locally produced materials, indige nous articles and ingredients and the delays which has occurred as a consequence.
Although the appellant did not get any reply to its representation from the Government permitting it to import isoxamine until the middle of 1979, yet it placed an order on Hoffmann La Roche Limited, Basle, Switzerland, for supply of isoxamine and opened an irrevocable letter of credit in favour of the said Hoffmann La Roche Limited.
Before the goods ordered by the appellant had reached India from Switz erland, the Under Secretary to the Government of India, Ministry of Petroleum, Chemicals and Fertilisers, by his letter dated January 20, 1979 informed the appellant that its request for permission to import isoxamine till the middle of 1979 could not be acceded to and the appellant was asked to manufacture SMX from indigenous materials.
Between March and June, 1979, consignments of isoxamine reached the Bombay Port pursuant to the order placed by the appellant to the said Hoffmann La Roche Limited.
The appel lant also gave a declaration that it was an Actual User, and that its registration had not been cancelled or withdrawn or otherwise made inoperative, as required to be given under paragraph 6 of Appendix 10 of the Import Policy, 1978 79 and got the goods cleared upon such declaration by the Customs Officers.
On September 7, 1979, the appellant received from the Collector of Customs, Bombay, a notice issued under section 130(2) of the Act calling upon the appellant to show cause why the goods imported by the appellant should not be con fiscated under section 3 of the Imports and Exports (Con trol) Act, 1947 and why a penalty of Rs.7,00,000 should not be imposed on the appellant under section 112(1,) of Act.
In the said notice to show cause, it was stated inter alia that the industrial licence granted to the appellant stipulated that after a period of two years the production of SMX should be based on indigenous 501 materials and, accordingly, the appellant was not allowed to use imported materials in the production of SMX after the expiry of two years, that is, after April 22, 1976.
It was also stated that the appellant was not an Actual User of the imported material, that is, isoxamine, after April 22, 1976 inasmuch as the industrial licence had ceased to be valid for the manufacture of SMX with imported materials.
Further, it was stated that the declaration given by the appellant in terms of paragraph 6 of Appendix 10 of the Import Policy 1978 79, contained a false statement, namely, that the registration of the appellant had not been cancelled, with drawn or otherwise made inoperative for the manufacture of SMX and, accordingly, the goods, namely, isoxamine, had been imported by the appellant in contravention of the Import Trade Control Order issued under section 3 of the Imports and Exports (Control) Act.
In the circumstances, the Collec tor of Customs proposed to review the said unauthorised clearance of the goods.
The appellant submitted its reply to the show cause notice contending, inter alia, that the industrial licence dated April 23, 1974 granted to it for the manufacture of SMX was still valid and operative.
The Collector of Customs, after hearing the appellant and after considering the facts and circumstances of the case, by his order dated November 14, 1979, held that the appellant was not an Actual User (Industrial) in respect of the said imported raw material, isoxamine, after April 22, 1976, that is to say, after the expiry of two years from the date of issue of the industrial licence to the appellant, and that since the industrial licence was invalid for manu facture of SMX the importation of the raw material, namely, isoxamine, was impermissible.
It was also held by the Col lector of Customs that the appellant had furnished a false declaration on the basis of which it got the goods cleared by the Customs Officers.
Accordingly, the Collector of Customs ordered as follows: "In exercise of powers conferred upon me under Section 130(1) of the , I therefore, review the order of clearance allowing storage in warehouse, the goods shall be confiscated under Section 111(d) of the read with Section 3 of the Imports and Exports (Control) Act, 1947.
I, however, allow under Section 125 of the Cus toms Act, 1962, an option to pay in lieu of such confiscation a fine of Rs. 19,00,000 (Rupees nineteen lakhs only) and clear the goods into town.
This option should be exer cised within a month from the date of this 502 order or within such extended period as may be allowed on good and sufficient cause being shown to the satisfaction of the Adjudication authority.
I also impose a penalty of Rs.5,00,000 (Rupee five lakhs only) on the importers under Section 112, of which is to be paid forthwith".
Being aggrieved by the said order of the Collector of Customs, the appellant challenged the same by filing a writ petition before the Bombay High Court.
A learned Single Judge of the High Court, who heard the writ petition, dis missed the same by his judgment dated April 11, 1984.
The appellant preferred an appeal against the judgment of the learned Single Judge to a Division Bench of the High Court which, as stated already, dismissed the same.
Hence this appeal by special leave.
It is not disputed that the industrial licence granted to the appellant clearly stipulated that after the expiry of two years the appellant would not be entitled to manufacture SMX with the imported material, isoxamine.
Such manufacture of SMX could be made by the appellant from indigenous mate rials.
It has been strenuously urged by Mr. Anil Divan, learned Counsel appearing on behalf of the appellant, that the goods, namely, isoxamine, having been imported under a valid Open General Licence (OGL), the customs authorities have no jurisdiction to confiscate the same.
It is submitted that the only thing that can be looked into by the customs authorities is whether the particular goods have been im ported under a valid licence or not.
As soon it is found that it has been so imported under a valid licence, the customs authorities will have no other alternative than to clear the goods.
We are unable to accept this contention of the appel lant.
It is true that the goods have been imported under OGL.
If that had been the only condition for clearance of the goods then, of course, the customs authorities could not confiscate the goods.
But, that was not the only condition to be fulfilled by the appellant.
Another conditions that has to be fulfilled by the appellant is that contained in paragraph (6) of Appendix 10 of the Import Policy 1978 79 which is as follows: "(6).
All Actual Users, at the time of clear ance of goods shall furnish to the customs authorities a declaration giving particulars of their registration as an Actual User with the concerned authorities and affirming that such registration 503 has not been cancelled or withdrawn or other wise made inoperative.
In case, where separate registration number is not allotted by the sponsoring authority concerned, the importers shall produce other evidence to the satisfac tion of the customs authorities that they are registered as industrial units.
Actual Users (non Industrial) shall, at the time of clear ance of the goods furnish to the customs authorities the original or a photostat copy of the (currently valid) Registration Certifi cate held by them under the Shops and Estab lishments Act, Cinematographic Act,or con cerned local statute.
" Thus, under paragraph (6), the Actual User has to fur nish a declaration affirming that the registration as an Actual User has not been cancelled or withdrawn or otherwise made inoperative.
If there be no separate registration number, as in the case of the appellant, importers shall produce evidence to the satisfaction of the customs 'author ities that they are registered as industrial units.
The appellant has, admittedly, been registered as an industrial unit which is evidenced by the grant of the industrial licence.
As stated already, the appellant furnished a decla ration that its registration had not been cancelled or withdrawn or otherwise made inoperative.
The appellant also claimed that it was an Actual User.
It is urged on behalf of the appellant that as soon as it is proved that it is an Actual User, and that its registration has not been can celled, the declaration that has been furnished by the appellant must be held to be a correct one and the customs authorities had rightly allowed the appellant to clear the goods.
Clauses (1) and (3) of Paragraph 5 of Chapter 2 of Import Policy 1978 79 define "Actual User" and "Actual User (Industrial)" respectively, as follows: "(1) "Actual User" means a person who applies for/ secures a licence for the import of any item or an allotment of a canalised item required for his own use, and not for business or trade in it.
Thus, in the case of an indus trial undertaking, the item concerned shall be utilised for the manufacturing processes or operations conducted within its authorised premises (or made available to jobbing units outside only as part of such production ef fort).
In the nonindustrial category, such as hospitals, research and development or any other institutions, commercial estab 504 lishments and individuals, the concerned item shall be utilised for its/his own use i.e. for the purpose for which the item was sought for import.
(3) "Actual User (Industrial)" shall mean an industrial undertaking, be it in the large scale, small scale or cottage industries sector, engaged in the manufacture of any goods for which it holds a licence or Regis tration Certificate from the appropriate Government authority, wherever applicable.
" There can be no doubt and it is also conceded to on behalf of the appellant that the definition of "Actual User (Industrial)", as contained in clause (3) of paragraph 5 should be read with the definition of "Actual User" in clause (1) of paragraph 5.
So read, it is clear that an "Actual User (Industrial)" means an industrial undertaking which is entitled to utilise the imported goods "in the manufacturing process or operations conducted within its authorised premises".
Much emphasis has been laid by the learned Counsel for the appellant on the first sentence of clause (1) of paragraph 5 "Actual User" means a person who applies for/secures a licence for the import of any item or an allotment of a canalised item required for his own use, and not for business or trade in it.
It is submitted on behalf of the appellant that the appellant having secured the OGL for the import of isoxamine for its own use and not for business or trade in it, the appellant should be held to be an Actual User.
We do not find any substance in the contention made on behalf of the appellant.
The appellant is not entitled under the industrial licence to utilise the imported goods for its own use for the manufacture of SMX.
Even otherwise, the latter part of clause (1) makes it very clear that the imported goods have to be utilised for the manufacturing process or operations conducted within the authorised premises of the industrial undertaking which the appellant is debarred from doing under the terms of the industrial licence after the expiry of the period of two years on April 22, 1976.
The appellant, therefore, does not satisfy the first condition of paragraph (6) of Appendix 10 of the Import Policy 1978 79, namely, the importer has to be an Actual User.
In other words, the importer must not be debarred from utilising, but must be entitled to utilise the imported goods under the terms of the industrial licence.
The appellant also does not fulfil the other condition under paragraph (6) that the registration has not been made otherwise invalid.
It may be that the industrial licence is operative for the 505 manufacture of SMX with indigenous materials but, surely, it is inoperative for the manufacture of the said product with imported materials after the expiry of two years from the date of the issuance of the licence.
The declaration of the appellant that it is an Actual User, and that its registra tion has not been otherwise made inoperative is a false declaration, as rightly held by the Collector of Customs in the impugned order.
When the industrial licence granted to the appellant does not permit the user of the imported goods for the manufacture of SMX, the importation of the goods under the OGL is illegal and could not be allowed to be cleared by the appellant.
There is, therefore, no substance in the contention made on behalf of the appellant that on a demurer at the highest, the appellant can only be said to have infringed a condition of its industrial licence and such infringement does not constitute a prohibition on import which is imposed by any law.
This submission com pletely overlooks the provision of paragraph (6) of Appendix 10 of the Import Policy 1978 79.
After the expiry of two years from the date of issuance of the industrial licence, the appellant had no right to import isoxamine under the OGL.
Accordingly, the importation of isoxamine after the expiry of two years from the date of the issuance of the industrial licence was illegal.
It is next contended on behalf of the appellant that even if the appellant 's declaration is considered to be wrong, it would not render the importation invalid, but the only consequence would be that the clearance of the goods would not be permitted and that in such situation, the respondents would only take recourse to clause 10 C(1) of the Imports (Control) Order.
Clause 10 C(1) provides that where, on the importation of any goods or at any time there after, the Chief Controller of Imports and Exports is satis fied, after giving a reasonable opportunity to the licensee of being heard in the matter, that such goods cannot be utilised for the purpose for which they were imported he may, by order, direct the licensee or any other person having possession or control of such goods to sell such goods to such persons, within such time, at such price and in such manner as may be specified in the direction.
The appellant cannot, in our opinion, take resort to the provi sion of clause 10 C(1).
That provision is not meant for granting relief to an importer who on the basis of a false declaration gets his goods cleared, nor does it apply to any import which is in violation of the conditions of an indus trial licence.
Clause 10 C(1) will apply to a case where the goods have been validly imported, but cannot be utilised for some reason or the other.
The contention of the appellant is unsound and is rejected.
506 Next contention of the appellant is that the Collector of Customs cannot, in exercise of his revisional jurisdic tion under section 130(2) of the Act, as it stood then, for the first time confiscate the goods and impose penalty on the appellant.
It is submitted that a revisional authority, as the Collector of Customs is under section 130(2) of the Act, can set aside the decision or order of an officer of customs subordinate to him, but cannot either confiscate the goods or impose penalty.
It is contended that in the instant case, the Collector of Customs could set aside the decision of the Customs Officer allowing clearance of the goods and direct issuance of a show cause notice under section 124 of the Act for the confiscation of the goods.
The grievance of the appellant is that if such a show cause notice was issued and there was an adjudication of confiscation and penalty under section 122 of the Act, in that case, the appellant could challenge the same by way of an appeal as provided in section 128 of the Act.
The Collector of Customs, it is urged, having himself confiscated the goods and imposed a penalty, has deprived the appellant of its right of appeal under section 128 and, accordingly, the impunged order of the Collector of Customs confiscating the goods and imposing the penalty on the appellant should be quashed.
We may first consider whether the Collector of Customs had exceeded his jurisdiction in confiscating the goods and imposing penalty for the first time in exercise of his revisional jurisdiction under section 130(2) of the Act.
In view of the provisions of section 122 read with section 124 of the Act, the Collector of Customs has the jurisdiction to confiscate goods or impose penalty after issuing show cause notice on the person concerned.
He has, therefore, both the original jurisdiction as also revisional jurisdiction.
In exercise of his revisional jurisdiction under section 130(2) of the Act, he set aside the order of the Customs Officer allowing the goods to be cleared by the appellant and, thereafter, in exercise of his original jurisdiction under section 122 read with section 124 of the Act, he issued a show cause notice on the appellant and, after hearing the appellant, confiscated the goods and imposed penalty on the appellant.
It, however, appears from the impugned order dated November 14, 1979 that the confiscation was made and the penalties imposed by the Collector of Customs in exer cise of his revisional power under section 130(2) of the Act.
This, in our opinion, is a mere irregularity not af fecting the order.
Admittedly, the Collector of Customs had the power to confiscate the goods and impose penalty under section 122 read with section 124 of the Act.
When an au thority has the power to do a certain act and in exercise of such power he does the same, but refers to a wrong provision of the 507 law, that would be a mere irregularity and would not vitiate such act.
In the instant case also, the Collector of Customs had admittedly the power to confiscate goods and impose penalty and even though in the impugned order it is stated that the confiscation of the goods was made and the penalty was imposed in the exercise of his power under section 130(2) of the Act, that would not be fatal and vitiate the order.
The decision of the Delhi High Court in Addl.
Commis sioner of Income Tax vs J.K. D 'Costa, , strongly relied upon by the appellant, does not apply to the facts and circumstances of the instant case.
In that case, the Addl.
Commissioner of Income Tax came to the conclusion, inter alia, that the failure of the Income Tax Officer to initiate penalty proceedings for both the assessment years, namely, 1964 65 and 1965 1966 under section 271(1)(a) and for the assessment year 1965 66 under section 273(b) of the Income Tax Act, 1961, was erroneous and prejudicial to the interest of the revenue.
In that view of the matter, he passed orders setting aside the assessment orders and di rected the Income Tax Officer to make fresh assessments in accordance with law.
It has been observed by the Delhi High Court that there is no identity between the assessment proceedings and the penalty proceedings; the latter are separate proceedings, that may, in some cases, follow as a consequence of the assessment proceedings.
Further, it has been observed that the penalty proceedings do not form part of the assessment proceedings and that the failure of the Income Tax Officer to record in the assessment order, his satisfaction or the lack of it in regard to the leviability of penalty cannot be said to be a factor vitiating the assessment order in any respect.
In that case, as the Income Tax Officer did not impose a penalty, the Addl.
Commissioner set aside the assessment order.
The omission to initiate penalty proceedings by the Income Tax Officer will not vitiate an assessment order which is otherwise valid and it has been rightly observed by the Delhi High Court that the Addl.
Commissioner was not justified in setting aside the assessment order on that ground.
In the instant case, the facts are completely different.
The Collector of Customs set aside the order of the Customs Officer allowing the appellant to clear the goods on a false declaration and also confiscated the goods and imposed penalty.
The Collector of Customs had, as noticed above, the power to confiscate the goods and impose penalty and he did the same after issuing a show cause notice and hearing the appellant.
In D 'Costa 's case (supra) the Addl.
Commissioner of Income Tax had no power to initiate penalty proceedings under section 271(1)(a) or section 273(b) of the Income Tax Act, 508 1961.
Be that as it may, that decision has no manner of application to the facts and circumstances of the instant case.
The appellant has complained that as the goods have been confiscated and the penalty has been imposed by the Collec tor of Customs in exercise of his revisional jurisdiction, the appellant has been deprived of his right to prefer an appeal before the Central Board of Excise and Customs under section 128(a) of the Act.
When the Collector of Customs could confiscate the goods and impose penalties only in exercise of his original jurisdiction under section 122 read with section 124 of the Act, surely, the appellant had a right of appeal against such confiscation and imposition of penalty.
At this stage, we may notice a very significant fact that in the impugned order of the Collector dated November 14, 1979, it has been specifically stated at the very outset that an appeal against the order lies to the Central Board of Excise and Customs, New Delhi, within three months from the date of its despatch.
It cannot, therefore, be said that the appellant was misled, as the order was purported to have been passed by the Collector of Customs in exercise of his revisional jurisdiction.
The appellant, however, did not avail itself of its right of appeal under section 128(a) of the Act and, accordingly, its complaint in that regard is not justified.
Before we part with this appeal, we may dispose of two other minor contentions of the appellant.
Counsel for the appellant submits that as the appellant has been found not entitled to use the imported material in the production of SMX, it is curious that by the impugned order the appellant has been given an option to pay in lieu of the confiscation of the imported materials a fine of Rs. 19,00,000 and clear the goods into the town.
Counsel submits that this shows that the appellant is entitled to use the imported material for the production of SMX.
This contention is devoid of merit and is fit to be rejected on the face of it.
The appellant may have been allowed to clear the goods on pay ment of a fine in lieu of confiscation, but that does not mean that the appellant would be entitled to use the goods for the manufacture of SMX in violation of the industrial licence.
The appellant may sell the goods to some other person but, surely, it cannot use it in its factory for the manufacture of SMX.
The other contention of the appellant is that as the capacity of the appellant to manufacture SMX has been raised from 18 tomes to 45 tonnes per annum, there is no sense in confiscating the imported goods.
This contention is equally devoid of merit.
It may be that the 509 manufacturing capacity of the appellant has been increased, but there is nothing to show that the Central Government has permitted the appellant to manufacture SMX with imported isoxamine.
The appellant may go on manufacturing SMX from indigenous materials and the manufacturing capacity of the appellant may have been increased from 18 tonnes to 45 tonnes for the manufacture of SMX from indigenous materials, but these facts are quite irrelevant and have no bearing on the question with which we are concerned.
The contention is rejected.
No other points have been urged on behalf of the appellant.
For the reasons aforesaid, the appeal is dismissed.
There will, however, be no order as to costs in this appeal.
R.S.S. Appeal dismissed.
| IN-Abs | The appellant is engaged in the business of manufacture of various pharmaceutical products including sulphamethoxa zole which is also known as 'SMX '.
One of the important ingredients or raw materials for the manufacture of SMX is a chemical known as 'isoxamine '.
On April 23, 1974 the Ministry of Industrial Development of the Government of India issued to the appellant an indus trial licence enabling it to manufacture 18 tonnes of SMX per year.
Under one of the conditions of the industrial licence, the appellant was permitted to import the material, isoxamine, for a period of two years only from the date of licence, and thereafter the product SMX was to be manufac tured from indigenous materials.
The appellant 's request for permission to import isoxamine till the middle of 1979 was not acceded to by the Government and the appellant was asked to manufacture SMX from indigenous materials.
In the mean time, the appellant had placed orders for the import of isoxamine under an import licence issued on October 13, 1976, and between March and June 1979 got the goods cleared after giving a declaration that the appellant was an Actual User, and that its registration had not been cancelled or withdrawn or otherwise made inoperative.
496 The Collector of Customs, Bombay, issued show cause notice on the appellant for confiscation of goods and impo sition of penalty, inter alia, on the ground that it had made a false statement that its registration had not been cancelled, withdrawn or otherwise made inoperative for the manufacture of SMX by using imported material, that is, isoxamine, inasmuch as the industrial licence had ceased to be valid for the manufacture of SMX with imported material after April 22, 1976.
The Collector of Customs, after bearing the appellant, held that the appellant was not an Actual User (Industrial) in respect of the said imported raw material, isoxamine, after April 22, 1976, and that since the industrial licence was invalid for manufacture of SMX with imported material the importation of the raw material, namely, isoxamine, was impermissible.
The Collector also held that the appellant had furnished a false declaration on the basis of which it got the goods cleared by the Custom Officer.
The Collector, therefore, set aside the decision of the Custom Officer allowing clearance of the goods.
The Collector of Customs further directed confiscation of the goods imported by the appellant and also imposed a penalty.
The appellant 's writ petition was dismissed by the learned Single Judge of the High Court, and appeal against his judgment was dismissed by the Division Bench.
Before this Court it was contended on behalf of the appellant that the goods, namely, isoxamine, having been imported under a valid Open General Licence (OGL), the customs authorities had no jurisdiction to confiscate the same; that the appellant having secured the OGL for the import of isoxamine for its own use and not for business or trade in it, the appellant should be held to be an Actual User; that the Collector of Customs could not, in exercise of his revisional jurisdiction under section 130(2) of the , as it stood then, for the first time confiscate the goods and impose penalty on the appellant; and that as the goods have been confiscated and the penalty has been imposed by the Collector of Customs in exercise of his revisional jurisdiction, the appellant has been deprived of his right to prefer an appeal before the Central Board of Excise and Customs under Section 128(a) of the .
While dismissing the appeal, this Court, HELD: (1) There can be no doubt that the definition of "Actual User (Industrial)", as contained in clause (3) of paragraph 5 of chapter 2 of Import Policy 1978 79 should be read with the definition of "Actual 497 User" in clause (1) of paragraph 5.
So read, it is clear that an "Actual User (Industrial)" means an industrial undertaking which is entitled to utilise the imported goods "in the manufacturing process or operations conducted within its authorised premises.
In other words, the importer must not be debarred from utilising the imported goods under the terms of the industrial licence.
[504C D] (2) The declaration of the appellant that it is an Actual User, and that its registration has not been other wise made inoperative is a false declaration, as rightly held by the Collector of Customs.
When the industrial li cence granted to the appellant does not permit the use of the imported goods for the manufacture of SMX, the importa tion of the goods under the OGL is illegal and could not be allowed to be cleared by the appellant.
[505A B] (3) In view of the provisions of section 122 read with section 124 of the , the Collector of Customs has the jurisdiction to confiscate goods or impose penalty after issuing show cause notice.
He has, therefore, both the original jurisdiction as also revisional jurisdiction.
In exercise of his revisional jurisdiction under section 130(2) of the Act, he set aside the order of the Customs Officer allowing the goods to be cleared by the appellant and, thereafter, in exercise of his original jurisdiction under section 122 read with section 124 of the Act, he issued a show cause notice on the appellant and, after hearing the appellant, confiscated the goods and imposed penalty on the appellant.
[506E F] (4) It appears, however, that the confiscation was made and the penalties imposed by the Collector of Customs in exercise of his revisional power under section 130(2) of the act.
This is a mere irregularity not affecting the order.
When an authority has the power to do a certain act and in exercise of such power he does the same, but refers to a wrong provision of the law, that would be a mere irregulari ty and would not vitiate such act.
[506G H; 507A] Addl.
Commissioner of Income Tax vs J.K. D 'Costa, , distinguished.
(5) In the order of the Collector it has been specifi cally stated at the very outset that an appeal against the order lies to the Central Board of Excise and Customs.
It cannot, therefore, be said that the appellant was misled, as the order was purported to have been passed by the Collector of Customs in exercise of his revisional jurisdiction. 498
|
ivil Appeal No. 4447 of 1989.
From the Judgment and Order dated 28.4.
1989 of the Delhi High Court in C.W.P. No. 3090 of 1987.
Kapil Sibal, Manoj Prasad and Dalveer Bhandari for the Appellant.
F.S. Nariman, Soli J. Sorabjee, H.N. Salve and K.J. John for the Respondents.
The following Order of the Court was delivered by VENKATACHALIAH, J. The New Delhi Municipal Committee (NDMC) seeks special leave to appeal to this court from the order dated 28.4.
1989, of the High Court of Delhi in Civil Writ Petition 3090 of 1987.
In the writ petition, Statsman Ltd., and its Managing Director, Respondents 1 and 2 respec tively herein, sought to impugn the decision of the NDMC dated 18.2.
1987, declining to sanction the Revised Plans for the construction of "Statesman House" a high rise building on plot No. 148, Barakhamba Road New Delhi, of which the first respondent is the lessee.
The High Court allowed the writ petition and directed the NDMC to convey its formal sanction of the building plans on or before the 5th day of May, 1989.
The NDMC assails the decision of the High Court on grounds, 596 principally, that the plans for the multi storeyed high rise building, as proposed by Statesman Ltd., did not, in the matter of the fire safety requirements, accord with the mandatory requirements of the Statutory Building Bye laws promulgated under the Punjab Municipal Act 1911, in relation to the Union territory of Delhi and that the proposed build ing did not also provide for a "podium/pedestrian walk way" made mandatory by the Zonal Development Plan for Zone D 1 (viz. Connaught Place Area) approved by the Central Govern ment on 30th April 1966 in No. 21023(7)66 UD under Section 9(2) of the Delhi Development Act 1957.
We have heard Sri Kapil Sibal learned Senior Advocate for the NDMC and Sri Nariman and Sri Soli J. Sorabjee learned Senior Advocate for the Statesman Ltd and its Manag ing Director.
Special Leave is granted.
Respondent No. 1, a publisher of Newspapers, holds a lease in perpetuity from Government of the plot No. 148, Barakhamba Road, New Delhi.
In the year 1980 Respondent No. 1 sought for, and obtained, permission from the Land Devel opment Officer, to erect a high rise building of an area of 1,62,000 square feet and paid Rs.63,40,918 as betterment levy.
On 4.5.1982 it applied for, and on 29.8.
1980 ob tained, sanction from the NDMC of its building plans, valid for 2 years.
The sanction was revalidated for a further period of two years.
In June 1985, however, there was, it would appear, prohibition on high rise structures.
But this prohibition, in relation to Connaught Place area, was lifted on 18.7.
On 29.12.
1986 Respondent No. 1 submitted Revised plans incorporating therein substantial changes in the plans necessitated, as it was claimed, by the changing require ments of printing technology and the plans as earlier sanc tioned did not meet these altered requirements.
The new building, as envisaged by the revised plans, would accommo date the printery of the Respondent 1, its offices and other offices and business accommodation.
On 7.1. 1987 the appel lant forwarded the Revised plans to the Delhi Urban Art Commission (DUAC) in compliance with the requirements of Section 12 of the Delhi Urban Art Commission Act 1973 which envisages that, notwithstanding anything contained in any other law for the time being in force, every local body shall, before according approval in respect of any "building operations" or "development proposals" refer the same to the DUAC for its scrutiny.
Section 12 further provides that the decision of the DUAC in that behalf shall be binding on such local 597 body.
The DUAC did not promptly scrutinise the plans but engaged itself in some correspondence with the NDMC as also with the Ministry of Urban Development, Government of India, seeking what it referred to as the "requisite clarifica tions", "clear cut finalised policy" and "guidelines" for it to be able to process the plans.
However, by communication dated 18.2.
1987, the NDMC in exercise of power under Section 193(3) of the Punjab Municipal Act, 1911, rejected the plans, assigning 28 rea sons for the rejection.
On 14.5.
1987, the Architect of First Respondent claiming to have subsequently complied with or clarified the points on which the rejection was based, resubmitted the plans.
On 26.5.
1987, the Architects wrote to NDMC to reconsider its decision dated 18.2.
1987, in the light of the rectifications effected.
However, no positive response having emanated from the NDMC Respondents 1 & 2, on 27.10.1987, filed the Writ petition in the High Court for an appropriate order directing the DUAC and the NDMC to "forth with deal with the application for grant of sanction".
Sometime in March 1988, the Chief Fire Officer, Delhi Fire Services, and the Deputy Commissioner of Police (Traf fic), New Delhi, were impleaded to the proceedings.
During the pendency of the proceedings in the High Court, the DUAC which had earlier considered the plans to be 'conceptually unsatisfactory ' took a decision to approve the plans.
So did the Chief Fire Officer who, by his communication dated 9.3.1988, gave clearance to the building plans in relation to the Fire safety precautions.
The High Court considered the objection raised by the Deputy Commissioner of Police (Traffic) as unrelated to the bye laws as applicable to the situation and held that the objection from that source should not interdict the sanction of plans by the NDMC.
During the pendency of the proceedings, the High Court required the parties to sort out their differences.
On 9.12.
1988, the High Court had occasion to say: " . .
We have no doubt that the NDMC will grant the final approval without wasting any further time.
In case the meeting of the Building Plans Committee of NDMC is not sched uled to be held within two weeks, the NDMC will so arrange that a special meeting is held so that the matter is not delayed any further.
Case to be listed before Court for final orders and disposal on February 3, 1989.
In the course of the order dated 28.4.1989 finally dis posing of 598 the writ petition, the High Court after referring to what is considered to be a co operative attitude of the DUAC and other authorities, however, had this to say of the NDMC: "However, to our surprise on the final date of arguments, that is, on 31.3.
1989 the NDMC changed its counsel and the Standing Counsel for NDMC appeared instead of Mr. H.P. Sharma, advocate who had been appear ing throughout . . " "But surprisingly NDMC was not willing to take a decision and continued to raise frivo lous objections for reasons best known to it.
Inspite of the fact the clearance had been granted by Urban Art Commission as also by all other Authorities the sanction was not con veyed and was withheld for no reasons.
This attitude of NDMC is beyond our understanding.
Since I have come to the conclusion that no objection remains from any Authority I am of the opinion that non sanction of the plans on the part of the NDMC is absolutely unjustified and cannot be supported by any reason whatso ever.
" The High Court was persuaded to the view that NDMC 's disinclination to accord sanction to the plan was unjusti fied; that whatever reservations it had had as to the ade quacy of the fire safety measures, as envisaged in the Building designs, were allayed by the Chief Fire Officer 's clearance and held that, thereafter, there was no impediment to the sanction.
The High Curt, accordingly, directed the NDMC: " . . to convey its formal sanction of the building plans and release the same to the petitioner Company on or before the 5th day of May, 1989 . . " 5.
Before us, Appellant NDMC has aired a serious griev ance both against the validity of the reasoning of and conclusion reached by the High Court as also the manner of the conduct of proceedings which were, according to the appellant, initially more in the nature of efforts directed towards the resolution of the dispute by mutual negotiation than by adjudication, but acquired an adjudicative complex ion with such suddenness that appellant was denied a reason able opportunity of elaborating on the substantial issues, of serious public importance pertaining, as they did, to a vital area of fire safety precautions in highrise buildings as conceived in the Building Bye laws.
It is submitted 599 that the High Court failed to consider submissions of the appellant on certain vital issues.
In his affidavit dated 6.6.
1989, filed in this Court, Sri H.P. Sharma, learned Advocate who appeared for the NDMC before the High Court stated: " . .
Again, it is clear from the order that the entire matter was being conducted in a spirit of compromise which shows that in stead of adjudicating upon the issues in the Writ Petition, parties to the petition were required to resolve the matter amicably.
On March 31, 1989, Mr. S.D. Satpate, Chief Archi tect, NDMC and Mr. Karam Chand, Dy Architect, NDMC were present in Court.
Counsel for NDMC informed to the Court of the presence of the said persons who were ready to assist the Court as certain objections were still outstanding.
However, the Court did not ascertain from any of the Officers if they had any objections.
Conse quently, the Hon 'ble Court was not informed of the details of the said objections of the NDMC.
Instead, the Court issued Rule on the same date and proceeded with the matter.
I, as counsel appearing on behalf of NDMC along with Mr. Bikramjit Nayyar, Advocate requested the Court that the NDMC wished.
to file an Affida vit giving details of the outstanding objec tions.
Time was sought to file the said affi davit.
Counsel for NDMC also indicated that the normal practice of the Court is to issue Rule and thereafter fix the case for final disposal giving an opportunity to the parties to file additional affidavits, if any for the disposal of the petition.
However, the Court declined the request and directed counsel for NDMC to proceed with the hearing on that very date.
The matter was proceeded with and Judg ment was reserved on that date.
During the course of the hearing the standing counsel for the NDMC raised the issue of the applicability of Bye law 16.4.8 of the applicable Building Bye laws of the NDMC and submitted that the clearance of the Chief Fire Officer did not prevent the NDMC from enforcing the applicable bye laws.
Standing counsel for the NDMC also submitted to the Court that the approval of the DUAC was conditional.
However, the Court in the light of the statement of counsel for the DUAC did not deal with the issue of the applicability of Bye law 16.4.8.
" (Emphasis Supplied) 600 To similar purport and effect is the affidavit of Sri Sat pate the NDMC 's Chief Architect.
Before we examine the specific contentions raised in the appeal, it is necessary to refer to certain basic fea tures of the proposed building in relation of its fire safety aspects.
The eligibility of the proposed construction for sanction except on the point of adequacy of "Refuge areas" in the requirement of a "pedestrian walk way" and "Podium" is not otherwise disputed.
The proposed "Statesman House" envisaged by the plans is a fifteen storey, 55.2 meter high structure its High rise portion being a cylindrical structure with a hollow core open to sky.
On each of the floors above the 4th floor, commencing above the height of 15 meters, there is a 5 foot wide circular passage on the inner side of the circle over looking the central vacant area.
These passages which are connected to the lift areas, provide access to the accommo dation on the respective floors.
Only an arc of the circular passage in each of the floors is visible from and overlooks the front of the building.
Respondent No. 1 claimed that these inner circular passages answer the description and serve the purpose, of "Refuge areas" required to be provided as fire safety measures.
In so designing, the Architects seek to combine general utility and "Refuge areas".
The question is whether this architectural and design resource fulness, which enables Respondent 1 to claim these, other wise essentially functional and utility areas, also as 'refuge areas ' for fire safety, really satisfies the re quirements of the Bye laws.
We may now turn to the requirements of the Bye laws in this behalf.
Fire protection requirements, generally are dealt with by bye law 17.1 and 17.2 which provide: "17.1 Buildings, shall be planned designed and constructed to ensure fire safety and this shall be done in accordance with part IV Fire Protection of National Building Code of India, unless otherwise specified in these bye laws.
In the case of buildings (identified in Bye law No. 6.2.4.1), the building schemes shall also be cleared by the Chief Fire Officer, Delhi Fire Service" "17.2 The additional provisions related to fire protection of buildings more than 15m in height and buildings identified in 6.2.4.1, shall be as given in Appendix K." 601 The proposed building is over 15 meters in height and attracts Bye law 16.4.8 which, inter alia, provides: "Refuge Area For all buildings exceeding 15 m in height, refuge area shall be provided as follows: (a) For floors above 15m and upto 24m one refuge area on the floor immediately above 13m.
(b) For floor above 24m and upto 36m one refuge area on the floor immediately above 24m.
(c) For floor above 36m one refuge area per every five floors above 36m.
This Bye law specifies the location, at various heights,, of the "refuge areas".
The structural nature and basis of its calculation of the extent of these "Refuge areas" are dealt with by Bye law 16.4.8.1.
which provides: "Refuge area shall be provided on the external walls as cantilever projections or in any other manner (which will not be covered in FAR) with a minimum area of 15 sq.
and to be calculated based on the population on each floor at the rate of 1 sq. m. per person.
" (Emphasis Supplied) The expression "External Wall" is a defined expression.
Bye law 2.27 says: "An outer wall of a building not being a partition wall even though adjoining to a wall of another building and also means a wall abutting on an interior open space of any building." In the plans, the disposition of the 'refuge area ' is, admittedly, not in strict accord with the prescription of Bye law 16.4.8 which requires the location of 'refuge areas ' for a group of floors as specified therein.
The Bye law does not contemplate one for each floor as now provided in the plans.
The 'refuge areas ' are not provided on the outer "external" wall; but are on the wall abutting the inner circular vacant space forming the floor of the hollow care of cylindrical structure.
As the entrance is now designed and conceived fire fighting and rescue 602 equipment cannot, it would appear, be carried into this inner area.
But Respondent 1 claims that the walls on which these refuge areas are provided about the inner vacant space and are eligible to be called 'External ' walls within the meaning of Bye law 2.27.
The NDMC by its communication dated 14.3.1989 to the Chief Fire Officer expressed its reservations as to the correctness and propriety of the clearance to the plans accorded by him on 9.3.
By his reply dated 30.3.
1989, the Chief Fire Officer, in justification of the approval which he gave stated: "the consultants have proposed refuge area at each floor above 15m level, which is consid ered to be more convenient and reliable be cause there is hardly any scope of smoke logging due to centre core open to sky." (Emphasis Supplied) 8.
The contentions urged by Sri Sibal in support of the appeal are: (i) Bye Law 16.4.8 prescribes that in respect of all buildings exceeding 15 metres in height there shall be provision for refuge areas at specific locations for a specific group of floors.
The requirement is mandatory as it is guided by the considerations of the need to direct and concentrate rescue operations at particular, pre fixed locations.
The Bye law is binding on the Chief Fire Officer who is not competent to relax the rigor of its pre scriptions.
(ii) The 'external ' walls spoken of by Bye law 16.4.8.1, though so defined in Bye law 2.27 as to include a wall "abutting on an interior open space of any building", however, having regard to the purpose of the Bye law can only refer to an outer wall accessible to the rescue team.
The definition is.
as always, subject to the context requiring a different meaning.
For purposes of Bye law 16.4.87 an "external" wall should be understood with reference to an open area from which rescue operations are possible.
In the present case the construction of the Bye law suggested by the respondent company would be justified only if fire fight ing and rescue operations could be conducted from the inner open space.
In the present case, 603 having regard to the lack of access to the inner vacant space for fire engines etc., the proposition of Respondent 1 is not even a statable possibility.
(iii) The clearance from the Chief Fire Offi cer, Delhi Fire Service, envisaged in Bye laws 17.1 is in addition to the requirements of bye laws 16.4.8.
and 16.4.8.1.
The said clear ance is one of the conditions for eligibility of the plan to be considered for accord of sanction by the NDMC is not in substitution of the requirement of compliance with the objec tive prescriptions of those bye laws.
The primacy to the Chief Fire Officer 's implicit in the approach of the High Court is erroneous and virtually renders the clearance of the Chief Fire Officer binding on the NDMC.
It is the NDMC and NDMC alone that can decide wheth er the plans satisfy the Bye laws in any particular case.
A reasonable construction bye laws 6.2.4.1, 16.4.8., 16.4.8.1, 17.1 and 17.2 would detract from the validity of the first respondent 's claim and establishes that the clearance from the Chief Fire Officer is one of the conditions and not the sole or conclusive test of the adequacy of fire safety measures in terms of the relevant Bye laws.
(iv) The view of the Chief Fire Officer that the design of the Refuge areas in the plans is "more convenient and reliable" is factually and technically unsound as the very nature of the cylindrical structure with a hollow core would promote a "stock" or chimney effect.
The Chief Fire Officer 's view is not final or conclusive on the point and, at all events, not binding on the NDMC.
(v) The construction of a Pedestrian walk way and Podium are mandatory not under the bye laws but from the requirements of a zonal plan of zone D 1 in which plot No. 148, Barakhamba Road is located and that no relaxation of the requirement would be permissible except on a modification of the relevant Zonal Development Control Plans.
The provision for "pedestrian walk way" and "podium" is, therefore, mandatory under the Zonal Development Plan and that no authority including the Chief Fire Officer could compel an abandonment of those statutory presumptions.
604 (vi) That in the manner in which the case before the High Court proceeded the NDMC was denied a reasonable and effective opportunity of presenting its case.
Considerations of public safety underlying the stand of the NDMC was not properly appreciated and the NDMC should have been afforded an opportunity to substantiate its valid objections to the plans.
(vii) The grant of relief in the writ petition in the form of a direction to the appellant to sanction the plan was not permissible and that, at best, the High Court could have directed the appellant to reconsider the question of according sanction to the plans in the light of the High Court 's order.
Sri Nanman, for the respondent company however, submitted that the objection to the plans raised by the appellant on the basis that the refuge areas were not in accordance with the Bye laws was a classic after thought on the part of the Appellant.
Bye laws 16.4.8 and 16.4.8.1 learned counsel urged, were merely prescriptive of certain minimal standards of fire safety precautions, it being always open to the owner to build into the designs better and more satisfactory standards of fire safety precautions and that in the present case the Chief Fire Officer who was a technical authority, had himself accepted the designs in that behalf as better and more reliable.
Learned counsel urged that out of the 28 reasons put forward by the appel lant on 18.2.
1987 in support of the rejection of the plans, not even one referred to its present insistence that the refuge areas should be built only at the levels suggested in the Bye law or that the refuge area did not abut the "exter nal wall" Shri Nariman further pointed out that in the communication dated 18.2.1987 all that was sought to be said, with reference to the refuge areas in each floor, was that the same had not been taken into account in the calcu lation of the F.A.R. Shri Nariman said that bye law 16.4.8 in its language and content had been bodily lifted from the corresponding prescriptions in the "National Building Code of India" (1983), from the provisions of part IV relating to "Fire Protection".
The said Code itself indicated that the norms in regard to fire protection referred to therein were only broad guide lines and were not to be construed to prohibit better arrangements.
Shri Nariman referred to the following excerpts from part IV of the said Code at para 0.2 and 0.7: 605 " . .
An indefinite combination of variable is involved in the phenomenon of fire, all of which cannot be quantified.
The requirements of this Code should, therefore, be taken as a guide and an engineering design approach should be adopted for ensuring a fire safe design for buildings.
It would also be necessary for this purpose to associate quali fied and trained fire protection engineers with the planning of buildings, so that ade quate fire protection measures could be incor porated in the building design fight from the beginning." (Emphasis Supplied) "0.7.
Nothing in this part of the Code shall be construed to prohibit better types of building construction, more exits or otherwise safer conditions than the minimum requirements specified in this part." (Emphasis Supplied) It was, accordingly, urged that the prescriptions in bye law 16.4.8.
and 16.4.8.1 were not inflexible and wherever more liberal and better standards of fire precautions were incor porated in the designs, the bye laws did not prevent such better measures being adopted by the licencing authority.
It was further urged that the Chief Fire Officer was the au thority competent to decide questions whether the provisions incorporated in the designs were better and more liberal and that his decision in the matter ought to be conclusive and binding on the licencing authority.
In regard to the adequa cy and acceptability of fire safety measures in the build ing design, it was urged, the bye law, recognised and ac corded a primacy of place to the decision of the Chief Fire Officer and that, indeed, para K 1 of Appendix K 'read with bye law 17.2 recognised the importance of, and finality, to the decision of the Chief Fire Officer.
The said para K 1 Appendix K reads: "K 1 In addition to the provision of Part IV Fire Protection of National Build ing Code of India, the Chief Fire Officer, Delhi Fire Service may insist on suitable provisions in the building from fire safety and fire fighting point of view depending on the occupancy and height of buildings.
" The decision of the Chief Fire Officer to accept the distribution of refuge areas in each of the floors, it was said, was referable to the general power of the Chief Fire Officer to issue such directions.
In the 606 present case, it was urged, the designs providing for refuge areas in the ratio of one sq.
metre per person on each floor was considered by the Chief Fire Officer as a better and more reliable fire safety measures than those envisaged by the bye laws and the Chief Fire Officer preferred to accept them.
Shri Nariman sought to point out that in the Annexure B. 1 to the Affidavit dated 7.7.1989 of respondent No. 2 a list of six buildings had been set out respecting which the sanctions granted by the NDMC indicated that the local body had itself understood the prescriptions in the bye laws to be flexible and had further limited the extent of the Ref uge Areas to 0.3 sq.
metre per person as against 1 Sq.
metre per person set out in bye law 16.4.8.1.
As to the requirement of bye law 16.4.8.1 that the refuge area shall be provided on the "external walls" is concerned, Shri Nariman relied upon the definition in Bye law 2.27 to say that a wall abutting an inner vacant space is also an "external wall" and the acceptance of the cor rectness of this position was implicit in the clearance given by the Chief Fire Officer.
The words "in any other manner" in Bye law 16.4.8.1 it is urged, makes room for the requisite flexibility.
In regard to the "pedestrian walk way and "podium" it was pointed out that the insistence upon these was again, a glaring instance of the inexhaustible resourcefulness of the appellant to thwart Respondent 's project.
It was pointed out that none of the 28 objections raised in the NDMC 's communication dated 18.2.1987; nor the further objections raised on 6.2.1989; nor, indeed, the objections raised by NDMC on 14.3.
1989, to the clearance given by the Chief Fire Officer who, incidentally, had advised the deletion of podium in view of the obstruction it would present the fire brigade appliances, had the NDMC raised the question of the alleged infirmity in the plans for want of provision for the walk way and Podium.
It was also pointed out that in none of the counter affidavits filed in the High Court nor in the memorandum of Special Leave Petition; nor in the written submissions filed before this Court had this question been agitated by the NDMC.
It was pointed out that the committee constituted by the order No. 10(24) RN 83/731/7714 24 dated 13.6.1983 made by the Lt. Governor, Delhi, had in its report of 5.2.1986 suggested the doing away with the proposal to construct a raised pedestrian walk way on either side of Barakhamba Road as, in the view of the committee, the "head clearance under this proposed walk way will be such that cars 607 will be able to pass under it, but fire/rescue appliances will not be able to approach any where near the buildings beyond the raised walkway.
" It was pointed out that the committee was also of the opinion that these walk ways, if and when constructed, would nullify all fire safety measures in the buildings on either side of the Barakhamba Road.
Shri Nariman referred to the advice of the Chief Fire Officer with regard to the present plans themselves that the walk way and the podium be dispensed with.
It was, therefore, urged that the insistence on the construction of the pedestrian walk way while being wholly undesirable, was also a glaring instance of how by these after thoughts appellant made manifest its determination to delay and defeat respondent 's project.
On the contentions urged, the points that fall for consideration are: (a) Whether Bye law 16.4.8 as to the disposition and location of the "Refuge Areas" prescribes an inflexible, rigid standard and whether the location and distribution of the refuge areas in each floor is violative of the Bye law? (b) If point (a) is held in the nega tive, whether the clearance given to the plan by the Chief Fire Officer, on the view that distribution of the refuge areas in each floor is a better and more reliable fire safety measure is conclusive and binding on the NDMC.
In other words, is it open to the NDMC to examine and decide the question independently of the Chief Fire Officer 's clearance? (c) Whether the Refuge Areas located on the walls abutting the inner vacant area be held to satisfy the requirements of Bye law 16.4.8.1? (d) Whether the extent of 'Refuge Area ' requires to be reduced from 1.0 sq.
metre per person to 0.3 sq.
metre per person? (e) Whether the NDMC is justified in insisting upon the erection of "Pedestrian Walk way" and a "Podium" in front of the proposed building? 13.
Re: points (a) and (b): A number of affidavits and counter 608 affidavits are placed before us on the scope of the Bye laws.
It is not necessary to examine all of them as the matter is essentially one of construction of the provision itself.
The contents of Bye laws 16.4.8 and 16.4.8.1 are borrowed from Part IV dealing with "Fire Precaution" in the National Building Code of India, 1983.
The Code conceives of these prescriptions as only broad guide lines.
But the Building Bye laws in the present case which have drawn on these provisions from the Code have, however, assimilated them as part of the statutory prescriptions under the Bye laws.
The NDMC says that once this is done the norms are no longer directory but assume statutory import and become mandatory.
In the infinite variety of ways in which the problem of adequate fire safety measures to be incorporated in build ings present themselves, and having regard to the wide and complex range of situational variations in the location, character and design of buildings and their disposition in relation to the other factors influencing the evaluation of such safety measures, a view favoring flexibility of ap proach ought to commend itself.
The National Building Code of India, from which the substance of the Bye laws are drawn, indicates that these are concerned with indicating certain broad minimal assurances for fire safety and that better and more reliable measures ought not to be excluded.
We are not, however, impressed by the submission that the six instances cited in Annexure B 1 to Affidavit dated 7.7.1989 of respondent No. 2 are really instances demon strating departure, from the present stand of the appellant.
indeed, appellant points out that out of the six buildings referred to in Annexure B 1, only two i.e. No. 23, Barakham ba Road and DLF Plaza, 21 22, Narendra Place, were dealt with by the NDMC and that the rest were dealt with by the D.D.A.
The affidavit of Shri Karamchand, Architect, NDMC overs that no sanction was given in respect of No. 23, Barakhamba Road and that no departure from Bye laws 16.4.8, as understood by the NDMC, was involved in the case of the DLF Plaza building.
The explanation offered is, in our opinion, acceptable and, nothing much turns upon the cases referred to in Annexure B 1. 14.
But that is not to say that the rigid interpretation sought to be placed by the appellant on the bye law 16.4.8 and 16.4.8.1 is justified.
It is, of course, wise in the interest of uniformity of administration of these Bye laws and of elimination of possible complaints of partisanship, that the NDMC should insist upon adherence to the require ments of the Bye law 16.4.8 on its own strict terms.
That 609 should not, however, denude the power of the appellant to accept designs which, in the judgment of the appellant, offer and incorporate fire safety precautions of higher measure.
When fast and sweeping changes are overtaking the fundamental ideas of building design and construction and new concepts of building material are emerging, it would be unrealistic to impute regidity to provisions essentially ' intended to promote safety in building designs.
As suggested in the National Building Code Bye law, provisions such as Bye law 16.4.8 envisage certain minimal safety standards compliance with which should, generally, be insisted in order that there be uniformity and equal treatment and an elimination of imputations of favoritism and arbitrariness.
If a building design incorporates fire safety measures in a measure promoting fire safety precautions far better than those suggested by the Bye laws, they should not fetter the hands of the licensing authority to accept them.
Under the relevant statute and the Bylaws, the authority to grant or refuse the licence is the NDMC.
It has the power to decide whether any proposals are an improvement on the prescrip tions contained in the Bye laws which, indeed, is a matter of some complexity and, in conceivable cases, one calling for expertise is the NDMC itself.
From the way the National Building Code, from which the provision is borrowed, has treated such provisions, it is not unreasonable to presume that the requirements were incorporated in the Bye laws with a similar approach as to their import.
The clearance from the Chief Fire Officer envisaged by Bye law 17.1 is an additional condition and not a limitation on the power of the NDMC to satisfy itself that the building plans provide for adequate fire safety precaution in accordance with its bye laws or in a better measure.
The clearance by the Chief Fire Officer, which is expected to involve and follow a technical assessment and evaluation, obliges the NDMC to give due weight to it but, having regard to the scheme and language of the Bye laws the decision of the Chief Fire Officer is not binding on the NDMC.
We accept the submis sions of Shri Sibal that clearance of the plans by the Chief Fire Officer would not render it obligatory on the part of the NDMC ipso facto to treat the plans as necessarily com plying with the requirements of relevant Bye laws.
While the clearance by the Chief Fire Officer is an indispensable condition for eligibility for sanction, however, such clear ance, by itself, is not conclusive of the matter nor binding on the NDMC.
On the material placed before us we are inclined to hold on points (a) and (b) that the requirements of Bye laws 16.4.8 are not inflexible and that in appropriate cases, where the plans and designs incorporate fire safety measures which, in judgment of the NDMC, are considered to provide for the safety in a measure better than those 610 envisaged by the Bye laws 16.4.8, the NDMC would not be precluded from accepting them.
Whether the plans submitted by Respondent 1 distributing 'Refuge Areas ' in each floor provide such a better and more reliable fire safety measure is a matter for the decision of the NDMC.
We also hold that the clearance from the Chief Fire Officer in this behalf though entitled to weight, would not be binding on the NDMC which can and is entitled to examine the question independ ently of such clearance from the Chief Fire Officer.
Re: point (c): Bye law 16.4.8.1 requires that Ref uge Areas shall be provided on the "external walls" by means of cantilever projections or "in any other manner".
In the present case the Refuge Areas are provided on the walls that open into an inner vacant space.
They are provided on walls which respondents say are "external walls" having regard to the definition of that expression in Bye law 2.27.
The definition is not conclusive; but is subject to the context indicating a contrary import.
The purposes of refuge areas include that in the event of an out break of fire in the building, persons exposed to the hazard should be able to have immediate access to a place of safety which by its access to fresh air insulates them from heat and smoke and further that those persons could conveniently be extricated and rescued to safety by rescue operations.
The word "exter nal wall" in Bye law 16.4.8.1 which is a provision intended to promote public safety, health and well being must receive a purposive construction which promotes those objects and purposes.
Refuge area located on a wall though abutting an inner vacant space would not, by itself, promote the object if the vacant space is such that no rescue operations are possible to be conducted therefrom.
If the fire fighting and rescue equipment cannot have access to such inner vacant space, then, in the context of the specific objectives of bye laws 16.4.8.1, the wall abutting such inner vacant space would not be an "external" wall for purposes of the said bye law.
Having regard to the very purpose of providing for "Refuge Areas" intended, as it is, to secure protection to persons in the event of an out break of fire in a high rise building, the expression "external wall" must be held to be one which abuts a vacant space to which fighting and rescue equipment can have access and from which rescue operations are feasible.
We find it difficult to accept the submissions of Sri Nariman based purely on the definition in Bye law 2.27.
The definition is subject to the context suggesting or requiring a different meaning.
The context here does suggest such a different import.
Having regard to purpose Bye law 16.4.8.1 is intended to serve "Refuge Areas" must be located on walls which open into vacant space from which rescue operations are possible.
NDMC should decide this question and examine whether such rescue 611 operations are feasible from the inner circular vacant space.
This is an exercise individual to each case and to be judged on case to case basis.
The words 'in any other man ner ' in Bye law 16.4.8.1 are not intended to envisage a totally different idea of the location of 'Refuge Areas ' but, prima facie, intended to suggest some feasible alterna tive to the technical design of the construction of the Refuge Area Whether it should be a cantilever projection or designed in some other way.
Point (c) is held and answered accordingly.
Re: point (d): One of the contentions raised by Sri Nariman was that the insistence of 1 sq. m. per person for calculating the extent of the Refuge Areas is discriminatory as the NDMC had reduced the requirement only to 0.3 sq. m. per person in many other similar highrise buildings.
In the course of the counter affidavit filed by Sri Karam Chand, Architect of NDMC, this claim that the extent of refuge area could be calculated at 0.3 sq.
metre per person instead of 1.0 sq.
metre per person is not disputed.
Indeed, it is stated in the said affidavit: " . .
The NDMC does not have any objection to the provision of 1.0 sq.
metre per person as required by by law 16.4.8.1.
In the event the Statesman Limited wish to provide only 0.3 sq.
metre per person in accordance with the resolution of August 4, 1988, the NDMC would have no objection to the same and the States man Limited in this regard be directed to amend their building plans in accordance with their desires . . " Respondents are therefore at liberty to limit the Ref uge Areas to 0.3 sq.
metre per person as against 1.0 sq.
metre per person.
Re: point (d): This relates to the insistence on construction of a "pedestrian walk way" and a "podium" parallel to Barakhamba Road in front of the proposed build ing.
Though the zonal development plans envisaging a raised pedestrian walk way on either side of Barakhamba Road and the provision for podia connecting the building with the walk way were accepted and an appropriate notification issued way back in 1966, no steps appear to have been taken to give effect to them in a uniform manner.
In the very nature of the concept of a pedestrian walk way on either side of the road, the insistence for provision of such a walk way in an individual case without the integration and continuation of the walk way along the whole of the road, 612 would indeed, be purposeless.
Several authorities, including a committee constituted by the Lt. Governor of Delhi in 1983 and the Chief Fire Officer, have advised against the imple mentation of the proposal.
In the instant case the Chief Fire Officer has, it is not disputed, expressly opined against the desirability of such a 'walk way '.
The NDMC has to bestow serious re consideration on its insistence to have such a pedestrian walk way for the building, if such walk ways do not already obtain in other buildings on the Road.
The only way in which, perhaps, the zonal developmental requirements in this behalf and the difficulties and prob lems inherent in the insistence upon construction of such pedestrian walk way in an isolated particular case, could be reconciled is to direct the NDMC, in the event of its ap proving the plans otherwise, to keep the requirement of the pedestrian walk way and the podium in abeyance for the present, subject to a written undertaking to be lodged with it by the respondent 1 and 2 to the effect that whenever the policy to implement the Zonal Developmental requirements in this behalf is finally decided upon, the respondent 1 and 2 would undertake to put up such a pedestrian walk way and Podium.
The NDMC also, if it so chose, could secure the requisite financial guarantees for the construction of such a pedestrian walk way by the NDMC itself at the expense of the respondent if Respondent 1 and 2 fail to do so whenever so required.
This course would, while ensuring the prospect of compliance with the Zonal Development prescriptions, if they are decided to be put into effect, also allay the apprehension of Respondent 1 and 2 that Governmental author ities are dealing with the Statesman 's project with 'an evil eye and an uneven hand.
Point (d) is answered accordingly.
We might advert here to the grievance of Respondent 1 and 2 that the NDMC did not raise, at the appropriate stage, any specific objections to the plans on the ground that either they were not in conformity with Bye law 16.4.8 or 16.4.8.1 or that the plans were .defective for want of pedestrian walk way.
Objection based on bye law 16.4.8.1, it was urged, was never in mind of the NDMC.
These objections, it was urged, were developed from stage to stage leaving the inference inescapable that the NDMC was pre determined to decline the sanction for the 'Statesman House ' on one ground or another.
We are afraid, the way NDMC has developed its stance from time to time incurs and perhaps justifies this griev ance.
Indeed, at no stage of the proceedings before the High Court, or even in important 613 communications bearing on the question of the sanction, did the NDMC refer to the specific objection based on the lacuna that Refuge Areas were not located on the "external" walls, as interpreted by the NDMC and the lack of a provision for the pedestrian walk way.
Sri Nariman urged that we should not permit the NDMC to raise these belated and laboured objections.
We have considered these submissions.
We have proceeded to consider the contentions of the NDMC even on these points on the merits in view of the fact that they are matters of some general public importance, though we are not unmindful that the NDMC has not been business like in the way it has dealt with the question from time to time.
It is for this reason that though in view of the findings recorded on the various contentions, the order dated 24.4.
1989 of the High Court requires to be and is hereby set aside, however, we keep this appeal pending for such final orders and directions as may become necessary to be issued.
In the meanwhile.
We permit Respondent 1 and 2 to effect such rectifications to the plans in regard to the Refuge Area as may be necessary in the light of the observa tions in this order.
The refuge areas could be located in each of the floors separately, provided that it could be shown to the satisfaction of the NDMC that such a measure would better promote fire safety in the building and, pro vided further, that they are located on external walls "by cantilever projection or in any other manner" abutting a vacant space from which rescue operations are rendered possible.
If such rectifications to the plans are made and submitted within 3 weeks from today, the NDMC will consider and decide the question of according sanction to the plans in the light of the observations in this order and without insisting upon any fresh clearance from DUAC or the Chief Fire Officer within 3 weeks thereafter and report to this Court the decision taken upon such re construction.
This appeal shall be kept pending and be taken up for final disposal after the submission of the report from the NDMC in this behalf.
If respondents 1 and 2 are aggrieved by such fresh decision of the NDMC, those grievances shall be considered in the further proceedings in the appeal.
It was also submitted to us that pending final decision, respondents 1 and 2 should be permitted to com mence the construction as delays had entailed serious cost and time over runs.
We permit 614 respondents, at their option, to commence the construction work according to the plans submitted by them, on the condi tion that they file a written undertaking before the NDMC that the construction would be at the risk of the Respond ents 1 & 2 and it would not progress beyond a height of 15 metres and in the event of an ultimate rejection of the plans, they would have no claim against the NDMC for any loss occasioned to respondent 1 and 2. 22.
The appeal is directed to be called after 6 weeks to await the further report of the NDMC referred to in para 20 supra.
Ordered accordingly.
| IN-Abs | The respondent company obtained sanction of a building plan from the New Delhi Municipal Committee for the con struction of a building on a plot held by it on lease.
After incorporating certain changes, the respondent company sub mitted a revised plan for sanction of the New Delhi Munici pal Committee, but the same was rejected by an order Dated 18.12.1987.
A rectified plan was thereafter submitted by the re spondent to the New Delhi Municipal Committee, for necessary sanction, but as no orders were received, the respondent filed a writ petition in High Court seeking a direction to the New Delhi Municipal Committee to deal with the same for grant of necessary sanction.
During the pendency of the aforesaid writ proceedings the Delhi Urban Art Commission approved the plans as re quired under Section 12 of the Delhi Urban Art Commission Act, 1973.
The Chief Fire Officer also gave clearance to the building plans in relation to the Fire Safety Precautions.
The High Court allowed the Writ Petition by an Order dated 28.4.1989 holding that inspite of the clearance grant ed by the Urban Art Commission and the Chief Fire Officer, New Delhi Municipal Committee 's disinclination to accord the sanction was unjustified, and directed the New Delhi Munici pal Committee to convey the formal sanction in respect of the building plans.
In appeal to this Court, it was contended on behalf of the New Delhi Municipal Committee, that (i) in the matter of fire safety requirements, the building plans were not in accordance with Building Bye Laws for the Union Territory of Delhi, 1983; (ii) The clearance given by the Chief Fire Officer is not binding on the New Delhi Municipal Committee which can examine the question independently of such clear ance and (iii) the proposed building plan does not provide for a 'Podium"/"Pedestrian Walk way" as required under the approved Zonal Development Plan under Sec.
9(2) of the Delhi Development Act, 1957.
Setting aside the High Court Order dated April 28, 1989, this Court, HELD: 1.
The requirements of Bye Laws 16.4.8 arc not inflexible and in appropriate cases where the plans and designs incorporate fire safety measures which, in judgment of the Corporation are 593 considered to provide for the safety in a measure better than those envisaged by the bye laws 16.4.8 the Corporation would not be precluded from accepting them i.e. if a build ing design incorporate fire safety measures in a measure promoting fire safety precautions far better than those suggested by the Bye laws they should not fetter the hands of the licencing authority to accept them.
[609H; 610A, 609C] 1.1 Whether the plans submitted by Respondent distribut ing Refuge Area in each floor provide such a better and more reliable fire safety measures is a matter for the decision of the Corporation.
[610A] 1.2 It is, of course, wise in the interests of uniformi ty of administration of these Bye laws and of elimination of possible complaints of ' partisanship, that the Corporation should insist upon adherence to the requirements of the Bye law 16.4.8 on its own strict terms.
That should not, however, denude the power of the Corporation to accept designs which, in its judgment offer and incorporate fire safety precautions of higher measure.
[608H: 609A] 1.3 When fast and sweeping changes are overtaking the fundamental ideas of building design and construction and new concepts of building material emerging, it would be unrealistic to impute rigidity to provisions essentially intended to promote safety in building designs.
[609A] 2.
The clearance from the Chief Fire Officer envisaged by Bye law 17.1 is an additional condition and not a limita tion on the power of the Corporation to satisfy itself that the building plans provide for adequate fire safety precau tion in accordance with its bye laws or in a better measure.
The clearance by the Chief Fire Officer, which is expected to involve and follow a technical assessment and evaluation, obliges the Corporation to give due weight to it but, having regard to the scheme and language of the bye laws the deci sion of the Chief Fire Officer is not binding on the Corpo ration.
[609E] 2.1 The clearance of the plans by the Chief Fire Offi cer would not render it obligatory on the part of the Corpo ration ipso facto to treat the plans as necessarily comply ing with the requirements of relevant bye laws.
While the clearance by the Chief Fire Officer is an indispensable condition for eligibility for sanction, however, such clear ance, by itself, is not conclusive of the matter nor binding on the Corporation which is entitled to examine the question independently of such clearance from the Chief Fire Officer.
[609G; 610B] 594 3.
Bye law 16.4.8.1 requires that Refuge Areas shall be provided on the "external Walls" by means of cantilever projections or "in any other manner".
The words "in any other manner" in Bye law 16.4.8.1 are not intended to envis age a totally different idea of the location of Refuge Areas, but, prima facie, intended to suggest some feasible alternative to the technical design of the construction of the Refuge Area whether it should be a cantilever projec tion or designed in some other way.
The purpose of Refuge Areas include that in the event of an out break of fire in the building, persons exposed to the hazard should be able to have immediate access to a place of safety which by its access to fresh air insulates them from heat and smoke and further that those persons could conveniently be extricated and rescued to safety by rescue operations.
Therefore, "Refuge Areas" must be located on walls which open into vacant space from which rescue operations are possible.
[610C, 611B, 610D G] 3.1 The word "external wall" in bye law 16.4.8.1 which is a provision intended to promote public safety, health and well being must receive a purposive construction which promotes those objects and purposes.
Having regard to the very purpose of providing for Refuge Areas the expression "external wall" must be held to be one which abuts a vacant space to which fighting and rescue equipment can have access and from which rescue operations are feasible.
[610D; 610F] 3.2 In the instant case, the Refuge Areas are provided on the wails that open into an inner vacant space.
Refuge Area located on a wail though abutting an inner vacant space would not, by itself, promote the object if the vacant space is such that no rescue operations are possible to be con ducted therefrom.
If the fire fighting and rescue equipment cannot have access to such inner vacant space, then, in the context of the specific objectives of bye law 16.4.8.1 the wail abutting such inner vacant space would not be an "external wall" for the purpose of the said bye law.
The Corporation should decide this question and examine whether such rescue operations are feasible from the inner circular vacant space.
This is an exercise individual to each case and to be judged on case to case basis.
[610C; E, H; 611A] 4.
Though the Zonal Development Plans envisaged a raised pedestrian walk way on either side of Barakhamba Road and the provision for podia connecting the building with the walk way were accepted and an appropriate notification issued way back in 1966, no steps appear to have been taken to give effect to them in a uniform manner.
In fact several authorities including a Committee constituted by the Lt. Gover 595 nor of Delhi in 1983, and the Chief Fire Officer, have advised against the implementation of the proposal.
In such circumstances insistence to have such a pedestrian walk way for the building, if such walk ways do not already obtain in other buildings on the Road, requires reconsideration.
Moreover, the insistence for provision of such a walk way in an individual case without the integration and continuation of the walk way along the whole of the road, would indeed, be purposeless.
[611G H; 612A B] [Respondent to effect such rectifications to 'the plans in regard to the Refuge Area as may be necessary, the New Delhi Municipal Committee to consider and decide the ques tion of according sanction to the plans without insisting upon any fresh clearance from Delhi Urban Arts Commission or the Chief Fire Officer.
Appeal to be kept pending and be taken for final disposal after the submission of the report from New Delhi Municipal Committee]
|
vil Appeals Nos.
1166 72 of 1985 etc.
From the Judgment and Order dated 24.1.85 of the Punjab & Haryana High Court in C.W.P. Nos.
698 to 703 and 733 of 1984.
Raja Ram Aggarwal, B. Sen, Dr. Devi Paul, D.S. Tawatia, Soli J. Sorabjee, Kapil Sibal and S.K. Dholakia, A.N. Haka sar, D.N. Misra, Mukul Mudgal, Ravinder Narain, P.K. Ram, section Sukumaran, section Ganesh, Mahabir Singh, H.S. Anand.
R. Karania wala, Mrs. Manik Karanjawala, A.S. Bhasme and A.M. Khanwil kar for the Appearing Parties.
The following Judgments of the Court were delivered: SABYASACHI MUKHARJI, J. Except civil appeals Nos.
416263 of 1988, in these appeals along with the special leave petitions and the writ petition, we are concerned with Sections 9(1) and 24(3) as well as the penalty proceedings initiated under Section 50 of the Haryana General Sales Tax Act, 1974 (hereinafter referred to as 'the Act ').
So far as civil appeals Nos. 4 162 63 of 1988 are concerned, these involve the scope, effect and validity of Section 13AA of the Bombay Sales 523 Tax Act.
1959 (hereinafter referred to as 'the Bombay Act ') as introduced by the Maharashtra Act No. XXVIII of 1982.
It will, therefore, be desirable first to deal with the ques tion of the Act, and then with the provisions of the Bombay Act as mentioned hereinbefore.
The appellant/petitioner Goodyear India Ltd., was engaged at all relevant times, inter alia, in the manufac ture and sale of automobile tyres and tubes.
It manufactured the said tyres and tubes at its factory at Ballabhgarh in the district of Faridabad in the State of Haryana.
For the said manufacturing activity the appellant had, from time to time, to purchase various kinds of raw materials both within the State and outside the State.
It is stated that about 7 to 10% of the total needs of raw materials on an all India basis were locally procured by the appellant from Haryana itself.
The raw materials purchased in Haryana were: (i) pigments (partly), (ii) chemicals (partly), (iii) wires (partly), (iv) carbon black (partly), (v) rubber (partly), and (vi) fabric (partly).
The rest of the requirements were imported from other States.
The appellant had its depots at different places in the State of Haryana as well as in other States.
After manufacturing the said tyres and tubes, about 10 to 12% of the total manufactured products used to be sold in the State of Haryana either locally or in the course of inter State trade & commerce or in the course of export outside the country and also sold locally against Declara tion Form No. ST 15.
It was stated that at the relevant time the local sales including sales in the course of inter State trade & commerce and in the course of export from the State of Haryana was about 30 to 35%.
The appellant was a regis tered dealer both under the Haryana Act and the , and had been submitting its quarterly returns and paying the sales tax in accordance with law, according to the appellant.
In 1979, the assessing authority, Farida bad, imposed upon the appellant the purchase tax under Sec tion 9 of the Act for the assessment year 1973 74 and subse quently for the years 1974 75 and 1975 76 as well on the despatches made by the appellant on the manufactured goods to its various depots outside the State.
Subsequently, the relevant revenue authorities sought to impose purchase tax under Section 9(1) of the Act and imposed purchase tax on despatches of manufactured goods, namely, tyres and tubes, to its various depots in other States.
This led to the filing of various writ petitions in the Punjab & Haryana High Court by the appellant/petitioner.
In respect of the assessment years 1976 77 to 1979 80.
these questions were considered by the Punjab and Haryana High Court, and the writ.
petitions were decided in favour of the appellant on December 524 4, 1982.
The said decision being the decision in Goodyear India Ltd. vs The State of Haryana & Anr.
is reported in 53 STC 163.
The Division Bench of the High Court in the said decision held that both on principle and precedent, a mere despatch of goods out of the State by a dealer to his own branch while retaining both title and possession thereof, does not come within the ambit of the phrase "disposes of the manufactured goods in any manner otherwise than by way of sale", as employed in section 9(1)(a)(ii) of the Act.
The High Court further held that the decision of this Court in The State of Tamil Nadu vs M.K. Kandaswami, [1975] 36 STC 191 was no warrant for the proposition that a mere despatch of goods was within the ambit of disposing them of.
The High Court also distinguished the decision of this Court in Ganesh Prasad Dixit vs Commissioner of Sales Tax, M.P., [1969] 24 STC 343, and held that Notification No. S.O. 119/H.A. 20/73/Ss. 9 & 15/74 dated July 19, 1974 issued under Section 9 (prior to its amendment by Act No. 11 of 1979) was ultra vires of Section 9 of the Act.
It was held that whereas the section provided only for the levy of purchase tax on the disposal of manufactured goods, the impugned notification by making a mere despatch of goods to the dealers themselves taxable, in essence, legislates and imposes a substantive tax which it obviously could not.
It was held that this was contrary to and in conflict with the provisions of section 9.
The High Court referred to the relevant portion of unamended Section 9 of the Act with which it was confronted and the notification.
In order to appreciate the said decision and the position, it will be appropriate to set out the said provisions, namely, the unamended provisions of Section 9 as well as the notifica tion: "9.
Where a dealer liable to pay tax under this Act purchases goods other than those specified in Schedule B from any source in the State and (a) uses them in the State in the manufacture of, (i) goods specified in Schedule B or (ii) any other goods and disposes of the manufactured goods in any manner otherwise than by way of sale whether within the state or in the course of inter State trade or commerce or within the meaning of sub section (1) of Section 5 of the , in the course of export out of the territory of India, 525 (b) exports them, in the circumstances in which no tax is pay able under any other provision of this Act, there shall be levied, subject to the provi sions of section 17, a tax on the purchase of such goods at such rate as may be notified under section 15.
" The relevant notification was as follows: "Notification No. S.O. 119/H. A. 20/73/Ss. 9 and 15/74 dated the 19th July, 1974.
In exercise of the powers conferred by section 9 and subsection (1) of section 15 of the Haryana General Sales Tax Act, 1973, the Governor of Haryana hereby directs that the rate of tax payable by all dealers in respect of the purchases of goods other than goods specified in Schedules C and D or goods liable to tax at the first stage notified as such under section 18 of the said Act, if used by them for purposes other than those for which such goods were sold to them shall be the rate of tax leviable on the sale of such goods: Provided that where any such dealer, instead of using such goods for the purpose for which they were sold to him, despatches such goods or goods manufactured therefrom at any time for consumption or sale outside the State of Haryana to his branch or commission agent or any other person on his behalf in any other State and such branch, commission agent or other person is a registered dealer in that State and produces a certificate from the assessing authority of that State or produces his own affidavit and the affidavit of the consignee of such goods duly attested by a Magistrate or Oath Commissioner or Notary Public in the form appended to this notifica tion to the effect that the goods in question have been so despatched and received and entered in the account books of the consignee, the rate of tax on such goods shall be three paise in a rupee on the purchase value of the goods so despatched." The High Court, as stated before, referred to section 9 and held that the expression 'disposes of ' was not basically a term of legal art and, therefore, it was proper and neces sary to first turn to its ordinary 526 meaning in order to determine whether a mere despatch of goods by a dealer to himself would connote 'disposal of ' such goods by him.
The High Court referred to the dictionary meaning of 'disposes of ' in Webster 's Third New Internation al Dictionary.
Reference was also made to 27 Corpus Juris Secundum, P. 345, and ultimately it came to the conclusion that the phrase 'disposes of ' or 'disposal ' cannot be possi bly equated with the mere despatch of goods by a dealer to himself.
After referring to the relevant provisions with which this Court was concerned in Kandaswami 's case (supra), the High Court held that that case was no warrant for con struing the expression 'despatch ' as synonymous to 'dispos al '.
On the other hand, the court held that the decision of this Court emphasises that the expression 'disposal ' of goods is separate and distinct from despatch thereof.
Ac cording to the High Court, the same position was applicable to Ganesh Prasad Dixit 's case (supra), and in those circum stances held that the term 'disposes of ' cannot be synony mous with 'disposal ', and once that is held then the notifi cation mentioned above travelled far beyond what is provided in Section 9 of the Act, while the said provision provided only for levy of purchase tax on disposal of manufactured goods.
The High Court observed as follows: "Once it is held as above, the impugned Notification No. S.O. 119/H.A. 20/73/Ss. 9 and 15/74 dated 19th July, 1974 (annexure P 2), plainly travels far beyond the parent section 9 of the Act.
Whereas the said provision provided only for the levy of a purchase tax on the disposal of manufactured goods, the notification by making a mere despatch of goods to the dealers themselves taxable in essence, legislates and imposes a substantive tax which it obviously cannot.
Indeed, its terms run contrary to and are in direct conflict with the provisions of section 9 itself.
There is thus no option but to hold that the notification, which is a composite one, is ultra vires of section 9 of the Act and is hereby struck down.
" The High Court also noted that though the challenged assessment orders were appealable, however, as the challenge was to the very validity of the notification which was obviously beyond the scope of the appellate authority, the writ petitions were entertainable as the assessment was based on the notification which was frontally challenged.
As a result, the High Court quashed the notification and set aside the assessment orders.
The said decision is under challenge in appeal to this Court.
527 It may be mentioned that sub section (1) of section 9 of the Act had been introduced by the Haryana Act, 55 of 1976 in the Act.
After the aforesaid decision of the High Court, the Haryana Legislature intervened and enacted the Haryana General Sales Tax (Amendment & Validation) Act, 1983 by which Section 9 of the principal Act was amended as follows: "Amendment of Section 9 of Haryana Act 20 of 1973 in Section 9 of the principal Act, (a) in sub section (1) , (i) for clause (b), the following clause shall be substituted and shall be deemed to have been substituted for the period commencing from the 27th day of May, 1971, and ending with the 8th day of April, 1979, namely: "(b) purchases goods, other than those speci fied in Schedule B, from any source in the State and uses them in the State in the manu facture of any other goods and either disposes of the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce or in the course of export outside the territory of India within the meaning of Sub section (1) of Section 5 of the ; or", (ii) after clause (b), the following clause shall be deemed to have been inserted with effect from the 9th day of April, 1979, name ly: "(bb) purchases goods, other than those speci fied in Schedule B except milk, from any source in the State and uses them in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured goods to a place outside the State in any manner otherwise than by way of Sale in the course of inter State trade or commerce or in the course of export outside the territory of India within the meaning of Sub Section (1) of Section 5 of the ; or"; 528 {iii) the following proviso shall be added, namely: "Provided that no tax shall be leviable under this section on scientific goods and guar gum, manufactured in the state and sold by him in the course of export outside the territory of India within the meaning of Sub section (3) of Section . of the ."; and (b) in sub section (3), the words "other than Railway premises" shah be omitted." After the aforesaid amendment the writ petitions were filed in the High Court by Bata India Ltd. In the meantime, the petitioner Company also filed writ petitions for the assessment years 1973 74 to 1975 76 and 1980 81 in the High Court challenging the assessment.
The High Court decided these matters on August 2, 1983.
The said decision Bata India Ltd. vs The State of Haryana & Anr. has been reported in 1983 Vol.
54 STC 226.
The High Court held that "mere despatch of goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce" is synonymous with or is in any case included within the ambit of the consignment of goods either to the person making it or to any other person in the course of inter State trade or commerce as specified in Article 269(1)(h) and Entry No. 92 B of List 1 of the 7th Schedule to the Constitution.
Hence, the levy of sales or purchase tax on such a despatch or consignment of goods and matters ancillary or subsidiary thereto, will be within the exclu sive legislative competence of Parliament to the total exclusion of the State Legislature.
Therefore, section 9(1)(b) of the Haryana General Sales Tax Act, 1973, as amended by the Haryana General Sales Tax (Amendment & Vali dation) Act, 1983, insofar as it levies a purchase tax on the consignment of goods outside the State in the course of inter State trade or commerce is beyond the legislative competence of the State of Haryana and is void and inopera tive.
It was held that the retrospective validation of the notification of 19th July, 1974 referred to hereinbefore, and the consequential validation of all actions taken there under were liable to be quashed.
The High Court further held that mere manufacture and consignment of goods outside the State to himself by a manufacturer is not sale or disposal thereof with the result that it will not be within the ambit of Entry No. 54 of List II of the 7th Schedule to the Con stitution.
Consequently, it was held that irrespective of the 46th Amendment, an attempt to tax the mere consignment or despatch of manufactured goods outside the State in the course of inter State trade 529 or commerce will not come within the ambit of Entry No. 54 of List II of the 7th Schedule, and consequently of the competence of the respective State Legislatures.
Even before the 46th Amendment, the mere consignment of goods in the course of inter State trade or commerce was beyond the scope of the said Entry and thus not within the legislative compe tence of the States and was entirely within the parliamen tary field of.
legislation by .virtue of Article 248 and the residuary Entry No. 97 of List I. The High Court was of the view that neither the original purchase of goods nor the manufacture thereof into the end product by itself attracts purchase tax and consequently are not even remotely the taxable events.
What directly and pristinely attracts the tax and can be truly labelled as the taxing event under section 9(1)(b) of the Act is the three fold exigency of; (i) disposal of the manufactured goods in any manner otherwise than by way of sale in the State; or (ii) despatch of the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce, or (iii) disposal or despatch of the manufactured goods in the course of export outside the territory of India.
It was these three exigencies only which were the taxable events in the amended section 9(1)(b) of the Act.
Consequently, in a Statute where the taxable event is the despatch or consignment of goods outside the State, the same would come squarely within the wide sweep of Entry No. 92B of List I of the Constitution, and thus excludes taxation by the States.
The High Court was of the view that section 9 of the Act must be strictly construed as it was a charging section.
If the charging section travels beyond the legislative Entry and thereby transgresses the legislative field, then the same cannot possibly be sustained.
The constitutional changes brought by the 46th Amendment in article 269 of the Constitution read with the insertion of Entry No. 92B in the Union List, leave no doubt that the legislative arena of tax on the consignment of goods (whether to one 's ownself or to any other person) in the course of inter State trade or commerce and all ancillary or complementary or consequential matters, are now declared to be exclusively reserved for parliamentary legislation and any intrusion into this field by the State Legislatures would be barred.
In my opinion, the High Court correctly noted in the said decision that the provisions of constitutional change have to be construed, and such problems should not be viewed in narrow isolationism but on a much wider.
spectrum and the principles laid down in Heydon 's case 530 ; are instructive.
Hence, in a situation of this nature, it was just and proper to see what was the position before the 46th Amendment of the Constitution, and find out what was the mischief that was sought to be reme died and then discover the true rationale for such a remedy.
In Black Clawson International Ltd. vs Papierwerke Waldhof Aschaffenburg Ag.
, ; , Lord Reid observed as follows: "One must first read the words in the context of the Act as a whole, but one is entitled to go beyond that.
The general rule in construing any document is that one should put oneself 'in the shoes ' of the maker or makers and take into account relevant facts known to them when the document was made.
The same must apply to Acts of Parliament subject to one qualifica tion.
An Act is addressed to all the lieges and it would seem wrong to take into account anything that was not public knowledge at the time.
That may be common knowledge at the time or it may be some published information which Parliament can be presumed to have had in mind.
It has always been said to be impor tant to consider the mischief which the Act was apparently intended to remedy.
The word 'mischief ' is traditional.
I would expand it in this way.
In addition to reading the Act you look at the facts presumed to be known to Parliament when the Bill which became the Act in question was before it, and you consider whether there is disclosed some unsatisfactory state of affairs which Parliament can properly be supposed to have intended to remedy by the Act . " The state of affairs that the Parliament has sought to remedy by the 46th Amendment of the Constitution, was that prior to the promulgation each State attempted to subject the same transaction to tax on the nexus doctrine under its sales tax laws.
Consequently, on the basis of one or the other element of the territorial nexus, the same transaction had to suffer tax in different States with the inevitable hardship to trade and consumers in the same or different States.
The framers of the Constitution being fully aware of the problems sought to check the same by a somewhat complex constitutional scheme and by imposing restrictions on the States ' power with regard to levy tax on the sale or pur chase of goods under article 286.
The High Court in the judg ment referred to hereinbefore, mentioned these factors.
It is in 531 this background that article 269 was amended and clause (3) was added to it.
The effect, inter alia, is that the power to levy tax on the sale or purchase of goods is now referable to the legislative power vested in the States by virtue of Entry No. 54 in List II of the 7th Schedule.
However, this legislative authority of the States is restricted by three limitations contained in Articles 286(1)(a), 286(1)(b) & 286(3) of the Constitution.
It may be mentioned that Parlia ment by the 6th Amendment to the Constitution, enacted the , with the object to formulate principles for determining when a sale or purchase of goods takes place in the course of inter State trade or commerce or outside a State or in the course of import into or export from India, to provide for the levy, collection and distri bution of taxes on sales of goods in the course of inter State trade or commerce and to declare certain goods to be of special importance and specify the restrictions and conditions to which State laws imposing taxes on the sale or purchase of such goods shall be subject.
In this connection, the High Court referred to the various propositions as mentioned by the Law Commission in its 61st Report rendered in May, 1974.
It is not necessary to set out the same in detail.
It was in the aforesaid historical background that the High Court construed the provisions in question and came to the conclusion that a plain reading of these would leave little manner of doubt that the legislative power to tax consignment transfers of goods from one branch of an insti tution to another branch thereof outside the State and all matters incidental, ancillary or complementary thereto were then declared to be vested in the Union of India to the total exclusion of the States.
The High Court referred to the observations of this Court in Khyerbari Tea Co. Ltd. vs State of Assam; , ; Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City, [1955] SCR 829 and Waverly Jute Mills Co. Ltd. vs Raymon & Co. (1) Pvt. Ltd.; , , and concluded that Entry 92B enabled the Union of India not only to tax the consignment of goods in the strict sense but also embraced all ancillary and complementary areas as well to the exclusion of the State Legislature therefrom.
In the aforesaid light the High Court construed section 9(1)(b) of the Haryana Act, 1983.
Analy sing the provisions in detail it observed that Section 9 of the Act was a charging section for the levy of purchase tax.
It imposed liability for payment of purchase tax, therefore, it should be distinguished from the machinery section.
The High Court examined the real nature of the business outside the State and found that there was merely a change in the physical situs of the goods without any change in the basic incidents of ownership and control.
Therefore, in its true nature a mere despatch of goods outside the State to another branch of the original institution is not and never 532 can be the equivalent of a sale either as a term of art in the existing sales tax legislation and not remotely so in common parlance, and construing section 9(1)(b) of the Act, the High Court was of the view that the real taxing event is the despatch of the manufactured goods to a place outside the, State in any manner otherwise than by way of sale in the course of inter State trade or commerce.
The High Court found that there was no distinction between the despatch as defined in the said amended section and the consignment of goods by the manufacturer to himself or any other person in the course of inter State trade or commerce, and referred to the meanings of the expressions 'despatch ' and 'consign ', which are similar and almost interchangeable when used in specific commercial sense.
The High Court referred to Webster 's New International Diction ary, Shorter Oxford English Dictionary and also to Random House dictionary for their meanings.
On construction, the High Court came to the conclusion that the amended provi sions of section 9(1)(b) of the Act attempt to levy an identical tax in the garb of a levy on the despatch of manufactured goods to places outside the State of Haryana, and therefore intruded and trespassed into an arena exclu sively meant for taxation by the Union of India.
The High Court also viewed from another point of view, namely, who was liable as it was the consignment of goods which attract ed the liability of purchase tax and in pristine essence was the "taxable event" under section 9(1)(b) of the Act.
The High Court also analysed it from the point of view that under section 9(1)(b), where a dealer purchases goods for the express purpose of manufacturing other goods within the State, then in strict sense such purchase by itself did not attract any tax under the provisions.
Hence, the High Court set aside the amended provision so far as it sought to levy purchase tax on the consignment of goods outside the State in the course of inter State trade or commerce, consequently it also set aside the retrospective validation of the noti fication and the consequential validation of all actions taken thereunder.
Special leave petitions were filed in this Court against the said decision of the High Court.
These are special leave petitions Nos. 8397 to 8402 of 1983.
During the pendency of the special leave petitions, show cause notices were issued by the assessing authority in respect of the assessment years 1973 74 to 1980 81 (except for 1978 79 & 1979 80) and also for 1982 83 asking the petitioner to show cause why in addition to purchase tax, it should not be liable to penalty as well.
The petitioner Company again filed writ petitions in Punjab & Haryana High Court chal lenging the validity of those notices.
It appears that in the meantime, a Full Bench of the High Court decided the question again in the case of Des Raj Pushap 533 Kumar Gulati vs The State of Punjab & Anr.
This decision was rendered on January 24, 1985, and is reported in 58 STC 393.
The assessment years involved in all appeals are 1973 74 to 1982 83.
According to the Full Bench, the taxing event is the act of purchase and not the Act of despatch or con signment as held in Bata India Ltd., (supra).
In the prem ises, it was held that section 9(1)(b) as amended, was neither invalid nor ultra vires and overruled the decision of Bata India Ltd. The writ petitions filed were also dis missed.
The petitioner Company filed special leave petitions against the aforesaid judgment of the Punjab & Haryana High Court which were admitted in Civil Appeals Nos.
1166 72/85.
Goodyear India also filed writ petition No. 3834 of 1985 in respect of the assessment year 1981 82, as the notices for assessment and penalty were received after the decision of Punjab & Haryana High Court in Des Raj Pushap Kumar 's case (supra).
The said decision was passed in appeal against the decision of the said court in Goodyear India reported in 53 STC 163, number being 1514 (NT) of 1984.
All these questions are the subjectmatters of these appeals.
It is well settled that what is the taxable event or what necessitates taxation in an appropriate Statute, must be found out by construing the provisions.
The essential task is to find out what is the taxable event.
In what is considered to be indirect tax, there is a marked distinction between the consequence of manufacture and the consequence of sale.
It is well to remember that in construing the expres sions of the Constitution to judge whether the provisions like Section 9(1)(b) of the Act, are within the competence of the State Legislature, one must bear in mind that the Constitution is to be construed not in a narrow or pedantic sense.
Constitution is not to be construed as mere law but as the machinery by which laws are to be made.
It was ob served by Lord Wright in James vs Commonwealth of Australia, at 614, that the rules which apply to the interpretation of other Statutes, however, apply equally to the interpretation of a constitutional enactment.
In this context, Lord Wright referred to the observations of the Australian High Court in The Attorney General for the State of New South Wales vs The Brewery Employees Union etc.
; , where it was observed that the words of the Constitution must be interpreted on the same principles as any ordinary law, and these principles compel us to consider the nature and scope of the Act, and to remember that the Constitution is a mechanism under which laws 534 are to be made, and not a mere Act which declares what the law is to be.
Hence, such mechanism should be interpreted broadly, bearing in mind in appropriate cases, that the Supreme Court like ours is a nice balance of jurisdictions.
A Constitutional Court, one must bear in mind, will not strengthen, but only derogate from its position if it seeks to do anything but declare the law; but it may rightly reflect that a Constitution is a living and organic thing, which of all instruments has the greatest claim to be con strued broadly and liberally.
See the observations of Gwyer, C.J. in Re: Central Provinces & Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938, AIR 1939 PC 1 at 4).
Mr. Justice Sulaiman in his judgment at p. 22 of the report observed that the power to tax the sale of goods is quite distinct from any right to impose taxes on use or consump tion.
It cannot be exercised at the earlier stage of produc tion nor at the later stage of use or consumption, but only at the stage of sale, (emphasis supplied).
The essence of a tax on goods manufactured or produced is that the right to levy it accrues by virtue of their manufacture.
On the other hand, a duty on the sale of goods cannot be levied merely because goods have been manufactured or produced.
Nor can it be levied merely because the goods have been consumed or used or even destroyed.
The right to levy the duty would not at all come into existence before the time of the sale.
In this connection, reference may be made to the observations of Chief Justice Gwyer in The Province of Madras vs M/s. Boddu Paidanna & Sons, AIR 1942 FC 33.
Mr Raja Ram Agarwala, learned counsel for the appellant/assessees, contended before us that it is neces sary to find out or identify the taxable event.
If on a true and proper construction of the amended provisions of section 9(1)(b) it is the despatch or consignment of the goods that is the taxable event as contended by the petitioners and appellants, then the power is beyond the State 's competence.
If, on the other hand, it is the purchase of the goods that is the taxable event as held by the Full Bench of the High Court, then it will be within its competence.
The Full Bench in Des Raj Pushap Kumar 's case (supra) has relied on the background of the facts and the circumstances which necessi tated the introduction of the amendment.
Mr. Tewatia, learned counsel appearing for the State canvassed before us the historical perspective and stated that Haryana State came into being as a result of the Punjab State Reorganisation Act, 1966, therefore, part of the legislative history of the taxing Statute like any other Statute is shared by the Haryana State with the Punjab State, and as such it is proper to notice the concept of purchase tax as it 535 evolved in the State of Punjab.
Purchase tax was introduced in the State of Punjab for the first time by the East Punjab General Sales Tax (Amendment) Act, 1958.
Section 2(ff) was introduced for the first time to define the expression 'purchase '.
The definition of the term 'dealer ' was changed to include therein a purchaser of goods also.
The definition of the term 'taxable turnover ' was also altered.
Some deal ers who crushed oil seeds, were called upon to pay purchase tax on the raw material purchased by them on the ground that the raw material had not been subjected to a manufacturing process as the process of crushing oil seeds did not involve a process of manufacturing.
He referred to the fact that Punjab had originally exempted purchase tax on the purchase of raw material by the dealers if such raw material was to be used for the manufacture of goods for sale in Punjab and thus generate more revenue to the State as a result of the sales tax on such manufactured goods.
But when the dealers started avoiding this condition for sale in Punjab by var ious ingenious devices after having escaped the payment of purchase tax on the raw material purchased by them, the Legislature amended the Act and Punjab Act No. 18 of 1960 was brought on the statute book w.e.f. April 1, 1960.
Sec tion 2(ff) of the Act was amended and it provided that all the goods mentioned in Schedule C when purchased shall be exigible to purchase tax and thus the concession given to the manufacturers was withdrawn.
Explaining this background, Mr. Tewatia contended that section 9, sub section (i) of the Act envisages payment of tax at such rate as may be notified under Section 15 on the purchase of goods from any source within the State by a dealer liable to pay tax under the Act when such goods, not being Schedule 'B ' goods, were consumed either in producing Schedule 'B ' goods or when the manufac tured goods were other than Schedule 'B ' goods, the same not being sold within the State or in the course of inter State trade or commerce, or in the course of export outside the territory of India, or the purchased goods were exported outside the State.
After referring to the relevant provisions and the provisions of section 9(1)(b), Mr Tewatia emphasised that the contingency contemplated by "or despatches the manufac tured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce or in the course of export outside the territory of India within the meaning of section 5(1) of the ; or" as well as clause (c) of section 9(1) which encompasses "purchases goods, other than those specified in Schedule B, from any source in the State and exports them, in the circumstances in which no tax is payable under any other provision of 536 this Act, there shall be levied, subject to the provisions of Section 17, a tax on the purchase of such goods at such rate as may be notified under Section 15.", have to be judged for determining their validity in the true historical perspective as well as bearing in mind the remedial aspect of the provisions for the purpose of which these were enact ed.
Therefore, the main question is whether the tax envis aged by section 9(1) is a tax on purchase/sale of given goods or is a tax on the despatch/ consignment of such goods and that depends on, as to whether the taxable event is a purchase/sale of goods or despatch/consignment of such goods.
As mentioned hereinbefore, Mr. Tewatia laid great deal of emphasis on the background of the provisions of section 9(1).
He urged that the said section is both a taxing as well as a remedial provision, as would be evident from the scheme of the Act.
The legislative policy was to see that all goods except non taxable goods i.e. Schedule 'B ' goods, must yield tax/revenue to the State in the hands of a dealer, at one stage or the other, according to Mr. Tewatia.
He analysed the scheme and referred us to section 6 along with section 27 of the Act, and then submitted that the provision of section 9(1) along with subsection (3) of section 24 of the Act are both composite provisions, i.e. they are both charging provisions as also remedial provi sions.
According to him, such composite provisions of a fiscal Statute deserve to be interpreted properly and in such a manner as to further remedy and thus effectuate the legislative intent and suppress the mischief intended to be curbed.
Reliance was placed by the High Court as well as Mr. Tewatia before us on the observations of this Court in The State of Tamil Nadu vs Kandaswami, (supra), where at p. 198 of the Sales Tax Cases, this Court while dealing with sec tion 7A of the Tamil Nadu (Amendment) Act, observed that it was at once a charging as well as a remedial provision.
Its main object was to plug leakage and prevent evasion of tax.
In interpreting such a provision, a construction which would defeat its purpose and, in effect, obliterate it from the statute book, should be eschewed.
If more than one construc tion is possible, that which preserves its workability and efficacy is to be preferred to the one which would render it otiose or sterile, observed this Court in that case.
While bearing the aforesaid principle in mind, it has to be exam ined as to how far the application of this provision can be construed with the well settled principle of fiscal legisla tion and the terms and conditions of the present legisla tion.
It has been said and said on numerous occasions that fiscal laws must be strictly construed, words must say what these mean, nothing should be presumed or implied, these must say so.
The true test must always be the language used.
537 On behalf of the assessee, Mr. Rajaram Agarwala, howev er, further contended that the ratio of Kandaswami 's case (supra) to which Mr. Tewatia referred, must be understood in the light of the question involved in that case.
The said decision of this Court was concerned with the limited point as to whether the Madras High Court was right in observing "whether one could say that the sale which is exempted is liable to tax and then assume that because of exemption, the tax is not payable".
This Court held that the language of section 7A of the said Act was far from clear as to its intention and did not concern with the identification of the taxing event.
Furthermore, it has to be borne in mind, as emphasised by Mr. Agarwala, that if at all the taxing event was spelt out, it was on the assumption that the goods in question were generally taxable and these were to be put to tax under section 7A of the Tamil Nadu Act, if these came to be purchased without payment of tax and then sought to be dealt with in any manner as to escape payment of State sales/purchase tax within the State.
Mr. Tewatia drew our attention to the observations of this Court in Kandaswami 's case (supra) to prove that the observations in Malabar Fruit Products Co. vs The Sales Tax Officer, Palai, 30 STC 537, where these questions were decided by Justice Poti of the Kerala High Court, who spelt out that the taxing event was not the event of despatch but the event of purchase/sale of goods.
It has, however, to be borne in mind that the questions involved in Malabar Fruit Products ' case and Kandaswami 's case (supra) were not con cerned with the actual argument with which we are concerned in the instant matter.
It is well settled that a precedent is an authority only for what it actually decides and not for what may remotely or even logically follows from it.
See Quinn vs Leathem, ; and The State of Orissa vs Sudhansu Sekhar Misra & Ors., ; Therefore, the ratio of the said decision cannot be properly applied in construing the provisions of section 9(1)(b) in this case to determine what is the taxable event.
It was contended by Mr. Rajaram Agarwala that clause (b) of Section 9(1) dealt with non exempted goods purchased in the State, used in the manufacture of any goods whether exempted or not, but when despatched outside the State of Haryana i.e. by way of stock transfer consignment will attract the tax liability under this section, hence, the event of despatch or consignment is the immediate cause which attracts the tax liability under section 9.
The quali ty or the character of goods which should be liable to tax under section 9 in clause (1)(a) is the non exempted goods purchased in the State; while 538 under the first part of clause (b) the quality of goods liable to tax is the non exempted goods purchased in the State and under the second part of clause (b), the quality of goods must be non exempted goods purchased and manufac tured in the State, whether exempted or not in the State which is liable to tax on despatch outside Haryana; and under clause (c) the goods purchased in Haryana without undergoing any further change or use is the quality of goods liable to tax when exported.
The submission of the State is that the taxable event is the purchase of goods in Haryana while the obligation to pay is postponed on the fulfilment of certain conditions.
The further argument is that there is a general liability to purchase tax which the dealer avoids on furnishing a Decla ration in S.T. Form 15 as provided by section 24 at the time of purchase, wherein certain conditions are mentioned and when those conditions are not fulfilled, those revive.
It was further argued that the conditions are incorporated in section 9 of the Act.
For testing which of the contentions are nearer to find out the exact taxable event, certain indicias and illustrations may be seen.
Their analysis will indicate that there is no liability to pay sales tax under the Haryana Act on the purchaser.
It is admitted that on such sales the selling dealer is liable to pay sales tax.
On such purchases, the sale and purchase being the two sides of the same coin, no purchase tax is imposed under the Act.
This has been the accepted position by the State also for, while replying to the question of double taxation counsel for the State admitted that sales as well as purchase tax is to be imposeable under the scheme of the Act which are of two sides.
Hence, it was rightly urged by Mr. Rajaram Agar wala that the first contention for attracting the applica bility of section 9(i), "whether a dealer is liable to pay tax under this Act purchases goods", is missing when the section (1) talks of a dealer liable to pay tax under the Act, obviously it is with reference to his purchasing activ ity and if on that activity no purchase tax is payable, section 9(1) would not be applicable.
To accept the submissions advanced by Mr. Tewatia, assumptions and presumptions are to be made.
It is not permissible to do so in a fiscal provision.
See in this connection the observations of this Court in C.S.T.U.P. vs The Modi Sugar Mills Ltd.; , and Baidyanath Ayurved Bhawan (P) Ltd., Jhansi vs Excise Commissioner, U.P. & Ors.
; , at 592.
In that background it must be noted that section 9 of the Act nowhere makes a reference to section 24 or any declaration furnished by the purchasing dealer on the basis of which he was granted temporary exemp tion and thereby revival of 539 the original purchase tax on the breach of declaration as such.
Section 9 of the Act opens with the expression "where a dealer liable to pay tax under this Act" and not "whether a dealer has paid tax or has not paid tax".
The phrase 'liable to pay tax ' under the Act must relate to liability to pay sales tax on such purchases.
It is well settled that the main test for determining the taxable event is that on the happening of which the charge is affixed.
The realisation often is postponed to further date.
The quantification of the levy and the recov ery of tax is also postponed in some cases.
It is well settled that there are three stages in the imposition of tax.
There is the declaration of liability, that is the part of the Statute which 'determines what persons in respect of what property are liable.
Next, there is the assessment.
Liability does not depend on assessment, that exhypothesi has already been fixed.
But assessment particularises the exact sum which a person is liable to pay.
Lastly comes the method of recovery if the person taxed does not voluntarily pay.
Reference may be made to the observations of Lord Dunedin in Whitney vs Commissioner of Inland Revenue, at p. 52 and of the Federal Court in Chatturam & Ors.
vs C.I.T., Bihar, 15 ITR FC 302 at 308.
Taxable event is that which on its occurrence creates or attracts the liability to tax.
Such liability does not exist or accrue at any earlier or later point of time.
The identi fication of the subject matter of a tax is to be found in the charging section.
In this connection, one has to analyse the provisions of section 9(2)(b) as well as section 9(1)(b) and 9(1)(c).
Analysing the section, it appears to us that the two conditions specified, before the event of despatch outside the State as mentioned in section 9(1)(b), namely, (i) purchase of goods in the State and (ii) using them for the manufacture of any other goods in the State, are only descriptive of the goods liable to tax under Section 9(1)(b) in the event of despatch outside the State.
If the goods do not answer both the descriptions cumulatively, even though these are despatched outside the State of Haryana, the purchase of those goods would not be put to tax under sec tion 9(1)(b).
The focal point in the expression "goods, the sale or purchase of which is liable to tax under the Act", is the character and class of goods in relation to exigibil ity.
In this connection, reference may be made to the obser vations of this Court in Andhra Sugars Ltd. vs State of Andhra Pradesh, ; On a clear analysis of the said section, it appears that section 9(1)(b) has to be judged as and when liability accrues under that section.
The liability to pay tax under this section does not accrue on purchasing the goods simpliciter, but only when these are despatched or consigned out of 540 the State of Haryana.
In all these cases, it is necessary to find out the true nature of the tax.
Analysing the section, if one looks to the alleged purchase tax under section 9, one gets the conclusion that the section itself does not provide for imposition of the purchase tax on the transac tion of purchase of the taxable goods but when further the said taxable goods are used up and turned into independent taxable goods, losing its original identity, and thereafter when the manufactured goods are despatched outside the State of Haryana and only then tax is levied and liability to pay tax is created.
It is the cumulative effect of that event which occasions or causes the tax to be imposed, to draw a familiar analogy it is the last straw on the camel 's back.
In this connection, reference may be made to the obser vations of Justice Vivian Bose in The Tata Iron & Steel Co. Ltd. vs The State of Bihar, ; at 1381, where he observed as follows: "I would therefore reject the nexus theory in so far as it means that any one sale can have existence and entity simultaneously in many different places.
The States may tax the sale but may not disintegrate it, and, under the guise of taxing the sale in truth and in fact, tax its various elements, one its head and one its tail, one its entrails and one its limbs by a legislative fiction that deems that the whole is within its claws simply because, after tearing it apart, it finds a hand or a foot or a heart or a liver still quivering in its grasp.
Nexus, of course, there must be but nexus of the entire entity that is called a sale, wherever it is deemed to be situate.
Fiction again.
Of course, it is fiction, but it is a fiction as to situs imposed by the Constitution Act and by the Supreme Court that speaks for it in these matters and only one fiction, not a dozen little ones.
" It is, therefore, necessary in all cases to find out what is the essence of the duty which is attracted.
A taxa ble event is that which is closely related to imposition.
In the instant section, there is such close relationship only with despatch.
Therefore, the goods purchased are used in manufacture of new independent commodity and thereafter the said manufactured goods are despatched outside the State of Haryana.
In this series of transactions the original trans action is completely eclipsed or ceases to exist when the levy is imposed at the third stage of despatch of manufac ture.
In the instant case the levy has no direct connection with the transaction of purchase of raw materials, it has only a remote connection of lineage.
It may be indirectly and very 541 remotely connected with the transaction of the purchase of raw material wherein the present levy would lose its charac ter of purchase tax on the said transaction.
Mr. Rajaram Agarwala submitted that the measure of tax is with reference to the value of purchased goods in the State of Haryana.
As mentioned before, reference has been made to the decision of Kandaswami 's case (supra), where this Court dealt with section 7A of the Tamil Nadu Act, which was not identical but similar to section 9 of the Act.
There at p. 196 of the report, this Court observed as fol lows: ".
Difficulty in interpretation has been experienced only with regard to that part of the sub section which relates to ingredients (4) & (5).
The High Court has taken the view that the expression "goods, the sale or pur chase of which is liable to tax under this Act", and the phrase "purchases . in circum stances in which no tax is payable under Sections 3, 4 or 5 are a "contradiction in terms".
Ingredients Nos.
4 & 5 are as follows: "4.
The goods purchased are "goods, the sale or purchase of which is liable to tax under this Act".
Such purchase is, "in circumstances, in which no tax is payable under sections 3, 4 or 5, as the case may be;" The relevant ingredient involved, as mentioned at page No. 196, was as under: "6.
The dealer either (a) consumes such goods in the manufacture of other goods for sale or otherwise or (b) despatches all such goods in any manner other than by way of sale in the State or (c) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter State trade or commerce.
" This ingredient was neither argued nor was considered, so the 542 passing reference based on the phraseology of the section is not the dictum of Kandaswami 's case.
Secondly, in section 9, in the instant case, the raw materials purchased or used in the manufacture of new goods and thereafter those new goods were despatched outside the State of Haryana whereupon the tax was levied.
This important factor is wholly missing in Section 7A of the Tamil Nadu Act, which was considered in Kandaswami 's case.
In that decision, this Court approved the Kerala High Court 's decision in Malabar Fruit Products, (supra), which was confined to the interpretation of the words 'goods ', the sale or purchase under the Act.
A deci sion on a question which has not been argued cannot be treated as a precedent.
See the observations of this Court in Rajput Ruda Maha & Ors.
vs State of Gujarat, [1980] 2 SCR 353 at 356.
The decision of the Division Bench of the Kerala High Court in Yusuf Shabeer & Ors.
vs State of Kerala & Ors., 32 STC 359 is clearly distinguishable.
In Ganesh Prasad Dixit 's case (supra) the question of constitutional validity was not argued.
A reference was made by Mr. Tewatia to the decision of the High Court in The Coffee Board vs Commissioner of Commercial Taxes & Ors., 60 STC 142 and the decision of this Court in Coffee Board, Karnataka vs Commis sioner of Commercial Taxes, Karnataka, 70 STC 162.
In these cases the question involved was the acquisition of coffee by the Coffee Board under compulsory acquisition or purchase or sale of goods.
That question is entirely different from the question with which we are concerned in these appeals.
Prior to 46 the Amendment, Entry 54 of List II of the 7th Schedule of the Constitution of India which demarcated the exclusive field of State Legislation, read with Article 246(3) of the Constitution conferred power on the State Legislature to impose tax on the transactions of sale or purchase of goods.
The said Entry read as follows: "Taxes on the sale or purchase of goods other than Newspapers, subject to the provisions of Entry 92 A of List I".
Entry 92A of List I, which is in the exclusive domain of the Union, was to the following extent: "Taxes on the sale or purchase of goods other than Newspapers, where such sale or purchase takes place in the course of inter State trade or commerce." The mere consignment of goods by a manufacturer to his own branches outside the State does not in any way amount to a sale or 543 disposal of the goods as such.
The consignment or despatch of goods is neither a sale nor a purchase.
The first judg ment in case of Goodyear India was on December 4, 1982 when it was held that the Notification was beyond the Act, as the word 'disposal ' did not include the word 'mere despatch ' as mentioned in the notification.
The Constitution (46th Amend ment) Act, 1982 came into force on February 2, 1983, whereby section 9 was amended.
This amendment was after 46th Consti tutional Amendment Act, 1982.
The 46th Constitution Amend ment Act in the Statement of Objects & Reasons, inter alia, stated as follows: "There were reports from State Government to whom revenues from sales tax have been as signed, as to the large scale avoidance of Central Sales Tax leviable on inter State sales of goods through the device of consign ment of goods from one State to another and as to the leakage of local Sales Tax in works contracts, hire purchase transactions, lease of films etc.
Though, Parliament could levy a tax on these transactions, as tax on sales has all along been treated as an item of revenue to be assigned to the States, in regard to these transactions which are semble sales also, it is considered that the same policy should be adopted.
" The Law Commission of India in its 61st Report made, as indicated before, certain recommendations, and noticed that the provisions of existing were insuf ficient to tax the consignment transfers from branch to another, as it was beyond the concept of sale, and its recommendations are contained in paragraph 2.23 of Chapter II (at page 66), it recommended that the definition of sale in the , after carrying out the requi site Constitution Amendment be amended somewhat on the lines indicated by them in their report.
The Union of India, in part, accepted the recommendations but instead of amending the definition of sales in , inserted a new Entry in the Union List in the shape of Entry 92B and also inserted a new sub clause (4) after subclause (g) in article 269 (1) of the Constitution.
The Parliament also amend ed clause (3) of Article 269.
It appears to us that the effect of the aforesaid amend ment is that the field of taxation on the consignment/des patch of goods in the course of inter State trade or com merce expressly come within the purview of the legislative competence of the Parliament.
It is wellsettled that the nomenclature of the Act is not conclusive and for 544 determining the true character and nature of a particular tax, with reference to the legislative competence of a particular Legislature, the Court will look into its pith and substance.
See the observations of Governor General in Council vs Province of Madras, [1945] 72 IA 91.
There, Lord Simonds observed as follows: " . .
For in a Federal Constitution, in which there is a division of legislative powers between Central and provincial legisla tures it appears to be inevitable that contro versy should arise; Whether one or other legislature is not exceeding its own, and encroaching on the others Constitutional Legislative Power, and in such a controversy it is a principle, which their Lordships do not hesitate to apply in the present case, that it is not the name of the tax, but its real nature, "it is pith and substance", as it has some times been said which must determine into what category it fails.
" We must, therefore, look not to the form but to the substance of the levy.
See the observations of the Federal Court in Ralla Ram vs The Province of East Punjab, AIR 1949 FC 81.
Therefore, the nomenclature given by the Haryana Legis lature is not decisive.
One has to find out whether in pith and substance, a consignment tax is sought to be imposed, a tax on despatch in the course of inter State trade or com merce.
I have no hesitation in holding that it is a tax on despatch.
Inter state trade or commerce, it has been empha sised, is of great national importance and is vital to the federal structure of our country.
As the imposition of consignment tax requires very deep consideration of all its aspects and certain amount of consensus among the States concerned, especially with regard to the rates, grant of exemption, and ratio relating to distribution of proceeds amongst the States inter se, the actual imposition of tax is bound to take some time till an agreeable solution is found, but that would not make the consignment tax to be in sus pended animation in the State, and make us hold that a tax which is in essence a tax on consignment should be taxed by the States by the plea either that otherwise there is ample scope of evasion and further States are without much re sources in these days when there is such a tremendous demand on the revenue of the States.
It is well settled that the Entries in the Constitution only demarcate the legislative fields of the respective legislatures and do 545 not confer legislative powers as such.
The tax on despatch of goods outside the territory of the State certainly is in the course of inter State trade or commerce, and in other words, amounts to imposition of consignment tax, and hence the latter part of section 9(1)(b) is ultra vires and void.
In these cases, we are concerned with the validity of the latter part of section 9(1)(b) of the Haryana Act which imposes a tax on despatch of manufactured goods outside the territories of Haryana.
If it is accepted that section 9(1)(b) is ultra vires, the penalty proceedings would auto matically go as they are in substance, based on the viola tion of section 9(1)(b) of the Act and the consequent pro ceedings flowing therefrom.
It is in that context that in writ petition No. 3834 of 1985, Mr. Soli Sorabjee urged that the attempt and action of the State in imposing tax and attempt to penalise are bad.
In this connection, it may be mentioned that before the Full Bench of the Punjab & Haryana High Court on behalf of the State, a statement was made, which has been recorded in 58 STC 393 at p. 408, as follows: "Counsel appearing for the State of Haryana made a statement that if the Full Bench held that Bata India Limited 's, case (1983)54 STC 226 did not lay down the correct law and the amendment effected by Act No. 11 of 1984 to Section 9 was intra vires, then the provision of sub section (3) of section 24 regarding the rate of tax shall not be enforced and only the old rate will be leviable.
" In view of the aforesaid statement, no higher rate except the old rate admissible factually would be applica ble.
Section 24(3) was introduced by the Haryana Act with retrospective effect from May 27, 1971, which is as follows: "Notwithstanding any other provisions of this Act or any Judgment, decree or order of any Court or other authority to the contrary if a dealer who purchases goods, without payment of tax under Sub section (1) and fails to use the goods so purchased for the purpose specified therein he shall be liable to pay tax on the purchase value of such goods, at the rates notified under Section 15 without prejudice to the provisions of Section 50 provided that the tax 546 shall not be levied where tax is payable on such goods under any other provision of this Act.
" This provision without making any change in the substan tive provision purports to give a direction to ignore the judgment, in other words, purports to overrule the judg ments, namely, Goodyear and Bata India, which is beyond the legislative competence of the State Legislature and this provision is void in view of the decision of this Court.
See Shri Prithvi Cotton Mills Ltd. vs Broach Borough Municipali ty, [1969] 2 SCC 283 at 286.
For the same reason, applying the main section instead of section 9(1), section 24 should also fail as amended.
Civil appeal No. 15 15/84 is also liable to be dismissed in view of the judgment of this Court in Dy.
Commissioner of Sales Tax (Law), Board of Revenue (Taxes) vs M/s. Thomas Stephen & Co. Ltd., Quilon, ; , where this Court observed that "disposal means transfer of title in the goods to any other person", and therefore it would not include mere despatch to own self or to its agents or to its branch offices or depots.
In the premises, the decision of the Punjab & Haryana High Court in Goodyear India Ltd., 53 STC 163 is correct on merits as well.
In the aforesaid view of the matter, it cannot be held that section 9(1) and sub section (3) of section 24 are constitutionally valid.
In civil appeals Nos. 1633 (NT) of 1985 and 3033/86 which are the appeals by the Food Corporation of India, Mr. Sen submitted that the FCI is a service agency of the Govt.
of India and is discharging the statutory functions of distribution of foodgrains by procuring/purchasing from the surplus States and despatching the same to the deficit States in accordance with the policy of the Govt.
of India.
He further submitted that the Corporation procures food grains from the farmers through commission agents in the Mandis of Haryana and despatch them to its own branches in the deficit States of the country.
The Corporation branches in the recipient States supply these stocks to the State agencies/fair price shops and also pay tax as per the provi sions of the Sales Tax law of the respective States.
Some of the stocks are distributed within Haryana for the Public Distribution System (PDS) for which sales tax is charged and deposited with the Sales Tax depot as per the provisions of the Haryana General Sales Tax Act.
In case the stocks are also sold in the course of inter State trade or commerce, central sales tax is levied and deposited with the Haryana Sales Tax authorities.
Some of the grains are also exported out of India on which there is exemption on payment of any tax.
547 In fact, the points at which the tax is to be levied have been indicated in Schedule 'D ' to the Act.
It is clear from the perusal of the Schedule that in case of Paddy, the taxable event is the last purchase.
Similarly, in case of rice the taxable event is the first sale point in the State.
In case of wheat and other cereals the point of taxation is the last sale to the consumer by a dealer liable to pay tax under the Act.
In respect of inter State despatch of wheat and other foodgrains by FCI to its own branches, tax is attracted at the time of despatch under section 9(1)(c) of the Haryana Act.
Section 9 is, therefore, the charging section for taxation in case where the goods are purchased for export.
There is no other provision for levy of purchase or sales tax in such cases of export.
Incidentally, "export" has been defined in section 2(e) of the Act which reads as follows: "2(e) "export" means the taking out of goods from the State to any place outside it other wise than by way of sale in the course of inter State trade or commerce or in the course of export out of the territory of India;" No tax is payable under the Haryana Act when exports outside the State take place either in the course of inter State sale or export out of the territory of India.
No tax is therefore payable in regard to export outside India but the tax is payable for sale in the course of inter State trade and commerce i.e. under the .
It is only when the goods are despatched/consigned to the depots of the FCI in other States that tax is levied under section 9 of the Haryana Act.
This is in addition to the sales tax paid by the FCI on the sale of grains in the recipient States.
On perusal of sections 14 & 15 of the , it becomes clear that wheat is one of the commodities specified as 'declared goods ' and in respect of which the intention is clear that the tax is payable only once on the declared goods.
In the case of inter State sale if any tax has been paid earlier on declared goods inside the State the same is to be refunded to the dealer who is paying tax on such inter State sales.
On these transactions no tax is liable in the recipient State, while in case of inter State despatches, the tax is leviable twice.
The appeals of.
the FCI are confined to section 9(1)(c), which insofar as it purports to tax export, is beyond the legisla tive competence of the State of Haryana.
On behalf of the State in Bata Co. Ltd. vs State of Haryana (supra), the submission of the State was on the basis that it had power to tax consignment or despatches of goods.
But after the 46th Amend 548 ment, the State Legislature is incompetent to legislate about consignments/despatches otherwise than by way of sale under which no purchase/sales tax is leviable under the Haryana Act.
It is the Parliament alone which is legisla tively competent to enact a legislation on consignment.
Now, it is necessary to deal with civil appeals Nos. 4 162 63/85 which deal with the validity of section 13 AA of the Bombay Sales Tax Act.
These appeals are by Hindustan Lever Ltd. and Wipro Products the appellants herein.
The appellants, at all material times, manufacture, make and deal in vanaspati, soaps, etc., chemicals and agro chemicals, and they used to purchase various types of VNE oils for their manufacture of vanaspati, soaps and other products.
Since the appellants had a wide net of distribution of their products all over India, they appointed 40 and more clearing and forwarding agents in the country.
The appellant used to despatch the goods so manufactured from their factory to the clearing and forwarding agents.
They also used to purchase VNE oils and other raw materials and paid 4% tax by way of purchase tax under section 3 of the Bombay Sales Tax Act, 1959 (hereinaf ter called 'the Bombay Act ').
The raw materials are used in the manufacture of said goods and as the said manufactured goods are despatched outside the State to the several dis tributing agencies, the appellant companies were held to be liable to pay, under section 13 AA of the Act, an additional tax @ 2% on purchase of the said goods.
The question, therefore, that arises, is: whether the levy of additional tax at 2% under Section 13 AA of the Act is a tax on purchases failing under Entry 54 of List II of the 7th Schedule or it is a tax on the despatch of consign ment of the manufactured goods outside the State.
In case of latter, the State Legislature will have no power to impose any tax on such consignment or despatch of goods outside the State.
If it is the former, then it will be valid.
The question is that under the true constructions of section 13 AA of the Act, on which the imposition of tax is made, or in other words, what is the incidence of that taxation or taxable event? In both these appeals, namely, civil appeals No. 4162/ 88 and 4163/88, the appellants M/s Wipro Products Ltd. and Hindustan Lever Ltd. are contending that the levy is bad.
The issue involved in both the appeals is the con stitutional validity and legality of the provisions of section 13 AA of the Act, which was introduced into the Act by the Maharashtra Act XXVIII of 1982.
The appellant 549 had a factory at Amalnar in Jalgaon district in the State of Maharashtra wherein it uses non essential oil purchased by it for the manufacture and transport.
The finished products, namely, vanaspati manufactured by the appellant used to be despatched to their various marketing depots in the State of Maharashtra, Madhya Pradesh, Karnataka, Andhra Pradesh, U.P., Tamil Nadu and Kerala etc.
On July 1, 1981 the rate of purchase tax payable on VNE oils (falling under Schedule C, part I at Entry 35) purchased within the State of Maharash tra from non registered dealers increased from 3% to 4%, by the Maharashtra Act 32 of 1981.
Section 13 AA was introduced into the Act providing for levy of 2% additional purchase tax on the purchase of goods, input goods, specified in part I of the Schedule from a non registered dealer if such goods were used in the manu facture of taxable goods within Maharashtra and thereafter the manufactured goods were transferred outside Maharashtra in the manner indicated in the said section.
The appellants filed writ petitions.
An order was passed by the Bombay High Court on July 19, 1988 in respect of these two writ petitions by the Wipro Products as well as Hindustan Lever Ltd. The decision of the High Court is reported in [1989] 72 STC 69.
Dismissing the petitions of the appellants the High Court held that (i) three different phases are contemplated in section 13 AA of the Act, namely, the initial purchase of the raw material, the consumption thereof in the manufacture of taxable goods, and the despatch of the manufactured goods outside the State.
If the goods purchased remain in the same form within the State, the question of levying additional tax would not arise.
The High Court came to the conclusion that there was no ground to hold that the additional tax was levied on the despatch of goods and was unconnected with the initial transaction of purchase, as it was required to be paid in addition to the sales or purchase tax paid or pay able in respect of the same goods which had been so pur chased before the conditions specified in section 13 AA are fulfilled, (ii) in the context of the other provisions of the Act, a sort of concession is given at the time of pur chase on the quantum of tax payable on the purchase of goods which fall under Part I of Schedule C.
However, there is a clear mandate of law, which is clearly understood between seller and buyer, that though tax at the concessional rate is paid, the obligation to pay the additional tax on the happening of certain events, namely, use of such goods in manufacture of finished goods, and despatch of finished goods outside the State, is undertaken 550 by the purchaser; and (iii) implicit in the low rates of tax prescribed on raw material attributable to goods in Part I of Schedule C is the condition precedent that to avail of this concession the goods in question are required to be sold in the State after being used in the manufacture of other taxable goods.
The High Court, further, was of the opinion that a manufacturer who purchases raw material at a concessional rate on the strength of declaration in Form 15 cannot transfer the goods manufactured out of such raw material outside the State.
The High Court held that if he does so, he is liable to pay purchase tax at the full rate on the raw material under section 14.
According to the High Court, similarly, a manufacturer who purchases goods covered in Part III of Schedule C, uses them in the manufacture of other taxable goods which he despatches outside the State, is liable to pay tax at rates ranging from 6% to 15%.
Sec tion 13 AA, therefore, far from being discriminatory, serves to wipe out any discrimination between the two categories of manufacturers mentioned above and manufacturers purchasing raw material covered by Part I of Schedule C, according to the revenue.
The High Court was of the opinion that the additional purchase tax leviable under section 13 AA of the Bombay Act, is on the purchase value of VNE oil used in the manufacture of goods transferred outside the State and not on the value of the manufactured goods so transferred.
It further held that the tax levied under section 13 AA of the Bombay Act, falls squarely and exclusively under Entry 54 of the State List in the 7th Schedule to the Constitution of India and the State Legislature was competent to levy it.
It does not even remotely fall under Entry 92B of the Union List, according to the High Court.
The High Court was also of the view that the goods taxed under section 13 AA of the Bombay Act, are consumed in the State as raw material in the process of producing other commodities.
Hence, there was no question of any hindrance to a free flow of trade bringing into operation Article 301 of the Constitution.
According to the High Court, the peti tioners had not brought forth any material to show how the free flow of trade has been affected by this additional rate of tax; and held that section 13AA is not violative of Article 14 of the Constitution; and that section 13AA of the Bombay Act and the orders requiring the appellants to pay additional tax @ 2% on purchase of VNE oil used by them as raw material in the manufacture of goods despatched outside the State, were valid.
The High Court in the judgment under appeal has set out the relevant provisions of the Act, which was enacted to consolidate and 551 amend the law relating to levy of tax on the sale or pur chase of certain goods in the State of Bombay.
Section 2 contains some of the definitions.
Section 24 deals with authorisations of turnover etc.
Section 13AA of the Bombay Act with which the High Court and these appeals are con cerned, is in the following terms: "13 AA.
Purchase tax payable on goods in Schedule C, Part I, when manufactured goods are transferred to outside branches.
Where a dealer, who is liable to pay tax under this Act, purchases any goods speci fied in Part I of Schedule C, directly or through Commission agent, from a person who is or is not a Registered dealer and uses such goods in the manufacture of taxable goods and despatches the goods, so manufactured, to his own place of business or to his agent 's place of business situated outside the State within India, then such dealer shall be liable to pay, in addition to the sales tax paid or payable, or as the case may be, the purchase tax levied or leviable under the other provi sions of this Act in respect of purchases of such goods, a purchase tax at the rate of two paise in the rupee on the purchase price of the goods so used in the manufacture, and accordingly the dealer shall include purchase price of such goods in his turnover of pur chases in his return under section 32, which he is to furnish next thereafter.
" The questions involved in these appeals are: whether section 13AA of the Bombay Act is beyond the legislative competence of the State Legislature; and it is violative of Article 14 of the Constitution; and thirdly, whether the said provision is violative of Article 301 of the Constitu tion.
It was contended on behalf of the appeallant that section 13AA of the Act is a charging section and imposes a charge of an additional rate of 2% in the rupee if the following conditions laid down therein are satisfied: (i) the charge is levied upon a dealer who is liable to pay tax under the Act; (ii) such a dealer purchases any goods speci fied in Part I of Schedule C, directly or through commission agent, from a person who is or is not a registered dealer; (iii) the goods so purchased are used in the manufacture of taxable goods; and (iv) the goods which are so manufactured (and not the goods on which purchase tax had been paid) are despatched to the dealer 's own place of business or to his agent 's place of business situated outside the State.
552 According to the appellant, the said section lays down the person who is liable to pay tax, the goods on which the same is leviable and the taxable event which would attract the liability of additional tax of two paise in the rupee, namely the despatch or consignment of goods by the dealer/manufacturer outside the State.
According to Dr. Pal, counsel for the appellant, the taxable event is not the purchase of goods as such which is the raw material, but it is the despatch or consignment of goods manufactured by the dealer/manufacturer to its own branch outside the state; and that thus manufactured goods are different from commercial commodity, distinct and sepa rate from the raw materials on which purchase tax has al ready been paid.
It is well settled, it was reiterated before:us, that in case of excise duty, the taxable event is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof.
In case of sales tax, taxable event is the sale of goods.
Hence, though both excise duty and sales tax are levied with reference to the goods, the two are different imposts, in one case the impo sition is on the act of manufacture or production while in case of other the imposition is on the act of sale.
But in neither case the impost is a tax directly on the goods.
See in this connection, the observations of this Court in re: The Bill to amend section 20 of the and section 3 of the Central Excises & Salt Act, 1944; , at 821 and M/s. Guruswarny & Co. vs State of Mysore, [ at 562.
The power to tax the sale or purchase of goods is dif ferent from the right to impose taxes on use or consumption.
According to Dr. Pal such power to levy sales tax cannot be exercised at the earlier stage of import or manufacture/production nor the said power can be exercised at the later stage of use or consumption but only at the stage of sale or purchase.
In respect of sales tax, the right to levy duty would not at all come into being before the time of sale/purchase.
Sales tax cannot be imposed unless the goods are actually sold and may not be leviable if there is a transfer in some other form.
See in this connection the observations of the Federal Court in Mukunda Murari Chakravarti & Ors.
vs Pabitramoy Ghosh & Ors., at 22.
Therefore, in this case it is necessary to ascertain what is the taxable event under section 13 AA of the Act which attracts duty.
A taxing event is that event the occurrence of which immediately attracts the levy or the charge of tax.
In the fiscal legislations normally a charge is created.
The mischief of taxation occurs on the happening of the taxable event.
Diffe 553 rent taxes have different taxable events.
In the instant case, Dr. Pal canvassed before us that the incidence of the levy of additional tax of two paise in the rupee is not on the purchase of goods but such a levy is attracted only when (a) the goods which so purchased on payment of pur chase tax are used in the manufacture of taxable goods; and (b) the goods so manufactured are despatched to his own place of business or to his agent 's place of business out side the State.
Therefore, the incidence of tax is attracted not merely on the purchase but only when the goods so pur chased arc used in the manufacture of taxable goods and are despatched outside the State.
In our opinion, it was rightly submitted that it is the effect of section 13AA of the Act.
It was further highlighted by Dr. Pal on behalf. of the assessee that additional tax is not levied on the goods purchased on payment of purchase tax and despatched outside the State.
The goods which are purchased on payment of purchase tax are used in the manufacture of taxable goods.
What is despatched is not the raw material which have been purchased on payment of purchase tax but a completely dif ferent commodity, namely, vanaspati and soap.
If the raw materials as such purchased on payment of purchase tax are despatched outside the State, the additional tax under section 13 AA of the Act is not attracted.
Hence, the inci dence of additional tax has no nexus with the purchase of the raw materials, as was contended by Mr. S.K. Dholakia, appearing for the State and as held by the High Court.
Purchase tax under section 3 of the Act is attracted when the taxable event i.e. the purchase of goods occurs, but the taxable event for the imposition of additional tax of two paise in the rupee occurs only when the goods so purchased are used in the manufacture of taxable goods and such taxable goods are despatched outside the State by a dealer manufacturer.
Dr. Pal drew our attention to some of the observations of this Court in Kedarnath Jute Mfg. Co. Ltd. vs Commissioner of Income tax (Central), Calcutta, 82 ITR SC 363 and State of Madhya Pradesh & Ors.
vs Shyama Charan Shukla, 29 STC SC 215 at 218 219.
On the other hand, Mr. Dholakia submitted that the submission of the appellant proceeded on the assumption that the liability to pay is the same as the obligation to pay but this was wrong.
These two are different.
It was submitted that the obligation to pay is not the same thing as liability to tax; and that it was wrong to proceed on the basis that because 'obligation to pay ' is a later event, 'the despatch of goods ' is the taxa ble event.
This is a fallacy, according to Mr. Dholakia.
In this connection, reliance was placed on the observations of this Court in R.C. Jail vs Union of India, [1962] Suppl.
3 SCR 436, where this Court reiterated that subject always to the legislative com 554 petence of the enacting authority, the tax can be levied at a convenient stage, so long as the character of the impost is not lost.
The method of collection does not affect the essence of the machinery of collection for administrative convenience.
Reliance was also placed on the observations of Union of India vs Bombay Tyre International Ltd., ; It was submitted by Mr. Dholakia that the correct ap proach is to first determine whether the State Legislature, having regard to Entry 54 of List II to the 7th Schedule to the Constitution, can levy tax on purchase of a class of goods, which class is to be identified by reference to the condition of use of such goods into other taxable goods and despatch of such taxable goods outside the State.
He submit ted that if it is accepted that the State could have the power to tax purchases of goods meant for use into manufac ture of other taxable goods and despatch outside thereafter, then next question is whether the State enactment (like section 13AA of the Bombay Act) is so formulated as to come within the framework described.
He admitted that even if it did, it would still have to be subject to (a) the doctrine of pith and substance, (b) the fundamental rights, and (c) Article 301.
According to Mr. Dholakia, the Act contains a charging section which is section 3.
It levies tax on turnover of sales and purchases within section 2(36) and 2(35) respec tively of the said Act.
Section 13 of the Act levies tax on purchases in accordance with rates prescribed in Schedule C if the goods are purchased from an unregistered dealer.
Section 13A levies a concessional tax on purchases if the goods are purchased from a registered dealer, provided a declaration in the prescribed form is given under section 12(b) of the Act, if the purchaser buys directly, or one under section 12(d) if the purchaser buys through a commis sion agent.
In both the forms the relevant conditions are: (a) that the goods fall within Part ii of Schedule C; and (b) that the goods bought would be used for manufacture of other taxable goods within the State and sold within the State.
Mr. Dholakia submitted that on giving the aforesaid declaration, the purchaser would have to pay only 4% tax.
The rates prescribed in Schedule C are as under: Schedule 'C ' Part Minimum Rate Maximum Rate I 2% 4% II 6% 15% 555 The effect of section 13A without section 13 AA, accord ing to Mr. Dholakia, was that only those who bought goods which fell into Part II, would have benefitted by the decla ration, since the rate mentioned in section 13A was 4%.
Hence, those buying goods falling within Part I of Schedule C had not to give any declaration under section 12(b) or 12(d), as the case may be, and still manufacture the taxable goods and despatch them outside the State.
According to him, as a result of this situation, two results emerged, i.e. (i) the State lost revenue because the goods manufactured with the help of the infrastructure provided by the State escaped further tax, by goods being resold outside the State; and (ii) the purchasers of raw materials used by the manufactur ers for producing new taxable goods, were not being treated equitably because those whose purchases of goods which fell into Part II had to give a declaration to get the benefit of reduced rate.
On the other hand, those whose purchases of goods fell in Part I, need not give such a declaration.
According to him, from the standpoint of the object of encouraging resale within the State, the classification in form of Part I and II had no rational nexus.
Therefore, that construction should be made which may make section 13 AA of the Act, to avoid this mischief.
According to Mr. Dholakia, section 13AA speaks of the requirement of additional purchase tax from those who have paid purchase tax, if the object of the purchases is to use the goods falling in Part I of Schedule C for manufacture of taxable goods and the despatch of such goods outside the State.
He alleged it to be a fair and reasonable construc tion and it will subserve the purpose of the amendment.
It is well settled that reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act.
See Commissioner of Wealth tax, Bihar & Orissa vs Kripashankar Dayashankar Worah, at 768 and Income tax Commis sioners for city of London vs Gibbs, 10 ITR Suppl.
121 HL at 132.
Mr. Dholakia further submitted that the Statement of Objects & Reasons also helps this construction.
In our opinion, he rightly submitted that because the accounts had to be maintained in a particular manner, is no criterion or evidence for determining when the liability arises.
The law is that the liability to tax would be determined with refer ence to the interpretation of the Statute which creates it.
It cannot be determined by referring to another Statute.
As contended by both the sides, it is well settled that the doctrine of pith and substance means that if an enactment substantially falls within the powers expressly conferred by the Constitution upon the Legislature 556 which enacted it, it cannot be held to be invalid merely because it incidentally encroches upon matters assigned to another Legislature.
See Kerala State Electricity Board vs Indian Aluminium Co, [1976] SCR 552 and Prafulla Kumar Mukherjee & Ors.
vs Bank of Commerce Ltd., AIR 1947 PC 60 at 65.
Therefore, the proper question which one should address to oneself is, whether section 13AA is in pith and sub stance, not levying tax on purchase but one levying tax on consignment.
Depending upon the answer to the question, the validity of the action can be judged.
Mr. Dholakia submitted that the Act is in pith and substance, an Act levying tax on purchase and not one levying tax on consignment, and re ferred to the observations of this Court in State of Karna taka vs Shri Ranganatha Reddy; , According to him, the consignment contemplated in section 13 AA is only of manufactured goods and no tax is levied under sec tion 13AA in respect of such manufactured goods.
He empha sised as aforesaid.
It is well settled that while determin ing nature of a tax, though the standard or the measure on which the tax is levied may be a relevant consideration, it is not the conclusive consideration.
One must have regard to such other matters as decided by the Privy Council in Gover nor General in Council vs Province of Madras, (supra) not by the name of tax but to its real nature, its pith and sub stance which must determine into what category it fails.
See the observations of R.R. Engineering Co. vs Zila Parishad Bareilly & Anr., ; ; in re: A reference under the Govt.
of Ireland Act, 1920, at 358 and Navnitlal C. Javeri vs K.K. Sen, Appellate Asstt.
Commis sioner of Income Tax, 'D ' Range, Bombay; , at 915.
On an analysis we find that the goods which are des patched are different products from the goods on the pur chase of which purchase tax was paid.
The Maharashtra legis lation has to be viewed in the context of 46th Amendment to the Constitution.
The 46th Amendment introduced Article 269 (1)(h) which lays down that the proceeds of the tax on consignment of goods (whether the consignment is to the person making it or to any other person) where such consign ment takes place in the course of inter State trade or commerce, will be assigned to the States.
The said Amendment also introduced Entry No. 92B in List I of the 7th Schedule.
The said Amendment was made on the consideration of the 61st Report of the Law Commission.
Entry 92B in List I of the 7th Schedule and Article 269(1)(h) of the Constitution bring within its sweep the consignment of goods by a person either to himself or to any other person in the course of inter State trade or 557 commerce.
Article 269(3) gives the power to Parliament to formulate the principles for determining when a consignment of goods takes place in the course of inter State trade or commerce.
If Entry 92B in List I is to be given the widest interpretation, as it should be, it would be clear that the constitutional changes introduced by the 46th Amendment in Article 269 read with the Entry, the tax on consignment of goods now comes within the exclusive legislative field of Parliament.
The true test to find out what is the pith and substance of the legislation is to ascertain the true intent of the Act which will determine the validity of the Act.
If the Parliament in exercise of its plenary power under Entry 92B of List I imposes any tax on the despatch or consignment of goods, Parliament will be competent to do so.
It is, therefore, not possible to accept the argument that the chargeable event was lying dormant and is activated only on the occurrence of the event of despatch.
The argument on the construction of the enactment is misconceived.
The charging event is the event the occurrence of which immediately attracts the charge.
Taxable event cannot be postponed to the occurrence of the subsequent condition.
In that event, it would be the subsequent condition the occurrence of which would attract the charge which will be taxable event.
If that is so, then it is a duty on despatch.
In that view of the matter, this charge cannot be sustained.
As mentioned hereinbefore, the section has been chal lenged as being violative of Article 14 of the Constitution.
This attack is based on the discrimination between the two types of taxes but in the way we have construed the section, in our opinion, this question does not survive.
It was further submitted by Dr. Pal that section 13AA of the Act is violative of Article 301 of the Constitution.
It makes a discrimination between the dealer/manufacturer who despatch es the goods outside the State and the other dealer/manufac turer.
Both the dealer/ manufacturers purchase the goods on payment of purchase tax and use them in the manufacture of taxable goods.
The incidence of additional tax on the pur chase of goods is attracted only when such manufactured goods are despatched outside the State.
If a dealer/manufac turer has to despatch the goods outside the State, he has to pay a higher rate of tax and thus he is discriminated as compared to the other dealer/manufacturer who purchases the raw material on payment of 4% purchase tax, but despatches the raw material straightaway outside the State and uses them in the manufacturer of goods outside the State.
The High Court held that there was no violation of Article 301 of the Constitution.
Reference was made to the decision of this Court in Atiabari Tea Co. Ltd. vs The State of Assam & Ors., ; ; 558 The Automobile Transport (Rajasthan) Ltd. vs The State of Rajasthan, [1963] 1 SCR 491; Andhra Sugars Ltd. vs State of Andhra Pradesh, (supra), State of Madras vs N.K. Nataraja Mudaliar, ; and State of Kerala vs A.B. Abdul Khadir & Ors., ; One has to determine: does the impugned provision amount to restriction directly and immediately, on the trade or commerce movement? As was observed by this Court in Kalyani Stores vs The State of Orissa & Ors.
, ; , imposition of a duty or tax in every case would not tanta mount per se to any infringement of Article 301 of the Constitution.
Only such restrictions or impediments which directly or immediately impede free flow of trade, commerce and intercourse fall within the prohibition imposed by Article 301.
A tax in certain cases may directly and immedi ately restrict or hamper the flow of trade, but every impo sition of tax does not do so.
Every case must be judged on its own facts and its own setting of time and circumstances.
Unless the court first comes to the finding on the available material whether or not there is an infringement of the guarantee under Article 301 the further question as to whether the Statute is saved under Article 304(b) does not arise.
The goods taxed do not leave the State in the shape of raw material, which change their form in the State itself and there is no question of any direct, immediate or sub stantial hindrance to a free flow of trade.
On the evidence adduced, we are in agreement with the High Court that the challenge to the imposition in the background of Article 301 cannot be sustained and, therefore, no question whether such imposition is saved under Article 304(b) of the Constitution arises.
In the aforesaid view of the matter and for the reasons mentioned hereinbefore, it must be held that so far as the appeals in respect of the Haryana Act are concerned, the High Court was right in the view it took in Goodyear India Ltd 's case, 53 STC 163 as well as the views expressed by the High Court in Bata India Ltd. vs The State of Haryana & Anr., 54 STC 226 are correct and are affirmed.
The views of the High Court expressed in Des Raj Pushap Kumar Gulati 's case (supra) are incorrect for the reasons mentioned herein before.
The last mentioned judgment and the judgment and orders following passed by the Punjab & Haryana High Court are, therefore, set aside.
In the premises, Civil Appeals Nos.
1166 72/85 (M/s Goodyear India Ltd. vs State of Har yana & Anr.), Civil Appeal No. 1173 77 (NT)/85 (Gedore (I) Pvt. Ltd. vs State of Haryana & Anr.), civil appeal No. 2674/86 (M/s. Kelvinator of India Ltd. & Anr.
vs State of Haryana & Ors.), Civil Appeal No. 1633 (NT)/85 F.C.I. vs State of Haryana & Anr.) and 559 Civil Appeal No. 3033 (NT)/86 F.C.I., Karnal vs The State of Haryana & Ors.) are allowed and the judgment and order of the High Court are set aside.
Civil Appeals Nos.
15 12 (NT)/84 [State of Haryana & Anr.
vs Gedore Tools (P) Ltd.] and 1515/84 [State of Haryana & Anr.
vs Goodyear India Ltd. ] are dismissed.
Special leave petitions Nos.
83988402/83 are dismissed, and for the rea sons mentioned hereinbefore, civil appeal Nos.
4162/88 (M/s. Wipro Products Ltd. vs State of Maharashtra & Anr.
and 4163/88 [Hindustan Lever Ltd. & Anr.
vs State of Maharashtra & Anr. ] are allowed and the judgment and order of the High Court passed therein, are hereby set aside.
In the facts and the, circumstances of this case, the parties will pay and bear the respective costs.
So far as the civil appeals Nos.
1633/85 and 3033/86 are concerned, wherein the appellants are the Food Corpn.
of India, I allow these appeals and setting aside the judgment of the High Court on the ground that tax on despatch or consignment was not within the competence of the State Legislature.
I am, however, not dealing with or expressing any opinion on the other contentions of the F.C.I. that in view of the nature of its business it was not liable to tax in respect of the sales tax.
This contention will be decided in the appropri ate proceedings.
So far as the contention regarding penalty under the Haryana Act, these proceedings fail because the charging provisions fail.
In so far as the penalty proceedings are impugned on other grounds apart from the failure of the charging provisions, I am expressing no opinion on these aspects.
RANGANATHAN, J. I agree but wish to add a few words.
The question raised in these appeals is a fairly tick lish one.
Simply stated, Section 9 of the Haryana General Sales Tax Act, 1973 as well as section 13AA of the Bombay Sales Tax Act, 1959, purport only to levy a purchase tax.
The tax, however, becomes exigible not on the occasion or event of purchase but only later.
It materialises only if the purchaser (a) utilises the goods purchased in the manu facture of taxable goods and (b) despatches the goods so manufactured (otherwise than by way of sale) to a place of business situated outside the State.
The legislation, howev er, is careful to impose the tax only on the price at which the raw materials are purchased and not on the 560 value of the manufactured goods consigned outside the State.
The States describe the tax as one levied on the purchase of a class of goods viz. those purchased in the State and utilised as raw material in the manufacture of goods which are consigned outside the State otherwise than by way of sale.
On the other hand, according to the respondentsasses sees, this is nothing but a tax on consignment of goods manufactured in the State to places outside the State, camouflaged as a purchase tax, by quantifying the levy of the tax with reference to the purchase price of the goods purchased in the State and utilised in the manufacture.
To me it appeared as plausible to describe the levy as a tax on purchase of goods inside the State (which attaches itself only in certain eventualities) as to describe it as a tax on goods consigned outside the State but limited to the value of the raw material purchased inside the State and utilised therein.
1, therefore, had considerable doubts not only during the arguments but even some time thereafter as to whether so long as the tax purports to be a tax on purchases and has a nexus, though a little distant, with purchase of goods in the State, the State Government 's competence to impose such a tax should not be upheld.
But, on deeper thought, I am inclined to agree with the conclusion of my learned brother.
It is one thing to levy a purchase tax where the character and class of goods in respect of which the tax is levied is described in a particular manner (vide, Andhra Sugars Ltd. & Anr.
vs State, ; and a case like the present where the tax, though described as purchase tax, actually becomes effective with reference to a totally different class of goods and, that too, only on the happening of an event which is unrelated to the act of purchase.
The "taxable event", if one might use the expres sion often used in this context, is the consignment of the manufactured goods and not the purchase.
I also agree with my learned brother that the decision in State of Tamil Nadu vs Kandaswami, [1975] 36 S.T.C. 191, though rendered in the context of an analogous provision, does not touch the issue in the present case.
The above distinction becomes significant particularly in the background of the constitutional amendments referred to in the judgment of my learned brother.
These indicate that there were efforts at sales tax avoidance by sending goods manufactured in a State out of raw materials purchased inside to other States by way of consignments rather than by way of sales attracting tax.
This situation lends force to the contention of the assessees that the States, unable to tax the exodus directly, attempted to do so indirectly by linking the levy ostensibly to the "purchases" in the State.
561 Viewing the impugned statutory provisions from the perspectives indicated above, I agree with my learned broth er that the appeals have to be allowed as held by him.
T.N.A. Appeals and petitions disposed of.
| IN-Abs | The appellant/petitioner company Good Year India Limit ed a registered dealer both under the Haryana General Sales Tax Act, 1973 and , was manufac turing automobile tyres and tubes at Ballabgarh in the State of Haryana.
For the said manufacturing activity it was purchasing various kinds of raw materials both within the State and from outside the State of Haryana.
The Company was despatching these manufactured goods viz. tyres and tubes to its own branches and sales depots outside the State of Haryana.
The assessing authority imposed upon the appellant company the purchase tax under section 9 of the Haryana General Sales Tax Act, 1973 in view of the despatches made by it of the manufactured goods to its various depots out side the State.
The petitioner company filed writ petition in the Punjab and Haryana High Court challenging the validity of the Notification levying the tax.
A Division Bench of the High Court allowed the petition holding that disposal of goods being separate and 'distinct from despatch thereof, a mere despatch of goods out Of the State by a dealer to his own branch while retaining both 'the title and possession there of does not come within the ambit of the phrase "disposes of the manufactured goods in any manner otherwise than by way of sale", as employed in Section 9(i)(a)(ii) of the Act.
Accordingly the High Court set aside the assessment orders and quashed the impugned Notification as ultra vires of section 9 on the ground that whereas Section 9 provided only for the levy of purchase tax On the disposal of the manufac tured goods, the impugned Notification makes mere despatch of goods to the dealer themselves taxable.
To override the effect of the said judgment the Haryana Legislature enacted Haryana General Sales Tax (Amendment and Validation) Act 1983 where by Section 9 of the Act was amended with retro spective effect to include within its sweep the despatch of manufactured goods to a place outside the State in any manner otherwise than by way of sale.
The impugned Notifica tion and the con 513 sequential action taken thereunder were also validated.
The petitioner company filed writ petitions challenging the assessments.
The High Court allowed the petitions hold ing section 9(1)(b) of the Haryana General Sales Tax Act 1973 as amended by the Haryana General Sales Tax (Amendment and Validation) Act, 1983 in so far as it levied a purchase tax on the consignment of goods outside the State in the course of inter State trade or commerce was beyond the legislative competence of the State of Haryana and was void and inoperative because it intruded and trespassed into an arena exclusively meant for taxation by the Union of India under Entry 92 B of List I of the Seventh Schedule.
Accord ingly the High Court set aside the amended provisions of section 9 as also the retrospective validation of the Noti fication and the consequential validation of all actions taken thereunder.
Against this decision of the High Court, State of Haryana preferred Special Leave Petitions in this Court.
During the pendency of these Special Leave Petitions, the assessing authority issued Show cause notices asking the petitioner company to show cause why in addition to the purchase tax, it should not be liable to penalty as well.
The Petitioner company again filed writ petitions in the Punjab & Haryana High Court challenging the validity of these notices.
In the meantime a Full Bench of the High Court decided the question again and overruling the decision of the earlier Division Bench held that the taxing event was the act of purchase and not the act of despatch of the consignment.
The Full Bench of the High Court held that section 9(1)(b) as amended was neither invalid nor ultra vires.
Against the aforesaid judgment of the Full Bench the Petitioner Company filed appeals in this Court.
All these questions are the subject matters of these appeals.
In the connected appeals, the Food Corporation of India was procuring food grains from the farmers through commis sion agents in tile mandis of Haryana and despatching them to its own branches in the deficit State of the country.
The Corporation branches in the recipient States were supplying these stocks to the State agencies/Fair Price Shops and were also paying tax as per the provisions of the Sales Tax law of the respective States.
Some of the stocks were distribut ed within the State of Haryana for the public distribution system for which sales tax was charged.
and deposited with the sales tax depots as per the Haryana General Sales Tax Act, 1973.
In respect of the inter State despatch of wheat and other food grains by the Food Corporation of India to its own branches tax was attracted at the time of despatch 514 under section 9(1)(c) of the Haryana Act.
The Food Corpora tion of India impugned the levy of tax.
In the other connected appeals the appellant companies Hindustan Lever Ltd. and Wipro Products were manufacturing vanaspati, soaps, chemicals and agro chemi cals.
For the said manufacturing activities, they were purchasing non essential vegetable oil (VNE oil) and other raw materials and were paying purchase tax @4% under section 3 of the Bombay Sales Tax Act, 1959.
The VNE oil was subse quently used by the appellant companies in the manufacture of vanaspati and soaps.
The finished products manufactured by the appellant companies viz. vanaspati and soaps used to be despatched outside the State of Maharashtra to their clearing and forwarding agents.
The assessing authority levied additional purchase tax @ 2% under section 13 AA of the Act on the purchase of said goods VNE oil.
The appellant companies filed writ petitions in the High Court challenging the orders of the assessing authority levying the additional tax of 2% and also the vires of section 13 AA of the Bombay Sales Tax Act, 1959 under which the additional tax was levied, contending that the addition al tax of 2% levied on raw materials, where the finished goods manufactured therefrom were despatched outside the State was in the nature of consignment tax which was not within the legislative competence of the State Legislature.
The High Court dismissed the petitions holding (i) the additional purchase tax levied under section 13 AA of the Act was on the purchase value of VNE oil used in the manu facturing of goods transferred outside the State and not on the value of the manufactured goods so transferred; (ii) the State Legislature was competent to levy the tax under Entry 54 of the State List in the Seventh Schedule to the Consti tution, and (iii) Section 13 AA was not violative of either Article 14 or Article 301 of the Constitution of India.
Against the decision of the High Court appellant compa nies filed appeal in this Court.
Disposing of the matters, this Court, HELD: (Per Mukharji, J.) 1.
Analysing section 9 of the Haryana General Sales Tax Act, 515 1973 it is clear that the two conditions specified, before the event of despatch outside the State as mentioned in section 9(1)(b), namely, (i) purchase of goods in the State and (ii) using them for the manufacture of any other goods in the State, are only descriptive of the goods liable to tax under Section 9(1)(b) in the event of despatch outside the State.
If the goods do not answer both the descriptions cumulatively, even though these are despatched outside the State of Haryana, the purchase of those goods would not be put to tax under Section 9(1)(b).
The liability to pay tax under section 9(1)(b) does not accrue on purchasing the goods simpliciter, but only when these are despatched or consigned out of the State of Haryana.
The section itself does not provide for imposition of the purchase tax on the transaction of purchase of the taxable goods but when fur ther the said taxable goods are used up and turned into independent taxable goods, losing its original identity, and thereafter when the manufactured goods are despatched out side the State ' of Haryana and only then tax is levied and liability to pay tax is created.
It is the cumulative effect of that event which occasions or causes the tax to be im posed.
[539F H; 540A B] 1.1 A taxable event is that which is closely related to imposition.
In the instant section viz. section 9(1)(b) there is such close relationship only with despatch.
The goods purchased are used in manufacture of new independent commodity and thereafter the said manufactured goods are despatched outside the State of Haryana.
In this series of transactions the original transaction is completely eclipsed or cease to exist when the levy is imposed at the third stage of despatch of manufacture.
The levy has no direct connection with the transaction of purchase of raw materi als, it has only a remote connection of lineage.
The mere consignment of goods by a manufacturer to his own branches outside the State does not in any way amount to a sale or disposal of the goods as such.
The consignment or despatch of goods is neither a sale nor a purchase.
The tax imposed under Section 9(1)(b) is a tax on despatch.
The tax on despatch of goods outside the territory of the State cer tainly is in the course of inter State trade or commerce and amounts to imposition of consignment tax, and hence the latter part of section 9(1)(b) is ultra vires and void.
[540G H; 542H; 543A; 544E; 545A] Tata Iron & Steel Co. vs State of Bihar, ; , referred to.
Good Year India Ltd. vs State of Haryana, 53 STC 163 and Bata India Ltd. vs State of Haryana & Anr., 54 STC 226, approved.
516 Des Raj Pushap Kumar Gulati vs The State of Punjab, 58 STC 393, overruled.
Yusuf Shabeer & Ors.
vs State of Kerala & Ors., 32 STC 359; Coffee Board vs Commissioner of Commercial Taxes & Ors., 60 STC 142 and Coffee Board, Karnataka vs Commissioner of Commercial Taxes, Karnataka, 70 STC 162, distinguished.
State of Tamil Nadu vs M.K. Kandaswami, 36 STC 191; Ganesh Prasad Dixit vs Commissioner of Sales Tax, M.P., [1969] 24 STC 343 and Malabar Fruit & Company vs Sales Tax Officer, Pallai, 30 STC 537, distinguished.
1.2 The effect of the Constitution (Forty sixth Amend ment) Act, 1982 is that the field of taxation on the con signment/despatch of goods in the course of inter State trade or commerce expressly comes within the purview of the legislative competence of the Parliament.
[543H] 2.
If section 9(1)(b) is ultra vires, the penalty pro ceedings would automatically go as they are in substance, based on the violation of section 9(1)(b) of the Act and the consequent proceedings flowing therefrom.
[545B] 3.
Section 24(3) of the Haryana General Sales Tax Act, 1973 without making any change in the substantive provision purports to give a direction to ignore the judgments in Goodyear and Bata India Ltd. cases.
This provision is void.
[546B] Shri Prithvi Cotton Mills Ltd. vs Broach Borough Munici pality, [1969] 2 SCC 283 and Dy.
Commissioner of Sales Tax (Law) Board of Revenue (Taxes) vs M/s Thomas Stephen & Co. Ltd. Quilon; , , followed.
In respect of inter State despatch of wheat and other food grains by Food Corporation of India to its own branch es, tax is attracted at the time of despatch under Section 9(1)(c) of the Haryana Act.
Section 9 is the charging sec tion for taxation in case where the goods are purchased for export.
There is no other provision for levy of purchase or sales tax in such cases of export.
[547B] 4.1 No tax is payable under the Haryana Act when exports outside the State take place either in the course of inter State sale or export out of the territory of India.
But the tax is payable for sale in the course 517 of inter State trade and commerce i.e. under the .
It is only when the goods are despatched/consigned to the depots of the FCI in other States that tax is levied under section 9 of the Haryana Act.
This is in addition to the sales tax paid by the FCI on the sale of grains in the recipient States.
In view of sections 14 & 15 of the , it becomes clear that wheat is one of the commodities specified as 'declared goods ' and in respect of which the intention is clear that the tax is payable only once on the declared goods.
In the case of inter State sale if any tax has been paid earlier on declared goods inside the State the same is to be refunded to the dealer who is paying tax on such inter State Sales.
On these transactions no tax is liable in the recipient State, while in case of inter State despatch es, the tax is leviable twice.
Section 9(1)(c), which inso far as it purports to tax, exports, is beyond the legisla tive competence of the State of Haryana.
[547E G] 5.
The incidence of the levy of additional tax of two paise in the rupee under Section 13 AA of the Bombay Sales Tax Act, 1959 is not on the purchase of goods, but such a levy is attracted only when (a) the goods which so pur chased on payment of purchase tax are used in the manufac ture of taxable goods; and (b) the goods so manufactured are despatched to his own place of business or to his agent 's place of business outside the State.
Therefore, the inci dence of tax is attracted not merely on the purchase but only when the goods so purchased are used in the manufacture of taxable goods and are despatched outside the State.
The incidence of additional tax has no nexus with the purchase of the raw materials.
[553A B; D] 5.1 Purchase tax under section 3 of the Act is attracted when the taxable event i.e. the purchase of goods occurs but the taxable event for the imposition of additional tax of two paise in the rupee occurs only when the goods so pur chased are used in the manufacture of taxable goods and such taxable goods are despatched outside the State by a dealer manufacturer.
The goods which are despatched are different products from the goods on the purchase of which purchase tax was paid.
It is therefore not possible to accept the argument that the chargeable event was lying dormant and is activated only on the occurrence of the event of despatch.
[553E; 556F; 557C] 5.2 The charging event is the event the occurrence of which immediately attracts the charge.
Taxable event cannot be postponed to the occurrence of the subsequent condition.
In that event, it would be the subsequent condition the occurrence of which would attract the Charge which will be taxable event.
Therefore the charge under 518 section 13 AA is a duty on despatch.
Accordingly this charge can not be sustained.[557D] The Bill to amend section 20 of the and section 3 of the Central Excises & Salt Act, [1944]; , ; M/s Guruswamy & Co. vs State of Mysore, ; Mukunda Murari Chakravarti & Ors.
vs Pabitramoy Ghosh & Ors., ; Kedar Nath Jute Mfg. Co. Ltd. vs C.I.T., 82 ITR SC 363; State of M.P. vs Shyam Charan Shukla, 29 STC SC 215; R.C. Jail vs Union of India, [1962] Suppl.
3 SCR 436; Union of India vs Bombay Tyre International Ltd., ; and State of Karnataka vs Shri Ranganatha Reddy, ; , referred to.
Wipro Products vs State of Maharashtra, [1989] 72 STC 69 Bom.
, Reversed.
5.3 Imposition of a duty or tax in every case would not tantamount per se to any infringement of Article 301 of the Constitution.
Only such restrictions or impediments which directly or immediately impede free flow of trade, commerce and intercourse fail within the prohibition imposed by Article 301.
A tax in certain cases may directly and immedi ately restrict or hamper the flow of trade.
but every impo sition of tax does not do so.
Every case must be judged on its own facts and its own setting of time and circumstances.
Unless the court first comes to the finding on the available material whether or not there is an infringement of the guarantee under Article 301 the further question as to whether the Statute is saved under Article 304(b) does not arise.
[558B C] 5.4 In the instant case.
the goods taxed do not leave the State in the shape of raw material, which change their form in the State itself and there is no question of any direct, immediate or substantial hindrance to a free flow of trade.
Therefore Section 13 AA of the Bombay Sales Tax Act 1959 is not violative of Article 301.
[558D E] Atiabari Tea Co. Ltd. vs The State of Assam & Ors., ; ; The Automobile Transport (Rajasthan) Ltd. vs The State of Rajasthan, [1963] 1 SCR 491; Andhra Sugars Ltd. vs State of Andhra Pradesh, ; ; State of Madras vs N.K. Nataraja Mudaliar, ; and State of Kerala vs A.B. Abdul Khadir & Ors., ; , referred to.
Kalyani Stores vs The State of Orissa & Ors., ; , relied on.
519 6.
The provisions of constitutional changes have to be construed not in a narrow isolationism but on a much wider spectrum and the principles laid down in Heydon 's case are instructive.
[529H; 530A] Black Clawson International Ltd. vs Papierwerke Waldhof Aschaffenburg, ; , referred.
Heydon 's case; , , relied on.
In construing the expressions of the Constitution to judge whether the provisions of a statute are within the competence of the State Legislature, one must bear in mind that the Constitution is to be construed not in a narrow or pedantic sense.
The Constitution is not to be construed as mere law but as the machinery by which laws are to be made.
[533F] James vs Commonwealth of Australia, ; The Attorney General for the State of New South Wales vs The Brewery Employees Union etc.
; , ; Re.
Central Provinces & Berar Sales of Motor Spirit and Lubri cants Taxation Act 1938, A.I.R. 1939 F.C.I. and The Province of Madras vs M/s Boddu Paidanna & Sons, A.I.R. 1942 F.C. 33, referred to.
The nomenclature of the Act is not conclusive and for determining the true character and nature of a particular tax, with reference to the legislative competence of a particular Legislature, the Court will look into its pith and substance.
[543H; 544A] Governor General in Council vs Province of Madras, [1945] 72 I.A. 91 and Ralla Ram vs The Province of East Punjab, A.I.R. 1949 F.C. 81, referred to.
The doctrine of pith and substance means that if an enactment substantially falls within the power expressly conferred by the Constitution upon the Legislature which enacted it, it cannot be held to be invalid merely because it incidentally encroaches upon matters assigned to another legislature.
[555H; 556A] Kerala State Electricity Board vs Indian Aluminium Co., [1976] 1 S.C.R. 552 and Prafulla Kumar Mukherjee & Ors.
vs Bank of Commerce, A.I.R. 1947 PC 60, referred to.
9.1 The true test to find out what is pith and substance of the 520 legislation is to ascertain the true intent of the Act which will determine the validity of the Act.
[577B] 10.
There are three stages in the imposition of tax.
There is the declaration of liability, that is the part of the Statute which determines what persons in respect of what property are liable.
Next, there is the assessment Liabili ty does not depend on assessment, that exhypothesi has already been fixed.
But assessment particularises the exact sum which a person is liable to pay.
Lastly comes the method of recovery if the person taxed does not voluntarily pay.
[539B C] Whitney vs Commissioner of Inland Revenue, [1926] A.C. 37 and Chatturam & Ors.
vs C.I.T., Bihar, 15 I.T.R. F.C. 302, referred to.
While determining nature of a tax, though the stand ard or the measure on which the tax is levied may be a relevant consideration, it is not the conclusive considera tion.
[556C] Governor General in Council vs Province of Madras, [1945] 72 I.A. 91; R.R. Engineering Co. vs Zila Parishad Bareilly & Anr., ; ; In Re A reference under the Government of Ireland Act, 1920, and Navnitlal C. Javeri vs K.K. Sen, Appellate Asstt.
Commis sioner of Income Tax 'D ' Range Bombay; , , referred to.
The liability to tax would be determined with reference to the interpretation of the Statute which creates it.
It cannot be determined by referring to another Statute.
[555G] 13.
In fiscal legislations normally a charge is creat ed.
The. mischief of taxation occurs on the happening of the taxable event.
Different taxes have different taxable events.
A taxing event is that event the occurrence of which immediately attracts the levy or the charge of tax.
What is the taxable event or what necessitates taxation in an appro priate Statute must be found by construing the provisions.
The main test for determining the taxable event is that on the happening of which the charge is affixed.
[552H; 553A: 552G: 533E; 539B] 14.
Fiscal laws must be strictly construed.
n is not permissible to make assumptions and presumptions in a fiscal provision.
[536H; 538G] C.S.T., U.P. vs The Modi Sugar Mills Ltd., ; and Baidyanath Ayurved Bhawan (P) Ltd., Jhansi, vs Excise Commis 521 sioner, U.P. & Ors., ; , referred to.
While interpreting a Statute a reasonable construc tion should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act.
[555F] Commissioner of Wealth tax, Bihar & Orissa vs Kripashan kar Dayashankar Worah, and Income Tax Commis sioners for City of London vs Gibbs, 10 I.T.R. (Suppl.) 121 H.L., referred to.
The Entries in the Constitution only demarcate and legislative fields of the respective legislatures and do not confer legislative powers as such.
[544H; 545A] 17.
A precedent is an authority only for what it actual ly decides and not for what may remotely or even logically follows from it.
[537E] Quinn vs Leathem, ; and The State of Orissa vs Sudhansu Sekhar Misra & Ors., ; , followed.
17.1 A decision on a question which has not been argued cannot be treated as a precedent.
[542B] Rajput Ruda Maha & Ors.
vs State of Gujarat, [1980] 2 S.C.R. 353, followed.
(Per Ranganathan, J.) (Concurring) 1.
Section 9 of the Haryana General Sales Tax Act, 1973 as well as section 13 AA of the Bombay Sales Tax Act, 1959 purport only to levy a purchase tax.
The tax, however, becomes exigible not on the occasion or event of purchase but only later.
It materialises only if the purchaser (a) utilises the goods purchased in the manufacture of taxable goods, and (b) despatches the goods so manufactured (other wise then by way of sale) to a place of business situated outside the State.
The legislation, however, is careful to impose the tax only on the price at which the raw materials are purchased and not on the value of the manufactured goods consigned outside the State.
[559G H; 560A] 2.
It is one thing to levy a purchase tax where the character and class of goods in respect of which the tax is levied is described in a particular manner and a case like the present where the tax, though described as purchase tax, actually becomes effective with reference to 522 a totally different class of goods and, that too, only on the happening of an event which is unrelated to the act of purchase.
[560D E] 2.1 The "taxable event", if one might use the expression often used in this context, is the consignment of the manu factured goods and not the purchase.
[560E] 2.2 The background of the Constitutional (Forty sixth Amendment) indicates that there were efforts at sales tax avoidance by sending goods manufactured in a State out of raw materials purchased inside to other States by way of consignments rather than by way of sales attracting tax.
This situation lends force to the view that the State, unable to tax the exodus directly, attempted to do so indi rectly by linking the levy ostensibly to the "purchases" in the State.
[560G H] Andhra Sugar Ltd. & Anr.
vs State, ; , re ferred to.
State of Tamil Nadu vs Kandaswami, [1975] 36 S.T.C. 191, distinguished.
|
ivil Appeal No. 584 of 1982.
From the Judgment and Order dated 21.9.1979 of the Punjab and Haryana High Court in Civil Writ Petition No. 2247 of 1979.
A.B. Rohtagi and M.S. Mann for the Appellant.
Harbans Lal and Ashok K. Mahajan for the Respondents.
The following Judgment of the Court were delivered by K. RAMASWAMY, J. I wholly agree with my learned brother Saikia, J. with regard to the reasoning and the conclusions.
He has succinctly stated the facts of the case and the relevant provisions of law and they need no reiteration.
I would add only few points which I deem relevant to be dealt with.
As regards the applicability of the limitation of six months period prescribed under Rule 18 for the exercise of the revisional power by the State Govt.
under Section 42 of the Act, assailing legality or propriety of the scheme prepared or confirmation thereof or repartition made in pursuance thereof, it could be angulated from yet another perspective.
Indisputably Section 42 was amended by the Amendment Act of 1960 incorporating after the words any order passed "(Scheme prepared or confirmed or repartition made)".
Rule 18 was made in exercise of the rule making power by the subordinate legislation.
After the amendment of Section 42 was made to exercise the revisional power by the State Govt.
against the schemes prepared or confirmed or repartition made, correspondingly, no amendment to Rule 18 was made bringing within its ambit scheme prepared or con firmed or repartition made in pursuance thereof.
It is unnecessary to go into the question whether Rule 18 was declared to be intra vires or not.
We proceed on the footing that Rule 18 is ultra vires and applies to the exercise of the revisional power by the State Govt.
under Section 42.
The omission to amend the Rule is an indication of the legislative animation that the limitation of six months prescribed under the Rule 18 would be confined to be ap plicable only to "any order passed by any officer under the Act.
Thereby, by necessary implication the prescription of the limitation of six months for filing revision petition against the scheme prepared or confirmed or repartition made in pursuance thereof would stand excluded.
It is no 580 doubt true as contended for respondents that the Consolida tion Officer who has prepared the scheme or confirmed it or modified or repartition made when it is objected to by the affected party, has to consider the objections and, as a part thereof by necessary implication, has to assign reasons and the record must contain reasons.
But the legislature made a dichotomy between the orders passed and scheme pre pared or confirmation thereof or repartition affected in pursuance thereof.
He is not free to take arbitrary deci sion.
Assigning reasons are sine quo non for application of the mind though he does not appear to communicate the rea sons therefore.
But to an order passed assigning reasons in its support and communication thereof are necessary concomi tants and this was made manifest when Section 19, 20 and 21 are looked into.
As regards the exercise of the power under Section 19 and 20 the statute does not envisage passing any orders.
But when exercise of the power in Sub sec.
20 of 21, the officer is enjoined to pass orders and appeals are provided within the prescribed limitation against those orders to the appellate forums.
This, also, is an indication of the fact that the limitation of six months is confined to the orders to be revised under section 42.
It is undoubted that the scheme prepared or confirmed or modified or repartition made in pursuance thereof are amena ble to the revisional jurisdiction under section 42.
The State Govt. would consider the legality or propriety of the reasons or the grounds on which the scheme was initially prepared or confirmed or modified or repartition made in pursuance thereof.
But that does not mean that it is an order made and the limitation of six months prescribed under Rule 18 would get attracted to the revision filed against the scheme prepared or modified or repartition made in pursuance thereof.
Thus I have.
little hesitation to hold that the prescription of limitation of six months under Rule 18 would be confined only to order passed by any officer under the Act; it would not apply to the revision filed against the scheme prepared or confirmed or reparti tion made in pursuance thereof.
It is undoubted that when there is no limitation pre scribed for exercise of the revisional power under Section 42 against the schemes prepared or confirmed or repartition made, it would be exercised within a reasonable time.
What is a reasonable time is always a question of fact depending upon the facts and circumstances in each case.
When legisla ture chose not to fix a particular period of limitation by judicial dicta it is not permissible to limit to a particu lar period.
The long lapse of time may be a fact for the revisional authority to take into 581 account in the light of the facts and circumstances obtain able in an appropriate case.
No absolute or precise period of limitation could be predicated or laid.
Take for instance the facts of this case.
the previous Sarpanch is a benefici ary from the impugned order and has chosen not to take steps to have the scheme impugned by filing a revision under Section 42 of the Act.
The Gram Panchayat, being a juristic person, could not by itself except through the executive authority take.
any action against the scheme prepared by the Consolidation Officer to assail its legality or proprie ty by filing the revision.
The revision petition was filed soon after the new Sarpanch came into office.
Take another instance of a case where the officer concerned and the person benefitted, in confabulation, have made a scheme and repartition affected in pursuance thereto and kept it in dark to the knowledge of the person affected by the scheme prepared or the partition made.
Until the person affected had actual knowledge, it is not possible to become award of it.
The limitation begins to run from the date of the knowl edge of the fraud so played.
It is always open to the af fected person to come forward and say that for the first time he became aware of the scheme prepared or partition made in pursuance thereof only when his rights are sought to be interfered with or exercise of the enjoyment of the property is interdicted.
Therefore immediately within a reasonable time thereafter he is to file a revision before the State Govt.
Having had the knowledge of the impugned action if he stood by without taking any further action, it is always open to the other party to bring it to the notice of the State Govt.
of the ground or the circumstances under which the revision petitioner when he became aware of the scheme prepared or the repartition made and he deliberately chose to acquiesce to it and if the State Govt.
is satisfied of the same, unless satisfactory explanation for the delay is given, the State Govt.
may decline to interfere with the impugned action or may decline to entertain the revision petition itself.
Thus it could be seen that each case has to be angulated on its own given facts and circumstances as to the reasonable period of limitation within which the revi sional power is to be filed.
Even though more than 5 years time had elapsed from the date of the preparation of the scheme till date of the filing of the revision under Section 42, there is sufficient ground in this case for the new Sarpanch in not filing a revision within six months from the date of the original scheme and the State Govt.
is well justified in exercising the power under Section 42.
The High Court is unjustified in interfering with the order passed by the Consolidation Officer.
Accordingly, the appeal is al lowed.
No costs.
582 K.N. SAIKIA, J.
This appeal by special leave is from the Judgment of the High Court of Punjab and Haryana at Chandi garh dated 21.9.1979 in Civil Writ Petition No. 2247 of 1979 allowing the petition and setting aside the order of the Director, Consolidation of Holdings dated 8.2.1979.
The appellant Gram Panchayat, hereinafter referred to as the 'Panchayat ', was the owner of 1200 Bighas of land in village Kanonda, Tehsil Bahadurgarh, District Rohtak.
A Scheme of consolidation of holdings, hereinafter referred to as 'the Scheme ', of the village was confirmed on 15.1.1974 under section 20 of the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948 (50 of 1948), hereinafter referred to as 'the Act '.
The Panchayat, there fore, moved an application under section 42 of the Act on 20.9.1977 for setting aside the Scheme, objecting to the utilisation of the land of value of /2/ (two annas) and allotments made to the other rightholders for their benefit.
On 24.1.
1979 a Mushtehri Mundadi was made for information of all the villagers concerned, but the rightholders were absent and ex party proceedings were taken against them.
The Panchayat 's case was that under the said Scheme the Panchay at land was consolidated, repartitioned and allotted to persons who did not have any right to hold the land.
Be sides, the land of Dharat containing two wells and a big house being religious place of worship was also partitioned under the Scheme and consequently the Panchayat has been reduced to a landless person, financially weakened and rendered incapable of rendering service in the village.
After hearing the parties the Director in his order dated 8.2.
1979 observed that it was evident from the perus al of the record that the Scheme of Consolidation of the village was confirmed on 15.1.
1974 whereas the application had been filed on 20.9.
1977 and as such the application had been filed too late.
After the expiry of six months period the application was time barred.
However, he said in his order: "In this case only to benefit some land own ers, the land of the value of two annas has been allotted due to which the deserving persons have been left over and they have not been given even Abadi plots.
Apart from this the Panchayat had no other land to cultivate, due to which the Panchayat is unable to devel op the agricultural schemes and in these circumstances of the matter I condone the delay in filing the present application.
" 583 He accordingly set aside the Scheme and remanded the case to the Consolidation Officer under section 21(2) of the Act with some directions.
Against that order the respondents moved the High Court of Punjab and Haryana in Civil Writ Petition No. 2247 of 1979 urging, inter alia, that the Director of Consolidation of Holdings had condoned the delay without there being any ground for the same and that, in doing so, he had acted illegally and with material irregu larity.
The High Court held that from the observations of the Director it was evident that the delay was condoned on extraneous considerations as no reason whatsoever was given by the applicant in the application filed before him under section 42 of the Act as to why it was filed after the period of limitation.
In that view of the matter, holding that the Director of Consolidation of Holdings had acted illegally and with material irregularity in condoning the delay, the High Court by the impugned order dated 21.9.79 allowed the writ petition and quashed the order of the Director of Consolidation of Holdings dated 8.2.1979.
Mr. A.B. Rohtagi, the learned counsel for the appel lant, submits that the High Court erred in setting aside the Director of Consolidation 's order applying to the confirma tion of the Scheme the period of limitation of six months as prescribed in Rule 18 of the East Punjab Holdings (Consoli dation and Prevention of Fragmentation) Rules 1949, herein after referred to as 'the Rules ', inasmuch as that rule speaks only of orders and not of confirmation of the Scheme; and that a Full Bench of the Punjab and Haryana High Court in Jagtar Singh vs Additional Director, Consolidation of Holdings, Jullundar, , taking the view that the bar of limitation under Rule 18 does not apply to those petitions under section 42 in which the legality or validity of a scheme prepared or confirmed or repartition made is challenged has overruled AIR 1982 Punjab and Har yana 148 and that Full Bench decision has since been followed in Mr. Rohtagi further submits that on merits also there was ample justification for the Director to have taken the view it did inasmuch as Panchayat lands were taken into consolidation and repartitioned and allotted to persons who had no right to obtain the land thereby impoverishing the Panchayat and rendering it incapa ble of giving any help to the villagers.
Mr. Harbans Lal, learned counsel for the respondents submits that the Full Bench decision that the limitation under rule 18 does not cover an order confirming a scheme is not tenable inasmuch as confirmation of a scheme is only by an order as contemplated under rule 18, and an applica tion challenging that order of confirmation has, there 584 fore, to be made within six months thereof; and that even assuming that there was no bar of limitation, an application had to be made within a reasonable time which, according to learned counsel, would be 'about two years '; and that by any standard the appellant 's application under section 42 was belated and could not have been allowed.
Lastly, counsel submits that there were three earlier applications dismissed by the Director under section 42 of the Act, including one by the Panchayat itself, and the Director had no power to review his own order.
The questions to be decided therefore are, whether for the purpose of limitation under rule 18 of the Rules confir mation of a scheme would be an order as envisaged in the rule; if it was not an order, whether the Director was justified in setting aside the scheme and remanding the matter to the Consolidation Officer; and whether the Direc tor 's order was one of review of his earlier order and as such beyond his jurisdiction.
To decide the first question we may conveniently refer to the provisions of the Act and rule 18 of the Rules.
Section 42 of the Act empowers the State Government to call for proceedings under the Act.
It says: "42.
Power of State Government to call for proceedings:The State Government may at any time for the purpose of satisfying itself as to the legality or propriety of any order passed, scheme prepared or confirmed or repar tition made by any officer under this Act, call for and examine the record of any case pending before or disposed of by such officer and may pass such order in reference thereto as it thinks fit: Provided that no order or scheme or repartition shall be varied or reversed with out giving the parties interested notice ' to appear and opportunity to be heard except in cases where the State Government is satisfied that the proceedings have been vitiated by unlawful consideration.
" From a perusal of this section there arises no doubt that under it the State Government may for the stated purpose call for proceedings wherein any order is passed, scheme prepared or confirmed or repartition made by any officer under this Act.
Under the proviso the State 585 Government shall not vary or reverse any order or scheme or repartition without giving the interested parties opportuni ty of being heard except in cases where the State Government is satisfied that the proceedings have been vitiated by unlawful consideration.
There is therefore no doubt that this section envisages proceedings wherein order is passed, scheme prepared or confirmed or repartition made.
These are the distinct proceedings for the purpose of exercising jurisdiction under this section.
Rule 18 deals with limitation for application under section 42, and it reads: "18.
Limitation for application under section 42: An application under section 42 shall be made within six months of the date of the order against which it is filed: Provided that in computing the period of limitation, the time spent in ob taining certified copies of the orders and the grounds of appeal, if any, filed under sub section (3) or sub section(4) of section 21, required to accompany the application shall be excluded: Provided further, that an applica tion may be admitted after the period of limitation prescribed therefore if the appli cant satisfies the authority competent to take action under section 42 that he had sufficient cause for not making the application within such period.
" From a perusal of this rule there arises no doubt that for applying this rule the application has to be one under section 42 of the Act and it has to be against an order and under the first proviso a certified copy of the order is required to accompany the application and in computing the period of limitation of six months, the time spent in ob taining the certified copy is to be excluded.
While the Division Bench comprising P.C. Jain and Tewa tia, JJ of the Punjab and Haryana High Court in the instant case applied the period of limitation to the confirmation of the scheme and in that view of the matter set aside the Director 's order, the Full Bench comprising P.C. Jain, Acting C.J., Tewatia and Tiwana, JJ.
held: "A bare perusal of rule 18 of the Rules would show that .it provides limitation only for petitions filed against orders 586 passed.
There is no reference in the Rules to a scheme prepared or confirmed or repartition made.
The fact that in section 42 of the Act the words 'scheme prepared or confirmed or repartition made ' have been added as a result of amendment, cannot justify the conclusion that in Rule 18 of the Rules these words have also to be read.
" We respectfully agree with this view.
Rule 18 has to be interpreted as we find it and the words of the rule are simple, precise and unambiguous and no more is necessary than to understand these words in their natural and ordinary sense.
Two different meanings cannot be given to the same word 'order ' namely, that in section 42 it does not include scheme prepared or confirmed or repartition made; while in rule 18 it would include them.
The Full Bench therefore rightly held that rule 18 of the Rules does not apply to those proceedings in which the legality or validity of the scheme prepared or confirmed or repartition made is chal lenged.
The Full Bench rightly approved the decision in Haqiqat Singh vs Addl.
Director, Consolidation of Holdings, AIR 1981 Punjab & Haryana 204, wherein it was held that a reading of section 42 as well as the scheme of the Act unmistakably pointed out that the statute made a clear distinction between order passed by an officer under the Act and the performance of duties by the authorities under the Act in the matter of preparation and confirmation of scheme of consolidation and re partition made in pursuance thereof.
So it could not possibly be held that preparation or confir mation of a scheme and the repartition carried would fail within the scope of 'order ' as used in rule 18 of the rules.
The rule did not come into play when a petitioner challenged either the scheme of consolidation including its preparation or confirmation of the repartition made in pursuance there of.
The amendment made this position clear.
In a subsequent decision reported in Joginder Singh and Ors.
vs The Director, Consolidation of Holdings, decided on August 8, 1988, where the direct hold ers had not challenged any order of the consolidation au thorities but had attacked the validity of the scheme and the repartition, it was rightly held that the bar of limita tion of six months in rule 18 of the Rules was not attracted to the facts of that case.
Mr. Harbans Lal submits that the above decisions require reconsideration.
We do not agreed.
We have perused the provisions of the Act and rule 18.
The Act provides for the compulsory consolidation of, and for prevention of fragmen tation of, agricultural holdings in the 587 State of Punjab and for the assignment or reservation of land for common purposes of the village.
It appears that prior to the Act there were two methods of consolidation in vogue in the Province, one through the Revenue Department and the other through the Cooperative Department but the progress of consolidation was very slow and lengthy and the Act sought to remedy those defects.
Section 19 of the Act provides for publication of draft scheme and on such publi cation any person likely to be affected by such scheme, shall, within 30 days of such publication, communicate in writing to the Consolidation Officer any objections relating to the scheme.
The Consolidation Officer, shall, after considering the objections, if any received, submit the scheme with such amendment as he considers necessary togeth er with his remarks on the objections to the Settlement Officer (Consolidation).
Thus, in this section we do not find any provisions for any order being passed.
Section 20 deals with confirmation of the scheme.
Under sub section(2) thereof if any objections are received to the draft scheme published under sub section (1) of section 19 and also if no written or oral objections to the draft scheme are received under subsection (3) of that section by the Settlement Officer (Consolidation) he shall confirm that scheme.
Under sub section (3) if any objections are received to the draft scheme published under sub section (1) of section 19 or if any written or oral objections are received by the Settle ment Officer (Consolidation) before the confirmation of the draft scheme by him the Settlement Officer(Consolidation) may after taking the objections into consideration together with the remarks thereon of the Consolidation Officer and also after considering the written or oral objections either confirm the scheme with or without modifications, or refuse to confirm it.
In case of such refusal the Settlement Offi cer (Consolidation) shall return the draft scheme, with such directions as may be necessary to the Consolidation Officer, for reconsideration and resubmission .
Under sub section (4) upon the consideration of the scheme under sub section (2) or (3) the scheme as confirmed shall be published in the prescribed manner in the estate or estates concerned.
Thus, this section also does not envisage passing of any order with reference to any person affected by the scheme.
It may be true, as Mr. Harbans Lal submits, that the confirmation may be done in the form of an order.
However, the word 'order ' has not been used by the legislature in this sec tion.
Section 21 deals with repartition.
Under sub section (1) of this section, the Consolidation Officer shall, after obtaining the advice of the land owners of the estate or estates concerned, carry out repartition in accordance with the scheme of consolidation of holdings 588 confirmed under section 20 and the boundaries of the hold ings as demarcated shall be shown on the Shajra which shall be published in the prescribed manner in the estate or estates concerned.
There is no provision of passing of any 'order ' under this sub section.
Under subsection (2) any person aggrieved by the repartition may file written objec tion within 15 days of the publication before the Consolida tion Officer who shall after hearing the objectors pass such orders as he considers proper confirming or modifying the repartition.
Thus this sub section envisages passing of orders on the objections after hearing the objectors.
Sub section (3) provides that any person aggrieved by the order of the Consolidation Officer under sub section (2) may within one month of that order file an appeal before the Settlement Officer (Consolidation) who shall after hearing the appellant pass such order as he considers proper.
This sub section also clearly envisages passing of an order on appeal by an aggrieved person as above.
Subsection (4) provides that any person aggrieved by the order of Settle ment Officer (Consolidation) under sub section (3) whether made before or after the commencement of the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Second Amendment and Validation Act, 1962 may within 60 days of that order appeal to the Assistant Director of Consolida tion and under sub section (5) any appeal against an order of the Settlement Officer (Consolidation) pending under sub section (4) immediately before the commencement of the East Punjab Holdings (Consolidation and Prevention of Frag mentation) Second Amendment and Validation Act, 1962, either before the State or any officer to whom the powers of the State Government in this behalf have been delegated, shall be decided by the Assistant Director of Consolidation.
Thus, the above sub sections clearly envisage passing of orders by the respective authorities.
We have already extracted section 42 of the Act and Rule 18 of the Rules.
It would be clear that though section 42 envisaged orders, preparation or confirmation of scheme and repartition separately, Rule 18 provides for limitation only in respect of an application under that section in a pro ceeding where an order was passed.
There is the maxim ex pressio unius est exclusio alterius expression of one thing is the exclusion of another.
Mention of one thing implies the exclusion of another.
When certain persons or things are specified in a law an intention to exclude all others from its operation may be inferred.
When mention has been made only of 'Orders ', the inference would be that preparation or confirmation of scheme and repartition are 589 excluded.
Again, Ex praecedentibus et consequentibus optima fit interpretation.
The best interpretation is made from the context.
As we have seen, while section 19 and 20 did not envisage passing of any order section 21 envisaged passing of orders.
Section 42 deals with applications against or ders, preparation or confirmation of scheme and repartition.
Rule 18 mentions only orders and hence by inference excludes 'preparation and confirmation of scheme and repartition '.
We have accordingly no doubt in approving the Full Bench deci sion in Jagtar Singh vs Additional Director, Consolidation of Holdings (supra).
Mr. Harbans Lal 's submission that even if no limitation was prescribed the application of the Panchayat before the Director was inordinately delayed is not tenable.
According to the learned counsel the period of two years would be reasonable period.
We are unable to agree.
In matters like Consolidation of Holdings by a scheme and the preparation and confirmation of the scheme and repartition thereafter the objections may arise at various stages for various reasons and it will not be possible to prescribe any hard and fast rule as to reasonable period after which an appli cation could be made under section 42 of the Act.
The legis lature itself did not do so.
In the instant case the Pan chayat filed the application on 20th September, 1977 before the Director of Consolidation under section 42 of the Act praying for the revocation of the Scheme and for directions for fresh valuation to be ordered and repartition effected through appropriate authorities stating that the Sarpanch was not given any Nishan Dehi or demarcation on the spot nor was issued any passbook, and the petition was not filed earlier because the new Sarpanch came to know all these only a month ago and so the petition was claimed to be in time.
The original Sarpanch was a beneficiary out of the Panchayat land and he took no steps and the present Sarpanch took charge only a few months ago.
There were lot of complaints about valuation and allotments to rightholders.
Under the above circumstances when the Director himself considered it fit for granting the prayer, it cannot be said that the application was unreasonably delayed.
The next submission of Mr. Harbans Lal is equally un tenable.
It is true that in Harbhajan Singh vs Karam Singh and Anr., ; , it has been held that there is no provision in the Act granting express power of Review to the State Government with regard to an order made under section 42 of the Act and in the absence of any such power the Director, Consolidation of Holdings could not have reviewed his previous order dismissing an application of the Panchay at 590 under section 42 of the Act, and if so done, the review order of the Director would be ultra vires and without jurisdiction.
In the instant case it has not been shown to us that the Panchayat earlier moved any application under section 42 on the same subject matter and the instant order of the Director amounted to a review of his own order.
There is no material to hold that the instant order of the Direc tor is an order of review of his earlier order; and Mr. Rohtagi clearly denied that it was so.
In the result we allow this appeal, set aside the im pugned order of the High Court and restore that of the Director, Consolidation.
We, however, leave the parties to bear their own costs.
Y. Lal Appeal allowed.
| IN-Abs | The appellant Panchayat owned 1200 Bighas of land in Village Kanonda Distt.
Rohtak in Haryana.
A Scheme of con solidation of Holdings under Section 20 of the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act 1948 was confirmed on 15.1.1974, as a result whereof the Panchayat 's land was consolidated, repartitioned and allot ted to persons, allegedly having no right to hold the same with the result, the Panchayat was reduced as a landless person, and financially weak.
The Panchayat, therefore, on 20.9.1977 moved an application under section 42 of the Act objecting to the utilization of the Land of the value of /2/ (Two annas) and the allotments made to other right holders.
After hearing the parties, the Director of Consolidation of Holdings by his order dated 8.2.79 set aside the scheme and remanded the case to the consolidation officer with some directions.
The Director took the view that even though the application had been made much beyond the period of limita tion of six months contemplated under Rule 18, yet in view of the fact that the Panchayat had no other land to culti vate due to which the Panchayat was unable to develop the agricultural Schemes, condoned the delay and allowed the application as aforesaid.
Against the said orders the Re spondents moved the High Court by means of a Writ Petition urging inter alia that the Director had condoned the delay without there being any ground for the same and thus had acted illegally.
The High Court held that the Director condoned the delay on extraneous considerations and accord ingly quashed the impugned 577 order of 8.2.79 passed by the Director.
Hence the Panchayat has filed this appeal after obtaining Special Leave.
Allowing the appeal, this Court, HELD: (Per K.N. Saikia & M. Fathima Beevi, JJ.) Section 42 of the Act envisages proceedings wherein order is passed, scheme prepared or confirmed or repartition made.
These are the distinct proceedings for the purpose of exercising jurisdiction under this section.
[585B] Applying Rule 18, the application has to be one under section 42 of the Act, and it has to be against an order and under the first proviso, a certified copy of the order is required to accompany the application and in computing the period of limitation of six months, the time spent in ob taining the certified copy is to be excluded.
[585F].
Rule 18 has to be interpreted as it is found, and the words of the rule are simple, precise and unambiguous and no more is necessary than to understand these words in their natural and ordinary sense.
Two different meanings cannot be given to the same word "order" namely, that, in section 42 it does not include scheme prepared or confirmed or reparti tion made, while in Rule 18, it would include them.
[586B C] The Rule did not come into play when a petitioner chal lenged either the scheme of consolidation including its preparation or confirmation or the repartition made in pursuance thereof.
The amendment made this position clear.
[586E] Though section 42 envisaged orders, preparation or confirmation of scheme and repartition separately, Rule 18 provides for limitation only in respect of an application under that section in a proceeding where an order was passed.
There is the maxim expressio unius est exclusio alterius expression of one thing implies the exclusion of another.
When mention has been made only of "orders", the inference would be that preparation or confirmation of scheme and repartition are excluded.
[588F G] In matters like consolidation of Holdings by a scheme and the preparation and confirmation of the scheme and repartition thereafter, the objections may arise at various stages for various reasons and it will 578 not be possible to prescribe any hard and fast rule as to the reasonable period after which an application could be made under section 42 of the Act.
The Legislature itself did not do so.
[589C D] In the instant case, it has not been shown that the Panchayat earlier moved an application under section 42 on the same subject matter.
There is no material to hold that the instant order of the Director is an order of review of his earlier order.
[590A] (Per K. Ramaswamy, J.) As regards the exercise of the power under sections 19 & 20, the statute does not envisage passing any orders.
But when exercising the power, the officer is enjoined to pass orders and appeals are provided within the prescribed limi tation against those orders to the appellate forums.
This also, is an indication of the fact that the limitation of six months is confined to the orders to be revised under section 42.
[580C D] The prescription of limitation of six months under Rule 18 would be confined only to order passed by an officer under the Act, it would not apply to the revision filed against the scheme prepared on confirmed or repartition made in pursuance thereof.
[580F] It is undoubted that when there is no limitation pre scribed for exercise of the revisional power under section 42 against the schemes prepared or confirmed or repartition made, it would be exercised within a reasonable time.
[580G] What is reasonable time is always a question of fact depending upon the facts and circumstances of each case.
[580G] When legislature chose not to fix a particular period of limitation, by judicial dicta it is not permissible to limit to a particular period.
:While exercising power under Sec tion 42, the revisional authority may take into account the long lapse of time as a factor in the light of the facts and circumstances obtainable in an appropriate, case.
No abso lute or precise period of limitation could be predicted or laid.
[580H] Jagtar Singh vs Additional Director, Consolidation of Holdings, Jullundar, AIR 1984 Punjab & Haryana 216, ap proved.
Haqiqat Singh vs Addl.
Director, Consolidation of Hold ings, AIR 1981 Punjab & Haryana 204; Joginder Singh & Ors.
vs The Director, 579 Consolidation of Holdings, and Harbha jan Singh vs Karam Singh & Anr., ; , referred to.
|
minal Appeal No. 77 of 1958.
Appeal by special leave from the judgment and order dated February 26, 1958, of the Punjab High Court in Criminal Appeal No. 860 of 1957, arising out 155 1220 of the judgment and order dated December 23, 1957, of the Additional Sessions Judge at Ambala in Sessions No. 20 of 1957 and Trial No. 32 of 1957.
Harnam Singh and Sadhu Singh, for the appellant.
Har Parshad and T. M. Sen, for the respondent.
September 2.
The Judgment of the Court was delivered by IMAM J.
The appellant and one Prem were tried for the murder of Nirmala Devi, wife of Banwari Lal, a Practising lawyer at Rupar.
The appellant was sentenced to death while Prem was sentenced to imprisonment for life.
The appellant and Prem appealed against their conviction and sentence to the High Court of Punjab.
Their appeals were dismissed and their conviction and sentence were affirmed by the High Court.
The appellant obtained from this Court special leave to appeal and in the present appeal the only question for consideration is whether the appellant was rightly convicted and sentenced for the murder of Nirmala Devi.
The case of Prem is not before us.
At Rupar, Banwari Lal practised as a lawyer.
His wife, the deceased Nirmala Devi lived with him there with their child, eight months old.
With them also lived Banwari Lal 's sister Vina, a girl of about 16 to 17 years of age.
Banwari Lal had employed Prem as a servant about four months before the murder of Nirmala Devi on February 12, 1957.
This Prem was a youngster of about fourteen years of age at that time.
According to the prosecution, lie was an associate of the appellant who was posted at Rupar in the capacity of a foot constable in the police force.
The appellant and Prem became friendly and it is said that the appellant had an eye on the ornaments of the deceased Nirmala Devi, which she was in the habit of wearing when she went out.
The deceased was a young person in her twenties and of good character.
She used to be left alone in the house with her child, when Banwari Lal went to court and Vina went to school.
Prem, however, used to remain at the house.
It is the case of the prosecution that the appellant in 1221 conspiracy with Prem took advantage of the deceased being alone in the house, when the appellant went upstairs and killed Nirmala Devi and stole her ornaments, while Prem remained down stairs with her child.
Vina had returned from school round about, 12 30 in the afternoon as it was the recess time.
At that time Nirmala Devi was in the drawing room feeding her child.
Prem was also at the house at that time.
Vina again returned to the house at about 3 45 p.m.
She enquired from Prem as to where Nirmala Devi was and was told by him that he did not know as he himself had been absent from the house.
Vina, thereafter, went upstairs to the kitchen to take her food.
Banwari Lal had returned from court at about 3 15 p.m., earlier than usual, as he had to attend an election meeting at the Municipal Office.
He was accompanied by a pleader Sudarshan Kumar Jain who was going to Chandigarh.
He had intended to give him a cup of tea, but finding the door leading through the staircase to the residential portion looked and thinking that his wife was not at home, lie and his friend left for the Municipal Hall.
Banwari Lal returned to his house at about 4 45 p.m.
He enquired from Prem as to where his wife was and was informed by him that she had gone out.
He went upstairs and saw his sister Vina eating her food.
On opening the drawing room, however, Banwari Lal was stunned to find his wife lying dead on the floor in a pool of blood.
lie noticed several injuries on her and that some of her jewellery was missing.
He proceeded to the police station almost opposite to his house and lodged a First Information Report about the murder at 5 p.m.
There can be no manner of doubt that an audacious and a brutal murder of a young and a defenceless person had taken place with the intention of robbing her of her ornaments.
The fact of murder has been apply proved and has not been seriously questioned.
The only matter for consideration is Whether the evidence established that the deceased Nirmala Devi was murdered by the appellant with the assistance of Prem.
The evidence upon which the prosecution relied for 1222 conviction is the confession of Prem, the statement of the appellant which led to the recovery of the ornaments belonging to Nirmala Devi from the possession of one Raj Rani a mistress of the appellant, the recovery of a blood stained dagger from his belongings at the police station and his conduct after the murder.
So far as the confession of Prem was concerned, it was retracted by him in the Court of Session.
Prem 's statement under section 342 to the Committing Magistrate, however, which had been brought on to the record under section 287 of the Code of Criminal Procedure, clearly stated that the confession was a voluntary one.
Indeed, his statement to the Committing Magistrate showed that the crime was committed by the appellant and that Prem had assisted him in the commission of that crime.
Although in the Court of Session Prem had retracted his confession, his memorandum of appeal in the High Court would indirectly suggest that the con fession made by him was voluntary and true.
Before we consider whether the confession was a voluntary and a true one, it is necessary to deal with the submission on behalf of the appellant that the confession, having been retracted by Prem, is irrelevant so far as the appellant is concerned as the retracted confession of an accused cannot be used against his co accused.
Although on behalf of the appellant it had not been argued that the retracted confession of Prem was inadmissible, we regard the submission that it was irrelevant and cannot be used against the appellant as tantamount to saying the same thing.
Section 30 of the Indian Evidence Act states: " When more persons than one are being tried jointly for the same offence, and a confession made by one of such persons affecting himself and some other of such persons is proved, the Court may take into consideration such confession as against such other person as well as against the person who makes such confession.
" It will be clear from the terms of this section that where more persons than one are being tried jointly for the same offence, a confession made by any one of them affecting himself and any one of his co accused 1223 can be taken into consideration by the court not only against the maker of the confession but also against his co accused.
The Evidence Act nowhere provides that if the confession is retracted, it cannot be taken into consideration against the co accused or the confessing accused.
Accordingly, the provisions of the Evidence Act do not prevent the Court from taking into consideration a retracted confession against the confessing accused and his co accused.
Not a single decision of any of the courts in India was placed before us to show that a retracted confession was not admissible in evidence or that it was irrelevant as against a co accused.
An examination of the reported decisions of the various High Courts in India indicates that the preponderance of opinion is in favour of the view that although it may be taken into consideration against a co accused by virtue of the provisions of section 30 of the Indian Evidence Act, its value was extremely weak and there could be no conviction with out the fullest and strongest corroboration on material particulars.
The corroboration in the full sense implies corroboration not only as to the factum of the crime but also as to the connection of the (co accused with that crime.
In our opinion, there appears to be considerable justification for this view.
The amount of credibility to be attached to a retracted confession, however, would depend upon the circumstances of each particular case.
Although a retracted confession is admissible against a co accused by virtue of section 30 of the Indian Evidence Act, as a matter of prudence and practice a court would not ordinarily act upon it to convict a co accused without corroboration.
On this basis it is now to be seen whether the confession was voluntary and true.
It will then be necessary to consider whether the confession has received full and strong corroboration in material particulars both as to the crime and the appellant 's connection with that crime.
It was strongly urged that the police had adopted a device to get the accused Prem into their custody again on a charge of theft as lie had already been placed in the judicial lock up after his arrest in 1224 connection with the murder of the deceased Nirmala Devi.
He was arrested on June 25, 1957, in connection with a burglary which had taken place on December 5, 1956, and he had been since then in police custody in connection with the investigation of that case until July 10, 1957, the last day of remand to police custody.
On July 10, 1957, Prem made a confession before a Magistrate concerning the murder of Nirmala Devi.
Prem was discharged in the burglary case on July 20, 1957.
Having adopted this device of getting Prem into police custody the police were in a position to exercise great influence upon Prem, a, young ' lad of about 14 years of age.
When lie made his confession on July 10, 1957, he must have been still labouring under the influence of the police and sufficient time was not given by the Magistrate to remove that influence.
The Magistrate ought not to have recorded his confession on July 10, 1957.
He ought to have remanded Prem to jail custody for a few days in order that the police influence may be removed from his mind.
We have examined the record and find no justification for the suggestion made that the police adopted a device to got the accused Prem in to their custody again by arresting him in the burglary case of December 5, 1956.
It is true that the accused Prem was discharged from the burglary case on July 20, 1957, but there is nothing on the present record to suggest that his arrest in the burglary case of December 5, 1956, was without justification and that it was done purely for the purpose of getting him back into police custody.
It is true that Prem had been in police custody from June 25, 1957 to July 10, 1957, and the Magistrate might as well have refrained from recording his confession on July 10, 1957.
It is clear, however, from the record of the Magistrate that at 1 p.m. the accused Prem was produced before him by the police for the recording of his confession.
The Magistrate told him that lie was not a police officer but a Magistrate and that he was at liberty to think over the matter whether he would volunteer to make a confession and gave him time, until 2 p.m. for this purpose.
He further explained to Prem that he should 1225 consider himself quite free and not make a statement under the influence or temptation of anybody.
At 2 p.m. the Magistrate took various precautions.
All the doors and the windows of his room were closed.
Everyone, except Prem, was turned out.
The police were asked to stand in the verandah from where they could not see Prem.
Prem was again told that he must regard himself as quite free and should not be under the influence of the police or anybody else.
The Magistrate then put a series of questions which have been recorded in the form of questions and answers.
By question 7, the Magistrate enquired how long Prem had been in police custody and from where he bad been brought that day, to which, the answer was that some 5 months back he had been arrested since then sometimes he had been sent to jail and sometimes had been kept in police custody.
By question 8, the Magistrate asked whether he was kept awake during that period or had been given greased diet (Mnaggan giza, etc.), which we understand to mean whether he had been given greasy food which would induce a sleepy condition in persons eating such food, to which question he replied that he had enjoyed regular sleep and had been taking common diet.
At the beginning, of course, the police had kept him awake.
The Magistrate also enquired whether the police or any other person had made any promise or had given any undertaking to help Prem or had given all temptation to him or had influenced or frightened him.
If so, he should state this fully from his heart, to which Prem replied that he had not been given any promise, temptation or inducement, nor was he subjected to fear or exhortation.
He had been merely asked to make a true statement.
Prem then said that he would make his statement of his own free will and the Magistrate could believe him or not.
The Magistrate also asked Prem whether any one had beaten him or if there was any mark of injury on his body, to which, the answer was 'no '.
The Magistrate then examined the body of Prem and found that there was no mark of injury on his person.
The Magistrate then asked as to why he was making a confession, to which, Prem answered 1226 that he was doing so of his own free will and to lessen the burden of his heart.
The nature of the questions put and the manner in which the Magistrate examined Prem clearly showed that the Magistrate took every precaution to be satisfied whether Prem was going to make a voluntary statement.
We are satisfied that during the period of police custody between the 25th of June and July 10, 1957, Prem was not induced to make a confession.
He made the confession voluntarily.
That the confession was voluntary finds support from Prem 's statement to the Committing Magistrate under section 342 of the Code of ' Criminal Procedure.
In that statement Prem told the Magistrate in answer to various questions the following story: He had been employed as a domestic servant by the lawyer Banwari Lal.
He had developed during this period friendship with the appellant.
The appellant had told him that he would commit rape on Nirmala Devi and would rob her of her ornaments and, if she resisted, he would murder her.
He informed the appellant on February 11, 1957, that Nirmala Devi would be alone in her house at about mid day on February 12, 1957.
He had received on February 11, 1957, a dagger wrapped in a pajama from the appellant and bad kept it in the store behind the office of Banwari Lal On February 12, 1957, he informed the appellant that Nirmala Devi was alone in the house.
He had handed over the dagger and the pajama to the appellant on February 12, after taking it out of the store room.
The appellant had sought his assistance in the commission of rape, robbery and murder of Nirmala Devi and he had been promised a half share in the booty.
To the question whether he had kept watch over the house of Banwari Lal when the appellant entered it for committing rape, robbery and murder of Nirmala Devi, Prem answered that he was made to stand near the stair case by the appellant and that he kept watch while the appellant committed the crime.
He finally admitted to the Committing Magistrate that the confession which had been recorded on July 10, 1957, was a voluntary confession.
When asked whether he had to say anything else, Prem told the Committing 1227 Magistrate that he had made a true statement before him and also in the Court of the Magistrate who had recorded his confession.
Shorn of details the substance of the story told by Prem to the Committing Magistrate is in keeping with the substance of his confession recorded on July 10, 1957.
It is to be further remembered that the statement of Prem to the Committing Magistrate was brought on to the record of the Court of Session under section 287 of the Code of Criminal Procedure which directs that the statement should be read as evidence.
Although Prem retracted the confession in the Court of Session, his memorandum of appeal filed in the High Court showed that he had acted under the influence of the appellant and had been allured by him to achieve his object.
He, however, pleaded that be should not have received such severe punishment.
On the contrary, lie should have been acquitted.
These circumstances clearly indicate that the confession recorded on July 10, 1957, was a voluntary confession.
It remains now to be seen whether it was a truthful confession.
Prem asserted in his confession that he had acquaintance with the appellant previous to the appellant 's posting to Rupar and their association continued at Rupar.
There is nothing inherently improbable in this story of Prem.
It is true that there is not much evidence to corroborate Prem.
that lie and the appellant were acquainted and used to associate.
Banwari Lal had seen them talking to each other once or twice before the murder.
The police station at which the appellant was posted was almost opposite to the house of Banwari Lal where Prem was employed as a servant and there was every probability of the appellant and Prem meeting.
It is significant that on the day of murder of Nirmala Devi, in the afternoon, Prem was present in the compound of the police station with a child in a perambulator.
Foot constable Gurbachan Singh, P.W. 4, enquired from Prem as to why he had gone inside the police station.
On this the appellant asked Gurbachan Singh not to remonstrate with Prem as he was a mere, boy.
Gurbachan 156 1228 Singh had stated that previously he had never seen Prem going inside the police station with a perambulater.
The intervention of the appellant suggests that he knew Prem and was friendly towards him.
Prem 's story that he was employed as a servant by Banwari Lal is corroborated by the evidence of Banwari Lal himself, his sister Vina and his clerk Naranjan Das.
In the nature of things there could be no corroboration of Prem 's story about the appellant 's proposal to rape and rob Nirmala Devi and, if necessary, to murder her.
According to Prem 's confession a day before the murder he had been given a dagger by the appellant along with a _pajama and that Prem took the pajama and the dagger to the upper storey of Banwari Lal 's house having concealed it in the kothri of firewood which was near the office room of Banwari Lal.
This part of his story receives corroboration from the evidence of Banwari Lal that after the murder he had found a blood stained pajama, Exbt.
P. 14, banging on the door of the store room which is at the back of the residential portion of the house.
Banwari Lal is supported by Nand Lal, P.W. 34, Motor Mobile Patrol Sub Inspector, who recorded the First Information of Banwari Lal.
According to him, he found the pajama hanging on one of the shutters of an almirah fixed in the wall in the fuel room situate at the back of the room where Nirmala Devi was found lying dead.
It was bloodstained.
Banwari Lal had clearly stated that this pajama did not belong to him or any one in his house.
The existence of the pajama in Banwari Lal 's house lends corroboration to the story of Prem that he had been given this pajama and that he had concealed it in the kothri of fire wood near the office of Banwari Lal.
The statement of Prem that he had asked Raj sabziwala to bring down the perambulator of the child and that he did so, finds corroboration from the evidence of Gurbachan Singh that in the afternoon he found Prem accused in the police station with a child in a perambulator.
The presence of the accused Prem at Banwari Lal 's house near about the time of the murder appears to 1229 be clear.
When Vina had left for her school at 9 45 a.m., Prem was in the house.
Vina returned to the house from her school at about 12 30 noon.
At that time Prem was present in the verandah in front of the office.
When she finally returned from the school at about 3 45 p.m., apparently Prem was not in the house but arrived shortly thereafter.
The murder was committed at any time between 12 30 p.m. and 2 15 p.m. if the appellant was the murderer, because Gurbachan Singh 's evidence showed that the appellant was at the thana at 2 15 p.m.
Apparently, the appellant went out with Gurbachan Singh and returned to the thana with him in time for Gurbachan Singh to be on duty from 3 p.m.
If the appellant was the murderer he must have committed the murder before 2 15 p.m. Nirmala Devi was alive at 12 30 p.m. when Vina saw her feeding her child.
Assuming that Vina did not stay long, as she had come to get some money to purchase a copy book, it would not be unreasonable to assume that Nirmala Devi was alive up to 12 40 or 12 45 p.m.
The interval of time between that and 2 15 p.m., when the appellant was seen at the police station, is about 1 1/2 hours.
It would be probable that during this time Prem was present in the house and when he says that lie was present there there is no inherent improbability in his statement.
At 3 45 p.m., when Vina arrived, no doubt Prem was not in the house, but he came shortly thereafter and Vina took from him the child of Nirmala Devi.
This clearly shows that Prem had gone out of the house with the child of Nirmala Devi which one would not normally expect him to do at that time of the day, if Nirmala Devi had left the house to do shopping or to visit anyone.
If Nirmala Devi was in the house and alive it was most unlikely that Prem accused would have taken her child out of the house.
Prem 's statement that he was amusing the child while the appellant was doing his nefarious work appears to be true, because the child was with him and he had been seen at the police station with a child in a perambulator.
If the circumstances tend to show that in all probability Prem was in the house from 12 30 p.m. to 2 15 p.m. then his 1230 story that he was present at the house when the appellant came there appears to be a truthful statement.
It is significant that when Vina arrived at the house at 3 45 p.m. she found the door of the stair case locked.
When Prem arrived she saw the key in his hand, although Prem had said it was lying on the floor.
He opened the lock of the door of the stair case with that key and Vinia went upstairs to the second floor where she went to the kitchen and took her food.
When Banwari Lal arrived at his house at about 3 15 p.m. he found his office room locked from outside.
He wanted to go to the residential portion for taking tea, but found the door of the stair case locked from outside.
Finding the door of the stair case leading to the residential portion of his house locked, he came down and went away in connection with the election work.
On his return he enquired from Prem about the whereabouts of his wife and Prem told him that she had gone out.
He wished to go upstairs to the residential portion of the house and Prem at his request opened the lock of the stair case, the key being with him.
According to Banwari Lal, the usual practice was to lock the door of the office which adjoins the stair case and to bolt the other door from inside, but on the day of the murder the door adjoining the stair case was looked while the other door was lying open.
Banwari Lal 's clerk, Naranjan Das, came to the house at 4 15 or 4 30 p.m.
He went up to the verandah in front of the office and found both the doors of the office locked from outside.
He asked Prem to open the office, but Prem told him that the key of one of the locks which was fixed on the door adjoining the stair case, had been lost.
He gave the key of the other lock and then Prem took out a key from his pocket and opened the lock fixed on the other door of the office.
There is no reason to distrust all this evidence which would indicate that after Vina had left the house on her first visit at about 12 30 p.m. the two doors were locked from outside which was something unusual and that the keys of the looks of these doors were with Prem.
He had given evasive answers about the keys to Vinia and Naranjan Das 1231 while the key was in his pocket.
These circumstances also indicate the truthfulness of Prem 's statement that he was present in the house during the period in which Nirmala Devi was murdered.
His statement in the confession that the appellant had locked the door and had thrown the key in tile office verandah and that while he sat there, the child, while playing, picked up the key and that he said to the girl (presumably Vina) there was the key and then he un locked the door appears to be true.
Reference in some detail to the various statements of Prem in the confession and the circumstances proved by the evidence of various witnesses became necessary in order to ascertain whether Prem had made a truthful statement about his presence at the house during the period in which Nirmala Devi was murdered and also as to the part he had played in assisting the appellant to commit the murder.
While it is true that in the confession Prem does not attribute to himself any participation in the murder itself, it is not to be for gotten that the murder of Nirmala Devi could not have taken place without his aid.
Whoever entered the house of Banwari Lal in broad day light could not have gone upstairs without the knowledge and cooperation of Prem.
According to his statement lie knew what was the intention of the appellant and to assist him in the accomplishment of his purpose he had concealed in his master 's house the pajama and the dagger given to him by the appellant.
If he did not actually participate in the murder he would be equally guilty of the murder if that murder was committed with his aid and his connivance.
The confession, as a whole, concerning the murder of the deceased appears to us to be true and we have no hesitation, after a very careful consideration of all the circumstances appearing in the case, in saying so.
In our opinion, Prem 's confession was not only voluntary and true but it had been corroborated in material particulars regarding the general story told by him in his confession.
The other question which now remains for consideration is whether the confession received material corroboration connecting the appellant with the murder of Nirmala Devi.
1232 Amongst the appellant 's possessions a dagger was recovered which appeared to be blood stained but owing to the long delay in sending it to the Chemical Examiner its origin could not be determined.
From the medical evidence it appears that the dagger in question could have inflicted the kind of injuries suffered by Nirmala Devi.
The most important corroboration, however, is the recovery of the ornaments of the deceased.
These ornaments, according to Banwari Lal, she had been wearing on the day of the murder when he left for court.
On some statement made by the appellant his mistress Raj Rani was visited by the authorities and in the presence of respectable witnesses some ornaments were recovered and they were identified as the ornaments of the deceased.
The evidence of Raj Rani also showed that these ornaments were given to her by the appellant.
She apparently had no reason to depose against the appellant, because she had said in her evidence that she wished to meet the appellant before giving clue to the ornaments and that she wished to give the ornaments to the police in his presence.
The defence case was not that these ornaments did not belong to the deceased but that, on the contrary, they were hers but had been produced by Banwari Lal during the police investigation and that it was falsely alleged that they had been recovered from Raj Rani.
The evidence of Charan Dass, P. W. 24, President of the Municipal Committee of Rupar, however, clearly shows that in his presence the appellant made a statement to the police to the effect that one gold kara and seven gold bangles had been given by him to Raj Rani.
This statement was made on August 3, 1957.
His evidence also shows that on August 9, 1957, he accompanied the police party from Rupar to Jangpura and that Raj Rani took them to her sister 's house.
She brought out a trunk from inside the room.
She opened the lock of the trunk and produced from it a tin box which contained a gold kara and seven gold bangles.
The evidence of GoriShanker, a Municipal Commissioner of Rupar is to the same effect and corroborated Charan Dass.
The courts below believed these two witnesses.
We have examined 1233 their evidence with some care in view of the submission on behalf of the appellant that they should not be relied upon.
There is nothing in their evidence to show that they were in any way hostile to the appellant or had any motive to depose against him.
The courts below having believed these witnesses, we would not ordinarily go behind their view on a question of fact.
Having regard, however, to the con sequences which arise as a result of the acceptance of their evidence in this particular case, we have examined their evidence in the light of the submission made on behalf of the appellant.
It was suggested that at the earlier stage the police investigation was not properly conducted and the public were dissatisfied.
A deputation of influential persons met the Chief Minister as a result of which a more active and thorough investigation took place.
It may be that influential persons of Rupar interviewed the Chief Minister, being dissatisfied with the manner in which the investigation was taking place.
There is, however, nothing to show that Charan Dass or Gori Shanker were amongst those who had interviewed the Chief Minister or that they had taken part in any agitation against the police concerning the manner of the investigation.
It is difficult to believe that two responsible persons such as the President of the Municipal Committee and one of its members would go out of their way to depose to certain events which would provide very strong evidence against the appellant and lead to his conviction on a capital charge, unless they had really heard the statement of the appellant and witnessed the recovery as deposed to by them.
It was then suggested that, apparently, Charan Dass had no real reason to go to the police station on August 3, 1957, and, therefore, his story that he heard the appellant make the statement which led to the recovery of the ornaments was false.
Charan Dass, however, had stated the reason for his visiting the police station.
He went there to complain to the police that people parked their push carts in the bazar and thus obstructed the passage.
In our opinion, as the President of the Municipal Committee of Rupar, if a nuisance was 1234 being created by people parking their push carts in the bazar, it was a natural thing for him to go to the police station in order to get such obstruction removed and for the police to see that the nuisance did not continue.
We can find nothing strange in the conduct of Charan Dass or Gori Shanker in having gone to the police station in the circumstances deposed to by them.
We have no hesitation in believing the evidence of Charan Dass and Gori Shanker that the appellant made a statement to the effect that he had given one gold kara and seven gold bangles to Raj Rani and that the same were recovered from Raj Rani in their presence.
It would appear, therefore, on the evidence of Raj Rani and these witnesses, that not long after the murder of Nirmala Devi the appellant was in possession of her ornaments and that he had given them to Raj Rani.
The ornaments being in possession of the appellant soon after the murder would show that he either stole the ornaments or was in possession of them knowing or having reason to believe that they were stolen properties.
Nirmala Devi had been murdered by someone who had stolen her ornaments.
According to the confession of Prem it was the appellant who had gone up stairs where Nirmala Devi was Sometime after the departure of Vina.
He had given the appellant the pajama and the dagger.
Thereafter, the appellant left the house leaving the pajama behind.
After the departure of the appellant no outsider entered the house.
It is clear, therefore, that in order to steal the ornaments the thief killed Nirmala Devi.
The circumstances clearly indicate that the thief was no other than the appellant.
It seems to us, therefore, that the confession of Prem receives strong and substantial corroboration connecting the appellant with the crime of the murder of the deceased Nirmala Devi.
The conduct of the appellant from 2 15 p.m. onwards clearly shows that he was in a disturbed state of mind which is consistent with his having committed the crime, It is curious that lie was uttering the word I Nirmala.
It had been suggested to Gurbachan Singh that the Assistant Sub Inspector Rikhi Ram had a 1235 daughter with whom the appellant had illicit connection and that her name was Nirmala, but the witness stated that he had no knowledge about it.
The appellant in his statement under section 342 of the Code of Criminal Procedure before the Sessions Judge admitted that he was shouting out the name of Nirmala but he had a love affair with a girl named Nirmala, daughter of Rikhi Ram.
We are not prepared to accept the explanation of the appellant as to how he was calling out the name of Nirmala so soon after the murder of Nirmala Devi.
This conduct of the appellant may not by itself have been corroboration of sufficient importance to enable a court to convict the appellant on the retracted confession of Prem.
No stronger and no better corroboration, however, of the confession of Prem could be had than the evidence which showed that the appellant had been in possession of Nirmala Devi 's ornaments soon after her murder.
There were several comments made on the evidence by the learned Advocate for the appellant, but those comments were with reference to unimportant matters and were not at all relevant.
In an appeal by special leave it is not ordinarily permissible to make submissions on questions of fact.
The principal matter with which we have been concerned in this appeal was whether the confession of Prem had been corroborated in material particulars regarding the general story told by him and in material particulars tending to connect the appellant with the murder of the deceased.
We have no hesitation in saying that the confession of Prem has been amply corroborated in both respects.
Recovery of the ornaments of the deceased at the instance of the appellant incriminated him to the fullest extent and lent the strongest corroboration to the con fession of Prem from which it was apparent that no other person than the appellant could have murdered Nirmala Devi.
The appeal is accordingly dismissed.
Appeal dismissed.
| IN-Abs | The appellant was tried along with P for the offence of murder.
The prosecution case was that the appellant, in conspiracy with P who was employed as a servant in the house of the deceased, took advantage of the deceased being alone in the house with her child, went upstairs and killed her and stole her ornaments, while P remained downstairs with the child.
The evidence upon which the prosecution relied for conviction consisted of the confession of P, the statement of the appellant which led to the recovery of the ornaments belonging to the deceased from the possession of the mistress of the appellant, the recovery of a blood stained dagger from his belongings at the police station and his conduct after the murder.
The confession of P was later retracted by him in the Court of 'Session.
It was contended for the appellant that a retracted confession of an accused cannot be used against his co accused Held, that a voluntary and true confession made by an accused though it was subsequently retracted by him, can be taken into consideration against a co accused by virtue Of section 30 of the Indian Evidence Act, but as a matter of prudence and practice the court should not act upon it to sustain a conviction of the co accused without full and strong corroboration in material particulars both as to the crime and as to his connection with that crime.
The amount of credibility to be attached to a retracted con fession would depend upon the circumstances of each particular case.
Held, further, that on the evidence in the case the confes sion of P was voluntary and true and was strongly corroborated in material particulars both concerning the general story told in the confession concerning the crime and the appellant 's connection with crime.
|
(Civil) No. 1155 of 1987.
(Under Article 32 of the Constitution of India).
S.P. Malik and Mrs. Lalitha Kaushik for the Petitioner.
Anil Dev Singh, R. Venkataramani, R.B. Mishra and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
The petitioner was the Additional Registrar of this Court.
His normal date of retirement was March 31, 1987.
He, however, sought for voluntary retirement from the service of this Court and on his application in that regard, the following order dated December 6, 1985 was communicated to him by the Registrar of this Court: "OFFICE ORDER The Hon 'ble the Chief Justice of India has accepted the notice of Shri section Banerjee, Offg.
Additional Registrar (Perma nent Deputy Registrar), seeking voluntary retirement from service under the provisions of Rule 48A of the Central Civil Services (Pension) Rules, 1972, and has permitted him to retire voluntarily from the service of the Registry of the Supreme Court of India with effect from the forenoon of January 1, 1986.
" 564 It is clear from the order extracted above that the petitioner was permitted to retire voluntarily from the service of the Registry of the Supreme Court with effect from the forenoon of January 1, 1986.
After the retirement of the petitioner, the Fourth Central Pay Commission (for short 'Pay Commission ') gave its report recommending the revision of salaries and pension of the Government employees.
It is not disputed that the above recommendations of the Pay Commission have been accepted by the Government and that the benefit thereof is also avail able to the employees of this Court.
Paragraph 17.3 of Chapter 17 of Part II at page 93 of the Report of the Pay Commission provides as follows: "17.3 In the case of employees retiring during the period January 1, 1986 to September 30, 1986, Government may consider treating the entire dearness allowance drawn by them up to December 31, 1985 as pay for pensionary bene fits.
" The petitioner claimed the benefit of the recommendation of the Pay Commission as contained in the said paragraph 17.3, but it was not allowed on the ground that he did not, as he was not entitled to, draw salary for January 1, 1986 in view of the proviso to rule 5(2) of the Central Civil Service (Pension) Rules, 1972, hereinafter referred to as 'the Rules '.
Rule 5(2) reads as follows: "5(2).
The day on which a Government servant retires or is retired or is discharged or is allowed to resign from service, as the case may be, shall be treated as his last working day.
The date of death shall also be treated as a working day.
Provided that in the case of a Gov ernment servant who is retired pre maturely or who retires voluntarily under clause (j) to (m) of Rule 56 of the Fundamental Rules or Rule 48 (or Rule 48 A) as the case may be, the date of retirement shall be treated as a non working day.
" At the hearing of the writ petition, it has also been vehemently urged on behalf of the respondents that as in view of the proviso to rule 5(2) of the Rules, the date of retirement of the petitioner should be treated as a non working day or, in other words, as the petitioner was not entitled to the salary for the day of his retirement, he was not 565 entitled to the benefit of the recommendation of the Pay Commission as contained in paragraph.
17.3 of the report extracted above.
Under paragraph 17.3, the benefits recommended will be available to employees retiring during the period, January 1, 1986 to September 30, 1986.
So the employees retiring on January 1, 1986 will be entitled to the benefit under para graph 17.3.
The question that arises for our consideration is whether the petitioner has retired on January 1, 1986.
We have already extracted the order of this Court dated Decem ber 6, 1985 whereby the petitioner was permitted to retire voluntarily from the service of the Registry of the Supreme Court with effect from the forenoon of January 1, 1986.
It is true that in view of the proviso to rule 5(2) of the Rules, the petitioner will not be entitled to any salary for the day on which he actually retired.
But, in our opinion, that has no bearing on the question as to the date of re tirement.
Can it be said that the petitioner retired on December 31, 1985? The answer must be in the negative.
Indeed, Mr. Anti Dev Singh, learned counsel appearing on behalf of the respondents, frankly conceded that the peti tioner could not be said to have retired on December 31, 1985.
It is also not the case of the respondents that the petitioner had retired from the service of this Court on December 31, 1985.
Then it must be held that the petitioner had retired with effect from January 1, 1986 and that is also the order of this Court dated December 6, 1985.
It may be that the petitioner had retired with effect from the forenoon of January 1, 1986 as per the said order of this Court, that is to say, as soon as January 1, 1986 had com menced the petitioner retired.
But, nevertheless, it has to be said that the petitioner had retired on January 1, 1986 and not on December 31, 1985.
In the circumstances, the petitioner comes within the purview of paragraph 17.3 of the recommendations of the Pay Commission.
After the conclusion of the hearing of the writ peti tion, an additional affidavit purported to have been af firmed by Mr. P.L. Sakarwal, the Director (Justice) of the Department of Justice.
In paragraph 8 of the affidavit the deponent has craved leave of this Court to file this addi tional affidavit.
It does not appear from the copy of the purported additional affidavit whether it has been affirmed or not inasmuch as no date of affirmation has been mentioned therein.
Be that as it may, a photocopy of the Office Memo randum dated April 14, 1987 of the Ministry of Personnel, Public Grievances and Pensions, Department of Pensions & Pensioners ' Welfare has been annexed.
It is submitted in the additional affidavit that the pension of Government servants retiring between 1.1.1986 and 30.6.1987 is to be governed in terms of 566 paragraphs 10.1, 10.2 and 11 of the said Office Memorandum.
Further, it has been submitted that the petitioner had ceased to be in the employment of the Supreme Court with effect from 1.1.1986 (F.N.) and, accordingly, the said Office Memorandum is not applicable to the petitioner.
Paragraph 3.1 of the Office Memorandum provides, inter alia, that the revised provisions as per these orders shall apply to Government servants who retire/die in harness on or after 1.1.1986.
The said Office Memorandum will, therefore, be applicable to Government servants retiring on 1.1.1986.
There is, therefore, no substance in the contention that the Office Memorandum dated April 14, 1987 will not apply to the petitioner.
Be that as it may, we have already held that the petitioner had retired with effect from 1.1.1986 and he comes within the purview of paragraph 17.3 of the recommen dations of the Pay Commission.
In the circumstances, the writ petition is allowed and the respondents are directed to calculate and pay to the petitioner within three months from today his pension in accordance with the recommendation of the Pay Commission as contained in paragraph 17.3 extracted above.
There will, however, be no order as to costs.
P.S.S. Petition allowed.
| IN-Abs | Paragraph 17.3 of Chapter 17, Part II of the Report of the Fourth Central Pay Commission entitled Government em ployees retiring during the period January 1, 1986 to Sep tember 30, 1986 to consideration of the entire dearness allowance drawn by them upto December 31, 1985 as pay for pensionary benefits.
Rule 5(2) of the Central Civil Services (Pension) Rules, 1972 permits the day on which a Government servant retires from service to be treated as his last working day.
The proviso thereto, however, states that in the case of a Government servant who retires voluntarily under Rule 48 A the date of retirement shall be treated as a non working day.
The petitioner was permitted to retire voluntarily from the service of the Registry of the Supreme Court under the provisions of Rule 48 A of the Rules with effect from the forenoon of January 1, 1986 by an order dated December 6, 1985.
His claim to the benefit of paragraph 17.3 was not acceded to.
In the writ petition it was contended for the respond ents that as in view of the proviso to rule 5(2) of the Rules the petitioner was not entitled to the salary for the day of his retirement, he was not entitled to the benefit of paragraph 17.3.
Allowing the writ petition, HELD: Under paragraph 17.3 of Chapter 17, Part II of the Report of the Fourth Central Pay Commission the benefits recommended will be available to employees retiring during the period, January 1, 1986 to September 30, 1986.
In the instant case, the petitioner was permitted to retire volun tarily from the service of the 563 Registry of the Supreme Court with effect from the forenoon of January 1, 1986.
The fact that under the proviso to rule 5(2) of the Rules, the petitioner will not be entitled to any salary for the day on which he actually retired has no bearing on the question as to the date of retirement.
The petitioner could not be said to have retired on December 31, 1985.
It has then to be said that he had retired with effect from January 1, 1986 and that is also the order of this Court dated December 6, 1985.
He, therefore, comes within the purview of paragraph 17.3 of the recommendations of the Pay Commission.
[565A E] The respondents to calculate and pay to the petitioner within three months his pension in accordance with the recommendation of the Pay Commission as contained in para graph 17.3.
[566D]
|
No. 5222 of 1985.
(Under Article 32 of the Constitution of India) (With Writ Petition Nos. 443 and 754 of 1988) R.K. Garg, S.K. Verma, P. Anshu Mishra and R.S. Singh for the Petitioners in Writ Petition No. 5222 of 1985.
G.B. Pai and S.K. Sinha for the Petitioners in Writ Petition No.754 of 1988.
K. Parasaran, Attorney General, G. Ramaswamy, Additional Solicitor General, Ms. A. Subhashini, Probir Mitra and K. Swamy for the Respondents.
The following Order of the Court was delivered: Workmen of Rohtas Industries Limited situated at Dalmi anagar in District Rohtas within the State of Bihar sent a letter addressed to Hon 'ble the Chief Justice of this Court on 8th of July, 1985, alleging that the Company had four units, namely, paper and boards, cement, asbestos and vege table ghee plant; the management closed down the industries with effect from 9th of September, 1984, and have denied employment to about 10,000 employees.
It was prayed that there should be immediate restoration of electricity to the colony, payment 618 of salary and wages for the period since closure should be directed and compensation as per the amendment to the Indus trial Disputes Act in 1984 and dues under the provident fund account, gratuity etc.
should also be directed to be paid.
This letter was registered as a writ petition and notice was issued.
In the meantime by order dated 22.5.
1986, the Patna High Court appointed a Provisional Liquidator under the Companies Act.
In the writ proceedings before this Court the employers, the Provisional Liquidator, the State of Bihar and the Union of India have, in due course, appeared.
On 27.4.1987, the Court made an interim order in the matter of payment of arrear wages by sale of assets.
On 22.7.1987, the Court took note of the fact that the proposal for restructuring of the Company was afoot in terms of its suggestion and stated that claims of the financial institu tions would be considered later.
On October 28, 1987, the Court stated: "This Court had issued notice to the Union of India and learned Attorney General to ascer tain if it is possible to revive the company which has suddenly gone sick.
Learned Attorney General states that in the meantime which received assent of the President on 8th January, 1986 has come into force and a Board in terms of section 4 thereof has now been constituted.
He suggests that a reference may be made to that Board and the Board may be called upon to frame the Scheme as contemplat ed under section 18 of the Act for revival of the company and instead of allowing the Scheme to be dealt with further under the Act, the Board may be called upon to submit its Report along with the Scheme for consideration of this Court.
He also submits that in the spe cial facts of the case there is no necessity to subject the Scheme to a statutory appeal.
Counsel for the petitioners agrees that an effort may be made as per the suggestion of the learned Attorney General.
" The Central Government made a reference to the Board within one week as directed by the Court and the Board was given four months ' time to frame the Scheme.
On 7.9.1988, this Court took note of the fact that the State of Bihar was inclined for nationalisation of the Company.
The Union of India filed an affidavit that if any proposal is mooted for nationalisation, it would be supported.
This Court stated in this order of 7.9.1988: 619 "On examining the matter in this background we are of the view that it is in the interest of everyone that the industrial establishment should be revived and sooner it is the better.
In these circumstances, we direct that a Committee with the Industries Secretary of the Union of India as its Chairman be immediately constituted to work out the modalities of nationalisation.
The Committee should consist of the Secretary, Industries, Government of Bihar, senior representatives of the creditor financial institutions, Finance Secretary of Government of India or his representative and representative of Reserve Bank of India.
The Committee should examine the matter and submit its report within six weeks . . . " On 9.8.1989, the Court took note of the report by saying: "The report submitted to this Court indicates that three units excepting paper unit are viable and can be revived.
On the 13th of December, 1988, this Court considered the report and adjourned the matter to give an opportunity to the parties to explore the modalities of revival of the three viable units.
No substantial progress has been made as we find.
By the adjourned date the modali ties should be discussed and finalised and reported to the Court so that an order can be made to revive the three units.
The report indicated that in regard to paper unit, the Committee was not of the opinion that it was viable.
Learned Attorney General and Mr. Pal had been requested by the Court to explore the possibilities of revival of the paper unit.
Ms. Subhashini on behalf of the learned Attorney General states that given two weeks ' time further discussions shall be held and a complete decision may be reached as regards the paper unit . . " A joint memorandum was filed by the Union of India and the State of Bihar on 12.9.1989 which the Court rejected on account of the fact that there was no clear and definite indication in the memorandum as to revival.
Thereafter, the State of Bihar and the Union of India have filed their statements separately and a copy of the memorandum prepared by the learned Attorney General and circulated has also been filed before us.
We have also heard learned counsel for the parties in the matter.
620 It is not disputed that there is a huge amount of wages outstanding to the workmen.
Several financial institutions have large dues to recover from the Company.
The Trustees of the Debenture Trust Deeds have also sought to intervene in this Court to maintain their claim.
Apart from these, the owners of the Company have also pleaded that they are enti tled to compensation in the event of the properties of the Company being taken away by way of nationalisation.
As already noted, the Company has been closed down for more than five years now.
A lot of assets are fast becoming useless and will soon become junk.
Several attempts were made to dispose of some of the stocks held by the Official Liquidator but for one reason or the other it has not been possible to complete the sale and though this Court had directed that the sale proceeds would be utilised for pay ment of arrears wages, that has not been feasible.
Claims have been laid against the Company and are perhaps awaiting adjudication.
If the Company is not revived and gets liqui dated, the liabilities would turn out to be far in excess of the assets and notwithstanding first or second charge on the assets, the creditors may not appreciably benefit.
This Court cannot lose sight of the fact that living to about 10,000 families had been denied for over five years and apart from national loss, the workmen have been put to serious jeopardy.
In these circumstances, we are satisfied that it is of paramount importance that the Company in respect of the viable units should be revived and allowed to come into production.
Unless there be a moratorium in regard to the liabilities of the Company for a reasonable time, the attempt to revive the Company in respect of the three units is bound to be frustrated upon the intervention of the creditors, whereas once the company is revived and big commercial activities are carried on, profit is bound to be earned and a conscientious and prudent administration would certainly, in due course, provide adequate funds for satis faction of the debts.
At present the question is one of priorities.
It has to be prudently decided as to which ones should be allowed to go ahead and which should be made to wait.
In this background and on the basis of the memoranda filed by the State of Bihar and the Union of India and the note prepared by learned Attorney General and made available to us by Mr. Pal for the other side with the Attorney Gener al 's consent, we give the following directions: 1.
The State of Bihar shall appoint an authorised officer from the Senior IAS cadre with appropriate commercial back ground 621 to be the Rehabilitation Administrator.
The Provisional Liquidator appointed by the High Court of Patna shall hand over to the Administrator all the assets of the Company which he has taken over under orders of the Court.
Such assets of the Company which have not yet been taken over by the Provisional Liquidator shall upon the appropriate officer being designated vest in him forthwith and he is clothed with the necessary power under our present orders to take such steps as are necessary to take over possession of such assets of the Company.
In the event of a dispute arising out of the decision of the Administrator that the asset is of the company and is to be taken over by the Administrator, an appeal shall be maintainable before a Division Bench of the Patna High Court and the Judges to constitute such Bench shall be nominated by the learned Chief Justice.
For convenience the same Judges shall contin ue on the nominated Bench for a reasonable period.
The assets of the Company encumbered with financial and other institutions shall not be available to be proceeded against for a period of one year from today and there shall be a moratorium for a period of one year in regard to pro ceedings taken and pending or to be taken against the Compa ny hereafter and limitation shall remain suspended for the period under our orders of today.
It would be open to the Court on being moved to extend the moratorium.
The costs of the entire assets to be taken over by the State Government of Bihar as per the book value and the dues against the company are estimated to be within the limit of Rs. 15 crores.
The State Government of Bihar has undertaken before us to deposit the amount of Rs. 15 crores with the Administrator within eight weeks from today.
A similar amount of Rs. 15 crores shall be advanced by the Union of India to the State of Bihar from out of plan assistance for the State.
The sum of Rs. 15 crores paid by the State Gov ernment shall be utilised, in due course, for payment of arrears of wages to the workers and for disbursement of secured loans of financial institutions and other parties for which security of the Company 's assets had been fur nished.
The Administrator shall open an account with the lead nationalised Bank for the State of Bihar operating at Dalmianagar into which the two sums of money being Rs. 15 crores each shall be credited.
622 5.
The Administrator shall set up one Committee with a retired High Court Judge, a retired District Judge and an Accounts Officer with at least five years ' experience as Financial Advisor to the State Government to examine the claims of the owners of the Company and other parties in cluding financial institutions.
This should be done within six months from now.
Once the list of creditors is settled with all reasonable particulars, the matter should be re ported to this Court for directions and it shall be open to this Court to finally indicate the figure at which each such claim shall be settled.
An inventory of all the articles shall be made within four weeks from now.
Steps shall be taken to form a new company within four weeks from now.
Appointment of technical consultants and other competent officers shall be undertaken within two months hence.
The asbestos, cement and vanaspati plants shall be commissioned after effecting such repairs as may be neces sary.
The retrenched employees shall come back to work in phases.
The first phase shall admit a thousand workers, the second phase shall admit an equal number and in the third phase, such number of further workers as may be necessary to run the industries in a viable way shall be finalised.
All expeditious steps as may be possible shall be taken to provide employment.
Steps shall be taken to explore the viability of the paper unit within three months after the Company is re commissioned in respect of the three units.
Liberty is given to the parties to apply in the event of necessity but it is made clear that no extension in regard to payment of the fifteen crores of rupees by the State Government and the Union Government shall be granted.
Every attempt should be made by all concerned to give effect to the order keeping its true purport and spirit in view.
We do not intend to leave doubts in any one 's mind that the purpose of our order is to revive the Company and make it work viably.
Everyone charged with the responsibility of implementing the order of the Court shall, therefore, be expected to work in such a way as would fulfil that purpose.
We direct that the case shall remain pending in this Court and shall not be taken to have been disposed of by this order.
Call the case on 1st of March, 1990.
| IN-Abs | Four large industrial units owned by the respondent company were closed down with effect from September 9, 1984 resulting in denial of employment to about 10,000 employees.
In the writ petition, the workmen sought immediate payment of salary and wages for the period since closure and compen sation as per the amendment to the Industrial Disputes Act in 1984 and payment of dues under the provident fund ac count, gratuity etc.
The High Court had in the meantime on May 22, 1986 appointed a provisional liquidator under the Companies Act.
This Court on October 29, 1987 had directed the Central Government to make a reference to the Board constituted in terms of s.4 of the Sick Industrial Companies Act, 1985, which had come into force, to frame a scheme as contemplated under section 10 thereof for revival of the company and submit it for consideration of the Court within four months time.
On September 7, 1988, the Court took note of the fact that the State of Bihar was inclined for nationalisation of the company and directed a committee with the Industries Secre tary to the Union of India as its Chairman to be immediately constituted to work out the modalities of nationalisation.
On December 13, 1988 the Court considered the report of the committee indicating that three units, excepting paper and boards unit, were viable and could be revived, and adjourned the matter to give an opportunity to the parties to explore the possibilities of revival of the viable units.
Till August 8, 1989 no substantial progress had been made.
There after the State of Bihar and the Union of India filed their statements separately and the memorandum prepared by the Attorney General was also made available to the Court.
In this background the Court, HELD: 1.
Living to about 10000 families has been denied for over five years and apart from national loss, the work men have been 616 put to serious jeopardy.
There is a huge amount of wages outstanding to them.
Several financial institutions have large dues to recover from the company.
The Trustees of the Debenture Trust Deeds have also sought to intervene to maintain their claim.
Apart from these, the owners of the company have also pleaded that they are entitled to compen sation in the event of the properties of the company being taken away by way of nationalisation.
A lot of assets are fast becoming useless and will soon become junk.
If the company gets liquidated, the liabilities would turn out to be far in excess of the assets and notwithstanding first or second charge on the assets, the creditors may not apprecia bly benefit.
It is, therefore, of paramount importance that the company in respect of viable units should be revived and allowed to come into production.
[620D, A C] 2.1 The State of Bihar is directed to appoint an autho rised officer to be the Rehabilitation Administrator.
[620H] 2.2 The Provisional Liquidator appointed by the High Court shall hand over to the Administrator all the assets of the company which he had taken over under orders of that Court.
The assets of the company not yet taken over shall vest forthwith in the Administrator.
[621A] 2.3 The assets of the company encumbered with financial and other institutions shall not be available to be proceed ed against for a period of one year, and there shall be a moratorium for a period of one year in regard to proceedings taken and pending or to be taken against the company hereaf ter, and limitation shall remain suspended for the period.
[621D E] 2.4 The State Government of Bihar shall deposit within eight weeks an amount of Rs. 15 crores with the Administra tor against the cost of assets to be taken over.
A similar sum of Rs. 15 crores shall be advanced by the Union of India to the State from out of plan assistance.
The sum paid by the State shall be utilised, in due course for payment of arrears of wages of the workers and for disbursement of secured loans of financial institutions and other parties for which security of the company 's assets had been fur nished.
The Administrator shall open an account with the lead nationalised bank for the State operating at Dalmiana gar into which the two sums of money shall be credited.
[621F H] 2.5 The Administrator shah set up a Committee with a retired 617 High Court Judge, a retired District Judge and an Accounts Officer to examine the claims of the owners of the company and other parties including financial institutions within six months and to report the matter to the Court for direc tions.
[622A] 2.6 An inventory of all the articles shall be made within four weeks.
Steps shall be taken to form a new compa ny within four weeks.
Appointment of technical consultants and other competent officers shall be undertaken within two months.
The retrenched employees shall come back to work in phases.
Steps shall be taken to explore the viability of the paper unit within three months after the company is recom missioned in respect of the three units.
Liberty is given to the parties to apply in the event of necessity.
[622C D & E] 2.7 The case shall remain pending, to be called again on March 1, 1990.
[622H]
|
ivil Appeal No. 4496 of 1989.
From the Judgment and Order dated 15.4.1986 of the Madras High Court in Writ Appeal No. 411 of 1986.
C.K. Sucharita for the Appellant.
B. Dutta, Additional Solicitor General, (N.P.), P.P. Singh and Mrs. Sushma Suri for the Respondents.
The following Order of the Court was delivered: Delay condoned.
722 Leave granted.
Heard counsel for the parties.
The appel lant, who is a freedom fighter was refused the grant of pension under the Swatantrata Sainik Samman Scheme by the Ministry of Home Affairs, Union of India and hence the appellant approached the High Court for the issue of a writ of certiorarified mandamus.
The appellant 's writ petition was dismissed by a learned single Judge and the writ appeal against the said order was also dismissed by a Division Bench.
Hence the present appeal by special leave.
Initially, the appellant sought the grant of pension on the ground that as a freedom fighter he was kept in police custody for fifteen days and after conviction he underwent imprisonment for three and a half months.
Since under the Freedom Fighters Pension Scheme, a freedom fighter must have undergone a minimum period of inprisonment for six months for his participation in the freedom struggle in order to get pension under that head, the appellant was refused pension.
Thereupon, he applied for grant of pension on another ground viz. that he had suffered permanent loss of vision in his left eye due to brutal lathi charge by the police against freedom fighters.
The appellant 's claim of permanent loss of vision in the left eye was duly certified by Government doctors.
The District Collector, after making a detailed enquiry, certified the claim of the appellant as a bona fide one and recommended his case for grant of pen sion by letter dated 13.9.84.
Accepting the report of the Collector, the Deputy Secre tary to the Government of Tamil Nadu addressed respondent No. 2 as under: "It is seen from the verification report that Thiru R. Narayanan, the freedom fighter has been permanently physically handicapped due to his involvement in the freedom struggle of the nation.
In the circumstances stated above.
I am directed to request that the Government of India may kindly be moved to sanction Swatan trata Sainik Samman Pension to Thiru R. Narayanan of Salem District.
" In spite of the medical certificates issued by Govern ment doctors and the recommendations of the District Collec tor and the State Government for grant of pension under the S.S.S. Pension Scheme, the Ministry of Home Affairs declined to grant pension to the appellant on the ground that "it is not possible to grant Samman Pension in terms of permanent incapacitation, hence your case stands rejected" by communi cation dated 30.4.85.
It was in such circumstances the appellant 723 moved the High Court of Madras for the issue of a writ of certiorarilied mandamus but failed to meet with success.
On notice being issued to the respondents, a counter affidavit has been filed on behalf of the Union of India by Shri Kishan Chand, Under Secretary, Ministry of Home Af fairs.
In the counter affidavit it has been stated as fol lows: "The alleged incapacity of his losing vision of one eye as a result of lathi blow during the freedom struggle is not considered as permanent incapacitation as contemplated under clause 3(e) under para 4 of the Scheme under the heading 'who is eligible '.
A person is eligible for the pension under the Scheme if he became permanently incapacitated during firing or lathi charge which would mean a person, in such a case, who has suffered complete loss of eye sight." . . . . . . . "The case of the petitioner has been consid ered and correctly rejected as per the terms of Scheme, the petitioner not being eligible for pension.
Moreover, the petitioner has not been able to produce any documentary evidence from official records of the relevant period in support of his claim of loss of vision in one eye.
In any case, the Government having decided as a policy in not treating loss of one eye as permanent incapacitation, a dis criminatory decision cannot be taken in favour of the petitioner.
" Learned counsel for the appellant urged before us that the respondents are not justified in construing clause 3(e) of Para 4 of the Pensions Scheme to mean that the incapaci ty, besides being permanent should also be of a total na ture, and as such the denial of pension to the appellant under clause (e) is unjust.
Under the Scheme a freedom fighter is eligible to receive pension if he satisfies one of the following clauses viz. (a) Had suffered a minimum imprisonment of six months (three months in the case of women); (b) Had remained underground for more than six months provided (i) he was a proclaimed offender; or 724 (ii) he was a person on whom an award for arrest had been announced or; (iii) he was a person against whom detention order had been issued but not served.
(c) Had been interned in his home or externed from his district provided the period of internment/externment was for six months or more.
(d) Had his property confiscated or attached and sold due to participation in the freedom struggle; (e) Had become permanently incapacitated during firing or lathi charge; (f) Had lost his job (Central or State Govern ment) and been thus deprived of his means of livelihood on account of his participation in the National movement.
" We are now concerned only with the interpretation of clause (e) of the Scheme.
The clause only refers to perma nent incapacitaton due to firing or lathi charge and not to total incapacitation.
The respondents would however take the stand that the incapacitation must not only be permanent but it must also be a total one.
Hence according to them, since the appellant has not lost vision in both the eyes, the incapacitation, though permanent is only partial and not total and as such he is not eligible to grant of pension under clause (e) of the Scheme.
The interpretation given by the respondents to clause 3(e) of Para 4 cannot be sustained because the words used in the clause are permanently incapacitated ' and not 'perma nently totally incapacitated. ' If the stand of the respond ents is to be accepted, it would be opposed to the plain meaning of the words and result in addition of more condi tions to the clause what the framers of the Scheme have laid down.
It cannot be disputed, in view of the certificates issued to him by the Government doctors that the appellant has suffered permanent incapacitation of his left eye due to lathi blows received by him during the freedom struggle.
The question would then be whether that incapacity would satisfy the requirement of clause (e) or not.
As already stated, clause (e) refers only to permanent incapacitation and not total incapacitation of a permanent nature.
It therefore follows 725 that the measure of test laid down by the clause is the permanent nature of the incapacitation and not the total nature of the incapacitation.
If clause (e) is to be inter preted in the manner set out in the counter affidavit, it would follow that a freedom fighter who has lost a leg or an arm cannot claim payment of pension on the basis of perma nent incapacitation inasmuch as the incapacitation suffered by him is not of both the legs or both the arms.
It would be the height of injustice to freedom fighters, who are a diminishing lot, to construe clause (e) in the said manner.
Highly inequitable therefore it would be for the appellant to be denied pension under the Scheme because he has suf fered loss of vision only in one eye and not in both the eyes.
The respondents have failed to see that under the Scheme if a freedom fighter had undergone imprisonment or had been underground for a minimum period of six months he can be granted pension.
In such circumstances can it be contended that a person who has permanently lost his power of vision in one eye due to firing or lathi charge cannot be granted pension unlike a person who has been in prison for six months or had remained underground for six months in order to evade arrest.
The Scheme has been formulated with a view to acknowl edge the services rendered to the country by patriotic citizens during the freedom movement and who had suffered at the hands of the British Rulers in one way or the other and to compensate them in some measure for their sacrifices for the sake of the country.
The respondents are therefore not justified in refusing to grant pension to the appellant under clause (e) of the Scheme on the ground that the perma nent incapacitation suffered by him does not satisfy the requirements of clause (e) of the Scheme.
The learned Single Judge and the Division Bench of the High Court, while re jecting the Writ Petition and Writ Appeal filed by the appellant, have only taken into account the period of im prisonment undergone by the appellant and the said period falling short of the prescribed minimum of six months and have not considered the appellant 's claim for pension under clause (e).
Before concluding the judgment we may also refer to two other objections that have been raised by the respondents in their counteraffidavits.
The first one is that the appel lant 's claim for pension under clause (e) is an after thought since he had putforth such a claim only after his claim for pension on the ground of incarceration had been rejected.
The second objection putforth is that: "the petitioner has not been able to produce any docu 726 mentary evidence from official records of the relevant period in support of his claim of loss of vision in one eye.
" There is neither justice nor grace in the respondent 's putting forth such objections.
No one can really expect official records to have been preserved for a period of 40 years to prove the treatment given to the petitioner for the injuries sustained by him during the freedom struggle.
Hence the objection relating to non production of official records of the relevant period by the appellant to prove the sus tainment of injury by him deserves outright rejection as well as outright condemnation.
As regards the criticism that the appellant 's claim under Clause (e) appears to be an after thought, this too merits instantaneous rejection.
As we have already pointed out, the government doctors who have examined the appellant have found his claim of permanent incapacitation of the left eye to be true and the State Government authorities have, after due enquiry, accepted the bona fides of the appellant 's claim and recommended his case for grant of pension under the S.S.S. Scheme by the respond ents.
Consequently, merely because the appellant, perhaps out of ignorance of the several heads under which the claim of pension could be made, had applied initially for grant of pension under clause (e), it can never be said that the present claim of the appellant is an after thought.
For all the aforesaid reasons, we allow the appeal with costs of Rs.2,000 and quash the impugned order of the re spondents dated 30.4.1985, set aside the judgment of the High Court and issue a rule absolute in favour of the appel lant as prayed for.
P.S.S. Appeal allowed.
| IN-Abs | Clause 3(e) of Para 4 of the Swatantrata Sainik Samman Pension Scheme of the Government of India entitles a freedom fighter to pension for having become permanently incapaci tated during firing or lathi charge in the freedom struggle.
The appellant applied for grant of pension on the ground that he had suffered permanent loss of vision in his left eye due to brutal lathi charge by the police against freedom fighters.
His claim of permanent loss of vision in the left eye was duly certified by Government doctors.
The District Collector after making a detailed enquiry, certified the claim of the appellant as a bona fide one and recommended his case for grant of pension.
The State Government also appended their recommendation.
The Ministry of Home Affairs, however, declined to grant pension on the view that loss of vision in one eye did not amount to permanent incapacita tion.
A single Judge of the High Court dismissed appellant 's writ petition and a writ appeal against the said order was also dismissed by a Division Bench.
In this appeal by special leave, it was contended for the respondents that the incapacitation under clause 3(e) must not only be permanent but it must also be a total one, and since the appellant had not lost vision in both the eyes the incapacitation, though permanent, was only partial and not total; and that the petitioner had not been able to produce any documentary evidence from official records of the relevant period in support of his claim.
721 Allowing the appeal, HELD: 1.1 The words used in clause 3(e) of Para 4 of the Pension Scheme are "permanently incapacitated" and not 'permanently totally incapacitated".
The measure of test thus laid down by the clause is the permanent nature of the incapacitation and not the total nature of the incapacita tion.
If clause (e) were to be interpreted to include total incapacitation then a freedom fighter who has lost a leg or an arm cannot claim payment of pension on the basis of permanent incapacitation inasmuch as the incapacitation suffered by him is not of both the legs or both the arms.
It would be height of injustice to freedom fighters to construe clause (e) in the said manner.
1724F; 725A B] 1.2 In view of the certificate issued to him by the Government doctors that the appellant had suffered permanent incapacitation of his left eye due to lathi blows received by him during the freedom struggle and the State Government authorities having, after due enquiry, accepted the bona fides of the appellant 's claim and recommended his case for grant of pension the respondents were not justified in refusing to grant him pension under clause (e) of the Scheme.
[724G, 726C, 725E] 2.
No one can really expect official records to have been preserved for a period of 40 years to prove the treat ment given to a freedom fighter for the injuries sustained by him during the freedom struggle.
Hence, the objection relating to non production of official records of the reley ant period by the appellant to prove the sustainment of injury by him .deserves outright rejection as well as out right condemnation.
[726B C]
|
ivil Appeal No. 3241 of 1979 etc.
From the Judgment and Order dated 24.7.1979 of the Allahabad High Court in Civil Misc.
Writ Petition No. 11370 of 1975.
M.V. Goswami and Dr. B.S. Chauhan for the Appellant.
Prithvi Raj, R.S. Rana and Ashok K. Srivastava for the Respondents.
The Judgment of the Court was delivered by NATARAJAN, J.
In these appeals by special leave, the appellants assail the interpretation given to certain provi sions of Section 4A of the U.P. Imposition of Ceiling on Land Holdings Act, 1960 as amended by U.P. Acts 18 of 1973 and 20 of 1976 (hereinafter referred to as the Act) by the Allahabad High Court.
Conflicting interpretations had been given by single judges on the relevant provisions and hence a reference was made in Kallu vs State of U.P. & Ors., [1979] A.L.I. 1113 to which connected writ petitions were tagged on to a Division Bench for an authoritative pro nouncement on two questions viz. 569 "1.
What is the true scope and effect of sub clause (b) of clause 'firstly ' of Section 4 A? 2.
In particular, whether the said sub clause would take in the entire plot only if two crops were grown in every inch of the land covered by it." The Division Bench, in its reported judgment Kallu vs State of U.P., has discussed the matter and answered the two questions as under: "Clause 'firstly ' of Section 4 A requires the Prescribed Authority to form an opinion as to whether, during the material Fasli years, irrigation facilities were available from such sources as are enumerated therein in respect of any crop.
The relevant consideration is merely the existence of irrigation facilities and not its actual utilisation.
This is under standably so because if facilities are avail able and yet a tenure holder neglects to make use of them there is no justifiable reasons why he should have an advantage over those who have been up and doing while he has chosen to be idle and asleep.
We have already held that 'land ' and 'plot ' cannot be equated.
If irri gation facilities of the nature mentioned in sub clause (a) of clause 'firstly ' of Section 4 A are available only to a part of the total area of which a plot is comprised it cannot be held that irrigation facilities were available for the entire plot.
In such cases, the Pre scribed Authority on a correct interpretation of subclause (a) of clause 'firstly ' will have to treat only that area of a tenure holder 's plot as 'irrigated land ' to which irrigation facilities were available.
We are consequently of the opinion that if a large plot consist partly of an area to which irrigation facili ties are available as also some to which irrigation facilities are not available only that area thereof will be covered by sub clause (a) of clause 'firstly ' to which irri gation facilities were in fact available.
Of course 'usar land ' as defined in the Act and determined in the manner provided by the Rules will have to be excluded even though irriga tion facilities may have been available to it.
Similarly other varieties of land exempted under Section 6 will have to be excluded from consideration.
As far as sub clause (b) of clause 'firstly ' is concerned, the 570 requirement is 'that at least two crops were grown in such land in any one of the aforesaid years ' (emphasis supplied) The expression such land, it is obvious, means land referred to in sub clause (b) is 'in ' and not 'over ' and consequently if the crops were grown in any portion of the area of a plot to which irriga tion facility was available under sub clause (a) of clause 'firstly ', the entire area to which irrigation facility was available shall have to be treated as land in which two crops were grown.
The requirement of sub clause (b) of clause 'firstly ' of Section 4 A is not that every inch of the land to which irrigation facilities were available in the material years should have grown double crops.
To take a hypothetical example, if to a plot of land consisting of 50 acres, irrigation facilities were available to an area of 20 acres and on any portion of such 20 acres at least two crops were grown in any of the years 1378 Fasli to 1380 Fasli, the entire area of 20 acres to which irrigation facilities were available will have to be treated as irrigated land for the purpose of sub clause (b) of clause 'firstly ' of Section 4A.
The word 'in ' is one of common use.
If it is said that an individual lives in a particular building or locality it does not convey that he is in occupation of the entire building or locality.
Similarly when it is said that one has grown threes in a piece of land or raised crops therein, it does not signify that he has grown trees or raised crops over the entire land.
When the legislature by amending the Act made availability of irrigation facilities the basis for determination of the ceiling area and surplus land instead of the quality of the land it must have had some purpose in mind.
During the last decade farm technology and agricultural science have made rapid progress and human ingenuity coupled with labour and application of scientific know how has suc cessfully converted even deserts into green belts provided water was available.
Applica tion of scientific methods has made possible improvement in soil quality and its fertility.
It is not unreasonable to infer that when the Act was amended the legislature intended that if any land has irrigation facilities avail able to it and is not 'usar land ' and in some part of it 'dofash ' crops have in fact been raised in any of the relevant 'fasli ' years, a willing and hard working tenure holder by application of modern agricultural appliance and fertilisers can improve the productivity of the land and consequently no premium should 571 be available to those who fail to do so.
In this view of the matter, to take a concrete case to compute the area of a tenure holder 's irrigated land ' under clause 'firstly ' of Section 4A Prescribed Authority must find out the area of land to which irrigation facili ties of the prescribed nature were available for any crop during the relevant Fasli years, exclude therefrom 'usar land ' etc., and if it finds that over any part of such area at least two crops were grown it must hold the entire area of 'irrigated land '.
Such an interpreta tion resolves the problem which the Prescribed Authority would be faced with in determination of the 'irrigated land ' of a tenure holder where records reveal the growing of the crops on varying areas of his holding during the material Fasli Years." "For the reasons given, our answer to question No. 1, passed by the learned single judge is as follows: If in any portion of an area of plot or plots to which during the Fasli Years 1378 to 1380 irrigation facilities were available and over any portion of such area double crop had in fact been sown, the entire area 'of the plot to which irrigation facilities were available will be covered by clause 'firstly ' of Section 4 A since both the condition laid in subclause (a) and (b) will be complied with.
" "Our answer to question No. 2 is in the nega tive.
In as far as a contrary view has been taken with regard to the scope of sub clauses (a) and (b) of clause 'firstly ' of Section 4 A of the Act in Gasi Ram vs State of U.P., (supra) and similar opinion expressed in Surrinjpal Singh vs State of U.P., and Sitaram Tyagi vs State of U.P., (Writ No. 8115 of 1975 decided on 22nd September, 1978, 1978 AWC SCC 114 page 90 have not been correctly decided.
" Thereafter, the writ petitions were placed before single judges for decision on merits and the petitions came to be dismissed.
In Civil Misc.
Writ Petition No. 11370 of 1975 it was held that plot Nos.
595 and 224 belonging to the peti tioner had been rightly treated as irrigated land in their entirety for purposes of computation under the Act.
Against that judgment, Civil Appeal No. 3241 of 79 has been 572 filed.
In the other appeal which arises from the dismissal of Civil Misc.
Writ Petition No. Nil of 84, leave has been granted confined only to Plot No. 466.
The writ petition was dismissed following the ratio in Kallu vs State of U.P., (supra).
Though the appeals are directed against the dis missal of the two writ petitions, the real challenge in the appeals is to the ratio laid down by the Division Bench in Kallu vs State of U.P., (supra).
The appellants dispute the correctness of the view taken by the Division Bench and would contend that in order to classify a land as irrigated land, there should be evidence of 'assured irrigation and secondly the two crops in a fasli should have been raised on the entire extent of the land and not in a portion of the land alone.
The interpretation of the terms of Section 4 A of the Act assume importance because 'ceiling area ' and 'surplus land ' under the Act have to be computed on the basis of the 'irrigated land ' held by a tenure holder.
Originally, the 'ceiling area ' under the Act was to be determined on the basis of 'fair quality land '.
However, by amendments intro duced by U.P. Act 18 of 1973 and U.P. Act 20 of 1976, 'cei ling area ' and 'surplus land ' are to be determined with reference to the assured irrigation facilities available to land held by a tenure holder.
We may now have a look at the relevant portions of Section 4 A of the Act.
They read as under: "4 A. Determination of irrigated land.
The prescribed authority shall examine the relevant khasras for the yeas 1378 Fasli, 1379 Fasli and 1380 Fasli, the latest village map and such other records as it may consider necessary, and may also make local inspection where it considers necessary, and thereupon if the prescribed authority is of opinion firstly, (a) that irrigation facility was available for any land in respect of any crop in any one of the aforesaid years; by (i) any canal included in Schedule No. 1 of irrigation rates notified in Notification No. 1579/W/XXIII 62 W 1946, dated March 31, 1953, as amended from time to time; or 573 (ii) any lift irrigation canal; or (iii) any State tube well or a private irriga tion work; and (b) that at least two crops were grown in such land in any one of the aforesaid years; or secondly, that irrigation facility became available to any land by a State Irrigation work coming into operation subsequent to the enforcement of the Uttar Pradesh Imposition of Ceiling of Land Holdings (Amendment) Act, 1972, and at least two crops were grown in such land in any agricultural year between the date of such work coming into operation and the date of issue of notice under Section 10; or thirdly, (a) that any land is situated within the effective command area of a lift irriga tion canal or a State tube well or a private irrigation work; and (b) that the class and composition of its soil is such that it is capable of growing at least two crops in an agricultural year; then the Prescribed Authority shall determine such land to be irrigated land for the purpose of this Act.
EXPLANATION I. (Omitted) EXPLANATION II.
(Omitted) EXPLANATION III.
(Omitted) On a reading of Section 4 A, it may be seen that the Legislature has prescribed different kinds of tests on the basis of which the authorities have to determine whether a land is irrigated land or not for the purpose of determining the ceiling area of a tenure holder.
The two broad tests are (1) availability of irrigation facilities and (2) the factum of raising or the capability of the soil for raising atleast two crops in an agricultural year.
We may now examine the merits of the appellant 's conten tions.
The statute has been enacted "to provide for the imposition of ceiling on land holdings in Uttar Pradesh and certain other matters connected ,therewith.
" The preamble to the Act reads as under: 574 "Whereas it is necessary in the interest of the community to ensure increased agricultural production and to provide land for landless agricultural labourers and for other public purposes as best to subserve the common good.
And whereas a more equitable distribution of land is essential.
And, therefore, it is expedient to provide for the imposition of ceiling on land holdings in Uttar Pradesh for the aforementioned purposes.
" The Act is thus a piece of social legislation for achieving the several objectives set out in the preamble.
In order to give greater thrust to the objects underlying the Act, the Legislature has changed the basis for reckoning the ceiling area from that of 'fair quality land ' to that of "assured irrigation facilities" available to a land.
Coming now to the specific provisions of Section 4 A dealt with by the High Court, it may be seen that in order 'to form an opinion whether irrigation facility was avail able for any land from one of the sources mentioned in sub clauses (i), (ii) and (iii) in respect of any crop in anyone of the aforesaid years viz., Faslis 1378 to 15380, the Prescribed Authority is enjoined to examine the Khasras for those three Fasli years, the village map, other relevant records considered necessary and also to make a local in spection whenever it is necessary.
Hence there is no scope for contending that a Prescribed Authority may form his opinion without reference to relevant material, in an arbi trary or capricious manner, to the detriment of a tenure holder as regards the availability of assured irrigation facility to a land from one of the enumerated sources.
Consequently, there is no merit in the first contention of the appellant that in addition to the materials and records set out in the sub clause, there must be independent evi dence of assured irrigation facility before ever a Pre scribed Authority can form an opinion about a land having assured irrigation facility.
As regards the second contention relating to sub clause (b), the clause refers only to the growing of atleast two crops in a land found to be having assured irrigation facil ity in any one of the relevant years.
The sub clause does not contemplate the raising of two crops on the entire extent of the land.
The classification has to be made with reference to the potentiality of the land to yield two crops in one Fasli year and not on the basis of the actual raising of two crops on the entire 575 extent of the land.
Therefore, sub clause (b) cannot be read so as to mean that two crops should have been grown on the entire extent of a land having irrigation facility for classifying the land as 'irrigated land ' as it would have the effect of limiting the operation of the sub clause contrary to the legislative intent.
The High Court has taken the view that when the Legislature made amendments to the Act, it must have had in mind the advancement that has been made in agricultural science and farm technology and by reason of it a tenure holder can overcome hurdles and raise two crops in a year over the entire extent of a land having irrigation facility.
We need not go as far as that.
The normal presumption, in the absence of contra material, would be that the quality and content of soil of a land would be uniform throughout its extent.
Such being the case, if a tenure holder is able to raise two crops in a year in a portion of the land, then it would be logical to hold that the other portions of the land also would have the capacity to yield two crops if the tenure holder had utilised the entire extent to raise two crops instead of utilising a portion of the land alone.
The raising of two crops even on a portion of the land will prove, in the absence of material to show poor quality of soil in portions of the land due to salinity etc.
, the uniform nature and content of the soil of the entire land.
The High Court was therefore right in holding that the Prescribed Authority can treat a land, having assured irrigation facility, as 'irrigated land ' if the tenure holder had raised two crops even m a portion of the land during anyone of the prescribed years and that it is not necessary that the raising of the two crops should have been made on the entire extent of the land in order to classify the land as 'irrigated land '.
As the learned single judges have dismissed the writ petitions on the ground that the lands in question satisfy the tests laid down by the Division Bench in Kallu vs State of U.P., (supra), we do not find any merit in these appeals.
Consequently, both the appeals are dismissed but there will be no order as to costs.
R.S.S. Appeals dis missed.
| IN-Abs | The appellants had Fried separate writ petitions in the High Court challenging the basis for determination of 'irr igated land ' under section 4A of the U.P. Imposition of Ceiling on Land Holdings Act, 1960.
In view of conflicting interpretations given earlier by Single Judges of that High Court, a reference was made to the Division Bench in the case of the petitioner/appellant Kallu Following the ratio laid down by the Division Bench in Kallu vs State of U.P., the writ petitions were dismissed.
Before this Court, the appellants disputed the correct ness of the view taken by the Division Bench, and contended that in order to classify a land as irrigated land, there should be evidence of 'assured irrigation ' and, secondly, that the two crops in a Fasli year should have been raised on the entire extent of the land and not in a portion of land alone.
Dismissing the appeals, this Court, HELD: (1) The Uttar Pradesh Imposition of Ceiling on Land Holdings Act, 1960 is a piece of social legislation for achieving the several objectives set out in the preamble.
In order to give greater thrust to the objects underlying the Act, the Legislature has changed the basis for reckoning the ceiling area from that of 'fair quality land ' to that of 'assured irrigation facilities ' available to a land.
[574C D] (2) On a reading of section 4A, it may be seen that the Legislature has prescribed different kinds of tests on the basis of which the authorities have to determine whether a land is irrigated or not for the purpose of determining the ceiling area of a tenure holder.
The two broad tests are (1) availability of irrigation facilities and (2) the factum of raising or the capability of the soil raising at least two crops in an agricultural year.
[573F G] 568 (3) There is no merit in the contention that in addition to the materials and records set out in the section there must be independent evidence of assured irrigation facility before ever a Prescribed Authority can form an opinion about a land having assured irrigation facility.
[574F] (4) Sub clause (b) of section 4 A cannot be read so as to mean that two crops should have been grown on the entire extent of a land having irrigation facility for classifying the land as 'irrigated land ' as it would have the effect of limiting the operation of the sub clause contrary to the legislative intent.
[575A] (5) The classification has to be made with reference to the potentiality of the land to yield two crops in one Fasli year and not on the basis of the actual raising of two crops on the entire extent of the land.
[574H] (6) The raising of two crops even on a portion of the land will prove in the absence of material to show poor quality of soil in portions of the land due to salinity etc.
the uniform nature and content of the soil of the entire land.
[575D]
|
ivil Appeal No. 4108 of 1982.
From the Judgment and Order dated 23.12.
1981 of the Andhra Pradesh High Court in C.R.P. No. 3547 of 1981.
P.P. Rao, R. Venkataramani, V.G. Pragasam and Satya Mitra Garg for the Appellant.
P. Krishna Rao, B. Krishna Prasad and K.K. Gupta for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This is a tenant 's appeal by special leave against the order of eviction from a commercial prem ises at Gudur in Andhra Pradesh.
The Controller, the Appel late Authority and the High Court have concurrently found that the appellant was a wilful defaulter liable to be evicted.
Under document No. 1327 of 1969, a thirty year lease with an annual stipulated rent was granted in favour of one Narayanan, a partner of the hotel, for a term of 30 years beginning from 9th of 727 September, 1961.
For the first 15 years rent was stipulated at the rate of Rs. 150 per month and for the second span of 15 years rent was to be escalated to Rs.200 per month, and the tenant undertook to pay the rent by the 9th of every succeeding month.
The lease deed further stipulated: "Out of the advance of Rs.6,500, the second party shall deduct every month Rs.75 from the stipulated rent upto Rs. 1,500 and the balance of Rs.5,000 shall be paid back to the second party by the first party under valid receipt after the expiry of the lease period." Thus, by March 1971 the amount of Rs. 1,500 had been adjust ed and the landlord held Rs.5,000 refundable to the tenant.
Action for eviction was initiated on the plea that the tenant had failed to pay the rent for a certain subsequent period.
Courts below debated the main perhaps the only contention as to whether the plea of payment which the tenant advanced had been established.
On behalf of the landlord the account books of the Hotel were placed and the benefit of section 34 of the Evidence Act was claimed.
Lot of attention was bestowed in the Courts below on the question as to whether the oral evidence along with the presumption arising under section 34 of the Evidence Act had not established the position that no payment as claimed had been made.
On the finding that payment had not been established, eviction was ordered.
Two contentions have been advanced by Mr. P.P. Rao appearing for the appellant to maintain that the order of eviction was contrary to law and cannot be sustained.
Reli ance is placed on section 7 of the Andhra Pradesh Buildings (Lease, Rent & Eviction) Control Act, 1960, (hereafter 'Act ') in support of the stand that the sum of Rs.5,000 which lay as advance in the hands of the respondent landlord was either refundable to the tenant or adjustable against rent and if out of the sum of Rs.5,000 the arrears were available to be adjusted, the tenant was not at all in ' default.
It has next been contended that the lease of 1969 was for a term of 30 years certain and eviction has been claimed against a contractual tenant during the subsistence of the lease.
Admittedly, the lease does not have a forfei ture clause so as to bring the matter within the ambit of section 111(g) of the Transfer of Property Act.
The application for eviction, a copy of which is available on the record (at p. 10 of the second paper book), refers to a notice in para graph 7 in the following terms: 728 "The petitioners caused a registered notice through their counsel dated 28.10.1973 to the respondent demanding the rent due and also for the eviction from the schedule mentioned premises since the respondent has become a wilful defaulter.
The respondent received the notice and has not chosen to give any reply.
" It, therefore, follows, appellant 's counsel has contended, that the lease remained unter minated and the right created under the lease cannot be taken away by filing an application for eviction on the plea of wilful default in the matter of payment of rent.
Section 7 of the Act as far as relevant, provides: "7 (2) Where the fair rent of a building has not been so fixed (a) the landlord shall not, after the commencement of this Act claim, receive or stipulate for the payment of any premium or other like sum in addition to the agreed rent: Provided that the landlord may receive, or stipulate for the payment of, an amount not exceeding one month 's rent by way of advance; (b) save as provided in clause (a), any sum paid in excess of the agreed rent whether before or after the commencement of this Act, in consideration of the grant, continuance or renewal of the tenancy of the building after such commencement, shall be refunded by the landlord to the person by whom it was paid or, at the option of such person, shall be otherwise adjusted by the landlord.
(3) Any stipulation in contravention of sub section (1) or sub section (2) shall be null and void.
" The lease deed described the amount of Rs.6,500 as advance at four places and stipulates adjustment of a sum of Rs. 1,500 out of it and the balance amount of Rs.5,000 to be paid back to the tenant after the expiry of the lease peri od.
The provio to section 7(2)(a) prohibits payment of any sum exceeding one month 's rent by way of advance and sub section
(3) declares the stipulation for payment of rent in advance beyond that of one month as null and void.
729 The receipt of Rs.6,500 by the landlord was, therefore, contrary to law and opposed to public policy.
A sum of Rs. 1,500 has already been adjusted in the manner indicated in the petition for eviction and the fact that a sum of Rs.5,000 was still held by the landlord was admitted there in.
On the facts appearing on the record it is thus clear that the landlord held a higher amount than the rent due on the date when the petition for eviction was filed on the plea of wilful default of payment of rent.
The stipulation of holding the excess amount of RS.5,000 free of interest to be refunded under a valid receipt after the expiry of the lease period is the null and void stipulation and the amount of Rs.5,000 in the hands of the landlord was an amount held by the landlord on account of the tenant on the date of filing of the petition for eviction.
This Court in Mohd. Salimuddin vs Misri Lal & Anr., ; had occasion to deal with a more or less similar situation arising under the Bihar Buildings (Lease, Rent & Eviction) Control Act, 1947.
There, a sum of Rs.2,000 had been advanced by the tenant to the landlord stipulating adjustment of the loan amount_against the rent which accrued subsequently.
The landlord asked for eviction on the ground of arrears of rent by filing a suit.
The trial court had decreed the suit but the lower appellate court reversed the decree by holding that the tenant was not in arrears of rent since the amount advanced by the tenant was sufficient to cover the landlord 's claim of arrears.
The High Court, however, vacated the appellate judgment and restored that of the trial court holding that the loan amount by the tenant was in violation of the prohibition contained in section 3 of the Bihar Act and the tenant was in arrears of rent and liable to be evicted.
This Court set aside the judgment of the High Court by saying: "The view taken by the High Court is unsus tainable inasmuch as the High Court has lost sight of the fact that the parties to the contract were unequal.
The tenant was acting under compulsion of circumstances and was obliged to succumb to the will of the land lord, who was in a dominating position.
If the tenant had not agreed to advance the loan he would not have been able to secure the tenan cy.
" The Court referred to the doctrine of pari delicto and held that the same was not applicable against the tenant.
In M/s. Sarwan Kumar Onkar Nath vs Subhas Kumar Agarwalla, 730 ; , Salimuddin 's case came for consideration.
This was also a dispute under the Bihar Act where two months ' rent had been paid in advance by the tenant to the landlord on the stipulation that the advance amount would be liable to be adjusted towards arrears of rent, whenever necessary or required.
The Court held that the tenant could not be evicted on the ground of default in the payment of rent for two months even if the tenant failed to ask the landlord to make adjustment of the advance amount in the absence of any agreement requiring the tenant to inform the landlord as to when such adjustment is to be made.
This Court said that when the Rent Act prohibited the landlord to claim such advance payment, the tenant could not be consid ered to be a defaulter and the doctrine of pari delicto was not attracted to such a fact situation.
Mr. Rao building upon the ratio of these two decisions rightly contended before us that when the landlord had Rs.5,000 on tenant 's account with him which he was holding for years without paying interest and against the clear statutory bar, there could be no justification for granting a decree of eviction on the plea of arrears of rent.
In view of the fact that the stipulation that the amount would be refundable at the end of the tenancy is null and void under section 7(3) of the Act, the amount became payable to the tenant immediately and the landlord with Rs.5,000 of the tenant with him could not contend that the tenant was in default for a smaller amount by not paying the rent for some months.
The second contention advanced before us is equally weighty.
The lease being for a term of 30 years is to expire in September, 1999.
As we have already said, the lease did not stipulate a forfeiture clause and in the absence of a forfeiture clause in the lease leading to termination by forfeiture, the contractual tenancy was subsisting under the provisions of the Transfer of Property Act and there could not be any eviction from such a tenancy.
We are somewhat surprised to find that these irresisti ble defences were not advanced in the Courts below and the course of the litigation was confined to a consideration of section 34 of the Evidence Act.
The appeal is allowed, the concurrent decision of all the three Courts below directing the tenant to be evicted are set aside and the application for eviction is dismissed with costs throughout.
Hearing fee in this Court is assessed at Rs.3,000.
P.S.S. Appeal allowed.
| IN-Abs | The proviso to section 7(2)(a) of the Andhra Pradesh Build ings (Lease, Rent and Eviction) Control Act, 1960 prohibits payment of any sum exceeding one month 's rent by way of advance, clause (b) thereto makes any such sum refundable or at the option of the tenant otherwise adjustable, and sub section
(3) declares the stipulation for payment of rent in advance beyond that of one month as null and void.
The appellant tenant took the demised premises on a thirty year lease beginning from September 9, 1969 and paid a large amount as advance, only a part of which was adjust able towards the stipulated rent in the subsequent months and the balance was to be paid back under a valid receipt after the expiry of the lease period.
The lease deed did not have a forfeiture clause.
The respondent land lord initiated action for eviction in October 1973 on the plea that the tenant had failed to pay rent for a certain subsequent period.
The tenant advanced the plea of payment.
The land lord placed the account books of the appellant and claimed the benefit of section 34 of the Evidence Act.
All the courts below found that the payment as claimed had not been estab lished.
In this appeal by special leave, it was contended that the balance of advance which lay in the hands of the re spondent landlord was either refundable to the tenant or adjustable against rent under section 7 of the Act, and if out of that sum the arrears were available to be adjusted the tenant was not at all in default; that the lease of 1969 being for a term of thirty years certain, eviction could not be claimed against a contractual tenant during the subsist ence of the lease, and that the lease did not have a forfei ture clause so as to bring the matter within the ambit of section 111(g) of the Transfer of Property Act.
726 Allowing the appeal by special leave, HELD: 1.
The stipulation in the lease deed that the amount of advance would be refundable at the end of the tenancy was null and void under section 7(3) of the Act.
The said amount became payable to the tenant immediately.
It was thus held by the landlord on account of the tenant on the date of filing of the petition for eviction.
The tenant could not, therefore, be considered a defaulter for a smaller amount by not paying the rent for some months.
[730D, 729BC, 730E] Mohd. Salimuddin vs Misri Lal & Anr., ; and M/s. Sarwan Kumar Onkar Nath vs Subhas Kumar Agarwalla, ; referred to.
The lease being for a term of thirty years was to expire in September, 1999.
The deed did not stipulate a forfeiture clause.
In the absence of such a clause the contractual tenancy was subsisting under the provisions of the Transfer of Property Act.
There could not, therefore, be any eviction from such a tenancy.
[730F]
|
vil Appeals No. 26A42648 of 1987: From the Judgment and Order dated 7.5.
1987 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, Order No. 377 to 381/1987 D in Appeal Nos.
CD/SA/A Nos. 2451, 1989 to 1991 & 1992/86 D. V.C. Mahajan R.P. Srivastava and P. Parmeswaran for the Appellant.
T.A. Ramachandran and Mrs. J. Ramachandran for the Respondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
These are four appeals by the Collector of Customs in the cases of M/s. Western India Plywood Mfg. Co. Ltd. and Kanara Wood & Plywood Industries Ltd. (herein after referred to as 'the assessee ').
A very short common point is involved in these appeals.
The assessee imported logs of timber from Burma.
Under the , timber is chargeable to cus toms duty at 60%.
(This we shall call the basic customs duty.) The relevant entry in the Schedule to the is under heading No. 44.01 which includes "wood and timber".
The Government had, however, issued a notification under section 25(1) of the exempting timber imported from certain countries of which Burma is one.
The result was that the basic customs duty payable by the assessee in respect of its imports we shall call this the effective basic duty was nil.
The assessee, however, was liable to pay an additional duty of customs in respect of its imports.
This additional duty may be referred to as the auxiliary duty of customs.
The levy of this duty is governed by the terms of notification No. 265 dated 8.12.1982 and its suc cessor notifications Nos.
59 of 1983 and 126 of 1984.
782 The last of these reads as follows: TABLE section No. Description of goods Rate (1) (2) (3) 1 Goods in respect of which Forty * per cent the rate of duty of customs of the value of specified in the said First the goods as Schedule, read with any determined in relevant notification of the accordance with Government of India for the the provisions time being in force is 60 per of Section 14 cent ad valorem or more.
of the (52 of 1962).
Goods in respect of which the Thirty * per cent rate of duty of customs of the value of specified in the said First goods as deter Schedule, read with any relevant mined in accord notification of the Government ance with the of India for .the time being in provisions of force is nil or less than 60 per Section 14 of cent ad valorem.
(52 of 1962) * These percentage are 30% and 20% in the notification of 1982 and 35% and 25% in the notification of 1983.
The terms of the notifi cations are otherwise identical.
Explanation: For the purpose of S1.
Nos. 1 and 2 in the above Table, the expression "the rate of duty of customs specified in the said First Schedule, read with any relevant notification of the Government of India for the time being in force", in relation to any article liable to two or more different rates of duty by reason of the country of origin of that arti cle, means that rate of duty which is the highest of those rates.
" The assessee cleared the goods by paying an auxiliary duty at 783 40%.
Subsequently, however, the assessee seems to have felt that its case falls under section No. 2 of the above notification and that it should have paid an auxiliary duty of only 30% and not 40%.
It, therefore, applied to the respondent for a refund of the excess duty allegedly paid by it.
This claim was rejected by the Assistant Collector.
However, on appeal, the Collector of Customs (Appeals) held that the assessee was entitled to the refund claimed and this order has also been confirmed by the Customs, Excise and Gold Control (Appellate) Tribunal (CEGAT).
The Collector of Customs has preferred these appeals.
The order of the Tribunal in the appeals preferred by the present respondent was a very short order in which the Tribunal followed its earlier decision in the case of M/s. Indian Plywood Company Limited, Bombay.
We have been taken through the decision of the Tribunal in the said case which is reported in (1987) 29 ELT page 559.
We have, therefore, had the benefit of the full reasoning of the Tribunal for reaching its conclusion.
We are of opinion that the Tribunal has erred in its interpretation of the notification set out above and that the assessee 's case is clearly covered by the explanation in the notification.
It is true that the main part of the notification provides for an auxiliary duty at 40% in cases where the effective rate of basic duty (i.e. the rates set out in the First Schedule read with any relevant notifica tion) is 60% or above and an auxiliary duty at 30% in cases where such effective basic rate is nil or less than 60%.
If the notification had stopped here, the assessee would have been perfectly within its rights to claim that the auxiliary duty payable by it would only be 30% because the effective basic rate in its case is nil.
However, the explanation has made an inroad into this simple rule.
It has provided that where there are two (or more) effective basic rates applicable in respect of any article and the differentiation in rates is attributable to the country of origin of the goods imported, then the auxil iary duty payable will be the higher of the two (or the highest of the) rates.
In the present case, when timber is imported from Burma and the other countries specified in the notification or notifications under section 25(1), the rate of basic duty is nil but if the goods are imported from other countries, the notification does not apply and a basic duty of 60% would be leviable under the entry in the First Schedule.
The result, therefore, is that when we read the rates specified in the First Schedule along with the rele vant notifications in respect of a particular article, namely, timber, we find that the effec 784 tive basic duty is leviable on it at two rates and this differentiation in rates is attributable to the country of origin in regard to the import.
Hence the explanation squarely comes into operation and the assessee will have to pay auxiliary duty by reference to the higher of the two rates of the effective basic duty, namely, 60%.
The contention on behalf of the respondent and this is also the view taken by the Tribunal appears to be that the explanation comes into operation only if there is more than one notification granting concession or exemption in respect of basic duty providing for different rates in respect of articles imported from different countries.
We are unable to see any warrant for reading any such restriction into the terms of the explanation.
As we see it, the terms of the explanation are perfectly clear.
It is this: that if, in respect of any article, there are :two or more effective basic duties in operation and the difference is referable to the country from which the article is imported, then the highest of the effective rates will govern the levy of auxiliary duty.
It does not matter whether the difference in the rates is because the First Schedule applies in certain cases and a concession notification applies in other cases.
Clearly, the use of the words "rate . . specified in the First Schedule, read with any relevant notification" does not necessarily require that there should be such a notifi cation; they mean: "the rates specified in the First sched ule read with the relevant notification, if any".
If there is no notification the rate specified in the First Schedule has obviously to be taken into account for purpose of the notification we are now concerned with.
It is.
therefore, not necessary that the differentiation referred to in the explanation should arise on account of the existence of more than one notification altering the basic duty set out in the Schedule.
Sri Ramachandran contended that the construction sought to be placed by us would lead to this anomaly that a person will have to pay an auxiliary duty even though the effective basic duty is nil.
This argument is without force for two reasons.
In the first place that is the direct result of the explanation and, therefore, if that is the clear intention of the statutory instrument, the anomaly cannot be helped.
The second and perhaps more appropriate answer to Sri Rama chandran 's contention is that the explanation is based on good reason.
It will be seen that in a case of this type as well as in cases governed by more than one notification, which make a distinction in the rate of duty based on the country of origin, there will be different importers import ing goods but paying basic duty at different rates.
The intention of the statute could well be that while for pur poses of basic duty a 785 differentiation in rates may be justified depending upon the country of origin that consideration would be totally irrel evant in the context of auxiliary duty.
In the context of auxiliary duty, it is .equitable that all importers should pay the additional duty at the same rate and that they should have no advantage or disadvantage inter se.
A grant of concession in the matter of auxiliary duty as well would result in widening the gulf between one importer and another and also that between such an importer and the local trader.
The provision, therefore, seems to have been deliberately enacted to achieve this result which is not really an anoma ly as described by Sri Ramachandran.
Sri Ramachandran sought to make same point on the use of the word 'article ' in the notification.
We do not, however, see any significance in the use of this word which has any relevance to the point at issue.
The word 'article ' is used because though a number of articles may be included in one item in the First Schedule, the relevant notification may not govern all of them and it may be restricted.only to some out of the many articles mentioned in the Schedule.
The notification and the explanation, therefore, make it clear that the auxiliary duty has to be calculated with reference to each article based on the effective basic rates of duty applicable to such article in terms of the First Schedule read with any relevant notification under section 25.
For the reasons mentioned above, we are of opinion that the auxiliary duty paid by the assessee was perfectly in order and that its refund applications are not maintainable.
We, therefore, set aside the order of the Tribunal and the Collector (Appeals) and restore the order of the Assistant Collector refusing refund to the assessee.
The appeals are, therefore, allowed.
In the circumstances of the case, we make no order as to costs.
N.P.V. Appeals allowed.
| IN-Abs | Under Heading No. 44.01 of Schedule to the , timber was chargeable to customs duty (basic effective duty) at 60%.
However, under a Notification issued by the Government under Section 25(1) of the , timber imported from certain countries was ex empted, but an additional duty (auxiliary duty) was payable on Such imports in terms of Notification No. 265 dated 1.12.1982 and its successor Notifications No. 53 of 1983 and 126 of 1984.
The assessee imported logs of timber from an exempted country, and as it was not liable to pay the basic duty, it cleared the goods by paying the auxiliary duty at 40%, with reference to the effective basic duty at 60%, as prescribed under Notification No. 126 of 1984.
Subsequently, however, the assessee felt that it should have paid an auxiliary duty of only 30%, and not 40% since no basic effective duty was payable on the goods imported.
It, therefore, applied to the respondent for refund of the excess duty paid by it.
This claim was rejected by the Assistant Collector.
On appeal, the Collector of Customs (Appeals) held that the assessee was entitled to the refund claimed.
This order was confirmed by the Customs Excise and Gold (Control) Appellate Tribunal (CEGAT), on the view that the explanation would come into operation only if there was more than one notification granting concession or exemption, in respect of basic duty, providing for different rates in respect of articles import ed from different countries.
Hence, the appeals by the Department.
Allowing the appeals, this Court, HELD: 1.
The Tribunal has erred in its interpretation of the Notification No. 126 of 1984.
The assessee 's case is clearly covered by 780 the explanation in the notification.
The auxiliary duty paid by the assssee was perfectly in order and its refund appli cations are not maintainable.
[783D, 785E] 2.1 The notification and the explanation make it clear that the auxiliary duty has to be paid with reference to each article based on the effective basic duty applicable to such article in terms of the First Schedule read with any relevant notification under Section 25.
[785D] 2.2 No doubt, the main part of Notification No. 126 of 1984 provides for auxiliary duty at 40% where rate of effec tive basic duty is 60% or above i.e. rates set out in First Schedule read with any relevant notification and at 30% where such effective rate is nil or less than 60%.
However, the explanation to the notification has made an inroad into this simple rule by providing that where two or more effec tive basic rates are applicable in respect of any article, and the differentiation in rates is referable to the country of origin, then the auxiliary duty payable will be the higher of the two, or highest of the rates.
[783E G] 2.3 In the instant case, when timber is imported from the countries specified in the notification or notifications under Section 25(1), the rate of basic duty is nil, but if the goods are imported from other countries, the notifica tion does not apply and a basic duty of 60% would be levi able under the entry in the First Schedule.
Thus, when the rates specified in the First Schedule are read along with the relevant notifications, it is found that the effective basic duty is leviable on it at two rates and this differen tiation in rates is attributable to the country of origin in regard to the import.
Hence, the explanation squarely comes into operation and the auxiliary duty will have to be paid by reference to the higher of the two rates of the effective basic duty, namely, 60%.
[783G H; 784A] 2.4 The differentiation referred to in the explanation need not arise on account of the existence of more than one notification, altering the basic duty set out in the Sched ule.
It does not matter whether the difference in the rates is because the First Schedule applies in certain cases and a concession notification in other cases.
If there is no notification the rate specified in the First Schedule has to be taken into account for purpose of the notification in question.
[784D E] 2.5 A person will have to pay an auxiliary duty even though the effective basic duty is nil.
That is the clear intention of the statutory instrument and the explanation is based on good reason.
It is equitable 781 that all importers should pay the additional duty at the same rate and that they should have no advantage or disad vantage inter se.
A grant of concession in the matter of auxiliary duty as well would result in widening the gulf between one importer and another and also that between such an importer and the local trader.
[784F; 785A]
|
vil Appeal Nos.
3820 24 of 1988.
From the Order dated 2.6.1988 of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in Order No. 410 414/88 D, Appeal Nos.
CD/SB./659/86 D;C/1526/84 D, CD/SB/1522/86 D;C/1565/84 D and C/422/86 D. V.C. Mahajan, and P. Parmeshwaran for the Appellants.
V. Sridharan, A.R. Madhav Rao and V. Balachandran for the Respondents.
The Judgment of the Court was delivered by 777 RANGANATHAN, J.
These are appeals under section 130E(b) of the from an order passed by the Customs, Excise and Gold Appellate Tribunal dismissing the appeals preferred by the Collector of Customs in the cases of M/s. Hunsur Plywood Pvt. Ltd. and M/s. Veneer Mills.
The question raised involves the interpretation of Notification Nos. 59/83 and 126/84.
These notifications are identically worded in all material respects with notification no.265/Cus.
dated 8.12.
1982 and the question before us is directly governed by our judgment of even date in Civil Appeal Nos.
2644 48 of 1987 (Collector of Customs vs Western India Plywood Manufac turing Co. Ltd., [1989] Supp. 1 S.C.R. 779.
For the reasons set out in detail in the said judgment these appeals have to be allowed and the orders of the Assistant Collector reject ing the claims filed by the respondents have to be upheld.
When these matters were taken up, Shri V. Sridharan, appearing on behalf of the assessee respondents, drew our attention to section 5 of the .
He con tended that exemptions or concessions in respect of goods imported from certain countries are generally granted in pursuance of agreements entered into with those countries, that the expression "country of origin" has a special mean ing and its determination governed by special provisions and that, in view of this, the explanation to the notification in question has to be confined in its application only to a comparison of the rates applicable under notifications of concession to goods imported from certain "countries of origin".
In this case, though there are four different notifications, one each in respect of Burma, Nepal, Bangla desh and Bhutan, they are all notifications of complete exemption and the rate of auxiliary duty by reference to any one of them will according to the assessee, be the smaller rate mentioned in the relevant notification under considera tion.
The rate of basic duty in respect of other countries is 60% as there is no notification of exemption or conces sion in relation thereto.
The argument is that the last of these should be ignored and the basic auxiliary duty deter mined only by reference to the rates prescribed in the four notifications of exemption.
For the reasons set out in the judgment in the case of Western India Plywood Manufacturing Co. Ltd. we are unable to accept this contention.
We are unable to agree with the learned counsel that the interpretation given by us will be inconsistent with the agreement for concessional treatment that may have been entered into between the Government of India and the coun tries from which the goods in question are imported.
In the first place, there is no material in the case before us to show that the notification under section 25 was issued in 778 pursuance of an agreement under section 5 of the .
That apart, if this argument were sound, the auxiliary duty, in a case where imports from different countries attract different degrees of exemption under different notifications, should be determinable separately by reference to the effective basic duty notified in respect of each such country.
But admittedly, if there are different rates of effective duty notified for goods imported from different countries of origin, then, notwithstanding the agreement with each of these countries, the auxiliary duty under the notification now under consideration will not be determined, in respect of the import from each of such countries, by reference to the effective basic duty leviable in respect thereof, but will be determined with reference to the highest of the effective rates of duty applicable to all the imports.
If that be so, there is no reason why the position cannot be the same in a case like the present where the imports come from two sets of countries the imports from which attract two different effective basic rates of duty, although the difference arises because in respect of one set of counties there is no notification of concession while in relation to the other there is a complete exemption granted under a notification.
As we have pointed out, there is nothing in the language of the explanation that excludes such a case from its purview.
Considering the language of the notification before us, as we have explained in the case of Western India Plywood Manufacturing Co. Ltd. the result of reading the First Schedule along with the relevant notifications is that imports of timber into India from most countries is charged to effective basic customs duty as per the tariff in the Schedule whereas in respect of imports from Burma, Nepal, Bhutan and Bangladesh, the rate of effective basic duty is nil.
The position, therefore, is that the article in ques tion is liable to two or more different rates of effective basic duty based on the country of origin for the import.
It, therefore, follows that the auxiliary duty is to be determined with reference to the higher of the two effective rates of duty.
We, therefore, see no reason to reach a different con clusion in the present case from that arrived at by us in the case of Western India Plywood Manufacturing Co. Ltd. We, therefore, allow the appeals and restore the orders of the Assistant Collector rejecting the claims of refund filed by the assesses.
The appeals are allowed but there will be no order as to costs.
P.S.S. Appeals allowed.
| IN-Abs | Import of timber is charged to effective basic .customs duty at 60 per cent under the .
The Government of India had, however, issued notification under section 25 of the absolutely exempting timber imported from Burma.
But the importers are liable to pay auxiliary duty in terms of Notification No. 265 dated Decem ber 8, 1982 and its successor Notification Nos.
59 of 1983 and 126 of 1984, which prescribed two rates with reference to the rate of duty of customs.
The explanation thereto provides that where there are two effective basic rates applicable in respect of any article and the differentiation in rates is attributable to the country of origin of the goods imported, then the auxiliary duty payable will be the higher of the two rates.
The respondents had imported certain consignments of timber from Burma which were assessed to auxiliary duty at the higher rate as per notification.
The Appellate Tribunal held in favour of the assessee respondents.
In these appeals by the Revenue under section 130E(b) of the , it was contended for the respondents that exemptions Or concessions in respect of goods imported from certain countries were generally granted in pursuance of trade agreements entered into with those countries under section 5 of the Tariff Act, that the expression "country of origin" in the notification had a special meaning and its determina tion governed by special provisions, and that, therefore, the explanation to the notification in question had to be confined in its application only to a comparison of the rates applicable under notification of concession and basic auxiliary duty determined accordingly.
Allowing the appeals, 776 HELD: The auxiliary duty, in a case where imports from different countries attract different degrees of exemption under different notifications in pursuance of agreements under section 5 of the should be determinable separately by reference to the effective basic duty notified in respect of each such country.
But, if there are different rates of effective duty notified for goods imported from different countries of origin, then, notwithstanding the agreement with each of these countries, the auxiliary duty under such a notification will not be determined, in respect of the import from each of such countries, by reference to the effective basic duty leviable in respect thereof, but will be determined with reference to the highest of the effective rates of duty applicable to all the imports.
[778A C] in the instant case, there is no material to show that the notification was issued in pursuance of an agreement.
It is a case where the imports come from two sets of countries the imports from which attract two different effective basic rates of duty.
The differentiation arises because in respect of one set of countries there is no notification of conces sion while in relation to the other there is a complete exemption granted under a notification.
There is nothing in the language of the explanation that excludes such a case from its purview.
The auxiliary duty is, therefore, to be determined with reference to the higher of the two effective rates of duty.
[777H, 778C D, F] Collector of Customs vs Western India Plywood Manufac turing Co. Ltd., [1989] Supp. 1 SCR 779, applied.
|
vil Appeal No. 62 (N) of 1970 etc.
From the Judgment and Order dated 13.10.
1969 of the Madras High Court in W.A. No. 464 of 1967.
K. Parasaran, Attorney General, Dr. Y.S. Chitale, F.S. Nariman.
T.S. Krishnamurthy Iyer, A.K. Ganguli, B. Sen, L.N. Sinha, R.N. Sachthey, R.B. Datar, R.F. Nariman, K.J. John, H.N. Salve, Praveen Kumar, A.V. Rangam, T.Sridharan, K.D. Prasad, Mrs. Naresh Bakshi, K. Rajendra Choudhary, Ms. Seita Vaidialingam, V. Krishnamurthy, Ms. A. Subhashini, N. Net tar, G.S. Narayan, Badrinath Babu, Anip Sachthey and S.K. Agnihotri for the appearing parties.
The Judgment of the Court were delivered by SABYASACHI MUKHARJI, J.
The question involved in these appeals, special leave petitions and writ petitions is, whether levy of cess on royalty is within the competence of the State Legislature.
In order to appreciate the question, it is necessary to refer to certain facts.
Civil appeal No. 62/79 is an appeal by special leave from the judgment and order of the High Court of Madras, dated 13th October, 1969, in writ appeal No. 464/67.
The appellant is a public limited 698 company incorporated under the Indian Companies Act, 1913.
The Company at all relevant times, used to manufacture cement in its factory at Talaiyuthu in Tirunelveli district, and at Sankaridrug in Salem district of Tamil Nadu.
By G.O. Ms. No. 3668 dated 19th July, 1963, the Govt.
of Tamil Nadu sanctioned the grant to the appellant mining lease for limestone and kankar for a period of 20 years over an extent of 133.91 acres of land in the village of Chinnagoundanur in Sankaridrug Taluk of Salem district.
Out of the extent of 133.91 acres comprised in the mining lease, an extent of 126.14 acres was patta land and only the balance extent of 7.77 acres Govt.
The lease deed was in accordance with the Mineral Concession Rules, 1960.
The rates of royalty, dead rent and surface rent, were as follows: "Royalty: LIMESTONE Government Lands: Re.O.75 per tonne, but subject to a rebate of Re.O.38 per tonne to be given on Imestone beneficiated by froth flota tion method.
Patta Lands: Re.O.38 per tonne but subject to a rebate of Re.O. 19 per tonne to be given on limestone beneficiated by froth flotation method.
KANKAR Government Lands: Five per cent of the sale price at the pit 's mouth.
Patta Lands: 2 1/2% of the sale price at the pit 's mouth Dead rent: Government lands: Rs.25 (Rupees twentyfive only) per hectare per annum.
Patta lands: Rs. 12/50 (Rupees twelve & naya paise fifty only) per hectare per annum.
Surface rent and water rate: At such rate as the land revenue and cess assessable on the land are paid.
" The appellant started mining operations soon after the execution 699 of the lease deed and has ever since been paying the royal ties, dead rents and other amounts payable under the Deed.
Under section 115 of the Madras Panchayats Act (XXXV of 1958) (hereinafter called 'the Act '), as amended by Madras Act XVIII of 1964 (herein after called 'the amended Act '), as royalty the appellant was required to pay local cess @ 45 paise per rupee.
It may be mentioned that the said imposi tion was with retrospective effect along with local cess surcharge under section 116 of the Act.
The contention of the appellant is and was, at all relevant times, that cess on royalty cannot be levied.
This is the common question which falls for consideration and requires determination in these appeals and petitions.
To complete the narration of events, however, it has to be noted that the Collector sent a communication on 10th April, 1965, demanding cess or royalty payable under the Act on minerals carried on during the period 1.7.1961 to 31.12.1964, and the petitioner was threatened of serious consequences in case of default of payment on receipt of that communication.
Thereafter, writ petition No. 1864/65 was filed in the High Court of Madras.
By the judgment delivered and order passed on 23rd February, 1967.
a learned Single Judge of the Madras High Court Justice Kailasam dismissed the writ petition holding that the cess levied under section 115 of the act is a tax on land and, as such, falls under Entry 49 of the State List of the Schedule VII of the Constitution, and was within the competence of the State legislature.
Reliance was placed by the learned single Judge on the decision of this Court in H.R.S. Murthy vs Collector of Chittoor & Anr., ; He held that the cess levied under section 115 was a tax on land, though fixed with reference to the land revenue.
In regard to section 116 of the Act, the learned Single Judge held that the maximum limit had been prescribed by the Government by rules flamed under the Act, and, therefore, there was no arbitrariness about the levy.
Sub section 1 of section 115 of the Act enjoins that there shall be levied in every panchayat development block, a local cess at the rate of 45 paise on every rupee of land revenue payable to the Govt.
in respect of any land for every Fasli.
An Explanation to the said section was added and deemed always to have been incorporated by the Tamil Nadu Panchayats (Amendment and Miscellaneous Provisions) Act, 1964 being Tamil Nadu Act 18 of 1964, which provided as follows: "[Explanation.
In this section and in section 116, 'land revenue ' means public revenue due on land and includes 700 water cess payable to the Government for water supplied or used for the irrigation of land, royalty, lease amount or other sum payable to the Government in respect of land held direct from the Government on lease or licence, but does not include any other cess or the sur charge payable under section 116, provided that land revenue remitted shall not be deemed to be land revenue payable for the purpose of this section.]" Sub section 2 of section 115 of the Act provides that the local cess shall be deemed to be public revenue due on all the lands in respect of which a person is liable to pay local cess and all the said lands, the buildings upon the said lands and their products shall be regarded as the security for the local cess.
Sub section 3, 4 (a), (b), (c) and (d) of section 115 of the said Act deal with the application of the cess so collected for various purposes mentioned therein.
In the controversy before us, the said provisions need not be considered.
Section 116 of the Act is as follows: "116.
Every panchayat union council may levy on every person liable to pay land revenue to the Government in respect of any land in the panchayat union a local cess surcharge at such rate as may be considered suitable as an addition to the local cess levied in the panchayat development block under section 115 provided that the rate of local cess surcharge so levied (shall not exceed two rupees and fifty paise on every rupee of land revenue) payable in respect of such land.
" The words "shall not exceed two rupees & fifty paise on every rupee of land revenue" were substituted for the words "shall be subject to such maximum as may be prescribed" by section 3 of the Tamil Nadu Panchayats ' (2nd Amendment and Validation) Act, 1970, and these words were substituted for the words "shall not exceed one rupee and fifty paise on every rupee of land revenue" by section 2 of the Tamil Nadu Panchayats (Amendment) Act, 1972.
There was an appeal from the said decision of the learned Single Judge, to the division bench of the High Court.
The division bench by its judgment and order dated 13th October, 1969, dismissed the writ appeal, and held that local cess authorised by section 115 as aforesaid "was not land revenue but is a charge on the land itself and Section 115 701 merely quantified on the basis of the quantum of land reve nue".
The division bench held that the meaning of the Expla nation added to section 115 was that the cess is levied as a tax on land and is measured with reference to land revenue, royalty, lease amount etc.
as mentioned in the Explanation.
The division bench also relied on the decision of this Court in H.R.S. Murthy (supra), and further held that in the aforesaid view of the matter, it was not possible to accept the contention that section 115 of the Act read with the Explana tion contravened in any manner section 9 of the Mines and Miner als (Regulation and Development) Act, 1957.
By leave granted by this Court on 12th January, 1970 the appeal has been filed.
The appellant is bound to pay royalty to the Govt.
according to the rates provided in the Second Schedule to the said Act of 1957.
Clause (1) of Part VII of the lease document provides as follows: "The lessee/lessees shall pay the rent, water rate and royalties reserved by this lease at such times and in the manner provided in Part V and VI of these presents and shall also pay and discharge all taxes, rates, assessment and impositions whatsoever being in the nature of public demand which shall from time to time be charged, assessed or imposed by the authority of the Central and State Government upon or in respect of the premises and works of the lessee/lessees in common with other premises and work of a like nature except demands for land revenue.
" As mentioned hereinbefore, there is an obligation of the lessee to pay rent and other charges mentioned in the said Clause, and all other Central and State Government dues "except demands for land revenue".
The question, therefore, which arises is, is cess on royalty a demand of land revenue or additional royalty? For the appellants and/or petitioners we have heard Mr. Nariman,_ Dr. Chitale and Mr. Salve, and for the interven ers, S/Shri K.D. Prasad, Rajendra Choudhary and Ms. Seita Vaidialingam have made their submissions.
For the State of Tamil Nadu, Mr. Krishnamurthy Iyer and Mr. V. Krishnamurthy have made their submissions.
We have had the advantage of the submissions made by learned Attorney General on behalf of Union of India.
The issues are common in the writ peti tions as well as in the appeal and in the special leave petitions.
The question involved in the appeals and the writ petition is about the constitutional validity of Section 115(1) of the Act, in so far as it 702 sought to levy as local cess @ 45 naya paise on every rupee of the land revenue payable to the Government, the meaning of land revenue being artificially expanded by the explana tion so as to include royalty payable under the mining lease.
In this connection, it may be appropriate to refer to the Statement of Objects and Reasons for the amendment which stated, inter alia, as follows: "Under the Explanation to section 115 of the Act "land revenue" means public revenue due on land and includes water cess payable to the Government for water supplied or used for the irrigation of land but does not include any other cess or surcharge payable under section 116.
The Explanation does not cover "royal ties", lease amount or other sum payable to the Government in respect of land held direct from the Government on lease or licence which were included in the definition of "land revenue" under the Madras District Boards Act, 1920.
As under the Madras District Boards Act, 1920, certain panchayat union councils contin ued to levy the cess and surcharge under the Madras Panchayats Act, 1958 also.
It is con sidered that the levy should be on the same basis as under the Madras District Boards Act, 1920.
It is, therefore, proposed to include "royalty, lease amount and other sums payable to the Government" in the definition of land revenue in the Explanation to section 115 of the Act and also to validate the levy and collection of the cess and surcharge made hitherto on the said basis.
" It is obvious that the said amendment was intended to bring royalty within the Explanation and the definition of land revenue in section 115 as well as section 116 of the Act, and was effected by the Gazette Notification of 2nd Septem ber, 1964 by Act No. 18 of 1964.
In order to appreciate the controversy, it has no be understood that in this case royalty was payable by the appellant which was prescribed under the lease deed, the terms whereof have been noted hereinbefore.
The royalty had been fixed under the statutory rules and protected under those rules.
The royalty was fixed under the Mines and Minerals (Regulation & Development) Act, 1957 which is a Central Act by which the control of mines and minerals had been taken over by the Central Government.
It was an Act for the regulation of mines and development of minerals under the control of Union of India.
That 703 Act was to provide for the regulation of mines and the development of minerals under the control of the Union of India.
2 of the Act declares that it is expedient in the public interest that the Union of India should take under its control the regulation of mines and the develop ment of the minerals to the extent provided in the Act.
Section 9 of the Act provides as follows: "9.
(1) The holder of a mining lease granted before the commencement of this Act shall, notwithstanding anything contained in the instrument of lease or in any law in force at such commencement, pay royalty in respect of any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub lessee from the leased area after such commencement, at the rate for the time being specified in the Second Schedule in respect of that mineral.
(2) The holder of a mining lease granted on or after the commencement of this Act shall pay royalty in respect of any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub lessee from the leased area at the rate for the time being specified in the Second Schedule in respect of that mineral.
(2A) The holder of a mining lease, whether granted before or after the commencement of the Mines and Minerals (Regulation and Devel opment) Amendment Act, 1972, shall not be liable to pay any royalty in respect of any coal consumed by a workman engaged in a col liery provided that such consumption by the workman does not exceed one third of a tonne per month.
(3) The Central Government may, by notifica tion in the Official Gazette.
amend the Second Schedule so as to enhance or reduce the rate at which royalty shall be payable in respect of any mineral with effect from such date as may be specified in the notification: Provided that the Central Government shall not enhance the rate of royalty in respect of any mineral more than once during any period of three years.
" The Act was passed by virtue of the power of the Parliament 704 under Entry 54 of list I of the 7th Schedule.
Since the control of mines and the development of minerals were taken over by Parliament, the question that arises here is whether the levy or the impost by the State Legislature imposed in this case can be justified or sustained either under entry 49, 50 or 45 of list II of the 7th Schedule.
Courts of law are enjoined to gather the meaning of the Constitution from the language used and although one should interpret the words of the Constitution on the same princi ples of interpretation as one applies to an ordinary law but these very principles of interpretation compel one to take into account the nature and scope of the Act which requires interpretation.
It has to be remembered that it is a Consti tution that requires interpretation.
Constitution is the mechanism under which the laws are to be made and not merely an Act which declares what the law is to be.
See the obser vations of Justice Higgins in the Attorney General for the State of New South Wales vs The Brawery Employees Union of New South Wales, ; at 611 2.
In re: C.P. and Berar Sales of Motor Spirit & Lubricants Taxation Act, 1938, [1939] FCR at p. 1, Chief Justice Gwyer of the Federal Court of India relied on the observations of Lord Wright in James vs Common wealth of Australia, and observed that a Constitution must not be con strued in any narrow or pedantic sense, and that construc tion most beneficial to the widest possible amplitude of its powers, must be adopted.
The learned Chief Justice empha sised that a broad and liberal spirit should inspire those whose duty it is to interpret the Constitution, but they are not free to stretch or pervert the language of the enactment in the interest of any legal or constitutional theory, or even for the purposes of supplying omissions or correcting supposed errors.
A Federal Court will not strengthen, but only derogate from, its position, if it seeks to do anything but declare the law; but it may rightly reflect that a Constitution of a country is a living and organic thing, which of all instruments has the greatest claim to be con strued ut res magis valeat guam pereat. 'It is better that it should live than that it should perish '.
Certain rules have been evolved in this period, and it is wellsettled now that the various entries in the three lists are not powers but fields of legislation.
The power to legislate is given by article 246 and other articles of the Constitution.
See the observations of this Court in Calcutta Gas Co. vs State of West Bengal, [1962] Suppl 3 SCR 1.
The entries in the three lists of the Seventh Schedule to the Constitution, 705 are legislative heads or fields of legislation.
These demar cate the area over which appropriate legislature can oper ate.
It is well settled that widest amplitude should be given to the language of these entries, but some of these entries in different lists or in the same list may overlap and sometimes may also appear to be in direct conflict with each other.
Then, it is the duty of the court to find out its true intent and purpose and to examine a particular legislation in its pith and substance to determine whether it fits in one or the other of the lists.
See the observa tions of this Court in H.R. Banthia & Ors. etc.
vs Union of India & Ors.
, ; at 489 and Union of India vs Shri H.S. Dillon; , at 792.
The lists are designed to define and delimit the respective areas of respective competence of the Union and the States.
These neither impose any implied restriction on the legislative power conferred by Article 246 of the Constitution, nor prescribe any duty to exercise that legislative power in any particular manner.
Hence, the language of the entries should be given widest scope, D.C. Rataria vs Bhuwalka Brothers Ltd., ; , to find out which of the meaning is fairly capable because these set up machinery of the Govt.
Each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it.
In interpreting an entry it would not be reasonable to import any limitation by comparing or con trasting that entry with any other one in the same List.
It is in this background that one has to examine the present controversy.
Here, we are concerned with cess on royalty.
One can have an idea as to what cess is, from the observations of Justice Hidayatullah, as the learned Chief Justice then was, in M/s Guruswamy & Co. etc.
vs State of Mysore & Ors., where at page 571, the learned Judge ob served: "The word 'cess ' is used in Ireland and_.
is still in use in India although the word rate has replaced it in England.
It means a tax and is generally used when the levy is for some special administrative expense which the name (health cess, education cess, road cess etc.) indicates.
When levied as an increment to an existing tax, the name matters not for the validity of the cess must be judged of in the same way as the validity of the tax to which it is an increment." The said observations were made in the dissenting judg ment, but there was no dissent on this aspect of the matter.
Relying on the aforesaid observations, Mr Nariman appearing for the appellant and 706 the petitioners suggested that the impugned levy in this case is nothing but a tax on royalty and is therefore ultra vires the State legislature.
Mr. Krishnamurthy Iyer appear ing for the State of Tamil Nadu submitted that the cess in question in the instant case is a levy in respect of land for every fasli.
He urged that the words "a local cess at the rate of 45 naya paise on every rupee of land revenue payable" qualify the words "land revenue".
These words were only intended, according to Mr. Krishnamurthy Iyer, to mean cess payable.
It is, however, not possible to accept this submission, in view of the obligation indicated by the language of the provisions.
Cess is not on land, but on royalty which is included in the definition of 'land reve nue '.
None of the three lists of the 7th Schedule of the Constitution permits or authorises a State to impose tax on royalty.
This levy has been sought to be justified under Entry 45 of List II of the 7th Schedule.
Entry 45 deals with land revenue, which is a well known concept and has existed in India before the Constitution came into force.
In N.R. Reddy & Ors.
vs State of A.P. & Ors., [1965] 2 Andhra Law Times 297, Jaganmohan Reddy, J. as the learned Judge then was of the Andhra Pradesh High Court, while sitting in a division bench observed that no land revenue Act existed in the composite State of Madras nor had the ryotwari system ever been established by legislative enactment.
The learned Judge at p. 306 of the report observed that in the earlier days, sovereigns had in exercise of their prerogative right claimed a share of the produce of all cultivated land known as 'Rajabhagam ' or by any of the various other names, and had fixed their share or its commuted money value from time to time, according to their will and pleasure.
The learned Judge noted that as long as the share of the sovereign was being paid, the sovereign had no right to the possession of the lands, and the proprietorship of these lands was vested in the occupier, who could not be removed because another offered more.
The right of the sovereign to a share in the produce as observed by the Govt.
of Madras in 1856 "is not rent which consists of all surplus produce after paying the cost of cultivation and the profits of agricultural stock but land revenue only which ought, if possible, to be so lightly assessed as to leave a surplus or rent to the occu pier, when he in fact lets the land to others or retains it in his own hands.
" It was noted that the amount of tax that was levied before the Mohamedan Rule, amounted to 1/8th, 1/6th or 1/12th according to Manu depending on the differ ences in the soil and the labour necessary to cultivate it, and it even went up to 1/4th part, in times of urgent neces sity, as of war or invasion.
The later commentators, Yajnav alkya, Apastamba, Gautama, Baudhayana and Narada, have all asserted not only the right but the extent of the share.
When the British came to India they followed not only the precedent 707 of the previous Mohamedan Rulers who also claimed enormous land revenue, with this difference that what the Mohamedan Rulers claimed they could never fully realise, but what the British Rulers claimed they realised with vigour.
It is not necessary to refer in detail how land revenue developed in India after the advent of the British Rule.
There was an appeal from the said decision of the High Court of Andhra Pradesh and this Court dismissed the appeal in State of A. P. vs N.R. Reddy & Ors., ; It is, however, clear that over a period of centuries, land revenue in India has acquired a connot active meaning of share in the produce of land to which the King or the Govt.
is entitled to receive.
It was contended on behalf of the appellants that the impugned measure being a tax, not on share of the produce of the land but on royalty; royalty being the return received from the produce of the land, revenue was payable for winning minerals from the land.
In the premises it was contended that it cannot be attributable to Entry 45 of List II of the 7th Schedule, being not a land revenue.
It has, however, to be borne in mind that Explana tion to Section 115(1) was added and there was an amendment as we have noted before.
That very Explanation makes a distinction between land revenue as such and royalty which by amendment is deemed to be land revenue.
It is, therefore, recognised by the very force of that Explanation and the amendment thereto that the expression 'royalty ' in sections 115 & 116 of the Act cannot mean land revenue properly called or conventionally known, which is separate and dis tinct from royalty.
It was also contended on behalf of the respondent State of Tamil Nadu of Mr. Krishnamurthy Iyer that it could also be justified under Entry 49 of List II of the 7th Schedule as taxes on lands and buildings.
This, however, cannot be accepted.
In this connection, reference may be made to the decision of this Court in Raja Jagannath Baksh Singh vs The State of U.P. & Anr., ; where at p. 229 it was indicated that the expression 'lands ' in Entry 49 is wide enough to include agricultural land as well as non agricultural land.
Gajendragadkar, J. as the learned Chief Justice then was, observed that the cardinal rule of inter preting the words used by the Constitution in conferring legislative power was that these must receive the most liberal construction and if they are words of wide amplitude the construction must accord with it.
If general word was used, it must be so construed so as to extend to all ancil lary or subsidiary matters that can reasonably be included in it.
So construed, there could not be any doubt that the word 'land ' in Entry 48, List II of the 7th Schedule 708 includes all land whether agricultural or non agricultural.
Hence, since the impugned Act imposed tax on land and build ing which was within the competence of the State Legislature and its validity was beyond challenge but the Court observed that as there was Entry 46 in List H which refers to taxes on agricultural income, it is clear that agricultural income is not included in Entry 49.
If the State Legislature pur ports to impose a tax on agricultural income it would not be referable to Entry 49.
Mr. Krishnamurthy Iyer relied on the said principle.
But in the instant case, royalty being that which is payable on the extraction from the land and cess being an additional charge on that royalty, cannot by the parity of the same reasoning, be considered to be a tax on land.
But since it was not a tax on land and there is no Entry like Entry 46 in the instant situation like the posi tion before this Court in the aforesaid decision, enabling the State to impose tax on royalty in the instant situation, the State was incompetent to impose such a tax.
There is a clear distinction between tax directly on land and tax on income arising from land.
The aforesaid decision confirmed the above position.
In New Manek Chand Spinning & Weaving Mills Co. Ltd. & Ors., vs Municipal Corpn.
of the City of Allahabad & Ors.
, ; at 696, this Court after referring to the several decisions observed that Entry 49 of list II of the 7th Schedule only permitted levy of tax on land and building.
It did not permit the levy of tax on machinery contents in or situated on the building even though the machinery was there for the use of the building for a particular purpose.
Rule 7(2) of the Bombay Municipal Corporation Rules was held to be accordingly ultra vires in that case.
In S.C. Nawn vs W.T.O., Calcutta & Ors., ; this Court had occasion to consider this and upheld the validity of the Wealth Tax Act, 1957 on the ground that it fell within Entry 86 of List I and not Entry 49 of List II.
Construing the said Entry, this Court observed that Entry 49 list II contemplated a levy on land as a unit and the levy must be directly imposed on land and must bear a definite relationship to it.
Entry 49 of list Il was held to be more general in nature than Entry 86, list I, which was held to be more specific in nature and it is well settled that in the event of conflict between Entry 86, list I and Entry 49 of list II, Entry 86 prevails as per Article 246 of the Constitution.
In Asstt.
Commissioner of Urban Land Tax & Ors.
vs The Buckingham & Carnatic Co. Ltd. etc.; , at 278, this Court reiterated the principles laid down in S.C. Nawn 's case (supra) and held that entry 49 of list II was confined to a tax that was directly on land as a unit.
In Second Gift Tax Officer, Mangalore etc.
vs D.H. Nazareth etc.
; , at 200 it was held that a tax on the gift 709 of land is not a tax imposed directly on land but only on a particular user, namely, the transfer of land by way of gift.
In Union of India vs H.S. Dhillon, (supra), this Court approved the principle laid down in S.C. Nawn 's case as well as Nazareth 's case (supra).
In Bhagwan Dass Jain vs Union of India, ; at 816 this Court made a distinction between the levy on income from house property which would be an income tax, and the levy on house property itself which would be referable to entry 49 list II.
It is, there fore, not possible to accept Mr. Krishnamurthy Iyer 's sub mission and that a cess on royalty cannot possibly be said to be a tax or an impost on land.
Mr. Nariman is right that royalty which is indirectly connected with land, cannot be said to be a tax directly on land as a unit.
In this connec tion, reference may be made to the differentiation made to the different types of taxes for instance, one being profes sional tax and entertainment tax.
In the Western India Theatres Ltd. vs The Cantonment Board, Poona Cantonment, ; at 69 it was held that an entertain ment tax is dependent upon whether there would or would not be a show in a cinema house.
If there is no show, there is no tax.
It cannot be a tax on profession or calling.
Profes sional tax does not depend on the exercise of one 's profes sion but only concerns itself with the right to practice.
It appears that in the instant case also no tax can be levied or is leviable under the impugned Act if no mining activi ties are carried on.
Hence, it is manifest that it is nor related to land as a unit which is the only method of valua tion of land under entry 49 of list II, but is relatable to minerals extracted.
Royalty is payable on a proportion of the minerals extracted.
It may be mentioned that the Act does not use dead rent as a basis on which land is to be valued.
Hence, there cannot be any doubt that the impugned legislation in its pith and substance is a tax on royalty and not a tax on land.
On behalf of the State of Tamil Nadu, learned counsel Mr. Krishnamurthy Iyer sought to urge that it can also be sustained under entry 50, list II.
Entry 50 of list II of the 7th Schedule deals with taxes on mineral rights subject to limitation imposed by Parliament relating to mineral development.
Entry 23 of List II deals with regulation of mines and mineral development subject to the provisions of list I with respect to regulation and development under the control of the Union and entry 54 in list I deals with regulation of mines and minerals under the control of Union declared by the Parliament by law to be expedient in public interest.
Even though minerals are part of the State List they are treated separately, and therefore the principle that the specific excluded the general, must be applied.
See the observations of Waverly Jute Mills Co. Ltd. vs Raymon & Co. (1) Pvt. Ltd., [1963] 3 710 SCR 209 at 220, where it was held that land in entry 49 of list II cannot possibly include minerals.
In this connection, learned Attorney General appearing for the Union of India submitted before us that in order to sustain the levy, the power of the State Legislature has to be found within one or more of the entries of list II of the 7th Schedule.
The levy in question has to be either a tax or a fee or an impost.
If it is neither a tax nor a fee then it should be under one of the general entries under List II.
The expression 'land ' according to its legal significance has an indefinite extent both upward and downwards, the surface of the soil and would include not only the face of the earth but everything under it or over it.
See the obser vations in Anant Mills Co. Ltd. vs State of Gujarat & Ors., [19751 3 SCR 220 at 249.
The minerals which are under the earth, can in certain circumstances fall under the expres sion 'land ' but as tax on mineral rights is expressly cov ered by entry 50 of list II, if it is brought under the head taxes under entry 49 of list II, it would render entry 50 of list II redundant.
Learned Attorney General is right in contending that entries should not be so construed as to make any one entry redundant.
It was further argued that even in pith and substance the tax fell to entry 50 of list II, it would be controlled by a legislation under entry 54 of list I.
On the other hand, learned Attorney General submitted that if it be held to be a fee, then the source of power of the state legislature is under entry 66 read with entry 23 of list II.
Here also the extent to which regulation of mines and mineral development under the control of the Union is declared by Parliament by law to be expedient in the public interest, to the extent such legislation makes provi sions will denude the State Legislature of its power to override the provision under entry 50 of list II.
In view of the Parliamentary legislation under entry 54, list I and the declaration made under section 2 and provisions of section 9 of the Act, the State Legislature would be overridden to that extent.
section 2 declares that it is expedient in the public interest that Union should take under its control the regu lation of mines and the development of minerals to the extent provided therein.
In this connection, reference may be made to the decision of this Court in The Hingir Rampur Coal Co. Ltd. & Ors.
vs The State of Orissa & Ors., ; See also the observations in State of Orissa vs M.A. TuIloch & Co., ; and Baijnath Kedia vs State of Bihar & Ors., ; at 111 115.
Our attention was drawn to the decision of the division bench 711 judgment of the High Court of Mysore in M/s. Laxminarayana, Mining Co., Bangalore vs Taluk Der.
Board.
, AIR There speaking for the court, one of us, Venkataramiah J of the Mysore High Court, as the learned Chief Justice then was, observed that a combined reading of entries 23 and 50 in list II and entry 54 of list I, establishes that as long as the Parliament does not make any law in exercise of its power under entry 54, the powers of the State Legisla ture in entries 23 & 50 would be exercisable by the State Legislature.
But when once the Parliament makes a declara tion by law that it is expedient in the public interest to make regulation of mines and minerals development under the control of the Union, to the extent to which such regulation and development is undertaken by the law made by the Parlia ment, the power of the State Legislature under entries 23 & 50 of List II are denuded.
There the court was concerned with the Mysore Village Panchayats & Local Boards Act, 1959.
Thus, it was held that it could not, therefore, be said that even after passing of the Central Act, the state legislature by enacting section 143 of the Act intended to confer power on the Taluk Board to levy tax on the mining activities carried on by the persons holding mineral concessions.
It followed that the levy of tax on mining by the Board as per the impugned notification was unauthorised and liable to be set aside.
At p. 306 of the said report, it was held that royal ty under section 9 of the Mines and Minerals Act was really a tax.
To the similar effects are the observations of the High Court of Patna in M. Lal & Ors.
vs The State of Bihar & Ors.
, AIR 1965 Patna 491 at 494.
Mr. Krishnamurthy Iyer, however, referred to the decision of this Court in H.R.S. Murthy 's case (supra).
There under the terms of a mining lease the lessee worked the mines and won iron ores in a tract of land in a village in Chittor district and bound himself to pay a dead rent if he used the leased land for the extraction of iron ore, to pay a royalty on iron ore if it were used for extraction of iron and in addition to pay a surface rent in respect of the surface area occupied or used.
In the said decision the legislative competence of sections 78 & 79 of the Madras District Boards Act was upheld by which land cess was made payable on the basis of royalty.
This Court proceeded on the basis that other cess related to land and would therefore be covered by entry 49 of list II.
It was held that land cess paid on royalty has a direct relation to the land and only a remote relation with mining.
This, with respect, seems to be not a correct approach.
It was further observed that it was not necessary to consider the meaning of the expression 'tax on mineral right ' follow ing under Entry 50 of List II in as much as according to this Court, Parliament has not made any tax on mineral rights.
This is not a correct basis.
712 In H.R.S. Murthy 's case (supra), at p. 676 of the re port, it was observed by this Court as follows: "When a question arises as to the precise head of legislative power under which a taxing statute has been passed, the subject for enquiry is what in truth and substance is the nature of the tax.
No doubt, in a sense, but in a very remote sense, it has relationship to mining as also to the mineral won from the mine under a contract by which royalty is payable on the quantity of mineral extracted.
But that, does not stamp it as a tax on either the extraction of the mineral or on the miner al right.
It is unnecessary for the purpose of this case to examine the question as to what exactly is a tax on mineral rights seeing that such a tax is not leviable by Parliament but only by the State and the sole limitation on the State 's power to levy the tax is that it must not interfere with a law made by Parlia ment as regards mineral development.
Our attention was not invited to the provision of any such law created by Parliament.
In the context of sections 78 and 79 and the scheme of those provisions it is clear that the land cess is in truth a "tax on lands" within Entry 49 of the State List.
" It seems, therefore, that attention of the Court was not invited to the provisions of Mines and Minerals (Development & Regulation) Act, 1957 and section 9 thereof.
section 9(3) of the Act in terms states that royalties payable under the 2nd Sched ule of the Act shall not be enhanced more than once during a period of 4 years.
It is, therefore, a clear bar on the state legislature taxing royalty so as to in effect amend 2nd Schedule of the Central Act.
In the premises, it cannot be right to say that tax on royalty can be a tax on land, and even if it is a tax, if it falls within entry 50 will be ultra vires the State legislature power in view of section 9(3) of the Central Act.
In Hingir Rampur Coal Co. Ltd. vs The State of Orissa (supra), Wanchoo J. in his dissenting judg ment has stated that a tax on mineral rights being different from a duty of excise, pertains only to a tax that is levi able for the grant of the right to extract minerals, and is not a tax on minerals as well.
On that basis, a tax on royalty would not be a tax on mineral rights and would therefore in any event be outside the competence of the state legislature.
The Rajasthan, Punjab, Gujarat and Orissa High Courts have held that royalty is not a tax.
Bherulal vs State of Rajasthan & Anr., AIR ; Dr. S.S. Sharma & Anr.
vs State of 713 Pb.
& Ors., AIR at 84; Saurashtra Cement & Chemicals India Ltd. vs Union of India & Anr., AIR 1979 Guj.
180 at 184 and L.N. Agarwalla & Ors.
vs State of Orissa & Ors.
, AIR 1983 Orissa 210.
It was contended by Mr. Krishnamurthy Iyer that the State has a right to tax minerals.
It was further contended that if tax is levied, it will not be irrational to corre late it to the value of the property and to make some kind of annual value basis of tax without intending to tax the income.
In view of the provisions of the Act, as noted hereinbefore, this submission cannot be accepted.
Mr. Krish namurthy Iyer also further sought to urge that in entry 50 of list II, there is no limitation to the taxing power of the State.
In view of the principles mentioned hereinbefore and the expressed provisions of section 9(2) of the Mines & Minerals (Regulation & Development) Act, 1957, this submis sion cannot be accepted.
This field is fully covered by the Central legislation.
In any event, royalty is directly relatable only to the minerals extracted and on the principle that the general provision is excluded by the special one, royalty would be relatable to entries 23 & 50 of list II, and not entry 49 of list II.
But as the fee is covered by the Central power under entry 23 or entry 50 of list II, the impugned legisla tion cannot be upheld.
Our attention was drawn to a judgment of the High Court of Madhya Pradesh in Miscellaneous Peti tion No. 410/83 M/s Hiralal Rameshwar Prasad & Ors.
vs The State of Madhya Pradesh & Ors., which was delivered on 28th March, 1986 by a Division Bench of the High Court.
J.S. Verma, Acting Chief Justice, as His Lordship then was, held that development cess by section 9 of the Madhya Pradesh Karadhan Adhiniyam, 1982 is ultra vires.
It is not necessary in the view taken by us, and further in view that the said decision is under appeal in this Court, to examine it in detail.
In the aforesaid view of the matter, we are of the opinion that royalty is a tax, and as such a cess on royalty being a tax on royalty, is beyond the competence of the State Legislature because section 9 of the Central Act covers the field and the State Legislature is denuded of its competence under entry 23 of list II.
In any event, we are of the opinion that cess on royalty cannot be sustained under entry 49 of list II as being a tax on land.
Royalty on mineral rights is not a tax on land but a payment for the user of land.
Mr. Krishnamurthy Iyer, however, submitted that in any event, the decision in H.R.S. Murthy 's case (supra) was the decision of the Constitution Bench of this Court.
Cess has been realised on that basis 714 for the organisation of village and town panchayats and comprehensive programme of measures had been framed under the National Extension Service Scheme to which our attention was drawn.
Mr. Krishnamurthy Iyer further submitted that the Directive Principle of State Policy embodied in the Consti tution enjoined that the State should take steps to organise village panchayats and endow them with power and authority as may be necessary to enable them to function as units of self Government and as the amounts have been realised on that basis, if at all, we should declare the said cess on royalty to be ultra vires prospectively.
In other words, the amounts that have been collected by virtue of the said provisions, should not be declared to be illegal retrospec tively and the State made liable to refund the same.
We see good deal of substance in this submission.
After all, there was a decision of this Court in H.R.S. Murthy 's case (supra) and amounts have been collected on the basis that the said decision was the correct position.
We are, therefore, of the opinion that we will be justified in declaring the levy of the said cess to be ultra vires the power of the State Legislature prospectively only.
In that view of the matter, the appeals must, therefore, be allowed and the writ petitions also succeed to the extent indicated above.
We declare that the said cess by the Act under section 115 is ultra vires and the respondent State of Tamil Nadu is restrained from enforcing the same any fur ther.
But the respondents will not be liable for any refund of cess already paid or collected.
The appeals are disposed of accordingly.
The special leave petitions and writ peti tions are also disposed of in those terms.
In the facts and the circumstances of the case, the parties will pay and bear their own costs.
OZA, J.
While I agree with the conclusions reached by my learned brother Hon ' Mukharji, J. I have my own reasons for the same.
The main argument in favour of this levy imposed by the State Legislature is on the basis of Entry 49 in List II of the Seventh Schedule conferring jurisdiction on the State Legislature.
The question therefore to be determined is whether the jurisdiction of the State Legislature under Item 49 of List II could be so exercised to impose a cess on the royality prescribed under Section 9 of the .
The entries which are relevant for the purpose of deter mining this questions are: Entry 54 List I reads: 715 "Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest.
" Entry 23 List II reads: "Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union.
" Entry 49 List II reads: "Taxes on lands and buildings.
" Entry 50 List II reads: "Taxes on mineral rights subject to any limi tations imposed by Parliament by law relating to mineral development.
" The language of Entries 23 and 50 in List I1 clearly sub jects the authority or jurisdiction on the State Legislature to any enactment made by the Parliament.
Entry 23 talks of regulation and Entry 50 talks of taxes on mineral rights.
It therefore could not be disputed that if the cess imposed under section 115 of the Madras Village Panchayat Act is a cess or tax on mineral rights then that jurisdiction could be exercised by the State Legislature subject to the law enacted by the Parliament.
The Parliament in Section 9(1) of the has fixed the limits of royality on the mining rights.
It was therefore contended on behalf of the State that in fact what is imposed under Section 115 is not a cess on the mining rights or on royality but is a tax on land which clearly falls within the authority of the State legislature in Entry 49 of List II.
Section 9 of the reads: "9(1) The holder of a mining lease granted before the commencement of this Act shall, notwithstanding anything contained in the instrument of lease or in any law in force at such commencement, pay royalty in respect of any mineral removed or consumed by him or by his gent, manager, employee, contractor or sub lessee from the leased area 716 after such commencement, at the rate for the time being specified in the Second Schedule in respect of that mineral.
(2) The holder of a mining lease granted on or after the commencement of this Act shall pay royalty in respect of any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub lessee from the leased area at the rate for the time being specified in the Second Schedule in respect of that mineral.
(2A) The holder of a mining lease, whether granted before or after the commence of the Mines and Minerals (Regulation and Develop ment) Amendment Act, 1972 shall not be liable to pay any royalty in respect of any coal consumed by a workman engaged in a colliery provided that such consumption by the workmen does not exceed one third of a tonne per month.
(3) The Central Government may, by notifica tion in the Official Gazette, amend the Second Schedule so as to enhance or reduce the rate at which royalty shall be payable in respect of any mineral with effect from such date as may be specified in the notification.
Provided that the Central Government shall not enhance the rate of royalty in respect of any mineral more than once during any period of three years.
" It is clear that by this Act alongwith Schedule limits on royality has been fixed and the authority has been given to Parliament alone to vary it and that too not more than once in a period of three years.
Admittedly royality as not based on the area of land under mining but per unit of minerals extracted.
Section 115 of the Madras Village Panchayat Act reads as under: "(1) There shall not be levied in every pan chayat development block, a local cess at the rate of 45 naye paise on every rupee of land revenue payable to the Government in respect of any land for every Fasli.
Explanation: In this Section and in section 116, 'land revenue ' means public revenue due on land and includes water cess payable to the Government for water supplied 717 or used for the irrigation of land, royalty, lease amount for other sum payable to the Government in respect of land held direct from the Government on lease or licence, but does not include any other cess or the surcharge payable under Section 116, provided that land revenue remitted shall not be deemed to be land revenue for the purpose of this Section.
(2) The local cess payable under this Sub section (1) shall be deemed to be public revenue due on the lands in respect of which a person is liable to pay local cess and all the said lands, the buildings upon the said lands and their products shall be regarded as the security for the local cess.
(3) The provisions of the Madras Revenue Recovery Act, 1864 (Madras Act II of 1864) shall apply to the payment and recovery of the local cess payable under this Act just as they apply to the payment and recovery of the revenue upon the lands in respect of which the local cess under this act is payable.
(4)(a) Out of the process of the local cess so collected in every panchayat development block, a sum representing four ninths of the proceeds shall be credited to the Panchayat Union (Education) Fund.
(b) Out of the proceeds of the local cess collected in every panchayat town in a pan chayat development block, a sum representing two ninths of the said proceeds shall be cred ited to the town panchayat fund.
(c) Out of the balance of the local cess credited in the panchayat development block, such percentage as the panchayat union council may fix shall be credited to the village panchayat fund, and the percentage shall be fixed so as to secure as nearly as may be that the total income derived by all the village panchayats in the panchayat union does not fall short of an amount calculated at 20 naye paise for each individual of the village population in the panchayat union.
(d) The balance of the proceeds of the local cess collected in the panchayat develop ment block shall be cre 718 dited to the funds of the panchayat union council.
" The explanation to sub clause I is the subject matter of controversy in this case.
Sub clause I provides for levy of 45 naye paise for every rupee of land revenue payable to the Government in the explanation a fiction is created thereby even the royalty payable have been included within the definition of "land revenue".
As it provides "royalty, lease amount or any other sum payable to the Government in respect of land.
" This phraseology has been incorporated by an amendment in 1964 by the Madras Village Panchayat Amendment Act, 1964 Section 13 wherein the explanation to Section 115 was substituted and substituted retrospectively wherein this royalty has also been included in the definition of 'land revenue ' and it is on this ground that it was mainly con tended that land revenue being a tax on land is within the authority of the State Legislature under Item 49 of List II and therefore the cess which is a tax on land revenue itself or an imposition on the land revenue and hence could not be anything else but a tax falling within the ambit of tax on land as provided by entry 49 List II and it was therefore contended that it would not fall within the ambit of entry 50 List II as if it falls within the ambit of entry 50 of List II, it would be beyond the authority of the State legislature as by passing the Parliament has denuded the State Legislature of its authority to levy any tax on mining rights.
Whether royality is a tax is not very material for the purpose of determination of this question in this case.
It is admitted that royality is charged on the basis of per unit of minerals extracted.
It is no doubt true that mineral is extracted from the land and is available, but it could only be extracted if there are three things: (1) Land from which mineral could be extracted.
(2) Capital for providing machinery, instruments and other requirements.
(3) Labour It is therefore clear that unit of charge of royalty is not only land but land + Labour + Capital.
It is therefore clear that if royalty is a tax or an imposition or a levy, it is not on land alone but it is a levy or a tax on mineral (land), labour and capital employed in extraction of the mineral.
It therefore is clear that royalty if is imposed by the Parlia 719 ment it could only be a tax not only on land but no these three things stated above.
It is not in dispute that the cess which the Madras Village Panchayat Act proposes to levy is nothing but an additional tax and originally it was levied only on land revenue, apparently land revenue would fall within the scope of entry 49 but it could not be doubted that royalty which is a levy or tax on the extracted mineral is not a tax or a levy on land alone and if cess is charged on the royalty it could not be said to be a levy or tax on land and therefore it could not be upheld as imposed in exercise of jurisdic tion under Entry 49 List II by the State Legislature.
Thus it is clear that by introducing this explanation to Section 115 clause (1) widening the meaning of word 'land revenue ' for the purposes of Section 115 and 116.
When the Legislature included Royalty, it went beyond its jurisdic tion under entry 49 List II and therefore clearly is without the authority of law.
But this also may lead to an interest ing situation.
This cess levied under Section 115 of the Madras Village Panchayat Act is levied for purposes indicat ed in the scheme of the Act and it was intended to be levied on all the lands falling within the area but as this cess on royalty is without the authority the result will be that the cess is levied so far as lands other than the lands in which mines are situated are concerned but lands where mines are situated this levy of cess is not in accordance with that law.
This anomaly could have been averted if the Legislature in this explanation had used words 'surface rent ' in place of royalty.
Even if the lands where mines are situated and which are subject to licence and mining leases even for those lands there is a charge on the basis of the surface of the land which is sometimes described as surface rent or sometimes also as 'dead rent '.
It could not be doubted that if such a surface rent or dead rent is a charge or an impo sition on the land only and therefore will clearly fall within the purview of entry 49 List H and if a cess is levied on that it will also be justified as tax on land falling within the purview of entry 49 and it will also be uniform as this cess would be levied in respect of the lands irrespective of the fact as to whether the land is one where a mine is situated or land which is only used for other purposes for which land revenue is chargeable.
R.S.S. Appeal allowed.
| IN-Abs | The appellant company used to manufacture cement and was granted mining lease for limestone and kankar by the Govern ment of Tamil Nadu in accordance with the Mineral Concession Rules, 1960.
The royalty was fixed under the Mines and Minerals (Regulation & Development) Act, 1957 which is a Central Act by which the control of mines and minerals had been taken over by the Central Government for the regulation and development of minerals.
Sub section 1 of section 115 of the Madras Panchayats Act, 1958 enjoins that there shall be levied in every pan chayat development block, a local cess at the rate of 45 paise on every rupee of land revenue payable to the Govern ment in respect of any land for every Fasli.
An explanation to the said section was added, and was deemed always to have been incorporated by the Tamil Nadu Panchayats (Amendment and Miscellaneous Provisions) Act, 1964.
In this explanation a fiction was created whereby even the royalty payable had been included within the definition of "land revenue".
The appellant filed a writ petition in the High Court challenging the competence of the State legislature to levy cess on royalty.
A learned Single Judge dismissed the writ petition holding that the cess levied 693 under section 115 of the Madras panchayats Act was a tax on land and, as such, fell under Entry 49 of the State List of Schedule VII of the Constitution.
The Division Bench dis missed the appellant 's appeal and held that local cess authorised by section 115 was not land revenue but was a charge on the land itself, and section 115 merely quantified the basis of the quantum of land revenue.
The learned Single Judge, as well as the Division Bench, relied on the decision of this Court in H.R.S. Murthy vs Collector of Chittoor, ; Before this Court, it was contended on behalf of the appellant that the levy of cess on royalty in this case was nothing but a tax on royalty and was therefore ultra vires the State legislature.
On the other hand, it was contended that the cess in the present case was a levy in respect of land and could be justified or sustained either under entry 49, 50 or 45 of List II of the 7th Schedule to the Constitu tion.
It was further submitted that the cess having been realised on the basis of the decision of this Court in "H.R.S. Murthy" case, if at all, the Court shall declare the said cess on royalty to be ultra vires prospectively.
Allowing the appeal, this Court, HELD: (E.S. Venkataramiah, C J, Sabyasachi Mukharji, Ranganath Misra, B.C. Ray, K.N. Singh and section Natarajan, JJ. per Sabyasachi Mukharji, J.) (1) Courts of law are enjoined to gather the meaning of the Constitution from the language used, and although one should interpret the words of the Constitution on the same principles of interpretation as one applied to an ordinary law but these very principles of interpretation compel one to take into account the nature and scope of the Act which requires interpretation.
It has to be remembered that it is a Constitution that requires interpretation.
Constitution is the mechanism under which the laws are to be made and not merely an Act which declares what the law is to be.
[704B C] The Attorney General for the State of New South Wales vs The Brewery Employees Union of New South Wales; , , referred to.
(2) A Constitution must not be construed in any narrow or pedantic sense, and construction most beneficial to the widest possible amplitude of its powers, must be adopted.
A broad and liberal spirit should inspire those whose duty it is to interpret the Constitution, but 694 they are not free to stretch or pervert the language of the enactment in the interest of any legal or constitutional theory, or even for the purposes of supplying omissions or correcting supposed errors.
[704D E F] In re. ' C.P. Berar Sales of Motor Spirit & Lubricants Taxation Act, 1938, [1939] FCR p. 1 and James vs Common wealth of Australia, , referred to.
(3) It is well settled now that the various entries in the three lists are not powers but fields of legislation.
The power to legislate is given by Article 246 and other articles of the Constitution.
[704G] Calcutta Gas Co. vs State of West Bengal, [1962] Suppl.
3 SCR 1, referred to.
(4) It is well settled that widest amplitude should be given to the language of these entries, but some of these entries in different lists or in the same list may overlap and sometimes may also appear to be in direct conflict with each other.
Then, it is the duty of the court to find out its true intent and purpose and to examine a particular legislation in its pith and substance to determine whether it fits in one or the other of the lists.
Each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it.
[705A B & D] H.R. Banthia & Ors. etc.
vs Union of India & Ors.
, ; ; Union of India vs H.S. Dhillon, ; and D.C. Rataria vs Bhuwalka Brothers Ltd., ; , referred to.
(5) It is clear that over a period of centuries, land revenue in India has acquired a cannot active meaning of share in the produce of land to which the King or the Gov ernment is entitled to receive.
[707B] N.R. Reddy & Ors.
vs State of A.P., [1965] 2 Andhra Law Times 297 and State ofA.P.v.
N.R. Reddy & Ors., ; , referred to.
(6) There is a clear distinction between tax directly on land and tax on income arising from land.
[708C] Raja Jagannath Baksh Singh vs The State of U.P. & Anr.
, ; , referred to.
695 (7) Explanation to section 115(1) itself makes a dis tinction between land revenue as such and royalty which by amendment is deemed to be land revenue.
It is, therefore, recognised by the very force of that explanation and the amendment thereto that the expression 'royalty ' in sections 115 & 116 of the Act cannot mean land revenue property called or conventionally known, which is separate and dis tinct from royalty.
[707D E] (8) In the instant case, cess is not on land, but on royalty, which is included in the definition of 'land reve nue ', None of the three lists of the 7th Schedule of the Constitution permits or authorises a State to impose tax on royalty.
(9) Royalty which is indirectly connected with land, cannot be said to be a tax directly on land as a unit.
Royalty is payable on a proportion of the mineral extracted.
The Act does not use dead rent as a basis on which land is to be valued.
Hence, there cannot be any doubt that the impugned legislation in its pith and substance is a tax on royalty and not a tax on land.
[709E] New Manek Chand Spinning & Weaving Mills Co. Ltd. & Ors.
vs Municipal Corporation of the City of Allahabad & Ors.
, ; ; S.C. Nawn vs W.T.O. Calcutta & Ors., ; ; Asstt.
Commissioner of Urban Land Tax & Ors.
vs The Buckingham & Carnatic Co. Ltd. etc.; , ; Second Gift 'Fax Officer, Mangalore etc.
vs D.H. Nazareth etc.
; , ; Bhagwan Dass Jain vs Union of India, ; and The Western India Theatres Ltd. vs The Cantonment Board, Poona Cantonment, ; , referred to.
(10) Royalty is directly relatable only to the minerals extracted and on the principle that the general provision is excluded by the special one, royalty would be relatable to entries 23 & 50 of List II, and not entry 49 of List II.
[713D] (11) Royalty is a tax, and as such a cess on royalty being a tax on royalty, is beyond the competence of the State Legislature because section 9 of the Central Act covers the field and the State Legislature is denuded of its competence under entry 23 of List II.
In any event, cess on royalty cannot be sustained under entry 49 of List II as being a tax on land.
Royalty on mineral rights is not a tax on land but a payment for the user of land.
[713F G] 696 Waverly Jute Mills Co. Ltd. vs Raymon & Co. (1) Pvt. Ltd.; , ; Anant Mills Co. Ltd. vs State of Gujarat & Ors., ; The Hingir Rampur Coal Co. Ltd. & Ors.
vs The State of Orissa & Ors., ; ; State of Orissa vs M.A. Tulloch & Co., ; ; Baijnath Kedia vs State of Bihar & Ors., ; M/s. Laxminarayana Mining Co. Bangalore vs Taluk Dev Board, AIR ; M. Lal & Ors.
vs The State of Bihar & Ors.
, AIR 1965 Patna 491; Bherulal vs State of Rajasthan, AIR ; Dr. S.S. Sharma & Anr.
vs State of Punjab & Ors., AIR ; Saurashtra Cement & Chemi cals India Ltd. vs Union of India & Anr., ; L.N. Agarwalla & Ors.
vs State of Orissa, AIR 1983 Orissa 210 and M/s Hira lal Rameshwar Prasad & Ors.
vs The State of Madhya Pradesh & Ors., M.P. High Court Misc.
Petition No. 410/83, referred to.
H.R.S. Murthy vs Collector of Chittoor & Anr., ; , overruled.
(12) The amounts of cess have been collected on the basis of the decision of this Court in H.R.S. Murthy 's case.
The Court is therefore justified in declaring the levy of the said cess under section 115 to be ultra vires the power of the State legislature prospectively only.
The respondents will not be liable for any refund of cess already paid or collected.
[714C D & E] Per G.L. Oza, J. (1) Sub clause (1) of Section 115 provides for levy of 45 naya paise for every rupee of land revenue payable to the Government.
In the explanation a fiction is created whereby even the royalty payable has been included within the defi nition of 'land revenue '.
[718A] (2) The language of Entries 23 and 50 in List II clearly subjects the authority or jurisdiction on the State Legisla ture to any enactment made by the Parliament.
Entry 23 talks of regulation and Entry 50 talks of taxes on mineral rights.
It therefore could not be disputed that if the cess imposed under section 115 of the Madras Panchayats Act is a cess or tax on mineral rights then that jurisdiction could be exer cised by the State Legislature subject to the law enacted by the Parliament.
[715D E] (3) Unit of charge of royalty is not only land but land + labour + capital.
It is therefore clear that if royalty is a tax or an imposition or a levy, it is not on land alone but it is a levy or a tax on mineral (land), 697 labour and capital employed in extraction of the mineral.
It therefore is clear that royalty if it is imposed by the Parliament it could only be a tax not only on land but on the three things stated above.
[718H; 719A] (4) When the Legislature included royalty, it went beyond its jurisdiction under Entry 49 of List II and there fore clearly is without the authority of law.
[719D] (5) This may lead to an interesting situation.
As this cess on royalty is without the authority, the result will be that the cess is levied so far as lands other than the lands in which mines are situated are concerned but lands where mines are situated this levy of cess is not in accordance with the law.
This anamoly could have been averted if the Legislature had used words 'surface rent ' in place of royal ty.
Even if the lands where mines are situated and which are subject to licence and mining leases, even for those lands there is a charge on the basis of the surface of the land which is Sometimes described as surface rent or sometimes also as 'dead rent '.
[719E F]
|
ivil Appeal No. 4494 of 1989.
From the Judgment and Order dated 31.5.88 of the Central Administrative Tribunal, Allahabad in O.A. No. 427/1986.
B. Dutta, ASG.
(N.P.), C.V. Subba Rao, A. Subba Rao and P. Parmeshwaran for the Appellants.
Harbans Lal and A.K. Mahajan for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
Special leave is granted.
Heard learned counsel for both parties.
The respondents were holding the posts of Junior Scien tific Officers (Group 'B ' posts) in the Defence Research & Development Service.
They were promoted to the posts of Scientists 'B ' with effect from October 16, 1985 or from the date they would actually assume charge of the posts.
The respondents filed an application before the Central Adminis trative Tribunal, Allahabad, claiming that they should have been promoted to the posts of Scientists 'B ' with effect from July 1, 1984.
The Tribunal rejected the prayer of the respondents that their promotions should have been made with effect from July 1, 1984.
The Tribunal, however, directed that their promotions should be with effect from the date on which the promotional posts were created.
753 The short question involved in this appeal is whether the Tribunal was justified in directing that the respondents ' promotion should be with effect from the date the promotion al posts were created.
Under rule 8(1)(a) of the Defence Research & Development Service Rules, 1970, hereinafter referred to as 'the Rules ', all those who have been recruited before the promulgation of the Rules as Junior Scientific Officers in the Defence Research & Development Organisation on regular basis and possess the educational qualifications and experience as laid down for direct recruits, shall be eligible, till they are wasted out, for promotion to the post of Scientist 'B ' up to 50 per cent of the vacancies in the grade.
Under the first proviso to rule 8(1)(a), the total number of posts filled in that grade shall at no time exceed 50 per cent of the total sanctioned strength for the grade on the date of promulgation of the Rules, and that this concession shall also be admissible to those persons who are appointed or promoted as Junior Scientific Officers on regular basis on or after the promulgation of the Rules.
There were a total number of 512 posts available in the grade of Scientists 'B ' in 1979.1n view of rule 8(1)(a) of the Rules, the Junior Scientific Officers were entitled to be promoted to the 50 per cent of these posts, that is to say to 256 posts.
These 256 posts were filled up by promo tion of the Junior Scientific Officers between the period 1979 and 1983.
According to the respondents, the posts of Scientists 'B ' to which they have been promoted with effect from October 16, 1985, were created between 1984 and 1985 and that, accordingly, the respondents should have been promoted to these posts with effect from 1st July, 1984.
It was the contention of the respondents that on previous occasions up to the year 1983, promotions were given effect from 1st July of the year in which the promotions were granted.
It has been already noticed that the Tribunal has overruled the said contention of the respondents and has directed that their promotions should be with effect from the date the said promotional posts of Scientists 'B ' were created.
At the same time, it has been found by the Tribunal that the flexible complementing scheme or SITU promotions, as provided in rule 8(2)(f) of the Rules, were not available to the Junior Scientific Officers.
It is not disputed that the promotions of the Junior Scientific Officers to the posts of Scientists 'B ' are vacancy based and such promo tions are granted after the assessment by the Assessment Board as provided in the Rules.
It has also been observed by the Tribunal that normally the promotions will take effect from the date of the order granting such promotions.
The only ground on which the Tri 754 bunal has directed that the promotions of the respondents should take effect from the date the posts of Scientists 'B ' were created, is that up to 1983 such promotions were given effect from 1st July of the year in which the promotions were granted.
There is no statutory provision that the promotion to the post of Scientist 'B ' should take effect from 1st July of the year in which the promotion is granted.
It may be that, rightly or wrongly, for some reason or other, the promotions were granted from 1st July, but we do not find any justifying reason for the direction given by the Tribu nal that the promotions of the respondents to the posts of Scientists 'B ' should be with effect from the date of the creation of these promotional posts.
We do not know of any law or any rule under which a promotion is to be effective from the date of creation of the promotional post.
After a post falls vacant for any reason whatsoever, a promotion to that post should be from the date the promotion is granted and not from the date on which such post falls vacant.
In the same way when additional posts are created, promotions to those posts can be granted only after the Assessment Board has met and made its recommendations for promotions being granted.
If on the contrary, promotions are directed to become effective from the date of the creation of addi tional posts, then it would have the effect of giving promo tions even before the Assessment Board has met and assessed the suitability of the candidates for promotion.
In the circumstances, it is difficult to sustain the judgment of the Tribunal.
For the reasons aforesaid, we set aside the judgment of the Tribunal directing that the promotions of the respond ents should be not from the date of the orders of promotion, but from the date the posts were created.
The orders of the appellants promoting the respondents with effect from Octo ber 16, 1985 will stand.
The appeal is allowed.
There will, however, be no order as to costs.
N .P.V.
Appeal allowed.
| IN-Abs | Under Rule 8(1)(a) of the Defence Research & Development Service Rules, 1970, Junior Scientific Officers in the Defence Research & Development Organisation were eligible for promotion to the posts of Scientists 'B ' upto 50 per cent of the vacancies in the grade.
The respondents who were holding the posts of Junior Scientific Officers, and were promoted to the posts of Scientists 'B ' with effect from October 16, 1985 or from the date they actually assumed charge of the posts filed an application before the Central Administrative Tribunal, contending that since the posts to which they had been promoted were created between 1984 and 1985, they should have been promoted with effect from July 1984, as was done on previous occasions upto 1983, when promotions were ef fected from 1st July of the year in which promotions took place.
The Tribunal rejected the prayer of the respondents and directed that the promotions should be effective from the date on which the promotional posts were created.
The Union of India being aggrieved appealed to the Court.
On the question whether the Tribunal was justified in directing the promotions to be effective from the date the promotional posts were created.
Allowing the appeal, this Court, HELD: After a post fails vacant for any reason whatsoev er, a promotion to that post should be from the date the promotion is granted and not from the date on which such post falls vacant.
Similarly, when additional posts are created, promotions to those posts can be granted 752 only after the Assessment Board has met and made its recom mendations for promotions being granted.
If, however, promo tions are directed to become effective from the date of creation of additional posts, then it would have the effect of giving promotions even before the Assessment Board has met and assessed the suitability of the candidates for promotion.
[754C E] In the instant case, there is no statutory provision that the promotion to the post of Scientist 'B ' should take effect from 1st July of the year in which the promotion is granted.
There is also no law or rule under which a promo tion is effective from the date of creation of the promo tional posts.
The Tribunal was, therefore, in error in holding that the promotions should be effective from the date the promotional posts were created.
The orders of the appellants promoting respondents from October 16, 1985 will stand.
[754B C & F]
|
ivil Appeal No. 4552 of 1989.
From the Judgment and Order dated 23.12.
1988 of the Rajasthan High Court in C.W.P. No. 13 of 1987.
G.L. Sanghi and Y.P. Rao for the Appellant.
C.S. Vaidyanathan, S.R. Setia and K.V. Mohan for the Respondents.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
Special leave granted.
Having heard counsel on both sides and having perused the material on record, we are of opinion that the matter requires reconsideration by the Provident Fund Commissioner.
The Food Corporation of India has depots located at various places in Rajasthan for handling storing and trans porting food grains and other articles.
It has appointed contractors for execution of such works and the contractors in turn engaged some workers.
In respect of such workers, the Provident Fund Commissioner called upon the Corporation to deposit contribution payable under the Employees, Provi dent Fund Act and the scheme framed thereunder.
When there was non compliance, the Commissioner made an order under section 7A of the said Act determining amount payable by the Corporation.
Being aggrieved by that determination, the Corporation moved the 757 High Court for relief under article 226 of the Constitution.
The High Court has dismissed the petition.
Hence the Corpo ration has appealed to this Court.
The grievance complained of by the Corporation is that it was denied of reasonable opportunity to produce material in proof of identification of the workers in respect of whom the contribution was payable.
It is urged that the contrac tors are in possession of the relevant lists and the Commis sioner has not even given notice to contractors nor made them parties to the proceedings in spite of repeated re quests made by the Corporation.
Counsel for the Union of Workmen, however, contended that under the provisions of the the Corporation being the principal employer has to maintain list of workers; that it has failed to produce such list and, therefore, it cannot throw the burden on the contrac tors to prove the case.
We have carefully perused the Commissioner 's order and also the order of the High Court.
The total amount ordered to be payable comes to about Rs.22,48,000 in respect of the employees of depots namely: Udaipur, Jaipur, Ajmer, Badmer and Sawai Madhopur.
The Commissioner has also directed the Divisional Officer, Jaipur to deposit the Provident Fund Contribution i.e. Rs. 18,72,194 to the Fund being maintained by the trustees of the establishment.
It is indeed a large amount for the determination of which the Commissioner has only depended upon the lists furnished by the workers, Union.
It is no doubt true that the employer and contractors are both liable to maintain registers in respect of the workers employed.
But the Corporation seems to have some problems in collating the lists of all workers engaged in depots scattered at different places.
It has requested the Commissioner to summon the contractors to produce the re spective lists of workers engaged by them.
The Commissioner did not summon the Contractors nor the lists maintained by them.
He has stated that the Corporation has failed to produce the evidence.
The question, in our opinion, is not whether one has failed to produce evidence.
The question is whether the Commissioner who is the statutory authority has exercised powers vested in him to collect the relevant evidence before determining the amount payable under the said Act.
It is of importance to remember that the Commissioner while conducting an inquiry under section (7A) has the same powers as are 758 vested in a Court under the Code of Civil Procedure for trying a suit.
The section reads as follows: "section 7(A) Determination of Moneys due from Employer (1) The Central Provident Fund Commissioner, any Deputy Provident Commissioner or any Regional Provident Fund Commissioner may, by order determine the amount due from any em ployer under any provision of this Act (the scheme or the Family Pension Scheme or the Insurance Scheme as the case may be) and for this purpose may conduct such inquiry as he may deem necessary.
(2) The Officer conducting the inquiry under sub section (1) shall, for the purposes of such inquiry, have the same powers as are vested in a Court under the Code of Civil Procedure, 1908, for trying a suit in respect of the following matters, namely: (a) enforcing the attendance of any person or examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavit; (d) issuing commissions for the examination of witnesses.
and any such inquiry shall be deemed to be a judicial pro ceeding within the meaning of Sections 193 and 228, and for the purpose of Section 196 of the Indian Penal Code.
" It will be seen from the above provisions that the Commissioner is authorised to 'enforce attendance in person and also to examine any person on oath.
He has the power requiring the discovery and production of documents.
This power was given to the Commissioner to decide not abstract questions of law, but only to determine actual concrete differences in payment of contribution and other dues by identifying the workmen.
The Commissioner should exercise all his powers to collect all evidence and collate all material before coming to proper conclusion.
That is the legal duty of the Commissioner.
It would be failure to exercise the jurisdiction particularly when a party to the proceedings requests for summoning evidence from a particu lar person.
759 We, therefore, allow the appeal and reverse the order of the Commissioner and that of the High Court.
The matter stands remitted to the Commissioner to dispose it of afresh and in accordance with law and in the light of the observa tion made.
The parties shall appear before the Commissioner to receive further orders on December 12, 1989.
The Commission er, shall dispose of the matter within three months thereaf ter.
N .P.V.
Appeal allowed.
| IN-Abs | Respondent No. 1 the Provident Fund Commissioner called upon the appellant Food Corporation of India to deposit contribution payable by it under the Employees ' Provident Fund and Miscellaneous Provisions Act, 1952 and the scheme thereunder, in respect of workers employed by the contrac tors appointed by the appellant for handling storing and transporting food grains and other articles in its depots in Rajasthan.
On appellant 's non compliance, Respondent No. 1 made an order under Section 7A of the Act determining the amount payable by the appellant.
Against the aforesaid order, the appellant filed writ petition before the High Court, which dismissed the same.
Hence the appeal, by spe cial leave, by the appellant Corporation.
It was contended that the appellant was denied a reason able opportunity to produce actual proof of identification of workers in respect of whom contribution was payable inasmuch as Respondent No. 1 neither gave notice to contrac tors, who were in possession of the relevant lists of work ers, nor made them parties to the proceedings, despite its repeated requests.
Allowing the appeal, HELD: The Commissioner, while conducting an inquiry under Section 7A of the Employees, Provident Fund and Mis cellaneous Provisions Act, 1952 has the same powers as are vested in a court under the Code of Civil Procedure for trying a suit.
Thus, the Commissioner is authorised to enforce attendance in person and also to examine any person on oath.
He has the power requiring the discovery and pro duction of documents.
This power was given to the Commis sioner to decide not abstract questions of law, but only to determine actual concrete differences in payment of contri bution and other dues by identifying the 756 workmen.
The Commissioner should exercise all his powers to collect all evidence and collate all material before coming to proper conclusion.
That is the legal duty of the Commis sioner.
It would be failure to exercise the jurisdiction particularly when a party to the proceedings requests for summoning evidence from a particular person.
[757H; 758A; F H] In the instant case, the appellant Corporation had some problems in collating the lists of all workers engaged in depots scattered at different places.
It requested the respondent Commissioner to summon the contractors to pro duce the respective lists of workers engaged by them.
Howev er, the appellant Commissioner did not summon the contrac tors, nor the lists maintained by them.
The matter is, therefore, remitted to the Commissioner for fresh disposal.
[757F; 759A]
|
Appeal No. 326 of 1955.
1250 Appeal by special leave from the judgment and decree dated April 10, 1953, of the Madras High Court in Second Appeal No. 1815 of 1949, arising out of the judgment and decree dated January 28, 1949, of the Court of Subordinate Judge, Bapatla, in A. section No. 188 of 1947, against the judgment and decree dated December 23, 1946, of the District Munsif, Ongole, in O. section No. 139 of 1946.
M. C. Setalvad, Attorney General for India and R.Ganapathy Aiyar, for the appellants.
A. V. Viswanatha Sastri, M. R. Rangaswami Aiyangar, T. section Venkataraman and K. R. Choudhury, for the respondents.
September 4.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This appeal arises out of a suit for partition of joint family properties instituted on April 2, 1942, in the Court of the District Munsif, Ongole, on behalf of one Kakumanu Ramanna, a minor of the age of about 2 1/2 years by his material grandfather, Rangayya, as his next friend.
The first defendant is his father.
The second and third defendants are the sons of the first defendant by his deceased first wife.
The fourth defendant is the second wife of the first defendant and the mother of the plaintiff .
The fifth defendant is the daugther of the first defendant by the fourth defendant.
In the plaint, three grounds were put forward as to why the minor plaintiff should have partition: (1) It was said that the mother of the plaintiff was ill treated, and there was neglect to maintain her and her children.
Both the District Munsif and the Subordinate Judge on appeal, held that this had not been established, and no further notice need be taken of it.
(2) It was then said that there had been a sale of the family properties to one Akkul Venkatasubba Reddi for Rs. 2,300, that there was no necessity for that sale, and that its object was only to injure the plaintiff.
That sale is dated May 9, 1939.
(3) Lastly, it was alleged that item 2 had been purchased on June 1, 1938, and item 11 on June 14, 1939, with joint family 1251 funds, but that the sale deeds had been taken in the names of the second and third defendants with a view to diminish the assets available to the plaintiff.
In addition to these allegations, it was also stated in the plaint that the family was in good circumstances, and that there were no debts owing by it.
On June 20, 1942, the defendants filed their written statements, wherein they claimed that the purchase of items 2 and 11 had been made with the separate funds of the second and third defendants, and that the joint family had no title to them.
They further alleged that the family had debts to the extent of Rs. 2,600.
Sometime in January 1943, the minor plaintiff died, and his mother who was the fourth defendant was recorded as his legal representative, and transposed as the second plaintiff.
The suit was in the first instance decreed, but on appeal, the Subordinate Judge remanded the case for trial on certain issues.
At the rehearing, it ",as proved that the first plaintiff was born on December 20, 1939.
On that, the District Munsif held that the sale of the family properties to Akkul Venkatasubba Reddi and the purchase of items 2 and II in the names of the second and third defendants having been anterior to the birth of the minor plaintiff, no cause of action for partition could be founded thereon.
The District Munsif also held on the evidence that the purchase of items 2 and 11 was not shown to have been made with separate funds, and that therefore they belonged to the joint family and further that the family owed no debts and that the allegations contra in the statements were not made out.
But he held, however, that this did not furnish a cause of action for partition.
In the result, he dismissed the suit.
There was an appeal against this judgment to the Court of the Subordinate Judge of Bapatla, who affirmed the findings of the District Munsif that items 2 and 11 belonged to the joint, family, and that there were no debts owing by it.
But he also agreed with him that as the sale and purchases in question were prior to the birth of the minor plaintiff, the suit for 159 1252 partition based thereon was not maintainable.
He accordingly dismissed the appeal.
The second plaintiff took the matter in second appeal to the High Court of Madras, and that was heard by Satyanarayana Rao J. who held that as the defendants had falsely claimed that items 2 and 11 were the separate properties of the second and third defendants, their interest was adverse to that of the minor and that the suit for partition was clearly beneficial to him.
He accordingly granted a preliminary decree for partition.
The present appeal has been brought against it on leave granted by this Court under article 136.
The learned Attorney General who appeared for the appellants advanced two contentions in support of the appeal: (1) that there was a concurrent finding by both the courts below that the suit was not instituted for the benefit of the minor, and that the High Court had no power to reverse it in second appeal; and (2) that, in any event, as the minor plaintiff had died before the suit was heard and before the court could decide whether the institution of the suit was for his benefit, the action abated and could not be continued by his mother as his legal representative.
On the first question, the contention of the appellants is that it is a pure question of fact whether the institution of a suit is for the benefit of a minor or not, and that a finding of the courts below on that question is not liable to be interfered with in second appeal.
But it must be observed that the finding of the Subordinate Judge was only that as the impugned sale and purchases were made before the minor plaintiff was born, no cause of action for partition could be founded by him thereon, and that, in our opinion, is a clear misdirection.
The transactions in question were relied on by the minor plaintiff as showing that the defendants were acting adversely to him, and that it was therefore to his benefit that there should be a partition.
It is no doubt true that as the plaintiff was not born on the date of those transactions, the defendants could not have entered into them with a view to injure him, though even as to this it should be noted that in May and June, 1253 1939 when the transactions were concluded, the first plaintiff was in the womb, and the first defendant admits knowledge of this, in his evidence.
But assuming that there was no intention to defeat the rights of the first plaintiff at the time when the transactions in question were entered into, that does not conclude the matter.
The real point for decision is whether the defendants were acting adversely to the minor, and if, after he was born, they used documents which might have been innocent when they came into existence, for the purpose of defeating his rights to the properties comprised therein, that would be conduct hostile to him justifying partition.
Now, what are the facts ? In the written statements which were filed shortly after the institution of the suit while the first plaintiff was alive, defendants I to 3 combined to deny his title to items 2 and I 1, and at the trial, they adduced evidence in support of their contention that they were the separate properties of defendants 2 and 3.
Even in the Court of Appeal, the defendants persisted in pressing this claim, and further maintained that the joint family had debts, and both the courts below had concurrently held against them on these issues.
These are materials from which it could rightly be concluded that it was not to the interest of the minor to continue joint with the defendants, and that it would be beneficial to him to decree partition.
In holding that as the transactions in question had taken place prior to his birth the minor could not rely on them as furnishing a cause of action, the courts below had misunderstood the real point for determination, and that was a ground on which the High Court could interfere with their finding in second appeal.
We accept the finding of the High Court that the suit was instituted for the benefit of the minor plaintiff, and in that view, we proceed to consider the second question raised by the learned Attorney General and that is the main ques tion that was pressed before us whether the suit for partition abated by reason of the death of the minor before it was heard and decided.
The contention on behalf of the appellants is that while in the case of an adult coparcener a clear and 1254 unambiguous expression on his part of an intention to become divided will have the effect of bringing about a division in status and the filing of a suit for partition would amount to such an expression, that rule can have no application in the case of a minor, as under the law he is incapable of a volition of his own.
It is conceded by the appellants that a suit for partition could be entertained on behalf of a minor plaintiff, and decreed if the court decides that it, is in the interests of the minor.
But it is said that in such a case, the court exercises on behalf of the minor a volition of which lie is incapable, that it is not until that volition is exercised by the court that there can be a division in status, and that, therefore, when a minor plaintiff dies before the court adjudicates on the question of benefit to him, he dies an undivided coparcener and his interest survives to the other coparceners and does not devolve on his heirs by inheritance.
The contention of the respondents, on the other hand, is that a suit for partition instituted on behalf of a minor coparcener stands on the same footing as a similar suit filed by an adult coparcener, with this difference that if the suit is held by the court not to have been instituted for the benefit of the minor it is liable to be dismissed, and no division in status can be held to result from such an action.
In other words, it is argued that a suit for partition on behalf of a minor effects a severance in status from the date of the suit, conditional on the court holding that its institution is for the benefit of the minor.
The question thus raised is one of considerable importance, on which there has been divergence of judicial opinion.
While the decisions in Chelimi Chetty vs Subbamma (1), Lalta Prasad vs Sri Mahadeoji Birajman Temple (2) and Hari Singh vs Pritam Singh(3), hold that when a suit for partition is filed on behalf of a minor plaintiff there is a division in status only if and when the Court decides that it is for his benefit and passes a decree, the decisions in Rangasayi vs Nagarathnamma (4), Ramsing vs Fakira (5) and Mandliprasad vs Ramcharanlal (6), lay down that when such a (1) 442.
(2) All.
(3) A.I.R. 1936 Lah.
(4) Mad.
(5) I.L.R. (6) I.L.R. 1255 suit is decreed, the severance in status relates back to the date of the institution of the suit.
While Chelimi Chetty vs Subbamma (1) decides that when a minor on whose behalf a suit is filed dies before hearing, the action abates, it was held in Rangasayi vs Nagarathnamma (2) and Mandliprasad vs Ramcharanlal (3) that such a suit does not abate by reason of the death of the minor before trial, and that it is open to his legal representatives to continue the suit and satisfy the court that the institution of the suit was for the benefit of the minor, in which case there would be, a division in status from the date of the plaint and the interests of the minor in the joint family properties would devolve on his heirs.
To decide which of these two views is the correct one, we shall have to examine the nature of the right which a minor coparcener has, to call for partition and of the power which the court has, to decide whether the partition in question is beneficial to the minor or not.
Under the Mitakshara law, the right, of a coparcener to share in the joint family properties arises on his birth, and that right carries with it the right to be maintained out of those properties suitably to the status of the family so long as the family is joint and to have a partition and separate possession of his share, should he make a demand for it.
The view was at one time held that there could be no partition, unless all the coparceners agreed to it or until a decree was passed in a suit for partition.
But the question was finally settled by the decision of the Privy Council in Girja Bai vs Sadashiv Dhundiraj (4), wherein it was held, on a review of the original texts and adopting the observation to that effect in Suraj Narain vs lqbal Narain (5), that every coparcener has got a right to become divided at his own will and option whether the other coparceners agree to it or not, that a division in status takes place when he expresses his intention to become separate unequivocally avid unambiguously, that the filing of a suit for partition is a clear expression of such an intention, and that, in consequence, (1) Mad.
(2) Mad.
(3) I.L.R. (4) (1916) L.R. 43 I.A. 151.
(5) (1912) L.R. 40 I.A. 40,45.
1256 there is a severance in status when the action for partition is filed.
Following this view to its logical conclusion, it was held by the Privy Council in Kawal Nain vs Prabhu Lal (1), that even if such a suit were to be dismissed, that would not affect the division in status which must be held to have taken place, when the action was instituted.
Viscount Haldane observed: "A decree may be necessary for working out the result of the severance and for allotting definite shares, but the status of the plaintiff as separate in estate is brought about by his assertion of his right to separate, whether he obtains consequential judgment or not." The law being thus settled as regards coparceners who are sui juris, the question is whether it operates differently when the coparcener who institutes the suit for partition is a minor acting through his next friend.
Now, the Hindu law makes no distinction between a major coparcener and a minor coparcener, so far as their rights to joint properties are concerned.
A minor is, equally with a major, entitled to be suitably maintained out of the family properties, and at partition, his rights are precisely those of a major.
Consistently with this position, it has long been settled that a suit for partition on behalf of a minor coparcener is maintainable in the same manner as one filed by an adult coparcener, with this difference that when the plaintiff is a minor the court has to be satisfied that the action has been instituted for his benefit.
Vide the authorities cited in Rangasayi vs Nagarathnamma (2 ) at p. 137.
The course of the law may be said, thus far, to have had smooth run.
But then came the decision in Girja Bai vs Sadashiv Dhundiraj (3) which finally established that a division in status takes place when there is an unambiguous declaration by a coparcener of his intention to separate, and that the very institution of a suit for partition constituted the expression of such an intention.
The question then arose how far this principle could be applied, when the suit for partition was instituted not by a major but by a minor acting through his next friend.
The view was expressed that (1) (1917) L.R. 44 I.A. 159.
(2) Mad.
(3) (1916) L.R. 43 I.A. 151.
1257 as the minor had, under the law, no volition of his own ' the rule in question had no application to him it was not, however, suggested that for that reason no .suit for partition could be maintained on behalf of a minor, for such a stand would be contrary to the law as laid down in a series of decisions and must, if accepted, expose the estate of the minor to the perils of waste and spoliation by coparceners acting adversely to him.
But what was said was that when a court decides that a partition is for the benefit of a minor, there is a division brought about by such decision and not otherwise.
It would follow from this that if a minor died before the court decided the question of benefit lie would have died an undivided coparcener of his family and his heirs could not continue the action.
In Chelimi Chetty vs Subbamma (1), the point directly arose for decision whether on the death of a minor plaintiff the suit for partition instituted on his behalf could be continued by his legal representatives.
It was held that the rule that the institution of a suit for partition effected a severance of joint status was not applicable to a suit instituted on behalf of a minor, and that when he died during the pendency of the suit" his legal representative was not entitled to continue it.
The ground of this decision was thus stated: " It was strongly argued by the learned pleader for the respondent that as the plaint states facts and circumstances which, if proved, would be good justification for the court decreeing partition, therefore at this stage we must proceed on the basis that there was a good cause of action and there was thus a severance of status effected by the institution of the suit.
This clearly does not amount to anything more than this, that it is open to a person who chooses to act on behalf of a minor member of a Hindu family to exercise the discretion on his behalf to effect a severance.
What causes the severance of a joint Hindu family is not the existence of certain facts which would justify any member to ask for partition, but it is the exercise of the option which the law lodges in a member of the joint family to say whether he shall continue to remain (1) Mad.
1258 joint or whether he shall ask for a division.
In the case of an adult he has not got to give any reasons why lie asks for partition but has simply to say that he wants partition, and the court is bound to give him a decree.
In the case of a minor the law gives the court, the power to say whether there should be a division or not, and we think that it will lead to considerable complications and difficulties if we are to say that other persons also have got the discretion to create a division in the family, purporting to act on behalf of a minor.
" This decision was cited with approval in Lalta Prasad vs
Sri Mahadeoji Birajman Temple (1), wherein it was observed: " The effect, therefore, we think, of an action brought by a minor through his next friend is not to create any alteration of status of the family, because a minor cannot demand as of right a separation; it is only granted in the discretion of the court when, in the circumstances, the action appears to be for the benefit of the minor.
See Chelimi Chetty vs Subbamma (2).
" In Hari Singh vs Pritam Singh (3), a suit for partition instituted on behalf of a minor was decreed, the court finding that it was for the benefit of the minor.
The question then arose as to the period for which the karta could be made liable to account.
It was held, following the decisions in Chelimi Chetty vs Subbamma (2 ) and Lalla Prasad vs Sri Mahadeoji Birajman Temple (1), that as the severance in status took place only on the date of the decision and not when the suit was instituted, the liability to account arose only from the date of the decree and not from the date of the suit.
It may be mentioned that in Chhotabhai vs Dadabhai (4) Divatia J. quoted the decision in Chelimi Chetty vs Subbamma (2) with approval, but as pointed out in Ramsing vs Fakira (5) and by the learned judge himself in Bammangouda vs Shankargouda (6), the point now under consideration did not really arise for decision in that case, and the (1) All. 461.
(2) Mad.
(3) A.I.R. 1936 Lah.
(4) A.I.R. 1935 Bom.
(5) I.L.R. (6) A.I.R. 1944 Bom.
1259 observations were merely obiter.
It is on the strength of the above authorities that the appellants contend that when the minor plaintiff died in January 1943, the suit for partition had abated, and that his mother had no right to continue the suit as his heir.
Now, the ratio of the decision in Chelimi Chetty vs Subbamma (1) and it is this decision that was followed in Lalta Prasad 's Case (2 ), Hari Singh vs Pritam Singh (3) and Chhotabhai vs Dadabhai (4) is that the power to bring about a division between a minor and his coparceners rests only with the court and not with any other person, and that, in our judgment, is clearly erroneous.
When a court decides that a suit for partition is beneficial to the minor, it does not itself bring about a division in status.
The court is not in the position of a super guardian of a minor expressing on his behalf all intention to become divided.
That intention is, in fact, expressed by some other person, and the function which the court exercises is merely to decide whether that other person has acted in the best interests of the minor in expressing on his behalf ail intention to become divided.
The position will be clear when regard is had to what takes place when there is a partition outside court.
In such a partition, when a branch consisting of a father and his minor son becomes divided from the others, the father acts on behalf of the minor son as well; and the result of the partition is to effect a severance in status between the father and his minor son, oil the one hand and the other coparceners, on the other.
In that case, the intention of the minor to become separated from the coparceners other than his father is really expressed on his behalf by his father.
But it may happen that there is a division between the father and his own minor son, and in that case, the minor would normally be represented by his mother or some other relation, and a partition so entered into has been recognised to be valid and effective to bring about a severance in status.
The minor has no doubt the right to have the partition set aside if it is shown to have been prejudicial to him but if that is not established, the partition (1) Mad.
(3) A.I.R. 1936 Lah.
(2) All.
(4) A.I.R. 1935 BOM.
160 1260 is binding on him.
Vide Balkishen Das vs Ram Narain Sahu (1).
And even when the partition is set aside on the ground that it is unfair, the result will be not to annul the division in status created by the partition but to entitle the minor to a re allotment of the properties.
It is immaterial that the minor was represented in the transaction not by a legal guardian but by a relation.
It is true, as held in Gharib Ul Lah vs Khalak Singh (2) that no guardian can be appointed with reference to the coparcenary properties of a minor member in a joint family, because it is the karta that has under the law the right of management in respect of them and the right to represent the minor in transactions relating to them.
But that is only when the family is joint, and so where there is disruption of the joint status, there can be no question of the right of a karta of a joint family as such to act on behalf of the minor, and on the authorities, a partition entered into on his behalf by a person other than his father or mother will be valid, provided that person acts in the interests of and for the benefit of the minor.
If, under the law, it is competent to a person other than the father or mother of a minor to act on his behalf, and enter into a partition out of court so as to bind him, is there any reason why that person should not be competent when he finds that the interests of the minor would best be served by a division and that the adult coparceners are not willing to effect a partition, to file a suit for that purpose on behalf of the minor, and why if the court finds that the action is beneficial to the minor, the institution of the, suit should not be held to be a proper declaration on behalf of the minor to become divided so as to cause a severance in status? In our judgment, when the law permits a person interested in a minor to act on his behalf, any declaration to become divided made by him on behalf of the minor must be held to result in severance in status, subject only to the court deciding whether it is beneficial to the minor; and a suit instituted on his behalf if found to be beneficial, must be held to bring about a division in status.
That (1) (1903) L.R. 30 I.A. 139.
: (2) (1903) L.R. 30 I.A. 165.
1261 was the view taken in a Full Bench decision of the Madras High Court in Rangasayi.
vs Nagarathnamma (1), wherein Ramesam J. stated the position thus: " These instances show that the object of the issue whether the suit was for the benefit of the minor is really to remove the obstacle to the passing of the decree.
It is no objection to the maintainability of the suit.
In my opinion therefore in all such cases the severance is effected from the date of the suit conditional on the court being able to find that the suit when filed was for the benefit of the minor.
" The same view has been taken in Ramsing vs Fakira (2) and Mandliprasad vs Ramcharanlal (3), and we agree with these decisions.
On the conclusion reached above that it is the action of the person acting on behalf of a minor that brings about a division in status, it is necessary to examine what the nature of the jurisdiction is which the courts exercise when they decide whether a suit is for the benefit of a minor or not.
Now, the theory is that the Sovereign as parens patriae has the power, and is indeed under a duty to protect the interests of minors, and that function has devolved on the courts.
In the discharge of that function, therefore, they have the power to control all proceedings before them wherein minors are concerned.
They can appoint their own officers to protect their interests, and stay proceedings if they consider that they are vexatious.
In Halsbury 's Laws of England, 3rd Edn., Vol.
XXI, p. 216, para.
478, it is stated as follows: " Infants have always been treated as specially under the protection of the Sovereign, who, as parens patriae, had the charge of the persons not capable of looking after themselves.
This jurisdiction over infants was formerly delegated to and exercised by the Lord Chancellor; through him it passed to the Court of Chancery, and is now vested in the Chancery Division of the High Court of Justice.
It is independent of the question whether the infant has any property or not.
" (1) Mad.
(2) I.L.R. (3) I.L.R. 1262 It is in the exercise of this jurisdiction that courts require to be, satisfied that the next friend of a minor has in instituting a suit for partition acted in his interest.
When, therefore, the court decides that the suit has been instituted for the benefit of the minor and decrees partition, it does so not by virtue of any rule, special or peculiar to Hindu law but in the exercise of a jurisdiction which is inherent in it and which extends over all minors.
The true effect of a, decision of a court that the action is beneficial to the minor is not to create in the minor proprio vigore a right which he did not possess before but to recognise the right which had accrued to him when the person acting on his behalf instituted the action.
Thus, what brings about the severance in status is the action of the next friend in instituting the suit, the decree of the court merely rendering it effective by deciding that what the next friend has done is for the benefit of the minor.
It remains to consider one other argument advanced on behalf of the appellants.
It was urged that the cause of action for a suit for partition by a minor was one personal to him, and that on his death before hearing, the suit must abate on the principle of the maxim, actio personalis moritur cum persona.
But that maxim has application only when the action is one for damages for a personal wrong, and as a suit for partition is a suit for property, the rule in question has no application to it.
That was the view taken in Rangasayi vs Nagarathnamma (1) at pp.
137 138 and in Mandliprasad vs Ramcharanlal (2) at p. 871, and we are in agreement with it.
All the contentions urged in support of the appeal have failed, and the appeal is accordingly dismissed with costs.
The amounts paid by the appellants to the respondents in pursuance of the order of this Court dated March 7, 1958, will be taken into account in adjusting the rights of the parties under this decree.
(1) Mad.
Appeal dismissed.
| IN-Abs | In a suit instituted on behalf of a Hindu minor for partition of the joint family properties, the minor plaintiff died during the pendency of the suit and his mother as the legal representative was allowed to continue the suit as the second plaintiff, and the suit was decreed as it was found that the defendants had been acting against the interests of the minor and that the suit for partition was therefore beneficial to him.
It was contended for the appellants that the suit had abated by reason of the death of the minor before the suit was heard and before the Court could decide whether the institution of the suit was for his benefit.
Held, that when a suit is instituted by a person acting on behalf of a minor for the partition of the joint family properties, a declaration made by him on behalf of the minor to become divided brings about a severance in status, subject only to the decision of the Court that the action is beneficial to the minor.
The true effect of the decision of the Court is not to create in the minor a right which he did not possess before but to recognise the right which had accrued to him when the action was instituted.
Rangasayi vs Nagarathnamma, Mad. 95, Ramsingh vs Fakira, I. L. R. and Mandilprasad vs Ramcharanlal, I.L.R. , approved.
Case law reviewed.
Accordingly, the suit did not abate and the legal represen tative was entitled to continue the suit and obtain a decree on showing that when the suit was instituted it was for the benefit of the minor.
Held, further, that the suit did not abate on the ground either that the cause of action for a suit for partition by a minor was one personal to him, because such a suit is one relating to property.
|
ivil Appeal No. 836 of 1974.
From the Judgment and Order dated 23.8.1971 of the Punjab & Haryana High Court in L.P.A. No. 487 of 1968.
S.P. Goyal and D.D. Sharma for the Appellants.
A. Minocha for the Respondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
Nawal Singh sold 102 bighas of land to Nathu Ram for Rs.8,000 by a sale dated 11th February, 1952.
He also executed a sale deed in respect of 90 bighas of land to Sardha Ram for a sum of Rs.4,500 on 28th October, 1952.
There were recitals in the two sale deeds regarding the necessity for the sale.
The first sale deed stated: 771 "(1) The land is Banjar Qadim.
According to the law in force, it is obligatory to break and cultivate this land.
Otherwise the Govern ment would give it out by auction to some other person.
(2) I need money to bring other land under the plough, to sink a new well and for other agricultural works, such as purchases of bullocks etc.".
The recitals in the second sale deed dated 28 10 1952 ran as follows: "I have absolutely sold the aforesaid banjar qadim land . . for meeting my own needs, repairing the well, installing a persian wheel purchasing camel, and reclaiming the aforesaid banjar qadim jungle land.
" Nawal Singh 's heirs filed suits for setting aside the sales on the ground that they were governed by Punjab Agri cultural customs in matters of alienation, that the land was ancestral and that the alienation had been made without legal necessity and, therefore, would not affect their reversionary rights on the death of the vendor.
Both suits were consolidated and tried together.
The suits were dis missed by the sub judge and the first appeals were dismissed by the senior subordinate judge.
Second appeals were pre ferred which came up for hearing before a learned Single Judge of the High Court.
The learned Judge held that the sale in favour of Nathu Ram was without legal necessity except to the extent of a sum of Rs. 1,000 which was actual ly utilised by the vendor for the sinking of a new well 'in his remaining lands ', and that the sale in favour of Sardha Ram was entirely without necessity.
There were appeals against the order of the learned Single Judge to a Division Bench of the same High Court.
The Division Bench held that, so far as the sale in favour of Nathu Ram was concerned, the learned Single Judge had fallen into an error in upsetting the concurrent findings of fact of the Courts below.
The Court proceeded to observe: "The Courts below found and on evidence that bulk of Nawal Singh 's land was banjar qadim.
It has been further found that under the Punjab Utilisation of Lands Act, notices were issued to Nawal Singh that if the land was not broken up it would be taken under that Act and leased out 772 to third party.
There were no irrigation facilities available for the land and to sink a well money was needed.
There is ample evi dence on the record on which these evidences are based.
The vendor has come into the wit ness box and stated that the money was raised for this purpose.
The statement of the vendee was accepted by the Courts of fact.
In this situation, there was no justification to displace the judgments of the Court below with regard to the sale in favour of Nathu Ram (exhibit D 3).
The rule is firmly settled that the vendee either established the existence of necessity in fact or a bona fide inquiry that there was necessity for the sale.
If he satis fies either one of the two requirements the sale would be held for necessity or an act and good management, as the case may be .
It cannot be denied that for an agriculturist to bring under his plough his land is a matter of necessity and if some land is sold to bring the bulk of the land under cultivation, it would certainly be an act of necessity as well as an act of good management.
We are, there fore, clearly of the view that the learned Single Judge was not justified in upsetting the sale in favour of Nathu Ram." However, in respect of sale in favour of Sardha Ram, the Bench observed that the real difficulty was that there was no evidence that the money was advanced for the purpose of breaking up of the land but for the mere recital in the sale deed which was not sufficient for the purpose.
Unfortu nately, neither the vendee nor the witness had stated that the land was sold by Nawal Singh to break up his banjar qadim land.
The only fact proved was that Nawal Singh had a lot of banjar land but that was of no consequence by itself.
The decision of the learned Single Judge was therefore upheld in respect of the sale in favour of Sardha Ram.
The vendor has accepted the decision in regard to the sale in favour of Nathu Ram.
Sardha Ram has preferred the present appeal before us.
The learned counsel for the appellant contended that there was really no difference in the factual position so far as the two sales are concerned and that the Division Bench has erred in upsetting the sale in favour of Sardha Ram while upholding it in the case of Nathu Ram.
The High Court overlooked that even assuming that there was no evi dence to show that Sardha Ram had made enquiries as to the necessity for the sale, factual necessity for the sale had been established by the evidence on the record which was common to both the sales.
After 773 hearing both sides, we are of opinion that this contention has to be accepted.
It is an admitted fact that the alienor owned about 1,100 bighas of land.
It was also an established fact that, of this, 973 bighas was banjar qadim and the remaining land was of inferior quality.
The land was also under mortgage.
It is also Common ground that the provisions of the East Punjab Utilisation of Lands Act (Act 3.8 of 1949) as amended by Ordinance 15 of 1950 were in force in the area.
Under the provisions of this Act, a notice could be given requiring a land holder to bring uncultivated land under cultivation after reclamation within a period of 30 days from the date of issue of a notice in that regard.
Failing this, the area could be resumed by the Government and leased out to some other cultivators or society for cultivation for a period of at least 8 years.
The appellant had examined the development clerk in the office of the Deputy Commissioner, Kamal (D .W. 1) to show that a notice had been issued to Nawal Singh under the provisions of the said Act on 8th May, 1951 in respect of his banjar land measuring 976 bighas.
The learned Single Judge overlooked the notice of 8th May, 1951 and, mistakenly referring to another notice issued on 15.10.1954 to Sardha Ram, thought that the compulsions under the Act arose only after the sales of 1952.
The Divi sion Bench, however, has accepted the correct position while dealing with the sale in favour of Nawal Singh.
Having done this, we fail to see now the Bench could have held that the sale in favour of Sardha Ram was not actuated by the same grounds of necessity.
The question for consideration is whether if Nawal Singh, faced by the notice under the Punjab Utilisation Act that unless he brought the land under culti vation they would be leased out to some other party, decided that it would be in the best interests of the holdings as a whole to sell a portion of the land so that sale proceeds may be utilised for the reclamation of the major part of the remaining land, it could not be said that such a sale was justified by necessity.
We think that the answer must be in the affirmative.
The learned Single Judge expressed the view that non compliance with the notice would result only in a temporary lease of the land to outsiders and this conse quence was not sufficient to justify the sale of a portion of the lands on grounds of necessity.
We, however, agree with the Division Bench on this.
A land owner receiving a notice under the said Act has two options before him.
He can either own his helplessness to reclaim the land and permit it to be leased out by the Government to other persons for cultivation for a substantial period.
Or he may decide that he should make an attempt to make at least a part of the lands fertile by selling a portion of the land and reclaim ing the rest 774 with the help of the sale proceeds.
A bona fide decision taken by him to exercise the latter option cannot be said not to be an act of good management.
We think that if the sale in favour of Nathu Ram in the same circumstances was a valid sale (and we agree with the Division Bench on this), it is very difficult to say that the sale in favour of Sardha Ram was not.
The necessity for both the sales was the situation arising out of the receipt of the notice under the Punjab Land Utilisation Act.
Indeed we think that the find ings of the trial court and first appellate court on this issue were findings of fact which did not call for interfer ence by the High Court.
Learned counsel for the respondent drew our attention to the findings of the Learned Single Judge that, according to D.W. 2, the vendor was a "drunkard given to licentious habits".
The trial court and first appellate court have examined the entire evidence and recorded a finding to the contrary.
That apart, all that D.W. 2 said was: "The charac ter of Nawal Singh is bad.
He drinks and is also a womanis er", D.W. 2, however, also said that Nawal Singh had sold the land for managing the work of cultivation.
It is, there fore, difficult to draw from D.W.2 's testimony the inference that the sale of the land had been necessitated by the immoral activities of the vendor and that there was no real necessity to sell the land.
The Division Bench, rightly, has attached no importance to this aspect of the case.
For the reasons mentioned above we are of opinion that the sale in favour of Sardha Ram was a valid sale and is not liable to be impugned by the representatives or the succes sors in interest of Nawal Singh.
This appeal is therefore allowed and the judgment of the first appellate court is restored.
In the circumstances, however, we make no order as to costs.
T.N.A. Appeal allowed.
| IN-Abs | The respondent 's predecessor in interest received notice under the East Punjab Utilisation of Lands Act, 1949 for bringing his uncultivated land under cultivation.
Thereafter he sold a portion of his land by executing two sale deeds in favour of two different vendees for the purpose of utilising the sale proceeds to reclaim the remaining land.
The re spondents fried suits for setting aside the sales, contend ing that the alienation was made without legal necessity, which were dismissed by the Trial Court.
The first appeals were dismissed by the Senior Subordinate Judge.
On second appeal a learned single judge of the High Court held that the sale in favour of the first vendee was for legal necessity only to the extent of Rs.1,O00 and the sale in favour of the second vendee was entirely without necessity.
On a further appeal the Division Bench reversed the decision of the single judge with regard to first vendee holding that the sale was for necessity but upheld the decision with regard to second vendee holding that the sale in his favour was without legal necessity.
Hence this appeal by the second vendee.
Allowing the appeal, this Court, HELD: 1.
The sale in favour of the second vendee was a valid sale and is not liable to be impugned by the represen tatives or the successors in interest of the vendor.
[774E] 770 2.
Under the provisions of the East Punjab Utilisation of Lands Act, 1949 a notice could be given requiring a land holder to bring uncultivated land under cultivation after reclamation within a period of 30 days from the date of issue of a notice in that regard.
Failing this, the area could be resumed by the Government and leased out to some other cultivators or society for cultivation for a period of at least 8 years.
[773B] 2.1 A land owner receiving a notice under the said Act has two options before him.
He can either own his helpless ness to reclaim the land and permit it to be leased out by the Government to other persons for cultivation for a sub stantial period.
Or he may decide that he should make an attempt to make atleast a part of the lands fertile by selling a portion of the land and reclaiming the rest with the help of the sale proceeds.
A bona fide decision taken by him to exercise the latter option cannot be said not to be an act of good management.
[773G H; 774A] 3.
If the sale in favour of the first vendee in the same circumstances was a valid sale, it is very difficult to say that the sale in favour of the second vendee was not.
The necessity for both the sales was the situation arising out of the receipt of the notice under the East Punjab Lands Utilisation Act.
In fact the findings of the Trial Court and the first appellate court on this issue were findings of fact which did not call for interference by the High Court.
[774A B]
|
ivil Appeal No. 3577 of 1988.
From the Judgment and Order dated 19.9.1986 of the Madras High Court in C.R.P. No. 3210 of 1985.
section Padmanabhan, Mr. T.A. Subramaniyam, R.N. Keshwani and section Balakrishnan for the Appellants.
G. Ramaswamy, Additional Solicitor General, K. Swami, section Srinivasan, Rajyappa, section Murlidhar, Diwan Balak Ram and M.K.D. Namboodari for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Venkatarayulu Naidu Charities is a public trust V.P. Venkatakrishna Naidu and V.P. Rajagopala Naidu, filed an original suit No. 28 of 1909 (hereinafter called original suit) in the court of Subordinate Judge, Mayavaram under Section 92 of the Code of Civil Procedure praying inter alia that the defendant trustee be 763 removed from the said office and a new trustee be appointed with directions to recover trust properties improperly and fraudulently alienated by the defendant.
The subordinate court permitted the trustee to continue and framed a scheme decree dated September 9, 1910 for the future manage ment and administration of the trust.
Clauses 13 and 14 of the scheme are as under: "13 The trustee shall not effect any altera tions or additions to the existing buildings except with the permission of the Tanjore Sub Court." "14 Liberty is given to the parties to apply to the Tanjore Sub Court for further direc tions if any from time to time as regards the administration of the trusts.
" The question for consideration in this Appeal is whether "parties" mentioned in Clause 14 of the scheme decree repro duced above mean only the named plaintiffs and defendant in the suit title and their successors in interest or the suit being representative it includes all those who are interest ed in the trust.
Further necessary facts are as under: The trust owns several items of proper ties.
We are concerned with the following two properties alone of the trust.
Property situate at Muthukumara Moopannaar Road in T.S. No. 2936 to an extent of 11484 sq.
ft. 2.
Property situate at ward No. 6 Gandhiji Road, in T.S. No. 2937 to an extent of 4429 sq.
The trustees filed interim application No. 453 of 1984 in the Original Suit before the subordinate court for per mission to sell the first property which was granted by the order dated October 27, 1984 and the property was sold for Rs.11,000.
Similarly the second property was sold for Rs.69,328 with the permission of the court dated January 23, 1985.
R. Venugopala Naidu and three others who are the present appellants filed interim application No. 175 of 1985 in the original suit before the subordinate judge, Thanjavur for setting aside the orders dated October 27, 1984 and January 23, 1985 granting permission to 764 the trust to sell the above mentioned two properties.
It was alleged that the negotiated sale was at a price which was almost 20% of the market price.
There was no publication in any newspapers or even in the court notice board inviting the general public.
The learned subordinate judge dismissed the application on the ground that the applicants have no locus sandi to file the application under clauses 13 and 14 of the scheme decree as they were not parties to the original suit.
A further revision before the Madras High Court was dismissed.
The High Court also came to the conclusion that the applica tion was not maintainable.
It was also held by the High Court that two of the four applicants who are muslims cannot have any interest in the administration of the trust.
Against the High Court judgment the present appeal by way of special leave has been filed.
Mr. section Padmanabhan, learned counsel for the appellants has vehemently argued that though the appellants were not shown as parties in suit title but the suit under Section 92 of Civil Procedure Code being a representative suit the scheme decree binds not only the parties thereto but all those who are interested in the trust.
According to him "parties" in clause 14 of the scheme decree would include appellants and all those who are interested in the trust.
He has relied on Raje Anandrao vs Shamrao and Others, ; wherein this Court held as under: " . .
It is true that the pujaris were not parties to the suit under section 92 but the deci sion in that suit binds the pujaris as wor shipers so far as the administration of the temple is concerned, even though they were not parties to it, for a suit under section 92 is a representative suit and binds not only the parties thereto but all those who are inter ested in the trust." The learned counsel further relied on Ahmed Adam Sait and Others vs Inayathullah Mekhri and Others, ; wherein this Court observed as under: "A suit under section 92, it is urged, is a repre sentative suit, and so, whether or not the present respondents actually appeared in that suit, they would be bound by the decree, which had framed a scheme for the proper administra tion of the Trust.
In support of this argu ment, reliance is placed on the decision of this Court in Raja Anandrao vs Shamrao, 765 where it is observed that though the Pujaris were not parties to the suit under section 92, the decision in that suit binds the pujaris as worshipers so far as the administration of the temple is concerned, because a suit under section 92 is a representative suit and binds not only the parties thereto, but all those who are interested in the Trust . . " " . .
In assessing the validity of this argument, it is necessary to consider the basis of the decisions that a decree passed in a suit under section 92 binds all parties.
The basis of this view is that a suit under section 92 is a representative suit and is brought with the necessary sanction required by it on behalf of all the beneficiaries interested in the Trust.
The said section authorises two or more persons having an interest in the Trust to file a suit for claiming one or more of the reliefs specified in clauses (a) to (h) of sub section (1) after consent in writing there prescribed has been obtained.
Thus, when a suit is brought under section 92, it is brought by two or more persons interested in the Trust who have taken upon themselves the responsi bility of representing all the beneficiaries of the Trust.
In such a suit, though all the beneficiaries may not be expressly impleaded, the action is instituted on their behalf and relief is claimed in a representative charac ter.
This position immediately attracts the provisions of explanation VI to section 11 of the Code.
Explanation VI provides that where persons litigate bona fide in respect of a public right or of a private right claimed in common for themselves and others, all persons interested in such right shall, for the pur poses of this section, be deemed to claim under the persons so litigating.
It is clear that section 11 read with its explanation VI leads to the result that a decree passed in a suit instituted by persons to which explanation VI applies will bar further claims by persons interested in the same right in respect of which the prior suit had been instituted.
Explanation VI thus illustrates one aspect of constructive res judicata.
Where a representa tive suit is brought under section 92 and a decree is passed in such a suit, law assumes that all persons who have the same interest as the plaintiffs in the representative suit were represented by the said plaintiffs and, there fore, are constructively barred by res judica ta from reagitating the matters directly and substantially in issue in the said earlier suit.
A similar result follows if a suit is either brought or 766 defended under 0.1.
, r. 8.
In that case per sons either suing or defending an action are doing so in a representative character, and so the decree passed in such a suit binds all those whose interests were represented either by the plaintiffs or by the defendants . . " The legal position which emerges is that a suit under Section 92 of the Code is a suit of a special nature for the protection of Public rights in the Public Trusts and chari ties.
The suit is fundamentally on behalf of the entire body of persons who are interested in the trust.
It is for the vindication of public rights.
The beneficiaries of the trust, which may consist of public at large, may choose two or more persons amongst themselves for the purpose of filing a suit under Section 92 of the Code and the suit title in that event would show only their names as plaintiffs.
Can we say that the persons whose names are on the suit title are the only parties to the suit? The answer would be in the negative.
The named plaintiffs being the representatives of the public at large which is interested in the trust all such interested persons would be considered in the eyes of law to be parties to the suit.
A suit under Section 92 of the Code is thus a representative suit and as such binds only the parties named in the suit title but all those who are interested in the trust.
It is for that reason that explanation VI to Section II of the Code constructively bar by res judicata the entire body of interested persons from reagitating the matters directly and substantially in issue in an earlier suit under Section 92 of the Code.
Mr. G. Ramaswamy, learned counsel appearing for the respondent trust has argued that only the two persons who filed the original suit can be considered as "parties" in terms of clause 14 of the scheme decree and according to him since the appellants were not the plaintiffs they have no locus standi to file any application under clause 13 and 14 of the scheme decree.
According to the learned counsel Section 92 of the Code brings out a dichotomy in the sense that there are "parties to the suit" and "persons interested in the trust." According to him persons interested in the trust cannot be considered parties to the suit although the judgment/decree in the suit in binding on them.
He has also argued that a suit under Section 92 of Civil Procedure Code is different from a suit filed under Order 1 Rule 8 of Civil Procedure Code.
We do not agree with the learned counsel.
A suit whether under Section 92 of Civil Procedure Code or under Order 1 Rule 8 of Civil Procedure Code is by the representatives of large number of persons who have a common interest.
The very nature of a representative suit makes all those who have common interest in the suit as parties.
We, 767 therefore, conclude that all persons who are interested in Venkatarayulu Naidu Charities which is admittedly a public trust are parties to the original suit and as such can exercise their rights under clauses 13 and 14 of scheme decree dated September 9, 19 10.
It is not necessary to go into the finding of the High Court that two of the appellants being muslims can have no interest in the trust as the other two appellants claim to be the beneficiaries of the trust and their claim has not been negatived.
Moreover, the trust has been constituted to perform not only charities of a religious nature but also charities of a secular nature such as providing for drinking water and food for the general public without reference to caste or religion.
In view of our findings above the subordinate court and the High Court were in error in holding that the appellants had no locus standi to file the application for setting aside the order permitting the sale of the properties.
We, therefore, allow the appeal and set aside the order of the subordinate court and that of the High Court.
The subordinate court and the High Court did not go into the merits of the case as the appellants were non suited on the ground of locus standi.
We would have normally remanded the case for decision on merits but in the facts and circum stances of this case we are satisfied that the value of the property which the trust got was not the market value.
Two persons namely S.M. Mohamed Yaaseen ad S.N.M. Ubayadully have filed affidavit offering Rs.9.00 lacs and Rs. 10.00 lacs respectively for these properties.
In support of their bona fide they have deposited 10% of the offer in this Court.
This Court in Chenchu Ram Reddy and another vs Gov ernment of Andhra Pradesh and Others, [1986] 3 SCC 391 has held that the property of religious and charitable endow ments or institutions must be jealously protected because large segment of the community has beneficial interest therein.
Sale by private negotiations which is not visible to the public eye and may, even give rise to public suspi cion should not, therefore, be permitted unless there are special reasons to justify the same.
It has further been held that care must be taken to fix the reserve price after ascertaining the market value for safeguarding the interest of the endowment.
We, therefore, set aside the orders of subordinate court dated October 27, 1984 and January 23, 1985 permitting the sale of the two properties and also set aside the consequent sale in favour of the respondents.
We direct that the properties in question may be sold by 768 public auction by giving wide publicity regarding the date, time and place of public auction.
The offer of Rs. 10 lacs made in this Court will be treated as minimum bid of the person who has given the offer and deposited ten percent of the amount in this Court.
It will also be open to the re spondents/purchasers to participate in the auction and compete with others for purchasing the properties.
The respondents vendees from the trust shall be enti tled to refund of the price paid by them with 10% interest from the date of payment of the amount till the date of auction of the property.
They will also be entitled to compensation for any super structure put up by them in the properties including compensation for any additions or improvements made by them to the building and the property.
The value of such super structure and the improvements and additions shall be ascertained by the subordinate court through a qualified engineer and by Such other method as the court may deem fit.
The court shall fix the value and com pensation amount after affording opportunity to the respond ents and the trust to make their representation in that respect.
There shall be no order as to costs.
G.N. Appeal al lowed.
| IN-Abs | Respondent No. 1 is a public trust.
The trust owns several properties.
On the ground that the trust properties were improperly and fraudulently alienated, a suit was fried under Section 92 CPC for removing the trustee and appointing a new trustee and to recover trust properties alienated by the said trustee.
The sub judge permitted the trustees to continue and framed a scheme decree for the future manage ment and administration of trust.
The scheme also granted liberty to the parties to apply to the sub court for further directions as regards the administration of the trust.
The trustees filed an interim application before the sub court and obtained permission to sell two properties.
The appellants filed an interim application for setting aside the order granting permission to the trust for selling the two properties, alleging that the negotiated price was only about 20% of the market price.
The sub judge dismissed the application on the ground that the applicants had no locus standi to file the application under clauses 13 and 14 of the Scheme decree as they were not parties to the Origi nal suit.
On revision the High Court also came to the conclusion that the application was not maintainable.
This appeal, by special leave, is against the said judgment of the High Court.
On behalf of the appellants, it was contended that since the suit under section 92 CPC being a representative suit, the scheme decree binds not only the parties thereto, but all those who are interested in the trust.
The contention of the Respondents was that only the two persons 761 who filed the original suit can be considered as "parties" in terms of clause 14 of the scheme decree and since the appellants were not plaintiffs in the suit, they have no locus standi to file an application under clauses 13 and 14 of the scheme decree.
Allowing the appeals, this Court, HELD: 1.1 A suit under Section 92 of the Code is a suit of a special nature for the protection of Public rights in the Public Trusts and charities.
The suit is fundamentally on behalf of the entire body of persons who are interested in the trust.
It is for the vindication of public rights.
The beneficiaries of the trust, which may consist of public at large, may choose two or more persons amongst themselves for the purpose of filing a suit under Section 92 of the Code and the suit title in that event would show only their names as plaintiffs.
The named plaintiffs being the repre sentatives of the public at large which is interested in the trust all such interested persons would be considered in the eyes of law to be parties to the suit.
A suit under Section 92 of the Code is thus a representative suit and as such binds not only the parties named in the suit title but all those who are interested in the trust.
It is for that reason that explanation VI to Section 11 of Code constructively bar by res judicata the entire body of interested persons from reagitating the matters directly and substantially in issue in an earlier suit under Section 92 of the Code.
[766B C] 1.2 A suit whether under Section 92 of the Civil Proce dure Code or under Order 1 Rule 8 of Civil Procedure Code is by the representatives of large number of persons who have a common interest.
The very nature of a representative suit makes all those who have common interest in the suit as parties.
In the instant case all persons who are interested in the respondent trust are parties to the original suit and as such can exercise their rights under clauses 13 and 14 of scheme decree.
[766H; 767A] Raje Anandrao vs Shamrao and Ors., ; ; Ahmed Adam Sait and Ors.
vs Inayatullah Mekhri and Ors., ; relied on.
2.1 The property of religious and charitable endowments or institutions must be jealously protected because large segment of the community has beneficial interest therein.
Sale by private negotiations which is not visible to the public eye and may even give rise to public suspicion should not, therefore, be permitted unless there are special 762 reasons to justify the same.
Care must be taken to fix the reserve price after ascertaining the market value for safe guarding the interest of the endowment.
[767F G] 2.2 The orders of subordinate court dated October 27, 1984 and January 23, 1985 permitting the sale of the two properties and consequent sale in favour of the respondents, are set aside.
The properties in question may be sold by public auction by giving wide publicity regarding the date, time and place of public auction.
The offer of Rs. 10 lacs made in this Court will be treated as minimum bid of the person who has given the offer and deposited ten percent of the amount in this Court.
It will also be open to the re spondents/purchasers to participate in the auction and compete with others for purchasing the properties.
The respondents vendees from the trust shall be entitled to refund of the price paid by them with 10% interest from the date of payment of the amount till the date of auction of the property.
They will also be entitled to compensation for any superstructure put up by them in the properties includ ing compensation for any additions or improvements made by them to the building and the property.
[767H; 768A C] Chenchu Ram Reddy and Anr.
vs Govt.
of Andhra Pradesh and Ors.
, [1986] 3 SCC 391, relied on.
|
ivil Appeal No. 778 of 1988.
From the Judgment and Order dated 5.8.
1987 of the Assam High Court in Civil Rule No. 372 of 1982.
Anil Dev Singh and P. Parmeshwaran for the Appellants.
A.K. Ganguli, I.A. Ansari and Ms. Mridula Ray for the Respondents.
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 Division Bench of the High Court of Guwahati setting aside the order of conviction and the punishment of imprisonment as also the order of dismissal from service inflicted on the three respondents following a finding of guilt by the General Court Martial.
Naik Subedar Baleshwar Ram was a Junior Commissioned Officer of Amaribari Supply Point in the far eastern sector and was in overall charge of the said supply point.
Around 5.30 p.m. on June 19, 1980, he directed Driver Rattan Singh to park an army vehicle near the ration store for loading dry ration.
Respondent Ramji with the help of one labour from civilian side loaded the dry ration in the vehicle, whereafter Baleshwar Ram directed the truck to be taken towards Balipura.
Respondent No. 1 sat in the front seat in civil dress while respondents 2 and 3 sat behind the body of the truck.
By the time the vehicle reached Balipura, it had become dark and respondent No. 1 ordered the driver to take the vehicle towards Tezpur.
When the vehicle reached the outskirts of village Eatavari, respondent No. 1 directed the driver to slow down and turn the vehicle towards the right and take it off on a narrow kutcha track not leading to Tezpur.
The driver of the vehicle was not prepared to take the vehicle on the kutcha road but upon respondent No. 1 's insistence the vehicle was so taken and on the kutcha track the vehicle bogged down mid way and could not be taken further.
In the meantime, some civilian persons gathered there.
The respondents 2 and 3 got down and started unload ing some ration until they were prevented by the civilians present there.
Respondent No. 2 21 slipped away from the place.
The civilians being suspicious informed the civil police, who in turn handed over the matter to military police for investigation and necessary action.
After due inquiry a disciplinary action was initiat ed and inquiry under Rule 22 of the Army Rules was undertak en.
A General Court Martial followed where definite charges were given and ultimately on the basis of summary evidence available all the three persons were found guilty, convicted and sentenced.
Order of dismissal from service followed.
The decision of the Court Martial and the order of dismissal were challenged before the Guwahati High Court in a writ petition.
The High Court found that as against re spondents 2 and 3 there was no inquiry under Rule 22.
The High Court relied upon the decision of this Court in Lt. Col. Prithi Pal Singh Bedi vs Union of India & Ors., [1982] 3 SCC 140 and held that the proceeding before the General Court Martial was in violation of the mandatory provisions of the Army Rules.
On that finding the High Court set aside the order of conviction and punishment of imprisonment as also the order of dismissal from service.
It is a fact that as against respondents 2 and 3 there was no inquiry under Rule 22.
It is not disputed that the Commanding Officer of the Unit had stated before the General Court Martial that he did not find any case against respond ents 2 and 3.
The summary of evidence recorded in the Gener al Court Martial has been made available to us and we have read the same.
The conclusion reached by the Commanding Officer seems to us to be a reasonable one.
We do not think there is any justification to set aside the order of the High Court so far as respondents 2 and 3 are concerned.
So far as the case against respondent No. 1 goes there was an inquiry under Rule 22.
The point raised on behalf of respondent No. 1 in the High Court was different from the case made out by respondents 2 and 3.
It had been pleaded that the inquiry under Rule 22 as against respondent No. 1 related to an offence which came under section 63 of the , namely, conduct prejudicial to good order and military discipline; while the charge he was called upon to face in the General Court Martial was one of theft punisha ble under section 52(a) of the .
We have seen the evidence recorded in the inquiry under Rule 22.
It is a fact that the allegation at the stage of inquiry under Rule 22 was described as prejudicial to good order and military discipline but the basic facts said to constitute that allegation were nothing else than removal of the foodstuff which constituted that charge of 22 theft.
It is, therefore, clear that no prejudice has been caused to respondent 1 and the inquiry under rule 22 and the trial before General Court Martial were over the self same facts.
In these circumstances, we are inclined to sustain the judgment of the High Court in regard to respondents 2 and 3 but we would reverse the judgment in regard to respondent 1 and restore the order of the General Court Martial.
Respond ent No. 1 has already been dismissed from service.
He has undergone more than 9 months of the punishment out of one year of imprisonment.
There has been a gap of several years since he has been released from jail initially on bail and Later on the basis of the judgment of the High Court.
In these circumstances he need not be taken into custody for suffering the balance period of the sentence.
The appeal is partly allowed.
There shall be no order for costs.
T.N.A. Appeal allowed.
| IN-Abs | The respondents faced trial for the charge of theft.
After a General Court Martial, they were found guilty, convicted and sentenced.
All the three respondents were dismissed from service.
The respondents filed a writ petition in the High Court challenging the decision of the Court martial, and the order of the dismissal.
The High Court set aside the order of conviction and punishment of imprisonment as also the order of dismissal from service by holding that the trial before the Court Martial General was in contravention of Rule 22 of the Army Rules, 1954.
Hence this appeal by the Union of India.
Allowing the appeal in part, this Court.
HELD: 1.
It is a fact that the allegation at the stage of inquiry under Rule 22 was described as prejudicial to good order and military discipline but the basic facts said to constitute that allegation were nothing else than removal of the foodstuff which constituted the charge of theft.
It is, therefore, clear that no prejudice has been caused to respondent 1 and the enquiry under Rule 22 and the trial before General Court Martial were over the selfsame facts.
[21H; 22A] 2.
It is a fact that as against respondents 2 and 3 there was no inquiry under Rule 22.
It is not disputed that the Commanding Officer of the Unit had stated before the General Court Martial that he did not find any case against respondents 2 and 3.
The conclusion reached by the Command ing Officer was reasonable.
Therefore there is no justifica tion to set aside the order of the High Court so far as respondents 2 and 3 are concerned.
[21D E] 20 Lt. Col. Prithi Pal Singh Bedi vs Union of India & Ors., [1982] 3 SCC 140, referred to.
|
Special Leave Petition (Civil) No. 10326 of 1989.
From the Judgment and Order dated 1.8.1989 of the Patna High Court in C.W.J.C. No. 5768 of 1989.
R.K. Jain, R. Sharma, R.P. Sharma and Ms. Sangeeta Tripathi for the Petitioners.
The Judgment of the Court was delivered by KANIA, J.
This is one more case of an educational insti tution started in the State of Bihar without recognition applying for permission to allow the students, whom it has admitted and, from whom it has presumably recovered substan tial fees, to be allowed to appear at the ensuing examina tion on the ground that the question of its recognition has not been decided by the Government.
It appears from the judgment of the High Court that a number of similar mushroom institutions have sprung up in the State of Bihar without prior recognition, have admitted students, received fees from them and allowed them to undergo training for a sub stantial period of time without getting any recognition and thereafter tried to get permission from the Court for their students to be allowed to appear at the examination on grounds of sympathy.
This impression has been gathered from a 25 number of similar applications made to this Court in the last few months.
It is not possible to grant any such permission as prayed for because the granting of such permission would be clearly violating the provisions of the Education Act (See the judgments in S.L.P. No. 120 14 of 1987 decided on Novem ber 25, 1987 and the A.P. Christians Medical Educational Society vs Government of A.P. & Anr., ; ; What is however, unfortunate is that applications made by various educational institutions to the Government for recognition are not promptly disposed of.
In fact, we are of the view that the concerned department of the Government of Bihar should see to it that applications for recognition of educational institutions are decided promptly and where such an application is without merit, the Government should promptly reject the same and take steps to see to it that the rejection is brought to the attention of the students of the institution concerned so that they may not waste further time and money by undergoing training in that institution.
The failure of the Government to take such action would only reflect callous indifference to the inter ests of the young students to whom the Government certainly owes certain responsibilities.
We also feel that the State Government should issue advertisement through newspapers and other possible channels, if any, to ensure that students do not get misled by such unrecognised institutions into wast ing their precious time and money in undergoing training which will be of no avail to them.
We find that there ap pears to be a large number of students in the State who are misled by such institutions.
In fact, the State should consider taking such steps, criminal or civil, as open to it in law to stop such institutions and those who run them from misleading students and deceiving them.
We are informed that in the present case, the applica tion for recognition was made by the petitioners and as early as 1986 that application has not still been disposed of.
We direct that, if this so, the application should be disposed of within 4 weeks from today.
In these circumstances, we direct the State Government of Bihar to get published advertisements in at least three newspapers in that State with wide circulation warning students not to take admission in any educational institu tion which has not got recognition and making it clear that if they do so, they would be doing so at their own risk.
The advertisements to be issued within three weeks from the date of receipt of this order by the department concerned.
We direct that the 26 copies of this order be sent forthwith to the Chief Minister of Bihar, the Minister in charge of the Education Department and the Secretary of that department.
Special leave petition is dismissed with these observa tions.
In case the application of the petitioners for recog nition is granted, the Government will consider the granting of appropriate relief to the students in respect of the years for which the recognition is concerned.
R.S.S. Petition dismissed.
| IN-Abs | The petitioners in the special leave petition started, without recognition, a teachers training college in Bihar, and later applied for permission to allow its students to appear at the examination on the ground that the question of its recognition had not been decided by the Government.
The petitioners failed to get the desired relief from the High Court.
Dismissing the special leave petition, this Court, HELD: (1) A number of mushroom institutions have sprung up in the State of Bihar without getting any recognition and thereafter have tried to get the permission from courts that its students be allowed to appear at the examination on grounds of sympathy.
[24G] (2) It is not possible to grant any such permission as prayed for because the granting of such permission would be clearly violating the provisions of the Education Act.
[25B] S.L.P. No. 12014 of 1987 decided on November 25, 1987 A.P. Christians Medical Educational Society vs Government of A.P. & Anr., ; , referred to.
(3) The application for recognition in this case was made by the petitioners as early as 1986 and that applica tion has not still been disposed of.
The same should be disposed of within 4 weeks from today.
[25F] (4) The concerned department of the Government of Bihar, should see to it that applications for recognition of educa tional institutions are decided promptly and where such an application is without 24 merit, the Government should promptly reject, the same and take steps to see to it that the rejection is brought to the attention of the students of the institution concerned so that they may not waste further time and money by undergoing training in that institution.
[25C] (5) The failure of the Government to take such action would only reflect callous indifference to the interests of the young students to whom the Government certainly owes certain responsibilities.
[25D] (6) The State should consider taking such steps, Crimi nal or Civil, as open to it in law, to stop such institu tions and those who run them from misleading students and deceiving them.
[25E] (7) The State Government of Bihar shall get published advertisements in at least three newspapers in that State with wide circulation warning students not to take admission in any educational institution which has not got recognition and making it clear that if they do so, they would be doing so at their own risk.
|
ivil Appeal No. 4565 of 1989.
85 From the Judgment and Order dated 4.5.1988 of the Cal cutta High Court in Appeal No. 806 of 1987 A.K. Sen, P.L. Sen, Bhaskar Sen, D.K. Sinha, A.N. Chat terjee, N.D.B. Raju and V.K. Jain for the Appellant.
F.S. Nariman, R.C. Nag, S.B. Mukharjee, R.F. Nariman, Kusum Agarwal, O.C. Mathur and D.N. Misra for the Respond ent.
The Judgment of the Court was delivered by OJHA, J.
Special leave granted.
This appeal by special leave has been preferred against the judgment dated May 4, 1988 of a Division Bench of the Calcutta High Court in Appeal No. 806 of 1987.
Facts in brief necessary for consideration of the submissions made by learned counsel for the parties are that the respondent, Pradip Kumar Sarkar made an application under section 155 of the (hereinafter referred to as the Act) for rectification of the share register of the appellantcom pany by inserting his name therein as a registered share holder of certain shares transferred in his favour.
These shares were fully paid up and the company had no lien over them.
According to the respondent, notwithstanding the shares being duly lodged with the Company along with the transfer deeds and requisite fees for registration being paid the Board of Directors of the Company disapproved of the registration of the said shares.
This disapproval led the respondent to make the application under section 155 of the Act for rectification of the share register.
The case of the respondent was that the shares in question being fully paid up and the company having no lien over them the regis tration of the transfer of the shares in his favour could not be refused under Article 39 of the Articles of Associa tion of the Company which was the article relevant for the purpose.
The application aforesaid was contested by the Company on various grounds.
Overruling the objections raised by the Company a learned single judge allowed the application.
Aggrieved, the Company preferred the appeal aforesaid before a Division Bench of the High Court which has been dismissed by the judgment appealed against.
It has been urged by learned counsel for the appellant that even if the Articles of Association do not make any specific provision in this behalf the Company had residuary inherent power to refuse registra 86 tion of the transfer of the shares for the benefit of the Company and its existing sharesholders.
Power of refusal to register the transfer of shares was also sought to be de rived from the words "or otherwise" used in Article 42 of the Articles of Association and section 111(2) of the Act.
The transferor not being made a party to the application under section 155 of the Act was also pleaded in justifica tion of the submission that the said application deserved to be dismissed.
It was also urged that in view of section 108 of the Act the Company was entitled to go into the question as to whether the consideration for transfer of shares as shown in the transfer deeds was real consideration for purposes of finding out as to whether the transfer deeds were duly stamped and refuse registration of the transfer of the shares if the Company was of the view that the transfer deeds were not duly stamped.
For the respondent on the other hand it was urged by his learned counsel that in view of the specific provision contained in this behalf in Article 39 of the Articles of Association and no residuary power whatsoev er having been conferred on the Company or its Directors to refuse registration of the transfer of shares it did not have the power claimed by it in aid of refusal of registra tion of the shares transferred to the respondent.
Having heard learned counsel for the parties we are of the opinion that unless there is any impediment in the transfer of a share of a public limited company, such as the appellant, a shareholder has the right to transfer his share.
Correspondingly, in the absence of any impediment in this behalf the transferee of a share, in order to enable him to exercise the rights of a sharesholder as against the Company and third parties, which is not possible until the transfer is registered in the company 's register, is enti tled to have a rectification of the share register of the company by inserting his name therein as a registered share holder of the share transferred to him.
To have such recti fication carried out is the right of the transferee and can be defeated by the company or its Directors only in pursu ance of some power vested in them in this behalf.
Such power has to be specified and provided for.
It may even be residu ary but in that case too it should be provided for and traceable either in the Act or the Articles of Association.
Even if the power of refusal is so specified and provided for the registration of a transferred share cannot be re fused arbitrarily or for any collateral purpose, and can be refused only for a bona fide reason in the interest of the company and the general interest of the sharesholders.
If neither a specific nor residuary power of refusal has been so provided, such power cannot be exercised on the basis of the so called undeclared inherent power to refuse registra tion on the ground that the 87 company or its Directors take the view that in the interest of the company and the general interest of the shareholders, registration of the transfer of shares should be refused.
Indeed making a provision in the Act or the Articles of Association etc.
conferring power of refusal would become futile if existence of an inherent power such as claimed by the company in the instant case is assumed, for the simple reason that the amplitude of the so called undeclared inher ent power would itself take care of every refusal to regis ter the transfer of share.
Assumption of such a power would result in leaving the matter of transfer of share and its registration at the mercy and sweet will of the company or its Directors, as the case may be.
In the absence of any valid and compelling reason it is difficult to comprehend such a proposition.
Even the submission based on the words "or otherwise" in subsection (2) of Section 111 of the Act and in Article 42 of the Articles of Association to the effect that these words recognise the existence of an inherent power to refuse registration of the transfer of the share does not commend itself to us.
The words "or otherwise" were inserted in sub section (2) of Section 111 of the Act in 1960 and it is this subsection so amended which is applicable to the facts of the instant case.
Sub section (2) of Section 111 does not confer any right but only casts a duty to give notice of refusal to register the transfer of a share and provides for punishment in case of default in doing so.
Giving of notice is necessary, inter alia, to facilitate the exercise of the right of appeal conferred by sub section (3) and (4) of Section 111.
To introduce a concept of either conferment or recognition of a right to refuse registration of the trans fer of a share in sub section (2) militates against and runs counter to the very texture and purpose of this sub section.
Such an interpretation would have the effect of imputing to the legislature an intention of making an effort to fix a square peg in a round hole, when the purpose, if it was to confer or recognise any inherent power to refuse registra tion of the transfer of a share, could plainly be achieved by inserting the words "or otherwise" after the words "under its articles" and before the words "to refuse to register" in sub section (1) of Section 111 which is the sub section relevant for such purpose.
The words "or otherwise" take colour from the context in which they are used.
In our opinion, the words "under its articles" in subsection (2) of Section 111 of the 'Act have been used in the same sense as is expressed in legal termi nology by the familiar words "conferred by law".
Consequent ly, if the opening part of sub section (2) is read as "If a Company refuses, whether in pursuance of any power conferred by 88 law or otherwise" it would be incongruous to suggest that the legislature in using the words "or otherwise" intended to give recognition to a power to refuse registration of the transfer of a share even otherwise than in accordance with law.
This would be tantamount to putting a premium on taking the law into one 's own hands.
The legislature cannot be imputed with any such intention.
For these reasons, we are of the view that in the context in which the words "or otherwise" have been used in sub section (2) of Section 111, they only purport to cast a duty or impose an obligation of giving notice of refusal to register the transfer of a share irrespective of the fact whether such refusal is under the Articles of Association of the Company or de hors the Arti cles, which would include even a case where such refusal has been made arbitrarily or for any collateral purpose.
A fortiorari, this would be the interpretation of even Article 42 of the Articles of Association of the Company inasmuch as on its plain language which, except for the provision for punishment, is in pari materia with sub section (2) of Section 111 of the Act, the purpose of this Article is the same as of the said sub section (2).
Even the marginal note of Article 42 lends support to this interpretation.
At this place, we may point out that it has not been disputed before us by learned counsel for the appellant that the shares in question having been fully paid up and the Company having no lien over them, Article 39 of the Articles of Association could not be invoked to refuse registration of the transfer of these shares.
We may now advert to the text books and the decided cases on which reliance has been placed by learned counsel for the appellant in support of the submission that the Company had an inherent power to refuse registration of the transfer of the shares.
It was pointed out that the board of directors is now the principal organ of a company.
The management of the affairs of the company is vested in the board of directors and all powers excepting those which are specifically reserved for the general meeting by the act or the articles or memorandum of association or otherwise must now be done by the board of directors vide section 291 of the Act (The New Frontiers of Company Law by S.C. Sen 1971 Edition Page 51).
Whatever may fairly be regarded as inci dental to the objects for which the Corporation was created is not to be taken as prohibited.
The incidental power is one that is directly and immediately appropriate to the execution of the specific power created and not one that has a slight or remote relation to it.
Furthermore, the want of an express enumeration of powers does not exclude such incidental powers as are reasonably 89 necessary to accomplish the corporate purpose.
The mere creation of a corporation was alone sufficient, in the absence of prohibition, to confer upon such corporation all those powers which are regarded as incident to corporate existence.
(Thomsons ' Commentaries on the Law of Corporation 3rd Edition Vol.
3 Pages 820 to 822) As to the relationship between the general meeting and the directors to some extent a more exact analogy would be with the division of powers between the Federal and State Legislatures under a Federal Constitution and the residual powers are in this case with the directors (Gower 's Principles of Modern Company Law 4th Edition Page 147).
Corporate authority (powers) are deter mined by reference to (1) charter, (2) incorporation law or act, (3) general and special corporation statutes relevant, (4) other applicable statutes, (5) case decisions (6) cus tomary practices, and (7) treatises and other discussions.
They include (1) general powers usually recognized in all corporations, (2) general powers usually recognized in corporations of the particular type, (3) powers inherent in or limited by the purposes or business as stated in the charter, and (4) implied powers to do all things reasonably and properly incidental to the specified purpose and busi ness.
(Modern Corporation Law by Howard L. Oleck Vol.
It is a well recognised rule that a Corporation is not restricted to the exercise of the powers expressly conferred upon it by its charter but has the implied or incidental power to do whatever is 'reasonably necessary to effectuate the powers expressly granted and to accomplish the purposes for which it was conferred unless a particular act sought to be done is prohibited by the law or its charter.
(American Jurisprudence 2nd Edition Vol.
Every corpora tion is of course created with certain express powers but in addition to those every corporation has also certain powers which attach to it as an incident to its corporate exist ence.
The powers which are incidental to corporate existence and which are always implied in the absence of express restrictions are: (1) The power to have perpetual succes sion, or succession during the period for which the corpora tion is created which includes the power to elect members in the place of those who are removed by death or otherwise, (2) The power to have a corporate name, (3) The power to purchase and hold land and chattels for authorised corporate purposes, (4) The power to have a common seal, (5) The power to make by laws for the government of the corporation, (6) The power to disfranchisement or removal of members except in the case of modern joint stock corporations.
(Corpus Juris Secundum Vol.
XlX Pages 372 373) Suffice it to say in this behalf that what has been stated above with regard to residuary, implied or incidental powers is calculated to 90 accomplish the objects, the corporate purpose or corporate existence of the corporation.
Refusal to register the trans fer of a share obviously does not fall in this category.
As has been pointed out in Palmer 's Company Law 24th Edition Page 121 the objects or purposes for which a company is created should be distinguished from the powers which it can exercise.
So far as refusal to register the transfer of a share is concerned it is almost the consistent view in decided cases that the power has to be specified and can be exercised only in the manner specified and within the frame work of the said specification.
There is no inherent power in this behalf.
(See: In re Smith, Knight, & Co., IV Chan cery Appeal Cases Page 20; In re National Provincial Marine Insurance Company, V Chancery Appeal Cases Page 559; Moffatt vs Parqunar, V11 Chancery Division Page 59 1; In re Cawley & Co., XLII Chancery Division Page 209; In re Discovers Fi nance Corporation, Limited, [1910] 1 Chancery Division Page 312 and Sadashiv vs Gandhi Sewa Samaj, A.1.R. 1958 Bombay Page 247) Reliance was then placed by learned counsel for the appellant on The Conservators of the River Tone vs Ash, 109 English Reports Page 479.
In that case by an Act for making and keeping the river Tone navigable, it was enacted, that the thirty persons therein named and their successors should be conservators of the river; and should have various powers referred to therein.
By a subsequent Act some more powers were conferred on them.
A question arose as to whether the conservators were entitled to sue in their corporate name for an injury done to their real property.
It was held that as it manifestly appeared from the different clauses of the Acts of Parliament that the conservators should take land by succession and not by inheritance, although they were not created a corporation by express words they were so by implication and that being so they were entitled to sue in their corporate name for an injury done to their real property.
In our opinion, on the basis of this decision it is difficult to cull out any power in the board of directors of the company in the instant case to refuse to register the transfer of a share by implication.
Reliance was also placed on Attorney General vs The Lord Mayor Etc.
of the City of Leeds, [1929] 2 Chancery Division Page 291 where it was pointed out that a corporation incor porated by royal charter stands on a different footing from a statutory corporation, the difference being that the latter species of corporation can do only such acts as are authorised directly or indirectly by the statute creating it whereas the former can, speaking generally, do anything that an ordinary individual can do.
If, however, the corporation by charter be a 91 municipal corporation then it is subject to the restriction imposed by the Municipal Corporations Act, 1882.
The ques tion in connection with which the above observations were made was whether the Corporation of Leeds, a municipal corporation, was entitled to work or run certain omnibuses along any route whether within or without the boundaries of the City of Leeds.
This again was obviously a question relating to the business of the corporation to work or run omnibuses and has no bearing on the question as to whether the directors of the appellant company in the instant case had inherent power to refuse to register the transfer of shares.
In E.M. Muthappa Chettiar vs Salem Rajendra Mills Ltd. XXV Company Cases Page 283 it was held that if a person is of such a character as to throw their company into confusion and if he was not a desirable one, then the Board of Direc tors would certainly be acting in the best interests of the company in refusing to register the shares in his name and such a reason is quite a valid reason.
Suffice it to say so far as this case is concerned that Article 56 which was the relevant article dealing with the refusal to register the transfer of a share itself clearly conferred power on the board of directors to refuse to register the transfer of a share inter alia "if the transferee of the share is not approved".
It was thus a case where power had been conferred by an article and was not a case of refusal to register under any inherent power.
Lastly, reliance was placed on Life Insurance Corpora tion of India vs Escorts Ltd. & Ors., [1985] Supp. 3 S.C.R. Page 909.
In that case with reference to an earlier decision of this Court in Bajaj Auto Ltd. vs N K. Firodia and Anoth er, 41 Company Cases page 1, it was held that where the articles permitted the directors to decline to register the transfer of shares without assigning reasons the court would not necessarily draw adverse inference against the directors but will assume that they acted reasonably and bona fide.
Here again, as is apparent from the decision in the case of Bajaj Auto Ltd. (supra) Article 52 of the appellant company in that case provided that the directors might at their absolute and uncontrolled discretion decline to register any transfer of shares.
This too was, therefore, a case of power being conferred by the articles of association and not a case of exercise of inherent power.
We may also point out that at page 997 of the Reports of Escorts Ltd. (Supra) it was held that even though it was open to the company and indeed it was bound to refuse to register the transfer of shares of an Indian company in favour of a non resident where the requisite permission under the FERA was not ob tained but 92 once permission was obtained whether before or after the purchase the shares, the company could not thereafter refuse to register the transfer of shares.
The third submission made by learned counsel for the appellant that the application under section 155 of the Act was not maintainable as the transferors had not been made parties therein, may now be considered.
A similar submission had been made before the Division Bench of the High Court also and was repelled by holding that the transferor is not a necessary party to an application under section 155 of the Act unless the transfer was disputed by him.
It was pointed out that even though in the instant case the transferors had been served with notice and in any event had knowledge of the proceedings for registration of transfer of shares they had not disputed the transfer of the shares.
We do not find any infirmity in the order of the High Court on this point.
Likewise, we find no substance even in the submission made by learned counsel for the appellant based on section 108 of the Act for the simple reason that after taking into consideration the evidence produced by the parties it has been found as a fact by the High Court that it had not been proved that the respondent had paid higher prices for the shares than those stated in the transfer deeds.
We find no justification for interferring with the said finding of fact in the present appeal.
On this finding the transfer deeds could not be termed as unduly stamped and power to refuse the registration of the transfer of shares contemplated by section 108 of the Act would not be invoked.
In the result, we find no substance in this appeal and it is accordingly dismissed with costs assessed at Rs.2,000.
T.N.A. Appeal dismissed.
| IN-Abs | The respondent lodged certain fully paid up shares with the appellant company for transfer in his name.
The Board of Directors of the Appellant company disapproved the registra tion of the shares.
The respondent filed an application under section 155 of the for rectifica tion of the share register i.e. for inserting his name in the share register as a registered share holder which was allowed by a single judge of the High Court.
The Company preferred an appeal which was dismissed by the Division Bench of the High Court.
In appeal to this Court it was contended on behalf of the company that (i) the Company had residuary inherent power to refuse the registration of the transfer of shares; (ii) the words "or otherwise" in Article 42 of the Articles of Association and section I 11(2) of the recognise the existence of an inherent power to refuse registration of the transfer of shares; (iii) the applica tion under section 155 was not maintainable as the transfer or had not been made parties therein; and (iv) the company was entitled to examine the correctness of transfer consi 83 deration shown in the transfer deeds and refuse registration of the transfer of shares if the transfer deeds were not duly stamped.
Dismissing the appeal, this Court, HELD: 1.
Unless there is any impediment in the transfer of a share of a public limited company, a shareholder has the right to transfer his share.
Correspondingly, in the absence of any impediment in this behalf the transferee of a share is entitled to have a rectification of the share register of the company by inserting his name therein as a registered shareholder of the share transferred to him.
To have such rectification carried out is the right of the transferee and can be defeated by the company or its Direc tors only in pursuance of some power vested in them in this behalf.
Such power has to be specified and provided for.
It may even be residuary but in that case too it should be provided for and traceable either in the Act or the Articles of Association.
Even if the power of refusal is so specified and provided for the registration of a transferred share cannot be refused arbitrarily or for any collateral purpose, and can be refused only for a bona fide reason in the inter est of the company and the general interest of the share holders.
If neither a specific nor residuary power of refus al has been so provided, such power cannot be exercised on the basis of the so called undeclared inherent power to refuse registration on the ground that the company or its Directors take the view that in the interest of the Company and the general interest of the shareholders, registration of the transfer of shares should be refused.
Indeed making a provision in the Act or the Articles of Association etc.
conferring power of refusal would become futile if existence of an inherent power is assumed, for the simple reason that the amplitude of the so called undeclared inherent power would itself take care of every refusal to register the transfer of share.
Assumption of such a power would result in leaving the matter of transfer of share and its registra tion at the mercy and sweet will of the company or its Directors, as the case may be.
[86E H; 87A B] 2.
The objects or purposes for which a company is creat ed should be distinguished from the powers which it can exercise.
So far as refusal to register the transfer of a share is concerned the power has to be specified and within the framework of the said specification.
There is no inher ent power in this behalf.
[90B] In re Smith Knight & Co., IV Chancery Appeal Cases 20; In re National Provincial Marine Insurance Company, V Chan cery Appeal Cases 559; Moffatt vs Parqunar, VII Chancery Division 591; In re 84 Cawley & Co., XLH Chancery Division 209; In re Discoverers Finance Corporation Ltd., [1910] 1 Chancery Division 312 and Sadashiv vs Gandhi Sewa Samaj, AIR 1958 Bom.
247 followed.
Palmer 's Company Law 24th Edn.
p. 121 referred to.
The Conservators of the River Tone vs Ash, 109 English Reports 479; Attorney General vs The Lord Mayor etc.
of the City of Leeds, [1929] 2 Chancery Division 291; E.M. Muthappa Chettiar vs Salem Rajendra Mills Ltd., XXV Company Cases 283; Life Insurance Corporation of India vs Escorts Ltd. & Ors., [1985] Suppl.3 S.C.R. 909 and Bajaj Auto Ltd. vs N.K. Firodia and Anr., 41 Comp.
Cases 1, distinguished.
In the context in which the words "or otherwise" have been used in sub section (2) of section 111, they only purport to cast a duty or impose an obligation of giving notice of refusal to register the transfer of a share irre spective of the fact whether such refusal is under the Articles of Association of the Company or de hors the Arti cles, which would include even a case where such refusal has been made arbitrarily or for any collateral purpose.
A fortiorari, this would be the interpretation of even Article 42 of the Articles of Association of the Company inasmuch as on its plain language which, except for the provision for punishment, is in pari materia with sub section (2) of Section 111 of the Act.
The purpose of this Article is the same as of the said sub section (2).
To introduce a concept of either conferment or recognition of a right to refuse registration of the transfer of a share in sub section (2) militates against and runs counter to the very texture and purpose of this subsection.
[88A C; 87E] 4.
The transferor is not a necessary party to an appli cation under section 155 of the Act unless the transfer was disputed by him.
[92B C] 5.
In the instant case, it has been found as a fact by the High Court that it had not been proved that the respond ent had paid higher prices for the shares than those stated in the transfer deeds.
Therefore, there is no justification for interfering with the said finding of fact.
On this finding the transfer deeds could not be termed as unduly stamped and power to refuse the registration of the transfer of shares contemplated by section 108 of the Act could not be invoked.
[92D E]
|
Petition (Criminal) No. 222 of 1989 etc.
(Under Article 32 of the Constitution of India).
Kapil Sibal, Arvind K. Nigam and Ms. Kamini Jaiswal for the Petitioners.
V.C. Mahajan, Subba Rao and P. Parmeshwaran for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
Elaborate submissions have been made by the learned Counsel for both the parties and, accordingly, we proceed to dispose of the case on its merit after granting special leave.
This appeal is directed against the judgment of the High Court of Punjab & Haryana, dismissing the writ petition filed by three detenu including one Madan Lal Anand, the husband of the appellant, challenging the validity of the orders of detention, all dated September 30, 1988, passed by the Joint Secretary to the Government of India, the detain ing authority, under section 3(1) of the , hereinafter referred to as the 'COFEPOSA Act '.
So far as the detenu Madan Lal Anand is concerned, the order of detention was passed 'with a view to preventing the detenu from abetting the smuggling of goods and dealing is smuggled goods otherwise than by engaging in transporting or conceal ing or keeping smuggled goods '.
The order of detention along with the grounds of such detention was served on the detenu on October 18, 1988 and a declaration under section 9 of the COFEPOSA Act was made on November 2, 1988 and served on him on November 3, 1988.
The grounds of detention that were served on the detenu run into several pages.
It is not necessary to reproduce all the grounds, but we may state only the relevant allegations against the detenu as made in the grounds of detention.
737 It is alleged that information was received that polyes ter filament yarn and polyester fibre imported in the name of M/s. Jasmine, B 3/7, Vasant Vihar, New Delhi, and M/s Expo International, C 224, Defence Colony, New Delhi, under the Duty Exemption Entitlement Certificate Scheme (DEEC Scheme).
were being disposed of in the local market without fulfilling export obligations in contravention of the provi sions of the Notification No. 117/CUS/78 dated 9.6.1978 (as amended) and the conditions of Advance Import Trade Control Licences.
M/s. Jasmine obtained five "Actual User" advance li cences in the financial year 1984 85 from the Joint Chief Controller of Imports & Exports, New Delhi, for the import of polyester filament yarn and polyester fibre free of customs duty under the DEEC Scheme.
Under this Scheme, M/s. Jasmine were granted the said licences subject to the condi tions, inter alia, that they would manufacture readymade garments (resultant products) out of the imported polyester filament yarn and polyester spun yarn and export the result ant products abroad within a period of six months from the date of the first clearance of the imported consignment in terms of the conditions of the advance licences and the conditions of the said Notification dated 9.6.1978.
By virtue of the other advance licences, excepting the fifth licence dated 9.1.
1985, the said M/s. Jasmine import ed the polyester filament yarn without payment of import duty amounting to more than Rs. 3 crores.
It is the case of the detaining authority that in respect of the imported yarn M/s. Jasmine have not fulfilled their export obligation in respect of the polyester filament yarn got cleared by them against the above licences thereby violating the provisions of the said Notification dated 9.6.1978 and the conditions of the advance licences and, consequently, the provision of section 111(0) of the .
In the applications made to the Joint Chief Controller of Imports & Exports, New Delhi, for the grant of advance licences, one Naresh Chadha and Madan Lal Chadha were de clared as the Partners of M/s. Jasmine and the address of their factory premises was declared as Khasra No. 694/205, Village Lado Sarai, New Delhi, which on investigation was found to cover the whole village of Lado Sarai.
During the last quarter of 1985 M/s. Jasmine shifted their factory premises to 374, Ram Darbar, Industrial Area, Phase II, Chandigarh.
On enquiry, it came to light that M/s. Jasmine did not manufacture any ready made garments in the said premises.
The raw material imported by the firm 738 was never brought to either of the said two premises for the purposes of manufacture.
They had no intention to manufac ture or export the goods, as there was neither any machinery at the so called factory premises nor power connection.
M/s. Expo International also obtained five "Actual User" advance licences in the financial year 1984 85 from the Joint Chief Controller of Imports & Exports, New Delhi, for the import of polyester filament yarn and polyester fiber, free of customs duty, under the DEEC Scheme.
They were also required to manufacture the resultant products out of the imported polyester filament yarn and polyester fiber and to export out of India resultant products within a period of six months from the date of clearance of the first consign ment of raw material in terms of the conditions of the ad vance licences and the provision of the said Notification dated 9.6.1978.
M/s. Expo International also imported polyester filament yarn under three advance licences without payment of customs import duty amounting to Rs.49.29 lakhs against the first licence dated 29.5.
1984 and Rs.1.17 crores against the second and third licences dated 3.8.
1984 and 11.9.1984, but did not clear the imported material.
The other two licences were not utilised by them.
In ground No. 15, it has been stated that investigations conducted by the Customs and Central Excise Staff, Chandi garh, have revealed that both the said firms have not ful filled their export obligations so far in terms of the advance licences granted to them and also in terms of the provisions of the said Notification dated 9.6.1978 (as amended) issued under section 125 of the .
Inves tigations have also revealed that both the firms have sold the polyester filament yarn cleared by them without payment of duty in contravention of the provisions of the above Notification and conditions of the advance licences.
It is the case of the detaining authority in the grounds of detention and the counter affidavit filed on behalf of the respondents that the said firms, namely, M/s. Jasmine and M/s. Expo International are benami firms of the detenu including the detenu Madan Lal Anand.
Although the said Naresh Chadha and Krishan Lal Chawla are stated to be the Partners of M/s. Jasmine and the said Naresh Chadha to be the Proprietor of M/s. Expo International, they were ciphers and the detenu had been taking out the advance licences in the benami of the said two firms.
Further, the said two firms had no factory anywhere, 739 and that they had no intention to comply with the conditions of the licences, that is, to export the resultant products out of the imported material for which the advance licences were issued.
The detenu Madan Lal Anand was arrested on 21.6.1988 under section 104 of the for his involvement in the import, clearance and sale of polyester filament yarn and polyester fiber in the names of the above two firms and on his application he was released on bail.
Again, the Chief Judicial Magistrate, Chandigarh, granted bail to the detenu on 11.7.
1988 and adjourned the case sine die.
In paragraph 47 of the grounds of detention, it has been stated by the detaining authority that the detenu has played a very active and major role for obtaining advance licences in the names of the said firms, importing the polyester filament yarn and polyester fiber, getting the same cleared from Bombay Customs and also for selling it in the local market in India in violation of the conditions of the said Notification dated 9.6.1978 and also of the advance li cences.
The detenu has been abetting the smuggling of the goods and also has been dealing with smuggled goods other wise than by engaging in transporting or concealing or keeping smuggled goods.
The three detenu including Madan Lal Anand filed a writ petition in the High Court of Punjab & Haryana praying for the issuance of a writ of habeas corpus and challenging the validity of the order of detention on a number of grounds.
The High Court by an elaborate judgment overruled all the contentions made on behalf of the detenu and upheld the order of detention and dismissed the writ petition.
Hence this appeal by special leave.
It has been already noticed that one of the conditions of the advance licences issued to the said firms was that the importer would manufacture ready made garments out of the imported polyester filament yarn and polyester fiber and export the resultant products abroad within a period of six months from the date of first clearance of the imported consignments in terms of the conditions of the advance licences.
With reference to the said conditions in the licences, it is urged by Mr. Sibal, learned Counsel appear ing on behalf of the appellant, that there was no smuggling of goods or any abetment of the smuggling of goods as al leged in the order of detention.
In support of this conten tion, the learned Counsel has placed reliance upon the definition of "smuggling", as contained in section 2(e) of the COFEPOSA Act.
Section 2(e) provides that "smuggling" has the same meaning as in clause (39) of section 2 of the 740 and all its grammatical variations and cognate expressions shall be construed accordingly.
Section 2(39) of the defines "smuggling" in relation to any goods as meaning any act or omission which will render such goods liable to confiscation under section 111 or section 113 of the .
It is not disputed that the relevant provision is clause (0) of is section 111 which provides as follows: "111.
The following goods brought from a place outside India shall be liable to confiscation: (o) Any goods exempted, subject to any condi tion from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which a condition is not observed unless the non observance of the condition was sanctioned by the proper offi cer.
" In view of clause (0) of section 111, if any goods exempted from payment of duty is imported without observing the condition, subject to which the exemption has been made, it will be a case of smuggling within the meaning of section 2(e) of the COFEPOSA Act.
It is strenuously urged on behalf of the appellant that as an abeyance order was passed against M/s. Expo Interna tional on March 27, 1985 before the expiry of six months from the date of first clearance of the goods imported by it on December 6, 1984, the said firm was prevented from com plying with the condition of the advance licence, namely, that the ready made garments were to be manufactured out of the imported polyester filament yarn and polyester fiber and the resultant products were to be exported abroad within a period of six months from the date of the first clearance.
It is submitted on behalf of the appellant that as the detenu was prevented from complying with the condition of the advance licence within six months of the first clearance by the issuance of an abeyance order by the Dy.
Chief Con troller of Imports & ' Exports, the provision of section 111(0) of the was not violated, for the goods could not be confiscated and, accordingly, there was no question of smuggling within the meaning of section 2(e) of the COFEPOSA Act read with section 2(39) of the .
It is urged that the detaining authority should have taken into consideration the above fact and should not have passed the impugned order of detention.
Attractive though the contention is, we regret we are unable to 741 accept the same.
It is true that before the expiry of six months from the date of the first clearance of the imported goods, an abeyance order was passed against M/s. Expo Inter national.
The question is whether by such abeyance order the said firm or the detenu was prevented from manufacturing the ready made garments and exporting the same within six months from the date of.
the first clearance.
In the grounds of detention, it has been clearly stated with all relevant particulars that the said two firms had really no existence and they did not have any factory whatsoever or any manufac turing device for the purpose of manufacturing ready made garments.
It is apparent from the grounds of detention and the counter affidavit filed on behalf of the respondents that with a view to procuring the licences for the purpose of importation of the goods without payment of any duty and for selling the same in the market, the said firms were created and/or set up by the detenu including the detenu Madan Lal Anand.
In these circumstances, no exception can be taken to the passing of the abeyance order against M/s. Expo International and, as it was more than certain that the imported goods would not and could not be utilised in ac cordance with the condition of the advance licence, the provision of section 111(0) of the was violated on the very importation of the goods.
There is, therefore, no substance in the contention made on behalf of the appel lant that there was no smuggling in this case and, as such, the order of detention was not at all justified.
The conten tion is rejected.
Next it is urged on behalf of the detenu that certain documents/ orders relating to the firm M/s. Expo Interna tional, which could influence the subjective satisfaction of the detaining authority in favour of the detenu, were not placed before him at the time he passed the order of deten tion.
The said documents/orders are as follows: (1) Abeyance Order No. 120/84 85/II dated the 27th March, 1985 issued by the Dy Chief Controller of Imports & Exports to M/s. Expo International under clause 8D of the Imports Control Order, 1955 as amended, placing the firm under abeyance for a period of six months w.e.f.
the date of the issue of the order (Annexure E to Cr.
Writ 545/88) . (2) Order dated the 29th March, 1985 issued by the office of the Chief Controller of Imports & Exports, New Delhi, to M/s. Expo Interna tional suspending the operation of the said five advance import licences granted to them (Annexure G to Cr.
Writ 545/88).
742 (3) Show cause notice dated the 26th December, 1985 issued by the office of the Chief Con troller of Imports & Exports to M/s. Expo International under section 4 L for action under section 4 I of the Imports and Exports (Control) Act, 1947 as amended, and under clause 8 of the Imports (Control) Order, 1985 (as amended) Annexure II to Cr.
Writ 545/88).
(4) Show cause notice dated the 27th March, 1985 issued by the office of the Chief Con troller of Imports & Exports to M/s. Expo International under clause 10 for action under clause 9(1)(a) & (d) of the IMPORTS (Control) Order, 1955 as amended as to why the five import licences should not be cancelled and rendered ineffective (Annexure F to Cr.
Writ 545/88).
Even assuming that the above documents/orders were not placed before the detaining authority, we fail to understand how the same could have influenced the subjective satisfac tion of the detaining authority in favour of the detenu.
As has been discussed above, the abeyance order was passed on the detenu when the authorities concerned found that the above two firms had no factories and, therefore, there was no question of their manufacturing ready made garments from the imported material and exporting them within a period of six months from the date of first clearance in accordance with the conditions under the advance licences.
The show cause notices issued to the said firm, M/s. Expo Interna tional, also would reveal that the detenu had failed to comply with the condition of the licences and, indeed, there was no chance of the conditions being complied with inasmuch as there was no manufacturing devices of the said firms.
We are of the view that even if the documents/orders had not been placed before the detaining authority that could not, in the least, affect the subjective satisfaction of the detaining authority.
At this stage, we may state a few more facts.
M/s. Expo International filed a civil revision petition, being C.R. No. 306 of 1986, under Article 227 of the Constitution of India in the Punjab & Haryana High Court through its alleged Proprietor, Naresh Chadha.
In this petition, M/s. Expo International prayed for the quashing of the show cause notices dated December 26, 1985 referred to above.
Another civil revision petition, being C.R. No. 3694 of 1985, was filed by M/s. Jasmine through its alleged Partner, Krishan Lal Chawla, inter alia, praying for release of certain documents to the said firm so as to 743 enable it to have its goods released from the Bombay Port.
It is significant to notice that in C.R. No. 306 of 1986, copies of all the said show cause notices dated December 26, 1985 and a copy of the said abeyance order dated December 27, 1985 were annexed.
Further, in C.R. No. 3694 of 1985 three miscellaneous applications were filed, namely, C.M. Applications Nos. 3199, 3498 and 3702 of 1988.
These appli cations have been mentioned in paragraphs 41, 42 and 43 of the grounds of detention.
Again, in paragraph 28 of the grounds of detention the said C.R. No. 306 of 1986 has been referred to as follows: "As per Civil Revision No. 306 of 1986 filed in the Punjab & Haryana High Court at Chandi garh, the factory premises were shifted some where in Mohali, but specific address of the factory was not declared either to the Joint Chief Controller of Imports & Exports, New Delhi, or to any other department.
" It is apparent from the facts stated above that the detaining authority had before him the petitions numbered as C.R. No. 306 of 1986 and C.R. No. 3694 of 1985, for he had referred to these civil revision petitions in the paragraphs mentioned above.
The grievance of the detenu that the said abeyance order and the show cause notices were not placed before the detaining authority has no factual foundation whatsoever inasmuch as the copies of the same were annexed to the petition in C.R. No. 3694 of 1985.
Another complaint has been made by the detenu that while the detaining authority had referred to the said C.R. No. 306 of 1986 and C.R. No. 3694 of 1985, he should have for warded copies of the said civil revision petitions to the detenu so that he could make an effective representation against the order of detention.
So far as C.R. No. 306 of 1986 is concerned, it has been already noticed in what context the same was referred to in paragraph 28 of the grounds of detention.
In C.R. No. 3694 of 1985, three civil miscellaneous applications were filed and the detaining authority had forwarded to the detenu copies of all the said three civil miscellaneous applications.
But, he did not forward to the detenu a copy of the civil revision petition.
The learned Counsel for the appellant has placed much reliance on a decision of the Delhi High Court in Kirpal Mohan Virmani vs Tarum Roy and others, In that case, the Delhi High Court has taken the view that the copies of important documents and circumstances which have a material bearing or could have 744 influenced the subjective satisfaction of the detaining authority should be supplied to the detenu.
It has been observed that if such documents are not supplied to the detenu, the detaining authority will then base his subjec tive satisfaction to detain a person without the help of the material documents even though to some extent or to a large extent the same go in favour of that person and that, ac cordingly, such a situation cannot be allowed to exist nor the liberty of an individual can be put to peril at the whims of the detaining authority.
In taking that view, the Delhi High Court also noticed the following observation made by this Court in Vakil Singh vs State of Jammu & Kashmir and another, " 'Grounds ' within the contemplation of Section 8(1) means materials on which the order of detention is primarily based.
Apart from the conclusions of facts 'grounds ' have a factual constituent also.
They must contain the pith and substance of primary facts but not subsid iary facts or evidential details.
" Although the Delhi High Court has referred to the above observation of this Court, it has not considered the effect of such observation.
The above observation lends support to the contention made on behalf of the respondents that only copies of documents on which the order of detention is primarily based should be supplied to the detenu and not any and every document.
We must not, however, be understood to say that the detaining authority will not consider any other document.
All that has to be shown is that any document which has bearing on the subjective satisfaction of the detaining authority but not relied upon by him was before the detaining authority at the time he passed the order of detention.
In the instant case, the detaining authority had placed reliance upon three civil miscellaneous applications filed in the said C.R. No. 3694 of 1985 and supplied to the detenu copies of the said three civil miscellaneous applications.
We do not find any substance in the contention made on behalf of the detenu that a copy of the civil revision petition should have also been supplied to him.
The decision of this Court in Kirti Kumar Chaman Lal Kundaliya vs Union of India, does not, in our opinion, help the contention of the detenu.
In the instant case, really the three civil miscellaneous applications have been re ferred to in the grounds of detention and not the civil revision petition, mentioning of which is necessary in order to identify the civil miscellaneous applications.
745 As regards C.R. No. 306 of 1986, the detaining authority has in paragraph 28 of the grounds of detention referred to the shifting of the factory premises by M/s. Expo Interna tional somewhere in Mohali, but no specific address of the factory was declared by the firm either to the Joint Chief Controller of Imports & Exports or to any other authority.
Mentioning of that fact in the grounds of detention does not, in our opinion, necessarily require the detaining authority to supply a copy of the civil revision petition in C.R. No. 306 of 1986.
At the same time, it has to be pre sumed that the petition in the said civil revision case was before the detaining authority and he had to go through it otherwise he could not mention in the grounds of detention the fact of the shifting of the factory premises without disclosing any specific address of the same.
In the circum stances, we are of the view that the detenu was not preju diced for the non supply to him of the copies of the docu ments mentioned 'above and, accordingly, there is no sub stance in the contention that there was non application of mind by the detaining authority.
The next contention of the detenu is that while the detaining authority had relied upon and referred to the confessional statement of the detenu as recorded by the Collector under section 108 of the , in the grounds of detention, the retraction made by the detenu was not placed before the detaining authority for his considera tion.
It is urged that if the retraction had been considered by the detaining authority, his subjective satisfaction could have been in favour of the detenu and against making an order of detention.
It is desirable that any retraction made should also be placed before the detaining authority.
But, that does not mean that if any such retraction is not placed before the detaining authority, the order of detention would become, invalid.
Indeed, this question came up for consideration before a Three Judge Bench of this Court in Prakash Chandra Mehta vs Commissioner and Secretary, Government of Kerala, ; In that case, a similar contention was made.
This Court in overruling the contention has re ferred to section 5 A of the COFEPOSA Act and has observed as follows: "Section 5 A stipulates that when the deten tion order has been made on two or more grounds, such order of detention shall be deemed to have been made separately on each of such grounds and accordingly that if one irrelevant or one inadmissible ground had been taken into consideration that would not make the detention order bad.
" 746 In the instant case, even assuming that the ground relating to the confessional statement made by the detenu under section 108 of the was an inadmissible ground as the subsequent retraction of the confessional statement was not considered by the detaining authority, still then that would not make the detention order bad, for in the view of this Court, such order of detention shall be deemed to have been made separately on each of such grounds.
Therefore, even excluding the inadmissible ground, the order of detention can be justified.
The High Court has also overruled the contention of the detenu in this regard and, in our opinion, rightly.
In this Court, the counter affidavit that has been filed on behalf of the respondents had been affirmed by Shri Kuldip Singh, Under Secretary to the Government, and not by the detaining authority himself.
It is urged by Mr. Sibal, learned Counsel for the detenu, that the counter affidavit not having been sworn by the detaining authority himself, the averments made therein should not be taken notice of.
One of the averments made in the counter affidavit is, inter alia, as follows: "The said Revision Petition No. 306/86 does find mentioning in para 28 of the grounds of detention.
Therefore, the said C.R. along with the above said four documents which were part thereof, was before the detaining authority, though the same were not relied upon in the grounds of detention.
" The four documents referred to in the above statement are the said abeyance order and the show cause notices referred to hereinbefore.
It is submitted that the deponent of the affidavit not being the detaining authority was not competent to say that the said documents were not relied upon by the detaining authority.
It is true that the depo nent could not say whether the said documents were relied upon or not, but in the facts stated in the counter affida vit this part of the statement of the deponent, namely, that the said documents were not relied upon by the detaining authority, should be taken to be his submission.
There can be no doubt that a deponent who has no personal knowledge about any fact may, on the basis of some other facts, make his submissions to court.
We do not think that any impor tance should be attached to the said statement made by the deponent in the counter affidavit.
No personal allegation of mala fide or bias has been made by the 747 detenu against the detaining authority.
If such an allega tion had been made, in that case, the detaining authority should have himself sworn the counter affidavit either in this Court or in the High Court.
In P.L. Lakhanpal vs Union of India & Ors., , it has been observed by this Court that since no allegation of malice or dishonesty has been made in the petition personally against the Minis ter, it is not possible to say that his omission to file an affidavit in reply by itself would be any ground to sustain the allegation of mala fides or nonapplication of mind.
That observation also applies to the instant case where no per sonal allegation has been made against the detaining author ity.
In Asgar Ali vs District Magistrate Burdwan and Others, , the District Magistrate of Burdwan, who passed the order of detention, did not file his affidavit and this Court observed as follows: "Although normally the affidavit of the person actually making the detention order should be filed in a petition for a writ of habeas corpus, the absence of such an affidavit would not necessarily be fatal for the case of the respondents.
It would indeed depend upon the nature of allegations made by the detenu in the petition for determing whether the absence of affidavit of the person making the deten tion order introduces a fatal infirmity.
In case an allegation is made that the officer making the detention order was actuated by some personal bias against the detenu in making the detention order, the affidavit of the person making the detention order would be essential for repelling that allegation.
Likewise, such an affidavit would have to be filed in case serious allegations are made in the petition showing that the order was mala fide or based upon some extraneous considera tions.
In the absence of any such allegation in the petition, the fact that the affidavit filed on behalf of the respondents is not that of the District Magistrate but that of the Deputy Secretary, Home (Special) Department of the Government of West Bengal would not by itself justify the quashing of the detention order.
" Again, in Suru Mallick vs State of West Bengal, , the affidavit was not filed by the detaining au thority and in spite of that this Court upheld the validity of the order of detention.
Thus, merely because the detaining authority has not sworn an 748 affidavit, it will not in all circumstances be fatal to the sustenance of the order of detention.
The contention in this regard is, therefore, unsound and is rejected.
The next ground of attach to the order of detention is the delay in considering the representation of the detenu.
It is not disputed that the representation of the detenu dated January 17, 1989 which was received by the Ministry of Finance, COFEPOSA Cell, New Delhi, on 18.1.1989 was rejected and the rejection memo was communicated to the detenu on 20.2.1989.
Prima facie it appears that there has been a long gap between the receipt of the representation, the consider ation thereof and the communication of the result of such consideration to the detenu.
In paragraph XXIV of the coun ter affidavit filed on behalf of the respondents, it has been stated as follows: "The representation dated 17.1.1989 was re ceived in COFEPOSA Unit of the Ministry on 18.1.1989 under cover of letter dated 17.1.1989 of Central Jail, Tihar.
The repre sentation was sent to CCE Chandigarh for comments on 19.1.1989.
Comments of Collector were received on 18.2.1989.
Under cover of Collector 's letter dated 9.2.1989.
The repre sentation along with comments were analysed by the Under Secretary and put up to the detain ing authority and JS on 13.2.1989.
11.2.1989 & 12.2.1989 were holidays.
The detaining author ity rejected the representation addressed to him on 13.2.
1989 and marked the file to MOS (R)/FM for consideration of representation addressed to Central Government.
MOS (R) rejected the representation subject to approv al by FM on 17.2.1989.
FM rejected the repre sentation on 17.2.1989.
The rejection memo was issued on 20.2.1989.
18.2.1989 and 19.2.1989 were holidays." At the hearing of this appeal, the learned Counsel for the respondents handed over to us a list of dates showing that a number of holidays intervened between one date and another and hence the apparent delay.
It appears that the Collector of Central Excise & Customs received the represen tation for his comments on 23.11.
1989 and handed over the same to the dealing officer for comments on 24.1.
1989 and the Collector 's comment was made on 9.2.1989.
Between 25.1.1989 and 8.2.1989 a number of holidays intervened, namely, 26.1.1989 (Republic Day), 28.1.1989 and 29.1.1989 (Saturday and Sunday), and 4.2, 1989 and 5.2.1989 (Saturday and Sunday).
On 749 9.2.
1989, it was sent to the Ministry of Finance (COFEPOSA CELL), New Delhi, and was received by that Ministry on 10.2.
1989.11.1. 1989 and 12.2.1989 being Saturday and Sunday were holidays.
On 13.2.
1989, it was put up before the Joint Secretary, COFEPOSA, and was sent to the Minister of State (Revenue).
The file was received back after the rejection of the representation and such rejection was communicated to the detenu on 20.2.1989.
The two intervening dates, namely, 18.2.1989 and 19.2.1989 being Saturday and Sunday were holidays.
It is clear from the above statement that there was no laches or negligence on the part of the detaining authority or the other authorities concerned in dealing with the representation of the detenu.
In Mst.
L.M.S. Ummu Saleema vs Shri B.B. Gujaral and Another, ; it has been observed that the time imperative can never be absolute or obsessive, and that the occasional observations made by this Court that each day 's delay in dealing with the representa tion must be adequately explained are meant to emphasise the expedition with which the representation must be considered and not that it is a medical formula, the slightest breach of which must result in the release of the detenu.
In the instant case, the detaining authority has explained the delay in the disposal of the representation made by the detenu and, accordingly, the order of detention cannot be rendered invalid on that ground.
Lastly, it is argued that the life of each of the ad vance licences has long expired and, therefore, there is no chance of the detenu in involving himself in smuggling activities, as he would not be in a position to import any goods by virtue of the advance licences.
It is submitted that the object of such detention is not punitive, but is preventive.
As there is no chance for the detenu to act in violation of the provisions of the COFEPOSA Act, the deten tion order should be quashed on that ground.
In support of that contention strong reliance has been placed on behalf of the detenu on a decision of the Delhi High Court in Achla Kakkar vs Administrator, Union Territory of Delhi and Others, [1988] Crl.
Law Journal 1896, where it has been observed that the recurrence of breach of such economic offence can be effectively prevented by black listing the person concerned, his detention under the COFE POSA Act was in the nature of punishment liable to be quashed.
In that case also, the detenu imported polyester zips and sold the same in the market without complying with the conditions of the advance li 750 cences.
There is, however, an important point of distinction between the facts of that case and those of the instant case before us.
In that case, the licences were issued in the name of the detenu himself.
But here the licences were issued not in the name of the detenu, but to the name of the said two firms which, according to the detaining authority, had really no existence and were the benami concerns of the detenu.
It is contended by Mr. Mahajan, learned Counsel appearing on behalf of the respondents, that if the detenu is released, he may indulge in such economic offences in setting up fictitious firms and taking out advance licences in the name of such firms.
We have taken into consideration the allegations made in the grounds of detention and in the counter affidavit and it appears that in the names of the said two firms huge amount of export duty has been evaded and the imported goods, which have been allowed to be cleared, have been sold in the market.
We are unable to accept the contention made on behalf of the detenu that the goods were cleared and sold under the orders of the High Court.
It has been rightly observed in the impugned order of the High Court that, surely, the High Court did not permit the detenu to sell the goods in the market.
It may be that a part of the imported goods has not been allowed to be cleared and stands forfeit ed to the Government, but that is no ground in favour of the detenu.
The Government may realise a part of the duty by selling those goods, but that is neither here nor there.
The fact remains that the detenu got the goods cleared and sold the same in the market.
We find no reason not to accept the contention of the respondents that the licences were pro cured by the detenu with a view to importing the goods duty free and selling the same in the market and thereby making a huge profit to the loss and detriment of national economy.
After giving our anxious consideration to all aspects of the case, we uphold the judgment of the High Court.
and dismiss the appeal.
Writ Petition (Criminal) No. 222 of 1989.
The disposal of the above appeal means the disposal of the writ petition.
The writ petition is, accordingly, dis missed.
R.S.S. Appeal and Petition dismissed.
| IN-Abs | The petitioner, Madan Lal Anand, was detained alongwith two other persons, under section 3(1) of the , 1974 COFEPOSA ACT.
In the grounds of detention it was inter alia alleged that the detenu had imported polyester filament yarn and polyester fibre in the names of M/s Jasmine and M/s Expo International on the basis of "Actual User" advance licences obtained under the Duty Exemption Entitlement Certificate Scheme on the condition that they would manufac ture ready made garments out of the imported polyester filament and export the same; that they had no intention to manufacture or export the manufactured goods, as there was neither any machinery at their so called factory nor any power connection; that investigations had revealed that both the firms had sold the imported polyester filament yarn in contravention of the orders and conditions of the advance licences; and that the said firms were benami firms and Madan Lal Anand had played a very active and major role for obtaining advance licences in the names of the said firms, importing the yarn and selling it in the local market.
The three detenu, including Madan Lal Anand, filed a petition in the High Court of Punjab and Haryana praying for the issuance of a writ of habeas corpus and challenging the validity of the order of detention.
The High Court dismissed the petition.
Before this Court it was contended on behalf of the detenu that: 734 (i) as the detenu was prevented from complying with the condition of the advance licence within six months of the first clearance by the issuance of an abeyance order by the by.
Chief Controller of Imports & Exports, the provision of section 111(0) of the Customs Act was not violated, for the goods could not be confiscated and, accordingly, there was no question of smuggling within the meaning of section 2(e) of the COFEPOSA ACT read with section 2(39) of the Customs Act, 1962; (ii) certain documents/orders, including the abeyance order, which could influence the subjective satis faction of the detaining authority in favour of the detenu were not placed before him; (iii) while the detaining au thority had relied upon and referred to the confessional statement of the detenu, the retraction made by the detenu was not placed before the detaining authority; (iv) the counter affidavit not having been sworn by the detaining authority himself, the averments made therein should not be taken notice of; (v) there was delay in considering the representation of the detenu; and (vi) the life of each of the advance licences having expired, there was no chance of the detenu now involving himself in smuggling activities.
Dismissing the appeal as well as the writ petition this Court, HELD: (1) In view of clause (0) of section 111 of the if any goods exempted from payment of duty is imported without observing the condition, subject to which the exemption has been made, it will be a case of smuggling within the meaning of section 2(e) of the COFEPOSA ACT, [740D] (2) It was more than certain that the imported goods would not and could not be utilised in accordance with the condition of the advance licence, the provision of section 111(0) of the was violated on the very importa tion of the goods.
There was, therefore, no substance in the contention that there was no smuggling in this case.
[741D] (3) Even if certain documents/orders had not been placed before the detaining authority that could not, in the least, affect the subjective satisfaction of the detaining authori ty.
[742D] Kirpal Mohan Virmani vs Tarun Roy, ; Vakil Singh vs State of Jammu & Kashmir, and Kirit Kumar Chaman Lal Kundaliya vs Union of India, , referred tO. (4) The detenu was not prejudiced for non supply to him of the 735 copies of certain documents and accordingly there was no substance in the contention that there was non application of mind by the detaining authority.
[745C] (5) Even assuming that the ground relating to the con fessional statement made by the detenu under section 108 of the was an inadmissible ground as the subsequent retraction of the confessional statement was not considered by the detaining authority, still then that would not make the detention order bad, for, in the view of this Court, such order of detention shall be deemed to have been made separately on each of such grounds.
Therefore, even exclud ing the inadmissible ground, the order of detention can be justified.
[746A B] Prakash Chandra Mehta vs Commissioner & Secretary, Government of Kerala, ; , referred to.
(6) There can be no doubt that a deponent who has no personal knowledge about any fact may, on the basis of some other facts, make his submission in court.
[746G] (7) Merely because the detaining authority has not sworn an affidavit, it will not in all circumstances be fatal to the sustenance of the order of detention.
[747H] P.L. Lakhanpal vs Union of India & Ors.
, ; Asgar Ali vs District Magistrate Burdwan & Ors., and Suru Mallick vs State of West Bengal, , referred to.
(8) There was no laches or negligence on the part of the detaining authority or the other authorities concerned in dealing with the representation of the detenu.
The observa tions made by this Court that each day 's delay in dealing with the representation must be adequately explained are meant to emphasize the expedition with which the representa tion must be considered and not that it is a magical formu la, the slightest breach of which must result in the release of the detenu.
[749C D] Mst.
L.M.S. Ummu Saleema vs Shri B.B. Gujaral, ; , explained.
(9) The said two firms had really no existence and were the benami concerns of the detenu, and the detenu if re leased, may indulge in such economic offences in setting up fictitious firms and taking out 736 advance licences in the name of such firms.
[750B] Achla Kakkar vs Administrator, Union Territory of Delhi
|
ivil Appeal No. 5 19521 of 1975.
From the Judgment and Order dated 9.5.1974 of the Punjab and Haryana High Court in I.T. Reference Nos. 30 to 32 of 1973.
G.C. Sharma, Ms. A. Subhashini and K.C. Dua for the Appellant.
Dr. Y.S. Chitale, R.K. Jain, Rakesh Khanna and Ms. Abha Jain for the Respondent.
The Judgment of the Court was delivered by PATHAK, CJ.
These appeals by special leave are directed against a judgment of the High Court of Punjab and Haryana disposing of an Income tax Reference in favour of the re spondent assessee.
The assessee manufactures strawboard.
For the assessment years 1965 66, 1966 67 and 1967 68 (the relevant previous years being the respective calendar years 1964, 1965 and 1966), the assessee claimed concessional rates of income tax, development rebate at higher rate and deduction under section 80 E of the Income Tax Act, 1961 on the 774 ground that the manufacture of strawboard was a priority industry.
For the assessment year 1965 66 the total income assessed was Rs. 17,71,334 and against the basic rate of 80 per cent the assessee claimed rebate at the rate of 35 per cent up to Rs. 10,00,000 and on the balance at 26 per cent.
The Income Tax Officer allowed the rebate at 30 per cent up to Rs. 10,00,000 and at 20 per cent on the balance.
For the assessment year 1966 67 the assessee claimed development rebate under section 33 of the Income Tax Act at the rate of 25 per cent on the value of the machinery installed after 1 April, 1965 worth Rs.34,287, but rebate was allowed at 20 per 'cent only.
The assessee also claimed benefit under section 80 E (inserted by the Finance Act, 1966 with effect from 1 April, 1966) to the extent of the income determined by the Income Tax Officer at Rs.8, 17,485 received from the manu facture of strawboard.
This industry is mentioned at item No. 16 in the Fifth Schedule to the Income Tax Act as sub stituted by the Finance Act, 1965.
The claim of the assessee was.
rejected by the Income Tax Officer.
For the assessment year 1967 68 the total income of the assessee was determined at Rs. 11,00,885.
The assessee claimed relief under section 80 E to the extent of Rs.7,50,316 received as income from the manufacture of strawboard.
This claim was similarly rejected by the Income Tax Officer on the ground that the assessee could not be described as a priority industry.
The Income Tax Officer took the view that the manufacture of Strawboard was not covered by the words 'paper and pulp ' in the rele vant Schedules pertaining to the assessment 1966 67 and 1967 68.
The assessee appeared to the Appellate Assistant Commis sioner of Income Tax in respect of the three assessments, but the appeals were dismissed.
In second appeals filed in all the three cases, the assessee 's plea that the manufac ture of strawboard was a priority industry was accepted and the Appellate Tribunal held that the assessee was entitled to the statutory rebates claimed by it.
At the instance of the Revenue, the Tribunal referred the following questions to the High Court for its opinion: "Assessment year 1965 66 Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that 'strawboard ' is covered by the term 'paper and pulp ' appearing in paragraph F of Part I read with Part III of the First Schedule to the Finance Act, 1965 (Act No. X of 1965)? 775 Assessment years 1966 67 and 1967 68 Whether on the facts and in the circumstances of the case, the Appellate Tribunal was fight in law in holding that 'strawboard ' is covered by the term 'paper and pulp ' appearing at item 16 of the Fifth Schedule to the Income Tax Act, 1961 and in allowing the assessee 's claim under section 80 E of the Act?" The High Court has held that the strawboard industry is covered within the expression 'paper and pulp ' appearing in the relevant Schedules of the Income Tax Act and has, there fore, answered the questions referred to it in the affirma tive, in favour of the assessee and against the Revenue.
The sole question before us is whether strawboard can be said to fall within the expression 'paper and pulp ' men tioned in the Schedules relevant to the respective assess ment years.
To resolve the question it is necessary, first to examine the significance and scope of the Schedules.
The provision for rebate has been made for the purpose of en couraging the setting up of new industries, and the indus tries are those described in the relevant Schedules.
It seems to us clear that when the Schedules refer to 'paper and pulp ' they in fact intend to refer to the paper and pulp industry.
That being so, the next question is whether the strawboard industry can be described as forming part of the paper and pulp industry.
We have no doubt in our mind that it does.
The expression has been used comprehensively.
It is necessary to remember that when a provision is made in the context of a law providing for concessional rates of tax for the purpose of encouraging an industrial activity a liberal construction should be put upon the language of the statute.
From the material before us, which we have carefully consid ered, that is the only reasonable conclusion to be reached in.
these case.
The High Court has referred to the licence dated 31 May, 1954 issued to the assessee that the undertak ing of the assessee was registered in terms of section 10 of the Industries (Development and Regulation) Act, 195 1, and the details given in the licence declare that it relates to a Schedule industry which includes newsprint, paperboard and strawboard.
The High Court has also referred to the circum stances that the process of manufacturing strawboard is identical with that of manufacturing paper.
The expression 'paper and pulp ' in the Industries (Development and Regula tion) Act includes paperboard; and strawboard.
Our attention has been drawn to the Entry relevant to the assessment year 1964 65 which speaks of 'paper and pulp including 776 paper products ' and, it is said, strawboard is evidently not within the natural meaning of the word 'paper '.
We do not think that the submission merits serious consideration.
Newsprint, paperboard and strawboard have been specifically mentioned in the entry in order to make it clear that they are included within the meaning of the word 'paper '.
In our judgment, the High Court is fight in taking the view which it has, and therefore, the appeals must be dis missed.
The appeals are dismissed with costs.
N.P.V. Appeals dismissed.
| IN-Abs | The assessee, manufacturer of strawboard, claimed con cessional rates of income tax, development rebate at higher rate under section 33 and deduction under section 80 E of the Income Tax Act, 1961, for the assessment years 1965 66, 1966 67 and 1967 68, on the ground that the manufacture of strawboard was a priority industry.
The claim was rejected by the Income Tax Officer on the ground that the assessee could not be described as a priority industry and that the manufacture of strawboard was not covered by the words 'paper and pulp ' in the relevant Schedules pertaining to the assessment years 1966 67 and 1967 68.
The assessee 's appeals were dismissed by the Appellate Assistant Commissioner.
In second appeals, the Appellate Tribunal accepted the assessee 's plea that the manufacture of strawboard was a priority industry and held that the assessee was entitled to the statutory rebates claimed by it.
On a reference made at the instance of the Revenue, the High Court held that the strawboard industry was covered within the expression 'paper and pulp ' appearing in the relevant Schedules of the income Tax Act.
Dismissing the appeals by the Revenue, this Court, HELD: When provision is made in the context of a law providing for concessional rates of tax for the purpose of encouraging an industrial activity, a liberal construction should be put upon the language of the statute.
[775E F] 773 The provision for rebate has been made for the purpose of encouraging the setting up of new industries, and the industries are those described in the Schedules relevant to the respective assessment years.
When the Schedules refer to 'paper and pulp ', they, in fact, intend to refer to the paper and pulp industry.
The expression has been used com prehensively.
[775D E] The expression 'paper and pulp ' in the Industries (Development and Regulation) Act, 1951 includes paperboard and strawboard.
Newsprint, paperboard and strawboard have been specifically mentioned in the relevant entry in order to make it clear that they are included within the meaning of the word 'paper '.
The process or ' manufacturing straw board is identical with the process of manufacturing paper.
[775G H; 776A] In the circumstances, there is no doubt that the straw board industry is part of the paper and pulp industry and the assessee, whose undertaking was registered in terms of section 10 of the Industries (Development and Regulation), 1951 is entitled to the rebates claimed by it.
[775E]
|
Civil Appeal No. 4567 of 1989.
From the Judgment and Order dated 22.12.1988 of the Punjab & Haryana High Court in C.R. No. 1327 of 1987.
Gopal Subramanium, N.D. Garg and Rajiv K. Garg for the Appellant.
J.K. Nayyar, Rajeev Sharma and S.K. Bisaria for the Respondent.
The short question for consideration in this appeal at the instance of the landlord in a proceeding for eviction under the East Punjab Urban Rent Restriction Act is as to whether the appellant before us is a specified landlord as defined in section 2(hh) of the Act.
The High Court has decided against the landlord by relying upon the decision of this Court in the case of D.N. Malhotra vs Kartar Singh, [1988] 1 SCC 656.
When this matter came before a 2 Judge Bench on 16.8.1988 the following order was made: "This matter may be listed before a Bench of three Hon 'ble Judges two weeks hence for consideration of the question in the light of the decision of this Court in D.N. Malhotra vs Kartar Singh, [1988] 1 SCC 656." Section 2(hh) of the Act defines 'specified landlord ' to mean: 95 "a person who is entitled to receive rent in respect of a building on his own account and who is holding or has held an appointment in a public service or post in connection with the affairs of the Union or of a State.
" It is not disputed that the appellant was Reader to the Sessions Judge of Sangrur from where he retired on 30th of September, 1981.
He was thus holding a post in connection with affairs of a State.
He was member of a Mitakshara family and the house in question was tenanted out to the respondent by his father in July, 1982, and upon his father dying in the following month the tenant attorned to the appellant.
Section 13 A of the Act provides: "Where a specified landlord at any time, within one year prior to or within one year after the date of his retirement or after his retirement but within one year of the date of commencement of the East Punjab Urban Rent Restriction (Amendment) Act, 1985, whichever is later, applies to the Controller along with a certificate from the authority competent to remove him from service indicating the date of his retirement and his affidavit to the effect that he does not own and possess any other suitable accommodation in the local area in which he intends to reside to recover posses sion of his residential building or scheduled building, as the case may be, for his own occupation, there shall accrue, on and from the date of such application to such specified landlord, notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force or in any contract (whether expressed or implied), custom or usage to the contrary, a right to recover immediately the possession of such residential building or scheduled building or any part or parts of such building if it is let out in part or parts: . . ." The amendment came into force with effect from 16.11.1985.
The appellant applied for eviction on 13.5.1986.
Thus, within one year of the enforcement of the Amending Act of 1985, the application for eviction was filed following the procedure laid down under the Act.
Appellant 's conten tion which has been rejected in the Courts below has been that all the ingredients of the definition of 'specified landlord ' are satisfied and he should, therefore, have been admitted to be a 96 specified landlord and given the benefit of the special procedure.
The High Court relied upon the following observa tions in Malhotra 's case: "It has been urged before us on behalf of the respondent at the relevant time i.e. after retirement of the respondent from service within one year of the date of commencement of the said Act he is the landlord of the appel lant and as such he falls within the defini tion of section 2(hh) of the said Act and he becomes a specified landlord.
This submission, in our view, cannot be sustained inasmuch as the words 'specified landlord ' as used in section 2(hh) refer to the person in service of the Union who is a landlord at the time of his retirement from the public service or post in connection with the affairs of the Union or of State.
It cannot in any manner include an ex serviceman who was not a specified landlord qua the tenant and the premises on or before the date of his retirement from the service of the Union.
This has been very succinctly held by this Court in the case of Mrs. Winifred Ross vs Mrs. Ivy Fonseca, which has been referred to hereinbefore.
" Malhotra 's case in terms relied upon an earlier decision of this Court in Mrs. Winifred Ross vs Mrs. Ivy Fonseca, [1984] 1 SCC 288 in support of its view.
It is not disputed that on the ratio laid down by this Court in the two decisions referred to above the High Court had come to the correct conclusion that on the facts the appellant could not be a specified landlord.
It is now for consideration whether the cases of Winifred Ross and D.N. Malhotra, have been correctly decided.
Winifred Ross, case was considering section 13A of the Bombay Rents, Hotel & Lodging Houses Rates Control Act of 1947.
Section 13A had been brought into the Act in 1975.
The said section provided: "Notwithstanding anything contained in this Act, (a) a landlord who is a member of the armed forces of the Union, or who was such member and is duly retired (which term shall include premature retirement), shall be enti tled to recover possession of any premises, on the ground that the premises are bona fide required by him for occupation by himself or any member of his family (which 97 term shall include a parent or other relation ordinarily residing with him and dependent on him); and the Court shall pass a decree for eviction on such ground if the landlord, at the hearing of the suit produces a certificate signed by the Head of his Service or his Commanding Officer to the effect that (i) he is presently a member of the armed forces of the Union or he was such member and is now a retired ex serviceman; (ii) . . . . (b) . . . . " Dealing with this provision this Court said: "The essential requirement is that he should have leased out the building while he was a member of the Armed Forces.
His widow can also recover the premises of which she is or has become the landlord under clause (b) subject to fulfilment of the conditions.
Having regard to the object and purposes of the Act and in particular Section 13 A 1, it is difficult to hold that Section 13 A 1 can be availed of by an ex member of the Armed Forces to recover from a tenant possession of a building which he acquires after his retirement.
Acceptance of this argument will expose the very Section 13 A 1 of the Act to a successful challenge on the ground of violation of Article 14 of the Constitution for it that were so, a retired military officer who has no house of his own can purchase any building in the occupation of a tenant after his retirement, successfully evict a tenant living in it on the ground that he needs it for his use, then sell it for a fancy price and again because he has no house of his own, he can again acquire another building and deal with it in the same way.
There appears to be n0 restriction on the number of times he can do so.
It was argued that he would not be able to get the requisite certificate under the Act more than once.
A reading of Section 13 A 1 of the Act shows that the certificate should show that the person concerned has been a member of the Armed Forces and that he does not possess any other suitable residence in the local area where he or members of his family can reside.
Those 98 conditions being satisfied the certificate cannot be refused.
A liberal construction of Section 13 A1 of the Act as it is being pressed upon us, would also enable unscrupu lous landlords who cannot get rid of tenants to transfer their premises to ex military men, as it has been done in this case in order to avail of the benefit of the said section with a private arrangement between them.
It is also possible that a person who has retired from the Armed Forces may after retirement lease out a premises belonging to him in favour of a tenant and then seek his eviction at his will under Section 13 A 1 of the Act . . . " A little later in the same decision this Court said: "Since a liberal interpretation of Section 13 A 1 of the Act is likely to expose it to a successful challenge on the basis of Article 14 of the Constitution, it has to be read down as conferring benefit only on those members of the Armed Forces who were landlords of the premises in question while they were in serv ice even though they may avail of it after their retirement.
Such a construction would save it from the criticism that it is discrim inatory and also would advance the object of enacting it, namely, that members of the Armed Forces should not while they are in service feel worried about the difficulties of a long drawn out litigation when they wish to get back the premises which they have leased out during their service.
" In Malhotra 's case, this Court was called upon to con sider section 13A of the very Act with which we are now con cerned.
On the basis of the ratio in Winifred Ross ' case, this Court came to the conclusion that until the landlord satisfied the test that he was a landlord qua the premises and the tenant at the time of his retirement or discharge from service, he would not be entitled to the benefit of section 13A of the Act.
It is not disputed that the appellant retired on 30th of September, 1981.
On the finding the appellant is right in his submission that this was not a case of transfer with an oblique motive but as the property belonged to a Mitakshara father, upon his death the property has come to his hands.
This feature which is different from the facts appearing in the two reported decisions, however, would not persuade us to give a different meaning to the definition in section 2(hh).
In both the cases, for good reason this Court came to the conclusion that the public officer 99 should have been a landlord of the premises in question while in service.
Admittedly, the appellant was not the landlord before he superannuated.
We are of the view that the opinion of this Court in Winifred Ross ' case is unassailable and, therefore, the appellant would not be entitled to the benefit of the spe cial procedure in section 13A of the Act.
The appeal fails and is dismissed.
Parties are directed to bear their own costs.
P.S.S. Appeal dismissed.
| IN-Abs | Section 13A of the East Punjab Urban Rent Restriction Act, 1949 lays down the procedure for a 'specified landlord ' to seek immediate recovery of possession of his residential building at any time within one year prior to or within one year after the date of his retirement or after his retire ment but within one year of the date of commencement of the East Punjab Urban Rent Restriction (Amendment) Act, 1985, whichever is later.
Section 2(hh) of the Act defines 'speci fied landlord ' to mean a person who is entitled to receive rent in respect of a building on his own account and who is holding or has held an appointment in a public service or post in connection with the affairs of the Union or of a State.
The appellant, who was holding a post in connection with the affairs of the State, had retired on September 30, 1981.
He was member of a Mitakshara family.
The house in question was tenanted out to the respondent by his father in July 1982 and upon his father dying in the following month the tenant attorned to the appellant.
The amendment came into force with effect from November 16, 1985.
The appellant applied for eviction on May 13, 1986.
He sought benefit of the special procedure laid down in section 13A of the Act on the ground that all the ingredients of the definition of 'speci fied landlord ' were satisfied.
The courts below rejected the contention.
The High Court relying on the ratio laid down by this Court in D.N. Malhotra vs Kartar Singh, [1988] 1 SCC 656 and Mrs. Winifred Ross vs Mrs. Ivy Fonseca, [1984] 1 SCC 288 held that the appellant could not be a 'specified land lord '.
Dismissing the appeal by special leave, HELD: Until the landlord satisfies the test that he was a landlord qua the premises and the tenant at the time of his retirement or dis 94 charge from service.
he can not be a 'specified landlord ' as defined in section 2(hh) of the East Punjab Urban Rent Restric tion Act, 1949.
[98F, 94F] In the instant case, the appellant was not the landlord of the premises in question before he superannuated.
He would not, therefore, be entitled to the benefit of the special procedure laid down in section 13A of the Act.
[99A B] D.N. Malhotra vs Kartar Singh, [1988] 1 SCC 656 and Mrs. Winifred Ross vs Mrs. Ivy Fonseca, [1984] 1 SCC 288, ap plied.
|
tition No.369 of 1989.
(Under Article 32 of the Constitution of India).
K. Madhava Reddy, B. Rajeswar Mehta Dave and Ms. Neelam for the Petitioners.
M.K. Ramamurthi, M.A. Krishnamurthy, Mrs. C. Ramamurthy, GVS Surayanarayana Raju in person TVSN Chari, Jagan Rao, DRK.
Reddy, GVS Surayanarayana for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
Promotee Engineers of the Roads & Buildings Wing of the Andhra Pradesh Engineering Service are the petitioners in this application under article 32 of the Constitution and challenge is to the Government circular of 12.8.1988 (Annexure A) fixing the guideline for the drawing up of the seniority list pursuant to a direction issued by this Court in a batch of writ petitions, decision whereof is reported in Siva Reddy & Ors.
vs State of Andhra Pradesh & Ors.
While petitioners are promotees, the respondents are direct recruits.
Petitioners allege that they had put in continuous service of 6 7 years by 1982 and their services having been regularised in the post of Deputy Executive Engineer in the year 1974 75, direct recruits appointed in the year 1982 cannot under any law be placed above them.
As noticed in Siva Reddy 's case (supra), substantive vacancies in the category of Assistant Engineers had to be filled up from two sources 37 1/2% by direct recruitment and the remaining 62 1/2% by transfer of Supervisors and Draughtsmen and by promotion of Junior Engineers.
Direct recruits had complained that notwithstanding this prescrip tion, there had been no recruitment of Assistant Engineers and the promotees from the other two modes had come into the cadre far in excess of the limit provided by the Rules.
The Chief Engineer by his order dated June 8, 1984 regularised the temporary service of promotees of the years 1972 73, 1973 74 and 1974 75 in the cadre of 142 Assistant Engineers (later designated as Deputy Executive Engineers).
They had, therefore, asked the quashing of the regularisation and drawing up of a seniority list on the basis of the ratio fixed under r. 3(1) of the Special Rules.
This Court in paragraph 5 of the judgment stated: "Reopening of the question of inter se senior ity on the basis of non enforcement of the rules from the very beginning may create hardship and that would be difficult to miti gate but we see no justification as to why the benefit of the scheme under the rules should not be made available to direct recruits at least from 1982.
When the State Government by rules duly framed prescribed the method of re cruitment and put the scheme into operation it had the obligation to comply with it.
The explanation offered by the State Government for non compliance of the 'requirements of the rules does not at all impress us.
We there fore, direct that as on December 31, 1982, the State Government must ascertain the exact substantive vacancies in the category of Assistant Engineers in the service.
On the basis that 37 1/2 per cent of such vacancies were to be filled up by direct recruitment, the position should be worked out.
Promotees should be confined to 62 1/2 per cent of the substantive vacancies and in regard to 37 1/2 per cent of the vacancies the shortfall should be filled up by direct recruitment.
General Rules shall not be applied to the posts within the limits of 37 1/2 per cent of the substan tive vacancies and even if promotees are placed in those posts, no seniority shall be counted.
The State Government shall take steps to make recruitment of the shortfall in the direct recruitment vacancies within the limit of 37 1/2 per cent of the total substantive vacancies up to December 31, 1987 within four months from today by following the normal method of recruitment for direct recruits.
The seniority list in the cadre of Assistant Engineers shall be redrawn up, as directed by the Tribunal by the end of September 1988, keeping the directions referred to above in view . " With a view to implementing this direction the State Govern ment came out with the impugned order dated 12.8.1988 marked Annexure 'A '.
In Siva Reddy 's case this Court found that promotees had exceeded the quota and even got regularised in respect of the posts in 143 excess of the limit.
Taking into consideration the fact that regularisation had been done after the promotees had put in some years of service and disturbing regularisation would considerably affect the officers concerned, regularisation was not interfered with.
This Court 's intention obviously was not to take away the benefit of regularisation in re spect of the officers belonging to the promotee group in excess of their quota but the Court did not intend to allow such regularised officers in excess of the quota to also have the benefit of such service for purposes of seniority.
A reading of the judgment in Siva Reddy 's case clearly indicates that this Court intended what the Government have laid down by way of guideline.
We see no justification to interfere with the Government direction.
A draft seniority list on the basis of such direction has already been drawn up and has been circulated.
We are told that objections have been received and would be dealt with in usual course by the appropriate authorities.
This writ petition had been enter tained in view of the allegation that the Government direc tion was on a misconception of what was indicated in the judgment and in case there was any such mistake the same should be rectified at the earliest.
Now that we have found that the Government order is in accord with the Court direc tion, this writ petition must be dismissed and individual grievances, if any, against the draft seniority list would, we hope, be considered on the basis of objections filed by the competent authority.
There shall be no order as to costs.
N.P.V. Petition dismissed.
| IN-Abs | Pursuant to this Court 's direction in K. Siva Reddy & Ors.
vs State of Andhra Pradesh & Ors.
, ; , the State Government issued Circular dated 12.8.1988, fixing the guideline for drawing up of inter se seniority list of direct recruit and promotee Deputy Executive Engi neers in Andhra Pradesh Engineering Service.
This Circular was challenged by the petitioners.
Promotee Engineers, in a Writ Petition filed in this Court, contending that since they had put in continuous service of 6 to 7 years by 1982 and their services had been regularised in the post of Deputy Executive Engineer in the year 1974 75, direct re cruits appointed in the year 1982 could not, under any law, be placed above them.
Dismissing the writ petition, this Court, HELD: Promotees had exceeded the quota and even got regularised in respect of the posts in excess of the limit.
Taking into consideration the fact that regularisation had been done after the promotees had put in some years of service and disturbing regularisation would considerably affect the officers concerned, regularisation was not inter fered with.
This Court 's intention was not to take away the benefit of regularisation in respect of the officers belong ing to the promotee group in excess of their quota but the Court did not intend to allow such regularised officers in excess of the quota to also have the benefit of such service for purposes of seniority.
[142 H; 143A B] A reading of the judgment in Siva Reddy 's case clearly indicates that this Court intended what the Government have laid down by way of guideline.
Therefore, there is no justi fication to interfere with the Government direction. [143B] 141 K. Siva Reddy & Ors.
vs State of Andhra Pradesh & Ors.
, ; , referred to.
|
ivil Appeal No. 2116 of 1972.
From the Judgment and Order dated 1.2.1971 of the Madhya Pradesh High Court at Jabalpur in S.A. 517 of 1969.
S.P. Singh for the Appellants.
Uday U. Lalit and A.G. Ratnaparkhi for the Respondents.
The Order of the Court was delivered by OZA, J.
This appeal arises out of the Judgment dated 1.2.1971 of the High Court of Madhya Pradesh in Second Appeal No. 5 17/69, wherein the learned Judge of the High Court dismissed the Second Appeal filed by the present appellant.
146 The present appellant filed a suit for injunction and possession on the basis of a registered sale deed dated 28.4.66 executed by Smt.
Yashoda Bai in his favour with respect to immovable property including agricultural lands and houses.
The property originally belonged to her husband and after his death she got it as a limited owner and by influx of time and by coming into force of the , she acquired the rights of an absolute owner.
On 28.4.63, she adopted respondent Nain Singh as her son and executed a document said to be the Deed of Adoption.
This document is not a registered document and the trial court admitted it in evidence in proof of adoption.
This document, in addition to recital of the factum of adoption in presence of Panchayat in accordance with the custom of the Community also contained a covenant wherein she had stated that after this deed of adoption her adopted son will be entitled (Hakdar) to the whole property including movable and immova ble and she will have no right to alienate any part of the property after this deed of adoption.
The trial court decreed the suit.
The first appellate court dismissed the suit setting aside the decree passed by the trial court.
The learned judge of the High Court consid ering the impact of section 12 of the Hindu Adoptions and Mainte nance Act rightly held that the adopted son, in view of the proviso (C) to section 12, will only be entitled to property after the death of the adoptive mother but the learned judge felt that the further covenant in the adoption deed deprived her of that right and conferred that right on the adopted son, on this basis the learned judge of the High Court came to the conclusion that the widow after executing this deed of adoption had no right left in the property and therefore a transfer executed by her will not confer any title on the plaintiff.
It is on this basis that the High Court main tained the Judgment of the lower appellate court dismissing the suit of the plaintiffappellant.
Against this, by Special leave, this appeal has come to this Court.
Learned counsel for the appellant contended that the document which is described as a deed of adoption, in sub stance, is in two parts.
One recites the facturn of adoption and the second contains the covenant wherein she has relin quished her rights in the property and conferred rights on adopted son.
According to the learned Counsel, so far as it refers to adoption, the courts below were right in admitting the document as an evidence of adoption but so far as it refers to a deed of relinquishment or conferment of right on the adopted son, will be hit 147 by section 17(1)(b) read with section 49 of the Indian and, therefore, the High Court was not right in relying on this clause to come to the conclusion that the widow Smt.
Yashoda Bai had no right to transfer the property in favour of plaintiff appellant.
Section 12 of the reads as follows: "12.
Effects of adoption: An adopted child shall be deemed to be the child of his or her adoptive father of mother for all purposes with effect from the date of the adoption and from such date all the ties of the child in the family of his or her birth shall be deemed to be served and replaced by those created by the adoption in the adoptive family: Provided that: (a) the child cannot marry any person whom he or she could not have married if he or she had continued in the family of his or her birth: (b) any property which vested in the adopted child before the adoption shall continue to vest in such person subject to the obliga tions, if any, attaching to the ownership of such property, including the obligation to maintain relatives in the family of his or her birth: (c) the adopted child shall not divest any person of any estate which vested in him or her before the adoption.
" Proviso (C) of this Section departs from the Hindu General Law and makes it clear that the adopted child shall not divest any person of any estate which has vested in him on her before the adoption.
It is clear that in the present case, Smt.
Yashoda Bai who was the limited owner of the property after the death of her husband and after came into force, has become an absolute owner and therefore the property of her husband vested in her and therefore merely by adopting a child she could not be de prived of any of her rights in the property.
The adoption would come into play and the adopted child could get the rights for which he is entitled after her 148 death as is clear from the Scheme of section 12 proviso (C).
section 13 of the Hindu Adoption and Maintenance Act reads: 13.
Right of adoptive parents to dispose of their properties: Subject to any agreement to the contrary, an adoption does not deprive the adoptive father or mother of the power to dispose of his or her property by transfer inter vivos or by will.
This Section enacts that when the parties intend to limit the operation of proviso (C) to section 12, it is open to them by an agreement and it appears that what she included in the present deed of adoption was an agreement to the contrary as contemplated in section 13 of the Hindu Additions and Maintenance Act.
Section 17(1)(b) of the clearly pro vides that such a document where any right in movable property is either assigned or extinguished will require registration.
It could not be disputed that this part of the deed which refers to creation of an immediate right in the adopted son and the divesting of the right of the adoptive mother in the property will squarely fall within the ambit of section 17(1)(b) and therefore under section 49 of the , this could not be admitted if it is not a registered document.
Unfortunately, the Hon 'ble Judge of the High Court did not notice this aspect of the matter and felt that what could not be done because of the proviso (c) to section 12 has been specifically provided in the document itself but this part of the document could not be read in evidence as it could not be admitted.
In view of this, the appeal is al lowed.
The Judgments of the High Court and that of the lower appellate Court are set aside and that of the trial court is restored.
In view of these special circumstances, there is no order as to costs.
N.P.V. Appeal allowed.
| IN-Abs | In a suit for injunction and possession of the suit property, on the basis of a registered sale deed executed by the widow of the owner of the property, filed by the appel lants, the question of admissibility of an unregistered document, said to be Deed of Adoption, by which the widow conferred on the adopted son rights in her property and relinquished her right to alienate any part of the property, came up for consideration.
The trial court accepted the document only in proof of adoption, and decreed the suit.
The first appellate court set aside the decree.
On appeal.
the High Court maintained lower appellate court 's judgment and held that after execut ing the deed of adoption, the widow had no right left in the property and, therefore, a transfer executed by her would not confer any title on the appellants.
Aggrieved, the appellants filed an appeal, by special leave, in this Court contending that as the deed 'would be hit by section 17(1)(b) read with section 49 of the Indian , regarding relinquishment or conferment of right on the adopted son, the High Court was not right in relying on this clause to come to the conclusion that the widow had no right to transfer the property in favour of the appellants.
Allowing the appeal, the Court, HELD: 1.
Proviso (c) Section 12 of the , departs from the Hindu General Law and 145 makes it clear, that the adopted child shall not divest any person of any estate which has vested in him or her before the adoption.
Section 13 enacts that when the parties intend to limit the operation of proviso (c) to Section 12, it is open to them by an agreement to the contrary.
[148C] In the instant case, the widow was the limited owner of the property after the death of her husband.
But after , came into force, she has become an absolute owner.
Therefore, the property of her husband vested in her.
Merely by adopting a child, she could not be deprived of any of her rights in the property.
The adoption would come into play and the adopted child could get the rights for which he is entitled, after her death.
[147G H] 2.
Section 17(1)(b) of the clear ly provides that a document, where any right in movable property is either assigned or extinguished, will require registration.
[148D] In the instant case, that part of the deed which refers to creation of an immediate right in the adopted son and divesting of the right of the adoptive mother in the proper ty will squarely fail within the ambit of Section 17(1)(b) and, therefore, under Section 49 of the , this could not be admitted if it is not a registered docu ment.
[148E]
|
iminal Appeal No. 28 of 1956.
Appeal by special leave from the judgment and order dated June 21, 1954, of the Calcutta High Court in Criminal Revision No. 811 of 1953.
1264 Ranadeb Chaudhury and P. K. Chatterjee, for the appellants.
B. Sen and P. K. Bose, for the respondents.
September 11.
The Judgment of the Court was delivered by KAPUR J.
This appeal by special leave raises a question of interpretation of section 237 of the Indian Companies Act.
Appellant No. 1 is One of the past directors of the Bank of Commerce Ltd., now in liquidation and appellant No. 2 was its Managing Director.
The Bank was ordered to be wound up by the High Court of Calcutta on August 7, 1950, and one G. K. Dutt, Bar at law was appointed its Official Liquidator but on September 7, 1950, the Official Receiver was appointed in place of Dutt.
On July 23, 1952, respondent No. 1 filed in Court of the Presidency Magistrate a complaint against the appellant under sections 120B, 406, 467, 477A, Indian Penal Code and 182A of the Indian Companies Act and stated that he was doing so under the authority of the official liquidator and the official liquidator had obtained the directions of the High Court to file the complaint.
On May 5, 1953, the appellant applied to the I residency Magistrate for dismissal of the complaint as being without the sanction of the Company Judge and therefore the official liquidator in his official capacity was incompetent to prefer the complaint, being the creation of the statute he could only act within the four corners of the statute.
He possessed only those powers which the statute conferred on him.
This application was dismissed by the Presidency Magistrate on June 13, 1953.
The appellant then applied to the High Court for quashing the criminal proceedings on the ground that the prosecution was ab initio void because of the absence of prior direction judicially given by the High Court under section 237(1) of the Indian Companies Act.
The High Court found against the appellants and discharged the rule.
The learned Chief Justice held that the provisions of section 237(1) are no bar to a prosecution by the liquidator; that under section 237(1) there is nothing in the nature of a judicial proceedings 1265 that it could not be said that the order was not a valid direction under section 237(1).
He said: " There can be no question in the present case that the relevant facts were all placed before the Company Judge, because they are all set out in the report of Adhikary and the affidavits annexed there to to which the order expressly refers and with reference to which the liberty to bring legal proceedings was expressly given.
In view of those circumstances, it is impossible to say that the Company Court had not before it all the facts on which the prosecution is based or that it did not apply its mind to the considerations relevant to section 237(1) ".
He also held that clause (a) of section 179 empowers the liquidator to institute or defend legal proceedings in the name of the company and that it was expressly concerned with the powers of ' the liquidator whereas section 237 dealt with the powers of the Court to give, directions.
P. B. Mukherji J. gave a concurring judgment.
After referring to the history of section 237, he held that under that section the Company Judge can act ex parte and it was not necessary for him to hear a director or an officer of the company com plained against and that direction given under that section was not a condition precedent to a prosecution by the official liquidator nor is it the intention of that section to impinge on the powers of a criminal court under the Code of Criminal Procedure.
Leave to appeal having been refused by the Calcutta High Court, the appellants have come to this Court in pursuance of special leave.
On the application of the official liquidator Bachawat J. an January 15, 1951, made an order which must be taken to be one under section 179.
In this order it was said: And it is further ordered that the said applicant be at liberty to institute or defend any suit or prosecution, or other legal proceedings, civil or criminal in the name and on behalf of the said Bank and to continue all pending suits and execution proceedings by or against the said Bank and for that purpose to engage advocates, Vakils and other.
lawyers and to 1266 pay out of the assets of the said Bank in his hands all costs of and incidental to such suits, prosecutions and/or legal proceedings ".
On July 22, 1952, the official liquidator obtained the order from Bannerji J. which the High Court has held, and in our opinion rightly, to be an order under section 237(1) of the Indian Companies Act.
This order said: " It is ordered that the said applicant be at liberty to take such civil or criminal proceedings as he may think necessary over the report of the said Jasoda Dulal Adhikary read with the affidavits of H. Sen Gupta and Nepal Chandra Adhikary read with the affidavits of H. Sen Gupta and Nepal Chandra Mitra as set out in the said Exhibit " A " ".
The passage already quoted from the judgment of the learned Chief Justice shows that all the relevant facts were before the Company Judge, as they were all set out in the affidavits placed before him.
The complaint was then filed on July 23, 1952.
During the pendency of the complaint the appellants took an appeal against the order of the Company Judge dated July 22, 1952, but it was dismissed on the objection taken by the liquidator that it was an administrative order and not a judicial order.
On August 5, 1953, the official liquidator took out misfeasance proceedings under section 235 of the Companies Act and the appellants then applied to the High Court for quashing the criminal proceedings already started on the ground of commencement of proceedings under section 235.
This application was also heard with the rule which was issued on June 29, 1953, and it was dismissed by the same judgment by which the rule was discharged, i. e., of June 21, 1954.
The general scheme of the Companies Act is that the Court should have complete control of all proceedings in winding up and it was therefore urged that the official liquidator was not authorised to do anything either without the sanction of the Court or without its directions.
Section 179 deals with the powers of official liquidator.
It provides: 1267 The official liquidator shall have power, with the sanction of the court, to do the following things: (a) to institute or defend any suit or prosecution or other legal proceeding, civil or criminal in the name and on behalf of the company;. . . " Under section 180 the Court may provide that the official liquidator may exercise any of the powers given under section 179 without the sanction or intervention of the Court.
Section 183 deals with the exercise and control of liquidator 's powers.
Sub section 3 authorises him to apply to the Court for directions in relation to any particular matter arising in the winding up.
Subsection 4 is a provision under which the official liquidator is entitled to use his own discretion in the administration of the assets of the company and in the distribution amongst the creditors.
Sub section 5 provides: " If any person is aggrieved by any act or decision of the official liquidator, that person may apply to the Court and the Court may confirm, reverse or modify the act or decision complained of, and make such order as it thinks just in the circumstances ".
These provisions show that section 179 deals with the powers of the liquidator.
Under section 235 the Court has the power to assess damages against delinquent directors and the Court may on the application of the liquidator or a creditor or a contributory examine into the conduct of a director and compel him to pay or restore money or property or to contribute such sum to the assets of the company by way of compensation in respect of any misfeasance on his part and this power may be exercised irrespective of the criminal liability of the director.
Section 237 deals with prosecution of delinquent director and the relevant portion of this section is: (1) " If it appears to the Court in the course of a winding up by, or subject to the supervision of, the Court, that any past or present director, manager or other officer, or any member, of the company has been guilty of any offence in relation to the company for which he is criminally liable, the Court may, either on 161 1268 the application of any person interested in the winding up or of its own motion, direct the liquidator either himself to prosecute the offender or to refer the matter to the registrar.
(2) If it appears to the liquidator in the course of a voluntary winding up that any past or present director, manager or other officer, or any member of the company has been guilty of any offence in relation to the company for which he is criminally liable, he shall forthwith report the matter to the registrar and shall furnish to him such information and give to him such access to and facilities for inspecting and taking copies of any documents, being information or documents in the possession or under the control of the liquidator relating to the matter in question, as he may require.
(3) Where any report is made under sub section (2) to the registrar, he may, if he thinks fit, refer the matter to the Central Government for further enquiry, and the Central Government shall thereupon investigate the matter and may, if they think it expedient, apply to the Court for an order conferring on any person designated by the Central Government for the purpose with respect to the company concerned all such powers of investigating the affairs of the company as are provided by this Act in the case of a winding up by the Court.
(4) If on any report to the registrar under sub section
2 it appears to him that the case is not one in which proceedings ought to be taken by him, he shall inform the liquidator accordingly, and thereupon, subject to the previous sanction of the Court, the liquidator may himself take proceedings against the offender.
(5) If it appears to the Court in the course of voluntary winding up that any past or present director, manager or other officer, or any member, of the company has been guilty as aforesaid, and that no report with respect to the matter has been made by the liquidator to the registrar, the Court may, on the application of any person interested in the winding up or of its own motion, direct the liquidator to make such a report, and on a report being made accordingly, 1269 the provisions of this section shall have effect as though,the report has been made in pursuance of the provisions of sub section (2).
(6) If, where any matter is reported or referred to the registrar under this section, he considers that the case is one in which a prosecution ought to be instituted, he shall place the papers before the Advocate General or the public prosecutor and if advised to do so institute proceedings : Provided that no prosecution shall be undertaken without first giving the accused person an opportunity of making a statement in writing to the registrar and of being heard thereon.
. . . . . . . . . . It was this section which the appellants pressed in support of the argument that without the order of the Court the official liquidator cannot lodge a criminal complaint against a past director and if he does so the proceedings will be ab initio void.
All that sub section
(1) requires is that if the Court finds in the course of winding up that any past or present director, etc., has been guilty of any offence in relation to the company the Court may either on the application of the person interested or of its own motion direct the liquidator to prosecute the offender or to refer the matter to the registrar.
In the latter case if the registrar finds that the prosecution ought to be instituted he can do so if advised by the Advocate General or the public prosecutor.
But emphasis was placed by counsel for the appellants on the proviso that no prosecution could be undertaken without first giving the accused person an opportunity of making a statement to the registrar or of being heard and it was urged that if the registrar cannot institute prosecution without first giving an opportunity to the person accused to file an explanation, no directions could be given by the judge unless the persons accused are first allowed an opportunity of giving an explanation.
But this contention must be repelled.
Under section 237 (1) the Court may direct the liquidator to himself prosecute the offender or to refer the matter to the registrar.
Giving an opportunity to the offender before such direction is given by 1270 the Court is not a prerequisite of the Judge making in order under sub section
Under sub section
(6) the registrar is required to give the offender an opportunity to show cause before a prosecution is undertaken.
That is a far step from saying that section 237(1) of the Companies Act requires a Judge to give the offender an opportunity before he gives a direction for prosecution by the liquidator or for reference to the registrar.
It was further urged that under sub s (4) in the case of voluntary liquidation, the liquidator has to proceed after obtaining the sanction of the Court and therefore it was urged that the liquidator cannot institute criminal proceedings without such sanction in the case of winding up by the Court.
Whatever may be the case of a liquidator under voluntary winding up sub section
(1) of section 237 makes no such provision in the case of compulsory liquidation.
Our attention was drawn to some passages from the Indian Companies Act by Sircar & Sen, 1937 Edition.
At page 624 it is stated that the object of the section is to provide against abuses and indiscriminate commencement of prosecutions and also for the first time a provision has been made under this section for prosecutions being conducted as crown prosecutions.
In a passage at page 628 it is stated: " But before the Court can exercise its jurisdiction it must come to the conclusion that in the course of winding up the person intended to be charged under this section has been guilty of an offence in relation to the company for which he is criminally liable.
But such a finding is not to prejudice the accused in any way in his trial.
Per Chitty J. in re Charles Denham & Co. Ltd. L.T. 570 at 571.
" The procedure under section 237(1) as stated in this book at the same page is as follows: " The application should be made on a petition verified by an affidavit in which materials must be set out sufficient to make out a prima facie case.
It is not quite settled as to whether the liquidator should make the application upon notice to any one.
Generally the application should be ex parte, but 1271 the Court may direct notice to be given to any person who is in its opinion entitled to be heard ".
These passages do not support the contention that before a prosecution can be validly instituted against a past director the sanction of the Court is necessary.
Mr. Choudhuri then relied on an observation of Buckley J.
In Re London and Globe Finance Corporation (1) also quoted in Sircar & Sen 's book at page 625.
There the principles guiding the Court in ordering prosecutions have been laid down as follows: " I have next to consider upon what principles I ought to exercise the power given me by section 167 of the Companies Act, 1862, to direct the official receiver to institute and conduct a prosecution at the expense of the assets.
It is obvious that no one legitimately can or ought to institute a criminal prosecution with a view to his personal profit.
Neither should a prosecution be instituted from motives of vengeance against the offender.
The motive of every prosecution ought, to be to inflict punishment upon the criminal for the proper enforcement of the law and for the advantage of the State and with a view to deter others from doing the like ".
This passage does not support the giving of an opportunity to the offender before the Judge can give direction nor do they affect the powers of the liquidator to start a prosecution or the, criminal court to entertain a complaint when filed by the liquidator.
The following passage from Buckley 's Company Law under the commentary under section 334 of the English Companies Act, 1948, which corresponds to section 237 of the Indian Companies Act was then referred to: " Proceedings will accordingly be taken by the Director of Public Prosecutions (or Lord Advocate) or not at all ".
But this is because of the peculiar and express language of section 334 tinder which the Judge can only direct the liquidator to refer the matter to the Director of Public Prosecutions or to Lord Advocate as the case may be.
In the English Act, special provision has been made for England saving the institution of (1) , 733. 1272 criminal proceedings by private prosecutors.
Merely because no such provision has been made in regard to scotland does not affect the argument.
Mr. Choudhuri then relied on certain English cases dealing with the mode of giving directions.
In re Northern Counties Bank Limited(1) the Judge had ordered the liquidator to ascertain by circular the wishes of the creditors and after they had appeared to oppose the starting of the prosecution, it was held (1) that it did not sufficiently appear that the offence had been committed and (2) that as 2/3 of the creditors opposed the application the prosecution should not be ordered as expenses will have to be paid from out of the money belonging to the creditors.
The main question for decision in that case was whether the prosecution should be at the cost and expense of the assets of the company but competency of the liquidator to file the complaint was not in dispute.
Reference 'was then made to Palmer 's Company Precedents, 1952 Edition, Vol.
II, again stating as to when leave to prosecute should be given but the law stated there does not support the case for the appellants.
At page 605 it is stated : " The summons will be ex parte, and should be supported by affidavit showing a strong case for prosecution, and also the extent of the assets and liabilities.
The court is not willing when the assets are small, to sanction proceedings which may swallow up or largely reduce those assets ".
The form at p. 607 does not show that under the English Companies Act when liberty is given to prosecute the person accused is heard.
All that is required is that the court will make its order upon affidavits etc.
filed before it and it can also order that the costs and charges incurred by the liquidator shall be paid out of the assets of the company.
It was next contended that although the language of section 237 was not in the negative form still the effect of the words was that no prosecution could be instituted without the sanction of the Court being obtained by the liquidator.
In support of the submission counsel (1) 1273 relied on The Queen vs Cubitt (1) which was a case under the Sea Fisheries Act which created certain offences and by section 11 provided: "The provisions of this Act. . . shall be enforced by sea fishery officers ", who are defined by that section and it was held that the effect of the words was that no one except the sea fishery officer could prosecute an offence under the Act.
But there are no such words of limitation in section 237.
In Taylor vs Taylor(2) the words of the statute were "entitled to the possession or the receipt of the rents and profits" and it was held that the order under the statute could only be made upon a petition which was within the words above quoted and if there was no such person no order could be made but that again was decided on the peculiar language of the statute.
Counsel also relied on Nazir Ahmad vs Crown (3) where it was held that if the statute authorises the doing of an act in one way then it had to be done in that way or not at all.
The argument of Mr. Choudhuri really comes to this that the complaint filed on behalf of the official liquidator was incompetent in the absence of a direction under section 237 or without complying with the procedure laid down in that section.
Section 237(1) does not lay down any procedure for the giving of directions and the provisions in regard to the action taken by the registrar do not have any relevancy to what the court should do before it gives directions.
English cases that have been cited do not go to the extent of saying that no prosecution can be instituted without the sanction of the court.
They deal with another subject and that is the circumstances in which the Judge would give directions for prosecution and would sanction the assets of the company to be expanded in prosecution.
Besides nowhere has it been stated that the court cannot give directions without first hearing the persons accused or that the directions of the Judge are a condition precedent to the lawful institution of criminal proceedings by the liquidator.
(1) (2) (3) (1936) L.R. 63 I.A. 372, 381. 1274 On the other hand it has been held that under section 179 of the Indian Companies Act no sanction is required for commencing a prosecution.
In Jaswantrai Manilal Akhaney vs The State of Bombay (1) at the instance of the official liquidator a report was lodged with the police against the Managing Director of a Bank and the police submitted a charge sheet to the Magistrate.
It was observed by Sinha J. at page 502: " In terms the section laws down the powers of the official liquidator.
Such a Liquidator has to function under the directions of the court which is in charge of the liquidation proceedings.
One of his powers is to institute prosecutions in the name and on behalf of the company under liquidation with the sanction of the court.
This section does not purport to impose any limitations on the powers of a criminal court to entertain a criminal prosecution launched in the ordinary course under the provisions of the Code of Criminal Procedure ".
It was also pointed out in this judgment that section 179 contains no words corresponding to the language of Drug Control Order, 1943, which was held to be a condition precedent for instituting prosecution in the case of Basdeo Aggarwalla vs King Emperor (2) nor are there any prohibitory words like those that are contained in sections 196 and 197 of the Criminal Procedure Code.
In the former case no prosecution could be instituted without the previous sanction of the Provincial Government and the latter provides that " no court shall take cognizance. . . .
There are two cases decided by two Indian High Courts which support the submission of the respondents ' counsel.
In Emperor vs Bishan Sahai (3) it was held that the Companies Act nowhere provides that without the directions of a Judge no criminal prosecution can be instituted.
In Mrityunjoy Chakravarti vs Provot Kumar Pal(4), it was held that neither section 179 nor section 237 indicates that if the liquidator takes action without a (1) ; (2) (3) I.L.R. (1937) All.
(4) A.I.R. 1953 Cal.
1275 direction of the Court this action would be illegal or invalid or it would invalidate a prosecution.
It would thus appear that both on the language of section 237(1) as well as on precedent the complaint made by the liquidator against the appellants suffers from no such infirmity as to make the proceedings null and void.
The section contains no such words which indicate that such a prosecution cannot be instituted by a liquidator without the sanction of the Judge or that the Court cannot take cognizance of a complaint without such sanction or direction.
Section 179 as the learned Chief Justice of Calcutta High Court has rightly pointed out, deals with the powers of liquidators to institute or defend proceedings with the sanction of the Court and section 237(1) deals with the powers of the Court to give directions for prosecution of delinquent directors, etc.
It was further urged on behalf of the respondents that in the case before us there was a proper direction under section 237(1).
The judgment of the High Court shows that before the learned Judge gave a direction on July 22, 1952, there were before him proper materials and, therefore, his sanction was perfectly valid, legal and proper.
Before this order made by Bannerji J. there was an order of Bachawat J. dated January 15, 1951, under section 179 and, therefore, when the liquidator authorised his Assistant, respondent No. 1 to institute the proceedings he was entitled to do so.
As we have said above even in the absence of such directions the legality of the criminal proceedings instituted would not be affected.
Nothing that we have said in this judgment must be taken to be an expression of opinion which in any way affects the control by the Judge of proceedings in winding up or over the liquidators.
We would, therefore, dismiss this appeal.
Appeal dismissed.
| IN-Abs | The Official Liquidator got a complaint under sections 120 B, 406, 467 and 477A, 'Indian Penal Code filed before the Presidency Magistrate against the appellants one of whom was a past director and the other the Managing Director of the Bank of Commerce Ltd., which was in compulsory liquidation.
The appellants applied to the Presidency Magistrate for dismissal of tile complaint on the ground that the Official Liquidator was incompetent to prefer the complaint as there was no sanction of the Company judge.
This was dismissed.
The appellants then applied to the High Court for quashing the criminal proceedings on the ground that the prosecution was ab initio void because of the absence of a prior direction judicially given by the High Court under section 237(1) of the Indian Companies Act.
The High Court rejected the application.
Held, that a direction of the Court under section 237(1) of the Indian Companies Act was not a condition precedent to the prosecution of the appellants by the Official Liquidator.
In fact, a valid and proper direction had been given by the Court under section 237(1) to the Official Liquidator for the prosecution of the appellants.
In giving a direction under this section the Court could act ex parte and it was not necessary to give to the appellants any opportunity of being heard.
Section I79 Of the Companies Act deals with the powers of liquidators to institute or defend legal proceedings with the sanction of the Court and section 239(1) deals with the powers of the Court to give directions for prosecution of delinquent directors, etc.
In the present case, the Court had made an order under section I79 giving liberty to the Official Liquidator to institute or defend legal proceedings, and the Official Liquidator was entitled to lodge the complaint against the appellants even without a direction under section 237(1).
|
it Petition (Civil) No. 10 18 of 1989.
(Under Article 32 of the Constitution of India) Ranjit Kumar for the Petitioner.
A.D. Singh, (N.P.) R.B. Misra, and Ms. A Subhashini, (N.P.) for the Respondents.
The Order of the Court was delivered by MISRA, J. This is an application under Article 32 of the Constitution and the President of the National Council of Bio Medical Scientists is the petitioner.
The reliefs asked for are on the allegation that the Group 'A ' scientists of the Ministry of Health and Family Welfare who are the mem bers of the Council, are being discriminatingly treated; they have not been given any promotional benefits and, therefore, there is a large scale stagnation in the service.
It has been alleged that the Group 'A ' scientists are re cruited through the Union Public Service Commission.
These scientists possess a Master Degree in the relevant disci plines and 3 years ' experience to entitle them to be re cruited.
It has been indicated in a chart filed along with the Writ Petition that the total posts in this category are 243 including post of Drug Controller of India.
The promo tional posts available are filled up by direct recruitment and open competition and there is no promotional channel provided.
Similar scientists in other Ministries, such as Ministry of Science and Technology, Ministry of Defence, Ministry of Environment and Ministry of Oceanography are recruited in terms of rules made under the proviso to Arti cle 309 of the Constitution and for their Group 'A ' scien tific and technical officers, promotional avenues are avail able.
The petition further alleges that on their representa tions from time to 179 time, meetings have been held but decisions taken in such meetings have not been given effect to and, therefore, all the representations have gone unheeded.
Particular reference has been made to the Minutes of a meeting held on 15.5.
1989, where Shri Basudeven, Joint Secretary in the Ministry of Health and Family Welfare presided; several officers from different wings of the Ministry attended and representatives of the petitioner 's Council participated.
It has been al leged that though several demands were pressed by the repre sentatives of the Council, only a few were considered and yet there was no follow up action for their implementation.
Notice was issued to the Union of India in the Minis tries of Health, Human Resources, Science and Technology and Bio Technology and the notice indicated that the matter would be taken up for final disposal.
Though no return has been filed to the Rule Nisi, counsel appeared for the re spondents and upon appropriate instructions, participated in the hearing of the matter.
Annexure P 1 indicates the institutions located in different parts of the country where the posts of 'A ' Group scientists who are members of the Council work.
Their total number is 243 and this is not disputed.
The petitioner has placed on record the rules framed in exercise of powers under proviso to Article 309 of the Constitution in the Ministry of Science and Technology, covering Group 'A ' scientists.
Rule 13 thereof provides avenues for promotion.
This also is not disputed.
Annexure P 3 is a tabuler state ment prepared by the petitioner, showing the disparities in the service conditions between the BioMedical scientists and other similar scientists and the discrimination that Group 'A ' specialists/scientists under the establishment of Direc tor General of Health Services suffer.
The pay scale for different categories of Group 'A ' scientists in the non medical posts and of doctors in the medical posts have been separately shown.
It has been pointed out therein that while there is a difference in the pay scale in the establishment of Director General of Health Services, there is no dispari ty in respect of similar posts in the Indian Council of Medical Research (ICMR) or in the All India Institute of Medical Sciences, Delhi or the Post Graduate Institute at Chandigarh.
It has been further pointed out in the said chart that various kinds of allowances are admissible to the doctors in the medical wing, such as book allowance, higher degree allowance, risk allowance and conveyance allowance in the establishment of Director General of Health Services while the non medical category manned by the 'A ' Group scientists is denied all these allowances.
It has also been alleged that while the medical category doctors get non practising allowance the benefit of 180 such allowance is not extended to the non medical category.
Such discrimination, according to the petitioner, is not noticed in the I.C.M.R. or in the two Institute at Delhi and Chandigarh respectively.
The 4th Pay Commission in Chapter 29, paragraph 29.8 recommended: "The question of granting incentive to offi cers and staff who acquire higher qualifica tion has also engaged our attention.
Railways have suggested a scheme for giving such incen tives in the context of the need for updating the skills of the employees for the more efficient discharge of their duties in these days when modernisation and adoption of ad vanced technology is being undertaken in different fields of railway working.
Sugges tions have also been made for grant of post graduate allowance to veterinary surgeons and special allowances to EDP personnel.
Some such schemes are in existence in the defence serv ices.
We suggest that some incentive should be given to employees who acquire qualifications which are useful for their work and contribute to their efficiency." On 15th of December, 1986, the Office Memorandum in the Ministry of Personnel, Public Grievances and Pension indi cated that this recommendation of the Pay Commission has been accepted by the Government.
Undoubtedly, in regard to the three other allowances, namely, book allowance, risk allowance and conveyance allow ance, there is no scope for discrimination between Group 'A ' scientists in non medical and medical wings.
In fact, at the hearing of the writ petition, respondent 's counsel found it difficult to support the prevailing position.
We are of the opinion that these four kinds of allowances, which are admissible to the medical doctors are also admissible to the Group 'A ' scientists under the non medical category employed in the establishment of Director General of Health Services.
The claim for nonpractising allowance stands on a somewhat different footing and we do not think on the present state of the record of this proceeding, we can come to a definite conclusion that the Group 'A ' scientists in the non medical category would be also entitled to such allowance.
We, however, leave the question open and Government at their level in the appropriate Ministry would examine tenability of this claim as and when raised.
It has been canvassed by petitioner 's counsel at the hearing that there is no justi fication for the disparity in the scale of pay between the two categories of officers.
Government counsel has taken 181 the stand that the qualifications of officers in the two wings are different and the difference in the pay scales has always existed.
It is difficult for us on the material available to take any final view of the matter but the respondent should examine tenability of the claim to equal scales of pay.
This Court, has on more than one occasion, pointed out that provision for promotion increases efficiency of the public service while stagnation reduces efficiency and makes the service ineffective.
Promotion is thus a normal inci dence of service.
There too is no justification why while similarly placed officers in other Ministries would have the benefit of promotion, the non medical 'A ' Group scientists in the establishment of Director General of Health Services would be deprived of such advantage.
In a welfare State, it is necessary that there should be an efficient public serv ice and, therefore, it should have been the obligation of the Ministry of Health to attend to the representations of the Council and its members and provide promotional avenue for this category of officers.
It is, therefore, necessary that on the model of rules framed by the Ministry of Science and Technology with such alterations as may be necessary, appropriate rules should be framed within four months from now providing promotional avenue for the 'A ' category scien tists in the non medical wing of the Directorate.
This Writ Petition is allowed and the following direc tions are issued: 1.
Within four months from today, the Ministry of Health and Family Welfare of the Union of India shall frame a set of appropri ate rules, inter alia, providing suitable promotional avenue for the 'A ' Group scien tists in the non medical wing of the estab lishment of Director General of Health Serv ices; 2.
These 'A ' Group scientists shall be entitled to book allowance, higher degree allowance, risk allowance and conveyance allowance at the same rate as is admissible to doctors in the medical wing in the Directorate w.e.f. 1.4.1989; 3.
Government shall examine the tenability of the claim of equal pay scales for this category of officers within four months from today.
There shall be no directions for costs.
T.N.A. Petition allowed.
| IN-Abs | The petitioner, group 'A ' scientist belonging to the non medical wing of the Directorate General of Health Serv ices, filed a wit petition in this Court seeking parity in pay scales and allowances with his counter part in the medical wing.
It was contended that group 'A ' scientists are treated discriminately vis a vis their counter parts in other Ministries, because the former are not given any promotional benefits while the latter are provided with avenues for promotion.
Allowing the writ petition, this Court, HELD: 1.
Provision for promotion increases efficiency of the public service while stagnation reduces efficiency and makes the service ineffective.
Promotion is thus a normal incidence of service.
There is no justification why while similarly placed officers in other Ministries would have the benefit of promotion, the non medical 'A ' group scientists in the establishment of Directorate General of Health Serv ices would be deprived of such advantage.
[181B] 2.
In a welfare State, it is necessary that there should be an efficient public service and, therefore, it should have been the obligation of the Ministry of Health to pro vide promotional avenue for this category of officers, [181 C] 3.
On the model of rules framed by the Ministry of Science and Technology, appropriate rules should be framed providing promotional avenue for the 'A ' category scientists in the non medical wing of the Directorate.
[181D] 178 4. 'A ' Group scientists shall be entitled to book allow ance, higher degree allowance, risk allowance and conveyance allowance at the same rate as is admissible to doctors in the Medical wing in the Directorate.
[18IF] 5.
Government shall examine the tenability of the claim of Group 'A ' scientists for equal pay scales with their counterparts in medical wing.
[181G]
|
ivil Appeal No. 4599 of 1989.
From the Judgment and order dated 16.9.1988 of the Punjab and Haryana High Court in Review Application 22 CII of 1988 in Civil Revision No. 2439 of 1980.
S.P. Goel, G.B. Singh and K.K. Mohan for the Appellant.
S.M. Ashri for the Respondent.
The Judgment of the Court was delivered by K. RAMASWAMY, J.
Special leave granted.
This appeal under Article 136 arises against the order dated Sept. 16, 1988 of the High Court of Punjab & Haryana refusing to review the order dated August 11, 1988 made in Civil Revision No. 2439/80 on its file.
The facts leading to the decision are that the respondent Govind Ram, the father of the respondents/landlord laid the suit No. 118/77 (ini tially numbered as O.S. No. 276/75) on the file of Sr.
Sub Judge for ejectment and recovery of arrears of rent and damages for use and occupation of the shop in Gurgaon, let out to the appellant/tenant.
The suit was originally laid in the Court of Sub 152 Judge, IIIrd Class, Gurgaon, which was transferred later to the Sr.
Sub Judge, Gurgaon, which was decreed ex parte on October 20, 1977.
The application under Order 9 Rule 13 C.P.C. to set aside the ex parte decree was dismissed on January 10, 1979, and was confirmed on appeal on August 17, 1979 and in revision by the High Court on October 15, 1979.
When the landlord laid the execution application for eject ment the appellant objected under section 47 of C.P.C. contending that the decree of the Civil Court is a nullity as the premises in question is governed by the Haryana Urban (Control of Rent & Eviction) Act 11 of 1973, for short 'the Act '.
The Controller under the Act is the competent forum regarding claims for ejectment on fulfilment of any of the conditions enumerated under Section 13 thereof.
The Civil Court is divested of jurisdiction to take cognisance and pass a decree for ejectment of the appellant.
That objection was overruled and on further revision the High Court dis missed the revision by order dated March 19, 1980.
Simulta neously he also filed Writ Petition under Article 227 which was dismissed on September 30, 1988.
This appeal is directed against that order of dismissal.
The contention raised by Shri S.P. Goel, the learned Sr. counsel for the appellant is that by operation of Section 13 of the Act the only authority to pass a decree of ejectment of the appellant tenant is the Controller under the Act and by necessary implication the jurisdiction of the Civil Court is ousted.
The Civil Court lacked inherent jurisdiction to take cognisance of the cause and to pass a decree.
The decree is thus a nullity.
The challenge to a decree on the ground of nullity can be raised at any stage and even in execution.
The courts below have committed manifest error of law in not considering the legal question in its proper perspective.
The shop consists of the original building belonging to the landlord, but a small part thereof in the frontside was constructed on municipal land.
Tenancy of the building is governed by the Special Act and, therefore, the decree of the Civil Court is a nullity and is inexecutable.
Shri Ashri, the learned counsel for the respondents refuted this contention.
Firstly he argued that the leave applica tion is barred by limitation.
Secondly, he contended that the appellant had raised the plea of want of jurisdiction at the trial.
Though he remained ex parte, the trial court considered the objection under issue Nos. 4 and 5 and over ruled the objection.
The decree became final; thereby the decree operates as res judicata.
He also further contends that the Act does not apply to the building in question.
Under Section 3, municipal land is exempted from the provi sions of the Act and thereby the only forum to lay the action is the Civil Court.
The Civil Court having jurisdic tion has validly granted the 153 decree.
The decree having been allowed to become final, it is not open to the appellant to ask the executing court to go behind the decree The question that emerges is whether the Civil Court lacked inherent jurisdiction to entertain the suit for ejectment of the appellant tenant and the decree so passed is a nullity.
The Act was enacted with the object of con trolling the increase of rent of buildings and rented lands situated within the limits of urban areas and "the eviction of the tenants therefrom".
Section 2(a) defines 'building ' which means any building or a part of a building let for any purpose whether being actually used for that purpose or not, including any land . . . . appurtenant to such building . . . . but does not include a room in a hotel, hostel or boarding house.
Section 2(b) defines 'Controller ' as any person who is appointed by the State Government to perform the functions of a Controller under the Act.
Landlord has been defined under Section 2(c) and Section 2(f) defines rented lands to mean any land let separately for the purpose of being used principally for business or trade. 'Tenant ' has been defined under Section 2(h).
Section 3 authorises the State Government by notifica tion to exempt any particular building or rented land or any class of building or rented lands from the application of any or all the provisions of the Act.
Section 13 contains the provisions for eviction of tenants, Sub section
(1) thereof reads: "Eviction of tenants (1) A tenant in posses sion of a building or a rented land shall not be evicted therefrom except in accordance with the provisions of this section.
" The other provisions are not necessary.
The sole ground raised by the landlord for eviction was that the appellant had committed default in the payment of rent and thereby had became liable for ejectment.
Accordingly, he issued a notice under Section 106 of the Transfer of Property Act determin ing the tenancy and laid this suit.
Section 13 gives the right to the landlord to seek eviction of the tenant for default in the payment of rent.
The Act provides the protec tion of continued tenancy and remedy of ejectment for breach of covenants in the lease and other statutory grounds as provided.
It provides that the remedy and the forum and the decree of ejectment passed by the Controller or the appel late authority or the revisional authority or confirmation thereof either in appeal or revision is final under the Act.
Thereby the exclusive jurisdiction to take cognisance of the cause of action for ejectment of the tenant from a building or rented land situated in urban areas is governed by the provisions of the Act and is 154 exclusively to be dealt with under Section 13 of the Act.
By necessary implication the jurisdiction of the Civil Court under Section 9 of C.P.C. is excluded.
It is undoubtedly true that open land is a part of the frontage of the shop and belonged to the municipality which the landlord had taken on lease from the Municipality.
As regards the munici pal land, the landlord was a lessee of the Municipal Commit tee.
But on construction of the building covering a portion of the municipal land the landlord became landlord and the appellant his tenant for the purposes of the Act.
This view was held by the full Bench of the Punjab and Haryana High Court in Hari Parshad Gupta vs Jitender Kumar Kaushik, [1982] Vol.
84, Punjab Law Reporter, 150.
We agree with the view.
Thereby though there is a notification issued by the State Government exempting the lands belonging to Gurgaon Municipality from the provisions of the Act, the building of the respondent does not get exempted from the provisions of the Act.
It is the finding of the forums below that the shop in question stands mainly on the land of the landlord and a small portion is located on municipal land.
Therefore, we are of the view that the building was governed by the provi sions of the Act and the exemption accorded by the Govern ment under Section 3 was not attracted to the premises.
In Sadhu Singh vs District Board, Gurdaspur & Anr., [1962] Punjab Law Reporter, Vol.
64, 1 the question was whether to the reconstructed building governed by the provisions of East Punjab Urban Rent Restriction Act the exemption under Section 3 applied.
It was held to be so by the Division Bench.
But the present facts are different.
In Barrachlough vs Brown, the House of Lords held that when a special statute gave a right and also provided a forum for adjudication of rights, remedy has to be sought only under the provisions of that Act and the common law court has no jurisdiction.
In Doe vs Bridges, ; at 859 the famous and oft quoted words of Lord Tenterdan, occur: "Where an Act creates an obligation and en forces the performance in a specified manner, we take it to be a general rule that perform ance cannot be enforced in any other manner." This statement of law was approved not only by the House of Lords in several cases, but also by this Court in Premier Automobiles vs K.S. Wadke, ; where this Court was called upon to consider whether the Civil Court can decide a dispute squarely coming 155 within the provisions of the Industrial Disputes Act.
While considering that question, this Court laid down four propo sitions and third of them is relevant for consideration here.
It is as follows: "(3) If the industrial dispute relates to the enforcement of a fight or an obligation creat ed under the Act, then the only remedy avail able to the suitor is to get an adjudication under the Act." Thus on construction of relevant provisions of the Act and in the light of the position in law it must be held that the provisions of Section 13 of the Act applies to the building leased out to the appellant by the landlord and the Controller was the competent authority to pass a decree of ejectment against the appellant and the Civil Court lacked inherent jurisdiction to take cognisance of the cause and to pass a decree of ejectment therein.
The next question is whether the impugned decree is a nullity and whether the plea can be raised in execution and further whether the decree in the suit does not operate as res judicata.
In Kiran Singh & Ors.
vs Chaman Paswan & Ors.
, ; = AIR 1954 SC 430 the facts were that the appellant had undervalued the suit at Rs.2,950 and laid it in the court of the Subordinate Judge, Monghyr for recovery of possession of the suit lands and mesne profits.
The suit was dismissed and on appeal it was confirmed.
In the second appeal in the High Court the Registry raised the objection as to valuation under Section 11.
The value of the appeal was fixed at Rs.9,980.
A contention then was raised by the plaintiff in the High Court that on account of the valuation fixed by the High Court the appeal against the decree of the court of the Subordinate Judge did not lie to the District Court, but to the High Court and on that account the decree of the Dis trict Court was a nullity.
Alternatively, it was contended that it caused prejudice to the appellant.
In considering that contention at page 121, a four Judge Bench of this Court speaking through Vankatarama Ayyar, J. held that: "It is a fundamental principle well estab lished that a decree passed by a Court without jurisdiction is a nullity, and that its inva lidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings.
A defect of jurisdic tion, whether it is pecuniary or territorial, or whether it is in respect of the subject matter of the 156 action, strikes at the every authority of the Court to pass any decree, and such a defect cannot be cured even by consent of parties.
If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was coram non judice, and that its judgment and decree would be nullities.
" On merits it was held that since the appellant himself had invoked the jurisdiction of the Civil Court with under valuation, the objection as to jurisdiction was not avail able by operation of Section 99 of the Code and as to the territorial jurisdiction he was precluded by operation of Section 21 of C.P.C.; and on such premise it was held that the decree of the District Court could not be treated to be a nullity and person who invoked the jurisdiction cannot plead prejudice to himself by his own act.
This Court has held that it is a well established prin ciple that a decree passed by a court without jurisdiction is a nullity and the plea can be set up whenever and wherev er the decree is sought to be enforced or relied upon, and even at the stage of execution or in collateral proceedings.
In the case of Ferozi Lal Jain vs Man Mal & Anr., AIR 1979 SC 794 the facts were that the appellant was the owner of a shop.
One of the covenants under the lease was that the lessee respondent should not sub let the shop.
On the ground that the respondent had sub let the shop, a suit was laid for eviction under Section 13 of the Delhi and Ajmer Rent Control Act, 1952.
The matter was compromised and a compro mise decree was passed.
Twice time was given for delivery of the vacant possession by the respondent.
On his failure to deliver vacant possession the appellant filed execution to recover possession.
The tenant raised the objection that unless any one of the grounds prescribed under Section 13 of the Rent Control Act was satisfied, the decree even on compromise was a nullity, and therefore, he could not be evicted.
This Court held that the order made did not show that it was satisfied that the sub letting complained of had taken place, nor was there any other material on record to show that it was so satisfied.
It is clear from the record that the Court had proceeded solely on the basis of the compromise arrived at between the parties.
That being so there was hardly any doubt that the Court was not competent to pass the impugned decree.
Hence the decree under execu tion must be held to be a nullity.
On that basis it was held that the objection could be 157 raised even at the execution stage.
Ultimately, the decree was held to be void.
In Bahadur Singh vs Muni Subrat Dass, the decree under execution was made on the basis of an award and it was held that the decree was passed in contravention of section 13(1) of the Rent Control Act.
Thereby the decree was held to be void and hence no execution could be levied on the basis of the void decree.
A similar view was also taken by this Court in Smt.
Kaushalya Devi & Ors.
vs K.L. Bansal, AIR 1970 SC 838.
This was also a case under the Delhi and Ajmer Rent Control Act and was on the basis of a compromise.
It was held that the decree passed on the basis of the award was in contravention of Section 13(1) of the Act as the Court had passed the decree without satisfying itself that any good ground of eviction existed.
Therefore, the decree for delivery of possession was held to be a nullity and could not be executed.
This is also a decision by a Bench of three Judges speaking through Sikri, J. as he then was.
In Chandrika Misir & Anr.
vs Bhaiya Lal, ; Palekar J. speaking for a Bench of two Judges held that the decree passed by the Civil Court in relation to matters governed by U.P. Zamindari Abolition and Land Reforms Rules, 1952 for possession was a nullity and in the appeal it was for the first time permitted to be raised in this Court and the decree was declared to be a nullity.
In Ledgard vs Bull, [1886] Law Report, 13 AC, 134 the Privy Council laid down that where the original Court in a suit was inherently lacking jurisdiction, and was incompe tent to try the same, on its transfer by consent of parties, to a Court with jurisdiction such consent did not operate as a waiver of the plea of want of jurisdiction.
In Bartan vs Fincham, [1921] 2 Kings Bench Division, 291 at 299 it was held that: "Parties cannot by agreement give the Courts jurisdiction which the Legislature has enacted they are not to have The Court cannot give effect to an agreement whether by way of compromise or otherwise, inconsistent with the provisions of the Act.
" In Peachery Property Corporation vs Robinson, [1966] 2 All Eng.
158 Report 981 at 983 Winn, Lord J. took the same view.
In Choudari Rama (dead) per L.R. Choudhary Ganapathi vs Qureshi Bee, [1983] 2 Andhra Law Times 133 one of us Ramas wamy, J. was called upon to consider the question on a set of similar facts.
Therein the petitioner who died subse quently was protected under A.P. (Telangana Area) Tenancy and Agricultural Holdings) Act, 1950.
The protected tenant was given possession in exercise of statutory power under Section 38 A of that Act.
That was done during the pendency of the suit for partition between the co sharers.
The tenant was impleaded co nominee defendant to the suit.
A prelimi nary decree for partition and for possession was passed.
A final decree followed.
The decree became final and execution was levied for possession.
Objection was taken that since the tenant was a protected tenant under the Act, the decree was a nullity and could not be executed against the legal representatives.
After considering the scope of relevant provisions of the Act, it was held that the Civil Court cannot go into the legality or correctness of the Exhibit B I issued by the Tehsildar.
The revenue authorities consti tuted under that Act were competent to go into the validity thereof.
Civil Court inherently lacked jurisdiction and the decree of ejectment of the protected tenant from the lands covered by the protected tenancy was a nullity because of the provisions of Chapter IV of the Act.
The plea can be set up even at the stage of execution, as was rightly done in that case.
Otherwise it would have the effect of nullifying the operation of the statutory provisions in Chapter IV of the Act and deprived the protected tenant of his vested interest in the land created in his favour under the tenancy certificate (exhibit B I).
It was also held in paragraph 64 that "Its validity can be assailed in the execution proceedings.
" We approve the view of the High Court.
In Mathura Prasad Bajoo Jaiswal & Ors.
vs Dossibai N.B. Jeejeebhey; , the Bench consisting of Shah, CJ., Hegde and Grover, JJ. was called upon to consider whether a decree passed without jurisdiction operates res judicata.
The facts therein were that the respondent leased out the land for construction of a building to the appel lant, which was duly constructed.
The tenant applied for fixation of the standard rent.
The Civil Court rejected the prayer holding that the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 does not apply to the open land let out for construction.
But later the High Court reversed that view in another decision and held that the Act applied to the open land leased out.
Relying upon that judgment, an application was again filed for fixation of the standard rent of the 159 premises.
Objection was raised that the earlier rejection operated as res judicata.
In that context, in negating the contention, this Court held that the doctrine of res judica ta belongs to the domain of procedure.
It cannot be exalted to the status of a legislative direction between the parties so as to determine the question relating to the interpreta tion of enactment affecting the jurisdiction of a Court finally between them, even though no question of fact or mixed question of law and fact relating to the right in dispute between the parties has been determined thereby.
A decision of a competent Court on a matter in issue may be res judicata in other proceedings between the same parties.
The matter in issue may be an issue of fact.
The fact decid ed by a competent Court is final determination between the parties and cannot be re opened between them in another proceeding.
The previous decision on a matter in issue alone is res judicata.
The reasons for the decision are not res judicata.
A matter in issue between the parties is the right claimed by one party and denied by the other.
The claim of right from its very nature depends upon proof of facts and application of the relevant law thereto.
A pure question of law unrelated to facts which give rise to a right, cannot be deemed to be a matter in issue.
When it is said that a previous decision is res judicata, it is meant that the right claimed has been adjudicated upon and cannot again be placed in contest between the same parties.
A previous decision of a competent Court on facts which are the founda tion of the right and the relevant law applicable to the determination of the transactions which is the source of the right is res judicata.
A previous decision on a matter in issue is a composite decision; the decision of law cannot be dissociated from the decision on facts on which the right is founded.
A decision on an issue of law will be res judicata in a subsequent proceeding if it be the same as in the previous proceeding, but not when the cause of action is different, nor when the law has since the earlier decision been altered by a competent authority, nor when the decision relates to the jurisdiction of the Court to try the earlier suit nor when the earlier decision declares valid a transac tion which is prohibited by law: "A question of jurisdiction of the Court, or of procedure, or a pure question of law unre lated to the right of the parties to a previ ous suit, is not res judicata in the subse quent suit.
Rankin, CJ., observed in Tarini Charan Bhattacherjee 's I.L.R. case: "The object of the doctrine of res judicata is not to fasten upon parties special principles of law as applicable to them inter se, but to ascertain their rights and 160 the facts upon which these rights directly and substantially depend; and to prevent this ascertainment from becoming nugatory or pre cluding the parties from reopening or recon testing that which has been finally decided." "A question relating to the jurisdiction of a Court cannot be deemed to have been finally determined by an erroneous decision of the Court.
If by an erroneous interpretation of the statute the Court holds that it has no jurisdiction, the question would not, in our judgment, operate as res judicata.
Similarly, by an erroneous decision if the Court assumes jurisdiction which it does not possess under the statute, the question cannot operate as res judicata between the same parties, whether the cause of action in the subsequent litiga tion is the same or otherwise." (Emphasis supplied) In that case it was held that since it relates to the jurisdiction of the Court as per law declared by the legis lature, it does not operate as res judicata.
In Vasudev Dhanjibhai Modi vs Rajabhai Abdul Rehman & Ors., a Bench of three Judges of this Court consisting of Shah, J., as he then was, Hegde and Grover, JJ. was considering the question of nullity of a decree.
The facts therein were that the appellant, owner of the plot of land, leased out the same to the respondent at an annual rental of Rs.411.
The suit was dismissed and on appeal it was reversed and suit was decreed.
On revision it was con firmed by the High Court.
Special leave petition filed in this Court was also dismissed.
In the execution the conten tion was raised that the Small Causes Court had no jurisdic tion to entertain the suit.
It was contended that the decree was a nullity on the ground that Bombay Rents Hotel and Lodging House Rates (Control) Act 57 of 1947 applied to the facts in that case.
In that context Shah, J., as he then was, speaking for the Court held that challenge to a decree which is a nullity can be raised at any time, but the Court executing the decree cannot go behind the decree between the parties or on their representation it cannot entertain any objection that the decree was incorrect in law or on facts, unless it is set aside by an appropriate proceeding in appeal or revision.
A decree even if it be erroneous is still binding between the parties.
In that context it was held that the question whether the Court of Small Causes had jurisdiction to entertain the Suit depended upon 161 the interpretation of the terms of the agreement of lease, and the use to which the land was put at the date of the grant of the lease.
These questions cannot be permitted to be raised in an execution proceedings so as to displace the jurisdiction of the Court which passed the decree.
It was further held that for the purpose of determining whether the Court which passed the decree had jurisdiction to try the suit, it is necessary to determine facts relevant to the issue on which the question depends, and the objection does not appear on the face of the record, the executing Court cannot enter upon an enquiry into those facts.
It is seen that on the facts in that case it is for the first time the executing Court is to adjudicate upon the terms of the lease whether the Court of Small Causes had jurisdiction to enter tain that suit.
It is not a case of interpretation of the statutory provisions or inherent lack of jurisdiction.
It is already seen that in fact for the first time this Court in Chandrika Misir 's case (supra) had to go into the statutory provisions though no case in that regard had been set up in the courts below and held that the Civil Court lacked inher ent jurisdiction to pass the decree.
Therefore, the ratio in this case is not in conflict with the view taken by this Court.
It is no doubt true that in Seth Hiralal Patni vs Sri Kali Nath, ; the facts were that the suit was instituted on the original side of the Bombay High Court against the appellant for recovery of certain arrears out of transactions taking place at Agra.
The dispute was referred to arbitration.
The arbitrator gave his award in favour of the respondent which was upheld on appeal by the High Court.
In execution proceedings an objection was raised by the appellant that the Bombay High Court has no jurisdiction to entertain the suit to make the award a decree of the Court as no part of the cause of action had arisen within its territorial jurisdiction.
Therefore, the decree was without jurisdiction.
It was held that since the parties had agreed to refer the matter to arbitration through Court, which had jurisdiction, he would be deemed to have waived the objec tion as to the territorial jurisdiction of the Court.
There fore, it is not a nullity and the appellant was held to be estopped from challenging the jurisdiction of the Bombay High Court.
The ratio therein does not apply to the facts of this case.
The case of Phool Chand Sharma & Ors.
vs Chandra Shanker Pathak & Ors., 828 also does not help the respondent.
It was a case where the suit was decreed and possession was taken thereunder.
On appeal by the respondent it was dismissed.
On Second Appeal before the Board of Revenue the matter was com 162 promised, whereunder Ramprasad was recognised as a tenant of the land in dispute and the order of eviction was thus nullified.
When he made an application under Sec.
144 C.P.C. for restitution it was resisted by the tenants subsequently inducted on the ground that the respondent was inducted as tenant by the decreeholder, and the decree does not bind them.
This was upheld by the trial court and on appeal.
A writ petition was also dismissed on merits.
The decree became final.
The order of the High Court under article 227 became final.
Then against the order of the Board of Revenue an appeal under article 136 was filed in this Court.
A prelimi nary objection was raised that the decision of the High Court under article 227 operated as res judicata.
In that context it was held by this Court that the appeal was barred by res judicata as the decision of the High Court was on merits and would bind the parties unless it was modified or reversed in appeal or by other appropriate proceedings.
The facts are clearly distinguishable.
The case of Mohanlal Goenka vs Benoy Krishna Mukherjee & Ors., ; is also of little assistance to the respondent.
The decree passed by the Calcutta High Court on its original side was transferred for execution to the Court of Subordinate Judge of Asansol with proper certified copy of the decree and order of transmission.
The execution application was dismissed for default and a certificate was sent under Sec.
41 C.P.C. stating that the execution case was dismissed for default without transmitting the decree or the covering letter sent by the High Court.
The decree holder again applied for execution.
It was accordingly executed.
Then an application to set aside the sale was made under Order 21 Rule 90 C.P.C. on the ground that the decree is a nullity and the Court had no jurisdiction to execute the decree.
While negating the contention it was held that since the decree sent was not transmitted it would be re garded as a fresh application for execution and, therefore, the executing Court had jurisdiction and the decree was not a nullity.
That case also is not one of inherent lack of jurisdiction.
Thus it is settled law that normally a decree passed by a Court of competent jurisdiction, after adjudication on merits of the rights of the parties, operates as res judica ta in a subsequent suit or proceedings and binds the parties or the persons claiming right, title or interest from the parties.
Its validity should be assailed only in an appeal or revision as the case may be.
In subsequent proceedings its validity cannot be questioned.
A decree passed by a Court without jurisdiction over the subject matter or on other grounds which goes to the root of its exercise or jurisdiction, lacks inherent jurisdiction.
It is a corum non 163 judice.
A decree passed by such a Court is a nullity and is non est.
Its validity can be set up whenever it is sought to be enforced or is acted upon as a foundation for a right, even at the stage of execution or in collateral proceedings.
The defect of jurisdiction strikes at the authority of the Court to pass a decree which cannot be cured by consent or waiver of the party.
If the Court has jurisdiction but there is defect in its exercise which does not go to the root of its authority, such a defect like pecuniary or territorial could be waived by the party.
They could be corrected by way of appropriate plea at its inception or in appellate or revisional forums, provided law permits.
The doctrine of res judicata under Sec.
11 C.P.C. is founded on public policy.
An issue of fact or law or mixed question of fact and law, which are in issue in an earlier suit or might and ought to be raised between the same parties or persons claiming under them and was adjudicated or allowed uncontested becomes final and binds the parties or persons claiming under them.
Thus the decision of a competent Court over the matter in issue may operate as res judicata in subsequent suit or proceedings or in other proceedings between the same parties and those claiming under them.
But the question relating to the interpretation of a statute touching the jurisdiction of a Court unrelated to questions of fact or law or mixed questions does not operate as res judicata even between the parties or persons claiming under them.
The reason is obvi ous; a pure question of a law unrelated to facts which are the basis or foundation of a right, cannot be deemed to be a matter in issue.
The principle of res judicata is a facet of procedure but not of substantive law.
The decision on an issue of law founded on fact in issue would operate as res judicata.
But when the law has since the earlier decision been altered by a competent authority or when the earlier decision declares a transaction to be valid despite prohibi tion by law it does not operate as res judicata.
Thus a question of jurisdiction of a Court or of a procedure or a pure question of law unrelated to the right of the parties founded purely on question of fact in the previous suit, is not res judicata in the subsequent suit.
A question relating to jurisdiction of a Court or interpretation of provisions of a statute cannot be deemed to have been finally deter mined by an erroneous decision of a Court.
Therefore, the doctrine of res judicata does not apply to a case of decree of nullity.
If the Court inherently lacks jurisdiction consent cannot confer jurisdiction.
Where certain statutory rights in a welfare legislation are created, the doctrine of waiver also does not apply to a case of decree where the Court inherently lacks jurisdiction.
In the light of this position in law the question for determination is whether the impugned decree of the Civil Court can be assailed by 164 the appellant in execution.
It is already held that it is the Controller under the Act that has exclusive jurisdiction to order ejectment of a tenant from a building in the urban area leased out by the landlord.
Thereby the Civil Court inherently lacks jurisdiction to entertain the suit and pass a decree of ejectment.
Therefore, though the decree was passed and the jurisdiction of the Court was gone into in issue Nos. 4 and 5 at the ex parte trial, the decree there under is a nullity, and does not bind the appellant.
There fore, it does not operate as a res judicata.
The Courts below have committed grave error of law in holding that the decree in the suit operated as res judicata and the appel lant cannot raise the same point once again at the execu tion.
It is seen from the dates mentioned that there is no delay in filing the leave application.
The leave application was filed within the limitation from the date of original order of dismissal of the revision or on a later date dis missing the review application.
It is true that the writ petition was filed against the order in revision, but it does not preclude the appellant to contest its invalidity in the appeal under article 136.
The decree was executed pending the special leave petition.
This Court would relieve the party from injustice in exercise of power under article 136 of the Constitution when this Court notice grave miscarriage of justice.
It is always open to the appellant to take aid of Sec.
144 C.P.C. for restitution.
Therefore, merely because the decree has been executed, on the facts when we find that decree is a nullity, we cannot decline to exercise our power under article 136 to set at nought illegal orders under a decree of nullity.
The appeal is accordingly allowed.
But in the circumstances parties are directed to bear their own costs.
Y. Lal Appeal allowed.
| IN-Abs | The respondent had filed a suit before the Senior Sub Judge, against the appellant for ejectment and recovery of arrears of rent and damages for use and occupation of the shop, let out to him.
The suit was decreed ex parte on October 20, 1977.
The application under Order 9, Rule 13.
C.P.C. to set aside the ex parte decree was dismissed on January 10, 1979 and was confirmed on appeal on August 7, 1979 and later in revision by the High Court.
When the respondent landlord took out execution proceed ings for ejectment of the appellant tenant, he objected under Section 47 of Code of Civil Procedure contending that the decree passed by the civil court was a nullity, as the premises in question was governed by the Haryana Urban (Control of Rent and Eviction) Act 11 of 1973.
According to him the Controller under the Act was the competent authority regarding claims for ejectment and by necessary implication, the civil Court was divested of jurisdiction to take cogni sance and pass a decree for ejectment.
That objection was overruled and further revision to the High Court also failed.
Simultaneously the appellant had also filed a writ petition under article 227 of the Constitution which was also dismissed.
Hence this appeal by the appellant tenant by special leave.
Allowing the appeal, this Court, HELD: Normally a decree passed by a court of competent jurisdiction after adjudication on merits of the rights of the parties, operates as res judicata in a subsequent suit or proceedings and binds the parties 150 or the persons claiming right, title or interest from the parties.
Its validity should be assailed only in an appeal or revision as the case may be.
In subsequent proceedings, its validity cannot be questioned.
[162G] A decree passed by a court without jurisdiction over the subject matter or on other grounds which goes to the root of its exercise of jurisdiction, lacks inherent jurisdiction.
It is a coram non judice.
A decree passed by such a court is a nullity and is non est.
Its invalidity can be set up whenever it is sought to be enforced or is acted upon as a foundation for a right, even at the stage of execution or in collateral proceedings.
The defect of jurisdiction strikes at the authority of the court to pass a decree which cannot be cured by consent or waiver of the party.
[162H; 163A] (See Kiran Singh & Ors.
vs Chaman Paswan & Ors., ; Ferozi Lal Jain vs Man Mal & Anr., AIR 1979 SC 794: Bahadur Singh vs Muni Subrat Dass, ; Smt.
Kaushalya Devi & Ors.
vs K.L. Bansal, AIR 1970 SC 838; Chandrika Misir & Anr.
vs Bhaiya Lal, ; ; Ledgard vs Bull, [1886] Law Report, 13 AC 134; Bartan vs Fincham, [1921] 2 K.B. Division, 291 at 299; Peachery Property Corporation vs Robinson, ,983; Choudari Rama (dead) per L.R. Choudharv Ganapathi vs Qureshi Bee, [1983] 2 Andhra Law Times 133 approved;) A question relating to jurisdiction of a court or inter pretation of provisions of a statute cannot be deemed to have been finally determined by an erroneous decision of a court.
Therefore the doctrine of res judicata does not apply to a case of decree of nullity.
If the court inherently lacks jurisdiction consent cannot confer jurisdiction.
Where certain statutory rights in a welfare legislation are creat ed, the doctrine of waiver also does not apply to a case of decree where the court inherently lacks jurisdiction.
[163F G] (See Mathura Prasad Bajoo Jaiswal & Ors.
vs Dossibai N.B. Jeejeebhey, ; ; Tarini Charan Bhattacher jee 's case I.L.R. It is the Controller under the Act that has exclusive jurisdiction to order ejectment of a tenant from a building in the urban area leased out by the landlord.
Thereby the civil court inherently lacks jurisdiction to entertain the suit and pass a decree of ejectment.
[164A] (See Barrachlough vs Brown, ; Doe vs Bridges, 151 ; at 859; Premier Automobiles vs K.S. Wadke; , Therefore in the instant case, though the decree was passed and the jurisdiction of the court was gone into in issue Nos. 4 and 5 at the ex parte trial, the decree there under is a nullity and does not bind the appellant.
There fore it does not operate as res judicata.
The courts below have committed grave error of law in holding that the decree in the suit operated as res judicata and the appellant cannot raise the same point once again at the execution.
[164B] Hari Prashad Gupta vs Jitender Kumar Kaushik, [1982] Vol.
84, Punjab Law Reporter, 150; Sadhu Singh vs District Board, Gurdaspur & Anr., [1962] Punjab Law Reporter, Vol.
64, 1; Vasudev Dhanjibhai Modi vs Rajabhat Rabdul Rehman & Ors., ; Seth Hiralal Patni vs Sri Kali Nath, ; ; Phool Chand Sharma & Ors.
vs Chandra Shankar Pathak dr Ors., 828; Mohanlal Goenka vs Benoy Krishna Mukherjee & Ors.
|
ivil Appeal No. 2635 of 1989.
From the judgment and order dated 3.11.82 of the Madras High Court in Second Appeal No. 2136 of 1979.
J. Ramamurti, R. Vagai and K.K. Mani for the appellant.
section Padmanabhan, Mrs. Anjani and K. Ramkumar, for the respondent.
The judgment of the Court was delivered by OZA, J.
Leave granted.
Heard learned counsel for the par ties.
Facts necessary for this appeal are, that the petitioner appellant original defendant purchased the suit property by registered sale deed dated 27.12.1950 executed by Asirvada Nadar, Ponnammal and Devadasan in favour of the present petitioner appellant for a consideration of Rs.7,000.
On 4.1.1951 the present respondent executed a rent agreement in favour of the present appellant for the building acknowledg ing her as her landlady @ Rs.80 per month.
In 1963 the mother of the appellant by name of Rama lakshmi Ammal died.
In 1974 the respondent filed the suit from which the present appeal arises viz. Suit No. 79 of 1974 against the petitioner appellant for conveyance of the property of the petitioner in favour of the respondent on the ground of a 'Yadast ' which was for the first time pro duced with the suit and is alleged to have been written by the mother of the petitioner on 24.12.
1950 which is marked as exhibit A 11, in favour of the respondent.
This document provided that respondent could get conveyance of the proper ty in the suit from the petitioner after paying the sale price of Rs.7,000 and Rs. 1,000 for registration expenses.
This 'Yadast ' (so called agreement) was on a plain piece of paper which is neither stamped nor registered nor attested.
It is also significant that although this document is al leged to have been written on 24.12.50 even before the sale 'deed of the property itself was executed in favour of the appellant but this document was not even mentioned in the notice which was served by the respondent on the present appellant before this suit nor there is any reference any where in any earlier correspondence nor there is a mention of this document in the sale deed dated 27.12.1950 which apparently is of a date subsequent to 24.12.1950 nor there is any mention of it in the rent 836 agreement dated 4.1.1951 to which the present respondent himself is a party.
By judgment dated 8.11.1978 the trial court (Sub Judge) relying on this 'Yadast ' decreed the suit filed by the respondent.
On appeal the Additional District Judge after detailed examination of all the facts and evidence came to the find ings of fact that the present petitioner acquired title to the property on the basis of the sale deed which is a regis tered document in her favour and this property was leased out to the respondent under a rent agreement.
It also held that as the mother of the petitioner was not a party to the sale deed she had no right to agree to convey the property or to ask the daughter to convey the suit property in favour of the respondent.
The plaintiff respondent was not a party to the sale deed (transferor) but is only a stranger who became a tenant under the rent agreement.
1n fact the sale deed was executed by some other person and therefore this 'Yadast ' could not be said to be an agreement to reconvey the property as apparently both the parties to the 'Yadast ' one making the commitment to reconvey and another in whose favour the commitment is made, are not parties at all to the original transaction of sale.
The learned Additional District Judge also came to the conclusion that this document was not genuine and is a forged document which is invalid and was just got up for the purposes of this suit and it has seen the light of the day for the first time after 23 years after the date on which it purports to have been executed and for all these 23 years it was never referred to also.
The learned appellate Court also felt that the suit for specific performance was barred as it was filed more than 20 years after the alleged 'Yadast ' (agreement.) The learned Judge of the High Court in second appeal by the impugned judgment interfered with the finding of fact arrived at by the lower appellate court which was the final court of facts and went on at length to reassess the evi dence and not only to reassess but unfortunately the circum stances have even been imagined to suggest the connection between the 'Yadast ' and the sale deed when in fact there is no mention of this kind of document in the sale deed al though it bears a date even earlier to the sale deed and it is on this ground that the special leave petition is filed.
The learned counsel appearing for the appellant contend ed that the suit for specific performance of the contract could only be decreed 837 against the executant of the contract provided the executant had a right to dispose of the property about which the suit is filed.
Admittedly the mother .of the present appellant who is alleged to have executed the 'Yadast ' is not the owner of the property and the sale deed is in favour of the present appellant does not disclose that the present appel lant purchased the property either as Benami on behalf of the mother or as a nominee of the mother.
It appears there fore that a theory of some loan and repayment was invented but the learned Judge of the High Court failed to notice that even if this agreement was genuine it could only be enforced against the executant and not against the present appellant.
In fact the theory of loan which was suggested and a case was sought to be made out that the sale deed was not an out and out sale but only as a guarantee for the loan and therefore this 'Yadast ' was in substance a document of reconveyance.
The learned Judge of the High Court failed to notice that the respondent is not the person who executed the sale deed in favour of the appellant.
In fact both the parties to the 'Yadast ' are strangers to the sale deed and the sale deed does not refer to any one of them nor there is anything in the sale deed to indicate that it was not an out and out sale.
Unfortunately, the learned Judge of the High Court has not even discussed the reasons on the basis of which the learned first appellate court had come to a finding of fact that this document is a forgery and could not be said to be a genuine document.
The learned first appellate court came to this conclu sion on the basis.of the circumstances which could not be denied although this document bears a date earlier than the sale deed and the rent agreement to which the respondent himself is a party but there is no mention of this document in anyone of those two documents.
There is no reference about this document for all these years i.e. from 1950 to 1974 even in the suit notice.
It is also a circumstance relied on by the lower appellate court that it is on ordi nary piece of paper not a stamped paper.
It is not regis tered and it is not attested and in view of these circum stances and especially of the fact that during the lifetime of Ramalakshmi Ammal, mother who is alleged to be the executant this document did not see the light of the day nor was referred to at any stage.
The learned lower appellate court came to a finding of fact and the High Court unfortu nately has not given reasons as to why these circumstances should not be considered.
The learned Judge has chosen to interfere with the findings of fact solely on the basis of one ground 838 that the evidence of the scribe of this document 'Yadast ' was not discussed by the lower appellate court but the evidence of the scribe who has chosen to write such a docu ment is worthless and the learned lower appellate court therefore was fight in not relying on this evidence.
Section 100 of the Code of Civil Procedure provides as under: "Second appeal: (1) Save as otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to the High Court, if the High court is satisfied that the case involves a substantial question of law.
(2) An appeal may lie under this section from an appellate decree passed ex parte.
(3) In an appeal under this section, the memorandum of appeal shall precisely state the substantial question of law involved in the appeal.
(4) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.
(5) The appeal shall be heard on the question so formulated and the respondent shall, at the hearing of the appeal, be allowed to argue that the case does not involve such ques tion: Provided that nothing in this sub section shall be deemed to take away or abridge the power of the court to hear, for reasons to be recorded, the appeal on any other substantial question of law, not formulated by it, if it is satisfied that the case involves such question" A perusal of this Section clearly indicates that the High Court had the jurisdiction to interfere only when a substan tial question of law is involved and even then it is expect ed that such a question shall be so framed although the court is not bound by that question as the proviso indi cates.
There may be some other substantial questions of law which may need decision and which can be so decided.
839 After going through the judgment of the High Court in this appeal we find that there is no substantial question of law and much less a question of law on the basis of which the learned Judge exercised jurisdiction under Section 100 and interfered with the findings of fact.
The only reason on the basis of which the High Court exercised jurisdiction under Section 100 is what has been said by the learned Judge himself: "As already stated, its failure to consider the evidence of P.W. 2 as well as its wrong surmise that exhibit B 16 series contained the signatures of Ramalakshmi Ammal, has affected the validity of the finding rendered by it.
" It is well known that P.W. 2 is the scribe of a document which has been found to be forged by the lower appellate court and therefore a person who can go to the extent of manufacturing a document to suit one of the parties to the litigation, in our opinion, cannot be said to be an inde pendent witness and the lower appellate court was right in discarding his testimony.
Unfortunately the High Court felt that he was an independent witness.
The learned Judge felt that the signatures on exhibit B 16 of Ramalakshmi Ammal is a mere surmise but this inference itself appears to be nothing but imagination as the signa tures prove the receipt by Ramalakshmi Ammal of a notice from Tuticorin Municipality for the collection of house tax.
This all in the opinion of the learned Judge was a substantial question of law which called for interference and it is clear that on such questions which have no sub stance and which could not be said to be even question of law, the interference by the High Court in second appeal could not be justified.
At best the two questions on which the High Court chose to interfere quoted above could be said to be questions of appreciation of evidence.
In our opinion therefore the High Court was not fight in interfering with the findings of fact arrived at by the learned lower appellate court.
The appeal is therefore allowed, the judgment of the High Court is set aside and that passed by the lower appellate court is restored.
The appellant shall be entitled to costs of this appeal.
Costs quantified at Rs.3,000.
N.V.K. Appeal allowed.
| IN-Abs | The appellant purchased the suit property by a regis tered sale deed dated 27th December, 1950 for a considera tion of Rs.7,000.
On 1st January, 1951, the respondent executed a rent agreement in favour of the appellant ac knowledging her as landlady at Rs.80 per month.
The mother of the appellant died in 1963.
In 1974, the respondent filed a suit against the appellant for conveyance of the suit property in his favour on the basis of a 'ya dast ', alleged to have been written by the mother of the appellant on 24th December, 1950 in his favour providing for conveyance of the property in his favour after .paying the sale price of Rs.7,000 and Rs.1,000 for registration ex penses.
This 'yadast ' was however neither stamped, regis tered, nor attested.
It was marked as exhibit A 11.
The Trial Court decreed the respondent 's suit relying on the 'yadast '.
On appeal the Additional District Judge after detailed examination of all the facts involved in the case and the evidence of the parties, came to the finding that the appel lant acquired title to the property on the basis of the sale deed which was a registered document in her favour and that the suit property was leased out to the respondent under a rent agreement, and that as the mother of the appellant was not a party to the sale deed she had no right to agree o convey the property or to ask her daughter to convey the same in favour of the respondent.
He also came to the con clusion that the Yadast was not a genuine document but a forged one which was just got up for the purposes of the suit.
He accordingly allowed the appeal, and held that the suit for specific performance was further barred as it was filed more than 20 years after the alleged 'Yadast '. 834 The High Court in Second Appeal, however interfered with the findings of fact arrived at by the lower Appellate Court solely on the basis that the evidence of the scribe of the 'Yadast ' was not discussed by the lower appellate Court, and accordingly allowed the Second Appeal.
In the Special Leave Petition to this Court, it was contended on behalf of the appellant that the suit for specific performance of the contract could only be decreed against the executant of the contract provided the executant had a right to dispose of the property about which the suit was filed, and that there was no question of law on the basis of which the High Court exercised jurisdiction under Section 100 C .P.C. and interfered with the findings of fact.
Allowing the appeal, this Court HELD: 1.
Section 100 C.P.C. clearly indicates that the High Court had the jurisdiction to interfere only when a substantial question of law is involved and even then it is expected that such a question shall be so framed although the court is not bound by that question as the proviso indicates.
There may be some other substantial questions of law which may need decision and which can be so decided.
[838G H] In the instant case, the Single Judge of the High Court has chosen to interfere with the findings of fact solely on the basis of one ground, that the evidence of the scribe of the 'Yadast ' PW 2 was not discussed by the lower appellate court, and its failure has affected the validity of the finding rendered by it.
This was no substantial question of law, much less a question of law on which the High Court could interfere with the findings of fact.
At best the questions on which the High Court chose to interfere could be said to be questions of appreciation of evidence.
[837H; 839F] 2.
The suit for specific performance of the contract could only be decreed against the executant of the contract provided the executant had a right to dispose of the proper ty about which the suit is filed.
[836H; 837A] In the instant case, admittedly the mother of the appel lant who, was alleged to have executed the 'Yadast ' was not the owner of the property.
Both the parties to the 'Yadast ' were strangers to the sale deed, and the sale deed does not refer to any one of them nor there is anything in the sale deed to indicate that it was not an out and out sale.
[837D] 835
|
il Writ Petition 747 of 1985.
(Under Article 32 of the Constitution of India).
S.R. Rangarajan and K.B. Rohtagi for the Petitioner.
Manoj Swarup and Miss Lalita Kohli Advocates for the Respondents.
The Judgment of the Court was delivered by PATHAK, CJ.
This writ petition under Article 32 of the Constitution has been filed by Baldev Raj Sharma against an order of the Bar Council of Punjab and Haryana rejecting his application for enrolment as an advocate.
On 4 March, 1972 the petitioner passed the Bachelor of Arts examination from the Punjabi University, Patiala.
In 1978 he joined the Bachelor of Laws (Academic) course in Kurukshetra University.
The course is of two years ' dura tion.
The petitioner completed the course and on 1 January, 1981 he was awarded the degree of Bachelor of Laws (Academ ic) by the Kurukshetra University.
During the year 198 1 the petitioner joined the LL.B. (Professional) course in the third year in Kanpur University as a regular student.
The Kanpur University confers two distinct degrees, LL.B. (General), which is a two year course, and LL.B. (Profes sional), which is a three year course.
A person who has been awarded the LL.B. (General) degree is eligible for admission to the LL.B, (Professional) third year.
The petitioner says that there is no distinction in the Rules and Regulations of the Kanpur University on whether LL.B. (General) course should be pursued by regular attendance or as a non collegi ate student.
It is urged that the LL.B. degree of the Kanpur University is recognised by the Bar Council of India for the purpose of enrolment as an advocate.
The petitioner attended classes as a regular student of the LL.B 864 (Professional) Course third year of the Kanpur University as required by the Rules and Regulations framed by that Univer sity.
He appeared in the final examination and was declared successful.
On 22 July, 1982 the degree of LL.B. (Profes sional) was issued by the Kanpur University to him.
Thereaf ter, on 4 August, 1982 the petitioner applied to the State Bar Council of Punjab and Haryana with the necessary enrol ment fee for enrolment as an advocate under the .
On 26 April, 1983 the Bar Council of Punjab and Haryana denied enrolment to the petitioner as an advocate on the ground that the petitioner has not fulfilled the conditions laid down in Rule 1(1)(c) of the Rules of the Bar Council of India framed under section 7(h) and (i), section 24(1)(c)(iii) and (iiia) and section 49(1)(d).
The detailed grounds of refusal supplied to the petitioner by the Bar Council of Punjab and Haryana state that the petitioner had obtained his Bachelor of Laws degree from the Kurukshetra University as a result of the examination held in April, 1980 as a private candi date.
It was an LL.B. (Academic) degree obtained in two years ' study as a private candidate.
The third year of law was pursued by him as a regular student from V.S.S.D. Col lege, Kanpur of the Kanpur University from which institution he obtained the professional degree.
It was further stated that the petitioner had not fulfilled the conditions laid down in the provisions detailed earlier as he had passed his two years ' law course as a private candidate from Kurukshe tra University and the third year law only by regular at tendance at the V.S.S.D. College, Kanpur.
It appears that the State Bar Council, upon receiving the application of the petitioner for enrolment as an advocate, obtained the opin ion of the Bar Council of India and in conformity with that opinion the State Bar Council has refused enrolment.
Section 24(1)(c) provides as follows: "24.
Persons who may be admitted as advocates on a State roll(1) Subject to the provisions of this Act, and the rules made thereunder, a person shall be qualified to be admitted as an advocate on a State roll, if he fulfils the following conditions, namely: (c) he has obtained a degree in law (i) . . (ii) . . 865 (iii) after the 12th day of March, 1967, save as provided in sub clause (iiia), after under going a three year course of study in law from any University in India which is recognised for the purposes of this Act by the Bar Coun cil of India; or (iiia) after undergoing a course of study in law, the duration of which is not less than two academic years commencing from the academ ic year 1967 68, or any earlier academic year from any University in India which is recog nised for the purposes of this Act by the Bar Council of India.
" Sub clause (iii) of clause (c) of section 24(1) entitles a person to be admitted as an advocate on a State roll if he has obtained a degree in law after 12th March, 1967 after under going three years ' of study in law in any University in India recognised for the purposes of the by the Bar Council of India.
An exception to this is provided by sub cl.
(iii) of cl.(c), under which a person is quali fied for admission as an advocate if he has obtained a degree in law after undergoing a course of study in law, the duration of which is not less than two academic years com mencing from the academic year 1967 68, or any earlier academic year from any University in India recognised for the purposes of the Act by the Bar Council of India.
The petitioner obtained a degree of Bachelor of Laws (Profes sional) from the Kanpur University in the examination of 1981.
He had pursued the third year course only of study pertaining to that degree as a regular student ,of the V.S.S. 'D. College, Kanpur in Kanpur University.
The Bar Council of India has framed Rules under the .
Rule 1(1)(c) of of the Bar Council of India Rules, 1975 provides that except as provided in section 24(1)(c)(iiia) of the a degree in law obtained from any University in the territory of India after 12th March, 1967 shall not be recognised for the purposes of section 24(1)(c)(iii) of the Act unless the conditions specified there are fulfilled, including the condition "that the course of study in law has been by regular, attendance at the requisite number of lectures, tutorials and moot courts in a college recognised by a University".
These rules were replaced by a fresh set of rules in 1984 and the new Rule 1(1)(c) is almost identical.
The Rule clearly requires that the course of study in law should have been by regular attendance for the requisite number of lectures, tutorials and moot courts and practical training.
The Rule envisages that for the entire period of the law course there must be a regular attendance of the student before he can satisfy the conditions necessary for enrolment as an advocate under the .
The Rules amplify what is intended in section 24(1)(c)(iii) 866 of the Act.
The three years ' course of study envisaged by that subclause in the Act intends that the three years ' course of study in law must be pursued by maintaining regu lar attendance.
We are unable to say that there is any inconsistency between the Act and the Rule.
So also in a case falling under cl.
(iii) of section 24(1)(c) of the Act, a course of study in law must be pursued for not less than two academic years in terms of that sub clause and Rule 1(1)(c) will apply to such a case also.
There is a substantial difference between a course of study pursued as a regular student and a course of study pursued as a private candi date.
The policy underlying the relevant provisions of the Bar Council Rules indicates the great emphasis laid on regular attendance at the law classes.
The conditions are specifically spelt out when the Act is read along with the Rules.
When so read, it is plain that a candidate desiring enrolment as an advocate under the must fulfil the conditions mentioned in section 24(1)(c)(iii) or section 24(1)(c)(iiia) read with Rule 1(1)(c) of the Bar Council of India Rules, 1975.
In the present case the petitioner failed to do so.
His application for enrolment was rightly reject ed.
The writ petition is dismissed, but in the circum stances, there is no order as to costs.
P.S.S. Petition dismissed.
| IN-Abs | Sub clause (iii) of cl.
(c) of section 24(1) of the entitles a person to be admitted as an advocate on a State roll if he has obtained a degree in law after 12th March, 1967 after undergoing three years ' of study in law.
Under sub cl.
(iii) of cl.
(c) a person is considered quali fied for admission as an advocate if he has obtained a degree in law after undergoing a course the duration of which is not less than two academic years commencing from the academic year 1967 68 or any earlier academic year.
Rule 1(1)(c) of of the Bar Council of India Rules, 1975 requires that the course of study in law should have been by regular attendance for the requisite number of lectures, tutorials and moot courts and practical training.
The petitioner had obtained his Bachelor of Laws (Aca demic) degree in 1980 as a private candidate.
He then pur sued the third year of law as a regular student from the Kanpur University and obtained the professional degree in 1982.
Thereafter, he applied to the State Bar Council of Punjab and Haryana for enrolment as an advocate under the Act.
The State Bar Council denied enrolment on the ground that he had not fulfilled the conditions laid down in Rule 1(1)(c) of the Rules.
Dismissing the writ petition, HELD: A candidate desiring enrolment as an advocate under the must fulfil the conditions mentioned in section 24(1)(c)(iii) or section 24(1)(c)(iiia) read with Rule 1(1)(c) of the Bar Council of India Rules, 1975.
In the instant case, the petitioner failed to do so.
His applica tion for enrolment was, therefore, rightly rejected.
[866C] Sub clause (iii) of section 24(1)(c) when read along with Rule 1(1)(c) 863 intends that the three years course of study in law must be pursued by maintaining regular attendance.
So also, in a case failing under sub cl.
(iiia) of section 24(1)(c) a course of study in law must be pursued for not less than two academic years and Rule l(1)(c) will apply to such a case also.
The petitioner had passed his two year 's law course as a private candidate and the third year law only by regular attendance.
He was, therefore, not entitled to be enrolled as an advo cate.
[865H 866A, 864E]
|
it Petition (Civil) No. 824 of 1988.
(Under Article 32 of the Constitution of India) V.C. Mahajan, Gaurav Jain, and Ms. Abha Jain for the Petitioner.
Anil Dev Singh, I. Makwana, Rathin Das, K.R. Nambiar, Ms. A. Subhashini, A.M. Khanvilkar, A.S. Bhasme, R.K. Mehta, V. Krishnamurthy, S.K. Agnihotri, A.V. Rangam, Mahabir Singh and P.K. Pillai for the Respondents.
The Order of the Court was delivered by MISRA, J.
This application under article 32 of the Consti tution is at the instance of an advocate by way of a public interest litigation asking for direction to the respondents for making provision of separate schools with vocational training facilities and separate hostels for children of prostitutes.
Notice was issued not only to the original respondents but at the instance of the Court also to a11 the States and the Union Territories.
Many of them have respond ed and affidavits have been filed by way of return to the rule nisi.
Though Mr. Mahajan for the petitioner has pleaded that separate schools and hostels be raised for the children of the prostitutes, we are not inclined to accept the submis sion.
Segregating prostitute children by locating separate schools and providing separate hostels, in our opinion, would not be in the interest of such children.
It is said that prostitutes do not want to have children and ordinarily when children are born to them it is inspite of their desire not to rear children.
But once such children are born to them, it is in the interest of such children and of society at large that the children of prostitutes should be segre gated from their mothers and be allowed to mingle with others and become part of the society.
In fact, counsel appearing for several States have stated at the Bar the same way.
We, therefore, reject the prayer for locating separate schools and hostels for children of the prostitutes.
Children of prostitutes should, however, not be permit ted to live in inferno and the undesirable surroundings of prostitute homes.
This 175 is particularly so for young girls whose body and mind are likely to be abused with growing age for being admitted into the profession of their mothers.
While we do not accept the plea for separate hostels for prostitute children it is necessary that accommodation in hostels and other reformato ry homes should be adequately available to help segregation of these children from their mothers living in prostitute homes as soon as they are identified.
Legislation has been brought to control prostitution.
Prostitution has, however, been on the increase and what was once restricted to certain areas of human habitation has now spread into several localities.
The problem has, therefore, become one of serious nature and requires considerable and effective attention.
We are of the view that instead of disposing of this writ petition with a set of directions, a Committee should be constituted to examine the material aspects of the prob lem and submit a report containing recommendations to the Court on the basis of which further orders can be made.
We accordingly direct that a Committee for such purpose shall be set up and it shall examine the matter from various angles of the problem taking into consideration the differ ent laws relevant to the matter and place its report before the Court within eight weeks from now.
The Committee shall consist of: 1.
Mr. V.C. Mahajan, Senior Advocate, New Delhi.
Mr. R.K. Jain, Senior Advocate, New Delhi.
Mr. M.N. Shroff, Advocate on Record, He shall act as the New Delhi.
convenor.
Mr. R.K. Mehta, Advocate on Record, New Delhi.
Dr. Deepa Das, Women 's Studies & Development Centre, Chhatra Marg, University of Delhi, Delhi 110 007.
176 6.
Sarla Mudgal, Kalyani, 5030, Kalidas Marg, Darya Ganj, New Delhi 110 002.
Krishna Mukherji, All Bengal Women 's Union, Research & Development Committee, 89, Elliott Road, Calcutta 700 016.
The Union of India in the Ministry of Welfare, Depart ment of Women & Child Development is directed to deposit in this Court a sum of Rs.20,000 for the present within two weeks to meet the expenses.
The matter shall be listed on 16th January, 1990 (Tues day) for further orders after the report is received.
| IN-Abs | This writ petition has been filed pleading for separate schools and hostels for the children of prostitutes.
On behalf of respondents, it was contended that since they are in fact unwanted children of prostitutes it is in the interest of such children and the society at large that they are segregated from their mothers and be allowed to mingle with others and become part of the society.
Setting up a Committee consisting of 4 Advocates and 3 Social Workers to look into the matter and directing listing of the matter on receipt of the Committee 's report, this Court.
HELD: 1.
Children of prostitutes should not be permitted to live in inferno and the undesirable surroundings of prostitute homes.
This is particularly so for young girls whose body and mind are likely to be abused with growing age for being admitted into the profession of their mothers.
While separate schools and hostels for prostitute children are not desirable, accommodation in hostels and other refor matory homes should be adequately made available to help segregation of these children from their mothers living in prostitute homes as soon as they are identified.
[174H; 175A B] 2.
The Committee now set up will look into the problems and submit its report within 8 weeks.
[175D] [This Court directed the Ministry of Welfare, Deptt.
of Women & Child Development functioning under the Union of India to deposit a sum of Rs.20,000 within two weeks to meet the expenses of the Committee].
|
ivil Appeal No. 2842 of 1982.
From the Judgment and Order dated 1.10.1981 of the Madras High Court in Appeal No. 516 of 1977.
C. Seetharamiah, P. Krishna Rao and K.R. Nagaraja for the Appellant.
section Balakrishnan for the Respondent.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
This defendant 's appeal by special leave is from the Judgment of the High Court of Judicature at Madras dated 1.10.1981 passed in Appeal No. 516 of 1977 dismissing the appeal and affirming the decree in O.S. No. 7667 of 1975.
The respondent Industrial Chain Concern as plaintiff filed Original Suit No. 7667 of 1975 in the City Civil Court, Madras for recovery of Rs.26,383.49p.
together with interest and costs, being the total amount of loss sustained by it on account of the alleged negligence and conversion on the part of the defendant Indian overseas Bank having its central office at 151, Mount Road, Madras 2, hereinafter referred as 'the Bank ', by negligently allowing one Sethura man, Manager of the plaintiff firm at Madras to open a 'fictitious account ' in the name of 'Industrial Chain Con cern ' as its proprietor and helping him to pay in stolen drafts and cheques drawn in favour of the plaintiff and collecting the same and paying to Sethuraman the proceeds thereof and closing the account thereafter.
It was the case of the plaintiff that it was doing extensive business in Steel Roller Chains and Sprockets with leading industries and Government undertakings.
Its head office was situate at 36, Linghi Chetti Street, Madras 1.
It had supplied goods to seven parties who sent to it drafts and cheques in its 31 name amounting to Rs.26,383.49 and those drafts and cheques had been received by Sethuraman, its Manager, who after opening the 'fictitious account ' in the Bank 's Nungambakkam Branch paid in the stolen drafts and cheques and the Bank collected those and allowed Sethuraman to withdraw the same defrauding the plaintiff.
The plaintiff averred that the Bank was negligent and guilty of conversion in opening of the account, collection of the cheques and drafts and allow ing Sethuraman to withdraw the same and therefore, it was liable to make good the plaintiff 's loss.
The appellant Bank as defendant resisted the suit con tending, inter alia, that it was not negligent in allowing Sethuraman to open the account inasmuch as approaching the Bank Sethuraman represented that he, as proprietor, had started a firm under the name and style of "Industrial Chain Concern" and proposed to open an account in that name.
Since the Manager of the Bank at Nungambakkam Branch was erstwhile classmate of Sethuraman he (the Manager) knew him and gave the introduction relying on which the current account was opened and after opening the account, which was a real account and not a 'fictitious account ' as alleged, various cheques and drafts had been paid into the account by the customer for collection and the Bank in good faith and without negligence, in course of its business, collected them and credited the account and Sethuraman as customer withdrew money from his account, and that neither at the time of opening the account for at the time of paying in and collection of the cheques, nor at the time of allowing money to be withdrawn there was anything to arouse any suspicion regarding the bona fides of the representation made by Sethuraman.
Later on the customer having expressed a desire to close the account because, as he said, he was winding up his business, the account was closed.
There was, therefore, no negligence on the part of the Bank acting in good faith and it was not liable for conversion.
At the trial the plaintiff firm examined its Manager D.R. Murthy (PW 1) while the defendant Bank also examined its Manager S.P. Muthukrishnan (DW 1).
The trial court decreeing the suit held that the defendant Bank had acted in good faith but not without negligence in opening the account and operating the same and in the process of collection of the cheques and drafts and it was not entitled to invoke the protection of section 131 of the Negotiable Instruments Act and, consequently, it was liable to make good the loss with interest as claimed by the plaintiff.
The Bank having ap pealed therefrom, the High Court agreed with the findings of the trial court and dismissed the appeal.
32 Mr. C. Seetharamiah, the learned counsel for the appel lant submits, inter alia, that the finding of the courts below that the defendant Bank was negligent in opening the account is contrary to law inasmuch as there were no circum stances antecedent or present to arouse any suspicion and there was no obligation on the part of the Bank to compare and verify the name and address given by Sethuraman as proprietor, industrial Chain Concern with the address of the then existing plaintiff 's firm of the same name; that the High Court 's finding that tile Bank was negligent in clear ing the amounts of the cheques is equally contrary to law inasmuch as there was nothing ex facie to put the Bank on guard and there was no warning or indication of defective title on the race of the cheques and drafts to arouse suspi cion of the Bank and it was not necessary for it to make thorough enquiry about the cheques and drafts to have been entitled to invoke the protection of section 131 of the Negotiable Instruments Act: and that even assuming, but not admitting that the Bank was negligent, the plaintiff itself contributed to it by entrusting Sethuraman to receive the cheques and drafts and to deal with them for a long time and that even when the complaint was made to Deputy Commissioner of Police on 19.2.1975 it was about two cheques only, and there was still no complaint about other cheques and drafts.
The first question to be decided, therefore, is whether the Bank was negligent in opening the account in the name of Sethurarman, as proprietor, Industrial Chain Concern.
Mr. section Balakrishnan, for the respondent, defends the High Court 's Judgment.
Evidence of DW 1 Muthukrishnan, Manager of the Bank at the relevant time is that the account was opened by Ext.
B 1, the Account Opening From, on 3.10.1974 by Sethuraman under the title Industrial Chain Concern, the sole proprie tary concern.
It was signed by Sethuraman for Industrial Chain Concern with a rubber stamp as proprietor.
Muthukrish nan, DW 1 deposed: "This account was opened by R. Sethuraman under the title Industrial Chain Concern sole proprietary concern.
Sethuraman is the sole proprietor.
Before that date I knew Sethura man.
He was my college mate in 1955 57 in Vivekananda College.
I was meeting him in social gathering.
When he went to open an account, he represented that he had just started as commission agent under the name and style of Industrial Chain Concern as sole proprietary concern.
He wanted to open an account with Overdraft facility.
I declined his request for overdraft because he himself stated that he had just started commission business.
I 33 was able to identify him as the college mate and to open his account I have signed the introduction in my personal capac ity . . .
It was an ordinary current deposit account.
The introduction given by me was in the normal course of bank ing business.
Before opening account, he showed me some business correspondence and orders.
Some of the orders were placed by India Sugars and Refineries and Madras Ferti lisers.
At that time there was nothing to show that the Industrial Chain Concern was not a proprietary concern or that Sethuraman was an employee of the firm.
He opened an account with cash deposit of Rs. 100 as he described himself as a proprietary concern and as he just then started the business and as I did not grant loan facility there was no occasion for calling credit reports from other bankers.
There was normal operation of the account.
Cheques given in the name of the concern were deposited in the account and after realisation they were withdrawn.
" Comparing the statement of Account and Ext.
B1 with the above evidence there is nothing to doubt this witness.
He denied that at any stage the Bank had acted with negligence or without good faith or that there was no proper introduc tion for opening an account.
He clearly said that the ad dress given in Ext.
B1 was Nallathambi Mudali Chetti Street and that he knew the location and it was far away from Nungambakkam.
That was the place of business of Sethuraman mentioned at the opening of account and the Mount Road Branch of the defendant Bank was the nearest Branch for that place.
Opening of an account by Sethuraman with a trading place at Nallathambi Street with Nungambakkam Branch oc curred to him as unusual but it did not create any suspicion as he asked Sethuraman why he wanted to open an account in Nungambakkam Branch and Sethuraman replied: "I am a commis sion Agent.
I want overdraft facility.
Your are the only agent known to me and that is why I have come to Nungambak kam Branch.
" DW 1 also said that in opening the Current Account he glanced through the order and correspondence shown to him by Sethuraman regarding supplies but he did not check up the address given in the correspondence by these companies in the name of the Industrial Chain Concern.
He denied that he had not checked up the business credentials for the account to be opened in the name of the business concern and that he was negligent in that aspect.
He said: "I declined overdraft facility.
That itself shows that I was not negligent.
Once I declined overdraft facility it did not strike me to refer Sethuraman to the nearest branch from his trading place.
I did not refer him to the 34 Mount Road Branch.
I suggested he can go to the Mount Road Branch.
He came with another request that his overdraft application might be considered after the period of about one year, after his business had improved.
Therefore, he wanted to open an account in Nungambakkam Branch.
" Both Courts below held that the Bank acted in good faith.
We agree.
The question is whether the Bank could be held to have been negligent while opening the account.
It is, however, necessary to bear in mind that this question is often associated with the question of negligence in collecting cheques, etc.
for the customers paid into the account.
This is because till an account is opened no bank er customer relationship exists between the bank and the person proposing to open an account.
Once the account is opened, that relationship is created and with it mutual rights and obligation between the banker and the customer are created under law.
Opening an account by cash is a little different from opening an account by a cheque as in that case the Bank has to act according to the tenor of that instrument and its collection and payment involves the Bank 's duty owed to its real owner if the proposer happens not to be its real owner.
Even when an account is opened by depositing cash but so soon after the opening of the account any cheque is paid into it as to make it part of the same transaction with the opening, the same duty may be implied by law.
What is the standard of care to be taken by a Bank in opening an account? In the Practice and Law of Banking by H.P. Sheldon, 11th Edition, in Chapter five at page 64 it is said: "Before opening an account for a customer who is not already known to him, a banker should make proper preliminary inquiries.
In particu lar, he should obtain references from respon sible persons with regard to the identity, integrity and reliability of the proposed customer.
If a banker does not act prudently and in accordance with current banking prac tice when obtaining references concerning a proposed customer, he may later have cause for regret.
" M.L. Tannan in Banking Law and Practice in India, 18th Edition at page 198 says: "Before opening a new account, a banker should take certain precautions and must ascertain by inquiring from the person wishing to open the account, if such person is unknown to the banker, as to his profession or trade as well as the nature of the account he proposes to open.
By mak 35 ing necessary inquiries from the references furnished by the new customer, the banker can easily verify such information and judge whether or not the person wishing to open an account is a desirable customer.
It is neces sary for a bank to inquire, from responsible parties, given as references by the customer, as to the latter 's integrity and respectabili ty, an omission of which may result in serious consequences not only for the banker con cerned, but also for other bankers and the general public.
" One of the tests of deciding whether the Bank was negli gent, though not always conclusive, is to see whether the Rules or instructions of the Banks were followed or not.
We may accordingly consult those instructions.
B6 contains the general instructions regarding constituent accounts for bank.
Mark II deals with opening of accounts.
It says: "Except at large branches where the sub agent or accountant may be authorised to open Cur rent Accounts, no new Current Account shall be opened without the authority of the agent manager who is solely responsible for all Current Accounts being opened in the proper manner.
A written application on the appropri ate form must be submitted and will be init ialled by the agent at the top left corner after he has satisfied himself of the respect ability of the applicant(s).
It is important that every party must be introduced to the Bank by a respectable person known to the Bank, who must normally call at the Bank and sign in the column specially provided for the purpose in the account opening form.
In all cases his signature must be verified with the specimen lodged and attested.
The agent or accountant may introduce constituents to the Bank provided they are known to him personally and in such cases he should sign the applica tion form at the appropriate place in his personal capacity.
When the introduction of any other member of the staff is accepted, the agent must invariably make independent inquiry and record his findings on the account opening form for future reference if the need arises . . " Mark IV deals with accounts of proprietary concerns.
It says: "An individual trading in the name of concern should fill in form F.S. 5 and sign it in his personal name and also affix his signature on behalf of the concern as proprietor in the space provided.
" 36 if the Banker was negligent in following up the references given at opening of account and subsequently cheques etc. are collected for the customer paid into that account and those happened to be of someone else the Bank may be liable for conversion, unless protected by law.
In the instant case, Sethuraman having been known to the Manager who gave the introduction, there was no violation of any instruction or Rules.
It was held in Commissioner of Taxation vs English Scottish and Australian Bank, , that a negli gence in collection is not a question of negligence in opening an account, though the circumstances connected with the opening of an account may shed light on the question whether there was negligence in collecting a cheque.
In Ladbroke & Co. vs Todd, , the plain tiff drew a cheque and sent it to the payee by post.
The letter was stolen and the thief took it to the defendant, a banker, and used it for the purpose of opening an account for the purpose of which he forged the payee 's endorsement.
The defendant accepted believing him to be the payee.
He was not introduced to the Bank and no references were obtained.
The defendant opened the account and the cheque was special ly cleared at the request of the thief, and he drew out the proceeds on the next day.
On the discovery of the fraud the plaintiff brought an action against the defendant for con version.
One of the main questions raised was whether the account having been opened by payment in all the cheques to be collected the defendant could be properly regarded as having received payment for a customer.
It was held that as account was already opened when the cheque was collected, payment had been received for a customer.
The drawer there upon sent another cheque to the real payee and took an assignment of his rights in the stolen cheque and, as hold ers of the cheque or alternatively as assignees, brought an action against the bank to recover the proceeds collected by the bank as money had and received to their use.
Evidence was given that it was the general practice of bankers to obtain a satisfactory introduction or reference.
It was held that the banker had acted in good faith, but was guilty of negligence in not taking reasonable precautions to safeguard the interests of the true owner of the cheque and that therefore he had put himself outside the protection of section 82 of the Bills of Exchange Act, 1882.
Bailbache, J. also said that the banker would have been entitled to the protection of the section as having received payment for a customer, but had lost it owing to his want of due care.
It was also held that the relation of banker and customer began as soon as the first cheque was handed in to the banker for collection, and not when it was paid.
37 In Turner vs London and Provincial Bank, [1903] 2 Legal Decisions Affecting Bankers 33, evidence was admitted as proof of negligence, that the customer had given a reference on opening the account and that this was not followed up.
In the instant case there was no question of a reference inasmuch as the Manager himself knew Sethuraman and gave the introduction.
The account was not opened by depositing any cheque but by depositing case of Rs. 100.
The first cheque was paid into the account later and there is nothing to show that it formed part of the same transaction.
No particulars have been proved as to the tenor of that cheque.
The Manager made several inquiries which in the facts and circumstances of the case, in our view, were sufficient, for it is an accepted rule that the banker may refrain from "making inquiries which it is improbable will lead to detection of the potential customer 's purpose if he is dishonest and which are calculated to offend him and may drive away his customer if he is honest," Marfani & Co. vs Midland Bank, (582).
Except when circumstances of a case so justifies, in making inquiries the banker 's attitude may be solicitous and not detective.
Sethuraman was believed when he said that he was the proprietor of Industrial Chain Concern which he recently started.
He showed some orders and references in proof of his business.
The banker believed in existence of his business but did not meticulously examine the addresses.
Sethuraman was asked as to why he wanted to come to that branch and his reply was that he expected there to have overdraft facility and when that was refused he expressed that after his business improved he would expect to be granted overdraft facilities after one year.
There is no doubt that Sethuraman was a rogue, but he prepared the plan intelligently and the banker in good faith believed in his statements.
We, therefore, find it difficult to hold that the Bank was negligent in opening the account accepting the deposit of cash by a person known to the Manager of the Bank under the above circumstances.
Mr. Balakrishnan has argued that a cheque for Rs.2,800 was paid in on the same date which was a stolen cheque and it ought to have aroused suspicion of the banker.
But there is nothing to show that it formed part of the same transac tion.
As we have already observed, once an account is opened the relationship of banker and customer begins.
Duration is not of the essence.
As was held in Ladbroke & Co. (supra) the mere opening of an account without the actual transac tion was sufficient to constitute the relationship and this view was followed in Commissioner of Taxation vs English Scottish and Australian Bank (supra) and it was stated that the word 'customer ' signifies a relationship of which dura tion is not of the essence.
The contract is not bet 38 ween a habitue and a newcomer, but between a person for whom the bank performs a casual service . . . and a person who has an account of his own at the bank.
Lord Chorley has even expressed the view that for the purpose of establishing the relationship of banker and customer there appears to be no logic in the actual opening of the account, and when the banker agrees to accept the customer the rela tionship comes into existence at that time though the ac count may not be opened until later.
According to the author "the relationship being contractual should be subjected to the normal rules of contract law and the making of the contract depends on the acceptance of the offer.
This con tract could clearly be effected before an account had actu ally been opened though it would state that there must be an agreement to open an account before the banker and customer relationship can exist.
" In the instant case there is, therefore, no doubt that the first cheque was subsequently paid in by Sethuraman as a customer and the Bank was to collect it on account of the customer.
The Bank, therefore, in collecting the cheque and paying the proceed to Sethura man acted as a Collecting Banker and can be held negligent, if at all, only as such as it was to collect it on account of the customer.
In fact, from the statement of account it is clear that the account was opened on October 3, 1974 and was closed on February 1, 1975 and there were a number of transactions of deposits and withdrawals.
The detailed particulars of the cheques paid into the account are not in evidence, it is, therefore, difficult to know whether each individual cheque or draft should have aroused suspicion in the mind of the Banker before accepting the same for collec tion from its customer.
The High Court did not analyse the legal position and did not consider the facts and circumstances in this regard in proper perspective.
We are not inclined to hold the Bank negligent in opening the account considered alone.
The next question is whether the Bank was negligent in collecting the cheques.
In collecting a cheque on account of a customer the banker is protected by section 131 of the Negotiable Instruments Act, 188 1 (26 of 1881) hereinafter referred to as 'the Act ' which reads: "131.
Non liability of banker receiving payment of cheque A banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specially to himself shall not, in case the title to the cheque proves defective, incur any liability to the true owner of the cheque by reason only of having received such pay ment.
Explanation A banker receives payment of a cros 39 sed cheque for a customer within the meaning of this section notwithstanding that he cred its his customer 's account with the amount of the cheque before receiving payment thereof.
" In the section the words 'a cheque crossed generally or specially to himself ' are important to be noted.
Section 131 corresponded to section 82 of the Bills of Exchange Act, 1882 of England which was repealed by the Cheques Act, 1957 and the protection there is now given by section 4 of the Cheques Act, 1957.
English decisions can, therefore, be guide in this regard.
In Lloyds Bank Ltd. vs E.B. Savory and Company, 1, the bank was held to be negligent (depriving it of the protection of section 82) not to ask a customer though respectively introduced the name of his employer and in the case of a married woman the name of her husband 's employer.
This is a case where a fraud had arisen through an employee stealing cheques from his employer and placing them into the credit of his account.
Had the bank known his employer, enquiries would have been made.
The request for special collection as in case of Lad broke & Co. (supra) was absent in this case as the account continued for quite some time.
Even in case of special collection it was held that it was desired for the purpose of learning quickly whether or not the cheques will be paid.
This case was mentioned in Marfani and Co. Ltd. vs Midland Bank Ltd., (supra) where the Midland Bank had make a special collection without being asked by their customer.
It was decided that this did not indicate that the bank 's suspi cions were aroused which would require further inquiry.
It was found that the bank took upon a special collection for the reasons (a) that the cheque was for a large sum, so that it was in their interest to collect quickly and (b) that the customer about to buy a restaurant might require the pro ceeds quickly.
In the Court of Appeal, Diplock LJ said that the 'significance ' of the special clearance depends upon the Judge 's assessment of the credibility of the bank officials who gave evidence; and he saw no reason to differ from him.
In the instant case we have no reason to disbelieve what was said by the Manager, DW 1.
In the instant case in the absence of any evidence giving the details of the cheques and their tenor, we are unable to hold that there were notices and circumstances which ought to arouse suspicion on the part of the bank.
The bank normally has an obligation to collect the customer 's cheques paid into his account.
In Halsbury Laws of England, 4th Edn., Vol. 3 at para 46 we read: 40 "46.
Customer 's title to money paid in.
In the absence of notice, express or implied the banker is not concerned to question the cus tomer 's title to money paid in by him.
al though if a person entrusted with a cheque wrongfully pays it to the bank to the credit of someone who is not entitled to it, the true owner, if he has given notice to the bank of his title while the credit remains, may recov er the amount from the bank as money had and received; or as damages for conversion . . .
A banker should be very cautious in accepting for a customer 's account any cheque drawn by him as agent upon his principal 's account, however broad may be the authority to draw.
If the court detects circumstances which should arouse suspicion that the agent was abusing his authority, the banker will be liable to the principal even though the cheque was crossed.
" This is because in every case of opening an account bank takes a mandate and, until changed, controls the operation of the account.
In the instant case, having already opened the account the Bank was not concerned to question the customer 's title to money paid in by him, when a cheque was drawn in favour of Industrial Chain Concern.
In Capital and Counties Bank vs Gordon, [1903] AC 240, the House of Lords accepted the position that a bank acts basically as a mere agent or conduit pipe to receive payment of the cheques from the banker on whom they are drawn and to hold the proceeds at the disposal of its customer.
Unless crossed the banker himself is the holder for value.
He may be a sum collecting agent or he may take as holder for value or as holder in due course.
As an agent of the customer for collection he is bound to exercise diligence in the presen tation of the cheques for payment within reasonable time.
If a banker fails to present a cheque within a reasonable time after it reaches him, he is liable to his customer for loss arising from the delay.
A banker receiving instruments paid in for collection and credit to a customer 's account may collect solely for a customer or for himself or both.
Where he collects for the customer he will be liable in conversion if the customer has no title.
However, if he collects in good faith and without negligence he may plead statutory protection under section 131 of the Act.
In the instant case in the absence of evidence on record we find it difficult to ascertain whether the bank was collecting the cheques merely as agent of the customer or as holder for value or as holder in due course.
Some of the entries in the statement do show deposits and 41 withdrawals of lesser amounts on the same date, but that is not enough for arriving at any conclusion whether the bank was collecting as a holder for value and not merely as an agent of the customer.
To enable a bank to avail the immunity under section 131 as a collecting banker he has to bring himself within the conditions formulated by the section.
Otherwise he is left to his common law liability for conversion or for money had and received in case of the person from whom he took the cheques having no title or defective title.
The conditions are: (a) that the banker should act in good faith and with out negligence in receiving a payment, that is, in the process of collection, (b) that the banker should receive payment for a customer on behalf of him and thus acting as a mere agent in collection of the cheque and not as an account holder (c) that the person for whom the banker acts must be his customer and (d) that the cheque should be one crossed generally or especially to himself.
The receipt of payment contemplated by the section is one from the drawee bank.
It is settled law that the onus of bringing himself within the section rests on the banker.
In Capital and Counties Bank vs Gordon, (supra) as we have seen, the conception of a col lecting banker was that of "receiving the cheque from the customer, presenting it and receiving the money for the customer, and then, and not till then, placing it to the customer 's credit, exercising functions strictly analogous to those of a clerk of the customer sent to a bank to cash an open cheque for his employer.
" If the banker performs these functions in course of his business, in good faith and without negligence he will be within section 131 of the Act.
We have already observed that the principle enunciated in the Commissioners of Taxation vs English Scottish and Australian Bank, (supra) is that the opening of the account is material as shedding light on the question whether there was negligence in collecting a cheque does bring out the true position that there must be sufficient connection established between the opening of the account and the collection of the cheque before a defence under section 131 could be held to be barred.
The question would then be one of facts as to how far the two stages can be regarded as so intimately associated as to be considered as one transac tion.
We have already found that in the instant case there was no evidence to show that the opening of the account and the collection of the cheques and drafts formed part of the same transaction.
Where a banker in good faith and without negligence receives payment for a customer of a cheque and the customer has no title or a defective title to the cheque, the banker does not incur any liability to the true owner of the cheque by reason only of having received such payment.
The banker is not to be treated for purposes of the protective 42 section as having been negligent by reason only of his failure to concern himself with absence of, or irregularity in, endorsement of the cheque or other instrument to which the section applies.
This has to be so because the drawer of the cheque is not a customer of the bank while the payee is.
Where the protection attaches, it covers the receipt of the cheque and every step taken in the ordinary course of busi ness and intended to lead up to the receipt of payment.
Even if there was negligence in opening of the account that act ipso facto would not result in loss to the true owner of the cheque collected.
While collecting the cheque for a customer the bank is under obligation to present it promptly so as to avoid any loss due to change of position.
When it receives the money collected then also there is no direct loss to the true owner.
It is only when the amount is paid or withdrawn by the customer that the loss results.
During this period what is important to note is that at every step in collec tion of the money and making payment the banker is bound by the banker customer relationship and rights and obligations flowing therefrom.
Even so, if there was anything to rouse suspicion regarding the cheque and ownership of the customer the banker may find itself beyond the protection of section 131.
The scope or ambit of possible suspicion will depend on various situations that may have prevailed between the drawer of the cheque and the customer.
In the instant case Sethuraman having been believed to have been the proprietor of Industrial Chain Concern the cheques payable to Industri al Chain Concern left little scope to have aroused any suspicion in the minds of the Bank.
The position may have been different if Sethuraman was known as acting as an employee of Industrial Chain Concern and the cheques were payable to that concern, but were deposited into personal account of the employee which was not the case here.
The requirement of receiving payment for a customer enunciated clearly in Capital and Counties Bank Ltd. vs Gordon, (supra) was extended in Barclays Bank Ltd. vs Astley Industrial Trust Ltd., wherein it was held that the banker may receive payment for himself and yet be enti tled to the protection where, acting in a purely collecting capacity, he has nevertheless a lien or is otherwise a holder for value.
There can be no doubt that the existence of a Current Account created relationship of banker and customer in this case.
Sethuraman would be a customer even if his account was over drawn until that account was closed.
In Halsbury 's Laws of England, 4th Edn., Vol. 3 at para 103 it is said: "If the banker wishes to plead the statutory protection, his dealings throughout must be in good faith and without negligence.
The alter native liability arising from negligence 43 renders the question of good faith practically superfluous, and it is seldom, if ever, raised.
Negligence in this connection is breach of a duty to the possible true owner, not the customer, created by the statute itself, the duty being not to disregard the interests of the true owner.
" It is a settled law that the test of negligence for the purpose of section 131 of the Act is whether the transaction of paying in any given cheque coupled with the circumstances antecedent and present is so out of the ordinary course that it ought to arouse doubts in the banker 's mind and cause him to make inquiries.
Lloyds Bank Ltd. vs E.B. Savory and Co., (supra), Marfani & Co. Ltd. vs Midland Bank Ltd., (supra), Arab Bank Ltd. vs Ross, and Karak Rubber Co. Ltd. vs Burden, (No. 2) are some of the authorities laying down the above rule.
The banker is bound to make inquiries when there is anything to rouse suspicion that the cheque is being wrongfully dealt with in being paid into the customer 's account.
However, the banker is not called upon to be abnormally suspicious, as was held in Penmount Estates Ltd. vs National Provincial Bank Ltd., It was held in Motor Traders Guarantee Corpn.
vs Midland Bank Ltd., , that disregard of the bank 's own regulations may be evidence of negligence.
In the instant case no such regulation of the bank has been produced so as to establish that in collecting the cheque and allowing the customer to withdraw the bank violated its own regulations.
Nor has the plaintiff been able to show that the transactions in paying in the drafts and cheques coupled with the circumstances antecedent and present were so out of the ordinary that it ought to arouse doubts in the Banker 's mind and cause him make inquiries.
As we have observed that the Bank 's negligence in not making inquiries as to the customer upon opening an account if there was any, could shed light in its negligence in col lecting the cheques for him.
But we have found that there was no such negligence in this case.
Mr. Balakrishnan 's submission that in this case while opening the account, the appellant should have inquired of the plaintiff 's firm does not reasonably follow in view of the fact that what Sethura man said was that he was the proprietor off the newly estab lished firm "Industrial Chain Concern" and if that was the name of the payee in the cheques, Sethuraman having been accepted as its proprietor there would be no room for suspi cion that the firm 's cheques were being paid into the pro prietor 's personal account.
There is no allegation and proof that the collection and payment were made contrary to the tenors of the instruments.
Carelessness could occur at the time of collection especially if there was failure to pay due attention to the actual terms of the mandate.
The actual circumstances at the time of 44 paying in for collection, if the amount was very large one might raise suspicion.
But in this case the first cheque paid in was of 2,800.17p.
which could not be regarded as such a large amount to have aroused suspicion considering the fact that the firm was 'Industrial Chain Concern ', dealing in industrial chains and pulleys.
Bharat Bank Ltd. vs Kishanchand Chellaram, AIR 1955 Madras 402; Sanyasilingam vs Exchange Bank of India, AIR 1948 Bombay 1; Woodbrier vs Catholic Bank, AIR 1958 Kerala 316, applied the accepted principles to the facts.
In Orbit Mining & Trading Co. vs Westminister Bank, [1962] 3 All E.R. 565, Harm LJ said: "It cannot at any rate be the duty of a bank continually to keep itself upto date as to the identity of a customer 's employer", though he is presumably required to know the identity of the employer.
That case is distin guishable on facts.
Underwood vs Bank of Liverpool, , was a case of a Director paying into his own pri vate account cheques in favour of the company duly endorsed by himself as sole Director and as such distinguishable on facts.
In Bapulal Premchand vs Nath Bank Ltd., AIR 1946 Bom.
482, Chagla J, as he then was, in the facts of that case expressed that in his opinion, there was no absolute and unqualified obligation on a bank to make inquiries about a proposed customer and that modern banking practice required that a customer should be properly introduced or the bank should act on the reference of some one whom it could trust.
Therefore, perhaps in most cases it would be wiser and more prudent for a bank not to accept a customer without some reference.
But he was not prepared to go so far as to sug gest that after a bank had been given a proper reference with regard to a proposed customer and although there was no suspicious circumstances attendant upon the opening of the account, it was still incumbent upon the bank to make fur ther inquiries with regard to the customer.
In that case the manager of the defendant bank accepted.the reference of the cashier Modi and also in fact made certain inquiries of Modi as to the position and status of the customer.
It was held that it was not obligatory upon the defendant bank to make any further inquiries about his customer and in having failed to make any such further inquiries in his Judgment they were not guilty of negligence.
In the instant case the Manager himself gave the introduction.
As a general rule a banker before accepting a customer, must take reasonable care to satisfy himself that the person in question is of good reputation; and if he fails to do so he will run the risk of forfeiting the protection given by section 131 of the Act but 'reasonable care ' will 45 depend on the facts and circumstances of the case.
The courts have tended to accept the practices and procedures which bankers lay down for themselves, but that can by no means be decisive.
The "type of necessary inquiry at the opening of an account seems to be less stringent at present than it was a generation ago, and it is difficult to spell out from the cases any hard and fast rules.
" This is so because, in the words of Lord Chorley, the use of banking facilities at the present day "has become so wide spread and has penetrated so far into social strata where banking accounts were previously unknown, that precautions at one time considered necessary are now difficult in the press of business to apply.
One of the obvious problems is that of the dishonest employee who may wish to open a bank account for the purpose of getting cheques collected for which he has stolen from his employer.
If the banker is aware of his employment he will naturally watch that those cheques of which the employer is payee, or in which he is otherwise interested, do not pass through the account.
But how far can he be expected to keep himself informed of the employment of all his customers? This is typical of the problems which have faced the judges, and on which their views have tended to vary from time to time, and indeed from judge to judge.
" The above problem has been realised by the courts in England and India.
In Marfani & Co. vs Midland Bank (supra) a man called Kureshy who was minded to cheat his employers, the plaintiffs in the case went to a branch of the defendant bank and asked to open an account giving the name of Sheik Eliaszade and also those of the referees.
He was allowed to do so immediately, before the references had been taken up, and paid Pound 50 the same day.
The next day he paid in a further Pound 35 in cash and the plaintiffs ' cheque for Pound 3,000 made payable to one Eliaszade which he had stolen from them.
His object in opening the account was to get this cheque collected by the defendant bank.
The defendants in fact had this cheque collected spe cially on the day it was paid in, and on the same day wrote to the referees.
On the next day the defendants received the proceeds of the cheque, and one of the officers of the bank on same day had an interview with one of the referees who was a customer at the same branch and who gave a favourable account of Eliaszade which satisfied the manager the other referee never replied.
During the following days Kureshy drew out the whole of the Pound 3,000; indeed he tried to draw out substantially more.
On discovering the fraud the plaintiffs sued the defendant bank for the conversion of their cheque.
When the defendants pleaded section 4 of the Cheques Act, 1957, the plaintiffs contended that they had been negligent under four heads: 46 (i) They had taken no steps to identify the proposed custom er, without which the referee 's good opinion was valueless.
(ii) No inquiry was made as to the antecedents of Kureshy.
(iii) Only one referee responded to the bank 's inquiry (iv) The cheque was in fact collected before the references had been taken up.
The defendants called evidence that they had done all that was usual in such a case, and claimed that this proved that they had acted with due care.
It was held that the defence succeeded.
It is thus clear that the question of negligence or no negligence depends entirely on the facts of each individual case and thus makes it difficult to judge in advance how any particular litigation involving allegations of negligence will go.
In the instant case Sethuraman had in effect opened another account in the name of the plaintiff firm and oper ated it himself as its proprietor.
As we have already observed, carelessness on the part of the bank is most likely to occur at the time of collection of cheques especially in failure to pay due attention to the actual terms of the mandate.
It is not here a case of play ing the detective but of a careful examination of everything which appears on the front and back of the instrument.
Each set of circumstances produces its own requirements.
The instruments, crossing, type of crossing, per pro, pay cash or order etc.
are important.
The banker may be negligent in acting contrary to such mandate under appropriate circum stances.
In the instant case, however, no details regarding such mandates on the alleged cheques are available.
The High Court took the view that if the Manager of the Bank gave the introduction of Sethuraman to open the account in the plaintiff 's name showing him is its proprietor with out making any enquiry as to its true relationship with the concern then he was taking a risk and when it transpired that Sethuraman had made fraudulent representation then the Manager should be taken to have acted negligently.
We are not inclined to agree inasmuch as while dealing with a customer for collecting a cheque, there is no contractual relation between the collecting banker and the true owner.
The duty is implied by law.
A conduct beneficial to the customer at the expense of the true owner when the Bank acts in good faith and without negligence, is no 47 breach of that duty.
It is from this position of the true owner that question of negligence under section 131 of the Act has to be viewed.
The formula approved in Lloyds Bank Ltd. vs Chartered Bank of India, Australia and China, , is that broadly speaking, the banker must exer cise the same care and forethought in the interest of the true owner, with regard to cheques paid in by customer, as a reasonable man would bring on similar business of his own.
Lord Dunedin in Commissioner of Taxation (supra) said that the bank 's action must be in accordance with the ordinary practice of banking and bank cannot be held liable merely because they have not subjected an account to a 'microscopic examination '.
In Ross vs London County, Westminister and Parr 's Bank Ltd., , Bailhache J. took the view that the clerks and cashiers of the defendant bank would be attribut ed the degree of intelligent and knowledge ordinarily re quired of a person in their position to fit them for the discharge of their duties but that no microscopic examina tion of cheques paid in for collection was necessary and that it was not expected that officials of banks should also be 'amateur detectives '.
It could not be said that before opening an account in the name of a firm the Bank would be required to enquiry always whether any firm of the same name was already in existence or not.
What facts ought to be known to the Bank, what inquiries he should have made and what facts were sufficient to cause the Bank reasonably to suspect that Sethuraman was not the true owner in the facts and circumstances of the case would depend on current bank ing practice.
What was the practice long time back when the use of banking facilities by the general public was much less widespread may not be a proper guide.
It should also be noted that the duty of care owed by the Bank to the plain tiff as owner of the cheque did not arise until the cheque was delivered to the Bank by the customer Sethuraman.
It was then only that duty to make inquiries about the cheque arose.
Those inquiries would depend on the apparent tenor of the cheque and the knowledge of facts that earlier inquiries ascertained.
What we have to do is to look at all the cir cumstances at the time of the paying in of the cheque by Sethuraman and to see whether those circumstances were such as would cause a reasonable banker possessed of the informa tion gathered about Sethuraman to suspect that he was not the true owner of the cheque.
There is very little evidence relating to the deposit and particulars of the cheques deposited and hence it is difficult to hold that the Bank ignored obvious indications and was negligent at that time.
It is difficult to accept so speculative a proposition as what would have happened if inquiries had been made which were not made.
It does not constitute any lack of reasonable care to refrain from making 48 such inquiries which it was improbable to have led to detec tion of the customer 's fraud.
While arriving at the above conclusion we have borne in mind the standard of reasonable care and the banking prac tices and its trend in a developing banking system in the country.
Any stricter liability may not be conducive.
It will also be observed that expansion of the banker 's liabil ity and corresponding narrowing down of the banker 's protec tion under the provision of section 131 of the Act may make the banker 's position so vulnerable as to be disadvantageous to the expansion of banking business under the ever expand ing banking system.
This is because a commercial bank, as distinguished from a Central bank, has the following charac teristics, namely (a) that they accept money from, and collect cheques for, their customers and place them to their credit; (2) that they honour cheques or orders drawn on them by their customers when presented for payment and debit their customers accordingly; and (3) that they keep current account in their books in which the credits and debits are entered.
The receipt of money by banker from or on account of his customer constitute it the debtor of the customer.
The bank borrows the money and undertakes to repay it or any part of it at the branch of the bank where the account is kept during banking hours and upon payment being demanded.
The banker has to discharge this obligation and normally the banker would not question the customer 's title to the money paid in.
Applying the above principles of law to the facts of the instant case we are not inclined to hold that the Bank was negligent either in collecting the cheques and drafts or allowing Sethuraman to withdraw the proceeds.
As we have taken the view that the bank was not negli gent, it is not necessary to deal with the question of contributory negligence.
Let the loss lie where it falls.
In the result, this appeal succeeds.
The impugned judg ments are set aside and the appeal is allowed, but without any order as to costs.
Y. Lal Appeal allowed.
| IN-Abs | The plaintiff respondent filed original suit No. 7667 of 1975 against the appellant Bank in the City Civil Court Madras for recovery of Rs.26,383.49 p. together with inter est and costs, being the amount of loss suffered by it on account of the negligence and conversion on the part of the appellant who negligently allowed one Sethuraman, Manager of the plaintiff 's firm to open a "fictitious account" in the name of "Industrial Chain Concern" as its proprietor and helped him to pay in stolen drafts and cheques drawn in favour of the plaintiff, and by collecting the same and paying the proceeds thereof to Sethuraman, and closing the account thereafter.
The plaintiff 's case was that it was doing extensive business in steel Roller chains and sprock ets with leading Industries and Government undertakings and had supplied goods to seven parties who sent to it drafts and cheques for Rs.26,383.49 p. which were received by Sethuraman, its Manager, who opened fictitious account in the name of the firm with the bank, and withdrew the amount defrauding the plaintiff.
According to the plaintiff the Bank was negligent and guilty of conversion in opening the account as also in collecting the cheques.
Hence it was liable to make good the loss suffered by it.
The appellant Bank denied the allegations of negligence levelled by the plaintiff.
It stated that Sethuraman, who was a Collegemate of the Manager of the Bank was known to him earlier and at the time of opening the account he had represented to the Bank that he, as proprietor, had started a firm under the name and style of "Industrial Chain Concern" and had shown in that connection some business papers on the basis of which the Manager gave the introduction necessary to open the Account but the manager declined to grant overdraft facility asked for by him.
The bank asserted that it acted in good faith throughout the dealings till the closure of the account.
The Trial Court held that the appellant bank had acted in good faith but not without negligence in opening the account and operating the same in the process of collection of cheques/drafts and that it was not 28 entitled to protection of section 131 of the Negotiable of Instruments Act.
Accordingly it decreed the plaintiff 's suit Bank 's appeal to the High Court against the decree of the trial Court was dismissed.
Hence this appeal by Special Leave.
Allowing the appeal, this Court, HELD: As a general rule a banker before accepting a customer, must take reasonable care to satisfy himself that the person in question is of good reputation, and if he fails to do so he will run the risk of forfeiting the pro tection under section 131 of the Negotiable Instruments Act.
What is "reasonable care", will depend on the facts and circumstances of the case.
[45F G] The courts have tended to accept the practices and procedures which bankers lay down for themselves, but that can by no means be decisive.
[45G] Till an account is opened, no banker customer relation ship exists between the bank and the person proposing to open an account.
Once the account is open, the relationship is created and with it mutual rights and obligations between the banker and the customer are created under law.
Opening an account by depositing cash is slightly different from opening one by a cheque as in that case, the Bank has to act according to the tenor of that instrument and its collection and payment involves the Bank 's avowed duty to its real owner if the proposer happens not to be its real owner.
Even when an account is opened by depositing cash but so soon after the opening of the account any cheque is paid into it as to make it part of the same transaction with the opening, the same duty may be implied by law.
[34D F] One of the tests of deciding whether the Bank was negli gent, though not always conclusive, is to see whether the Rules or instructions of the Banks were followed or not.
In the instant case, Sethuraman having been known to the Manag er who gave the introduction there was no violation of any instruction or Rules.
[35E; 36D] Except when circumstances of a case so justify in making inquiries the bankers attitude may be solicitious and not detective.
It is difficult to hold that the Bank was negli gent in opening the account, accepting the deposit of cash by a person known to the Manager of the Bank under the circumstances.
[37G; 38B] 29 The bank normally has an obligation to collect the customer 's cheques paid into his account.
[42H] In every case of opening an account bank takes a man date and, until changed, controls the operation of the account.
In the instant case having already opened the account the Bank was not concerned to question the custom er 's title to a cheque paid in by him, when a cheque was drawn in favour of 'industrial Chain Concern '.
[41A B] If a banker fails to present a cheque within a reason able time after it reaches him, he is liable to his customer for loss arising from the delay.
A banker receiving instruc tions paid in for collection and credit to a customer 's account may collect solely for a customer or for himself or both.
Where he collects for the customer he will be liable in conversion if the customer has no title.
However, if he collects in good faith and without negligence he may plead statutory protection under section 131 of the Act.
[41D E] To enable a bank to avail the immunity under sec tion 131 as a collecting banker he has to bring himself within the conditions formulated by the section.
Otherwise he is left to his common law liability for conversion or for money had and received in case of the person from whom he took the cheques having no title or defective title.
The conditions are: (a) that the banker should act in good faith and without negligence in receiving a payment, that is, in the process of collection, (b) that the banker should re ceive payment for a customer on behalf of him and thus acting as a mere agent in collection of the cheque and not as an account holder (c) that the persons for whom the banker acts must be his customer and (d) that the cheque should be one crossed generally or especially to himself.
The receipt of payment contemplated by the section is one from the drawee bank.
It is settled law that the onus of bringing himself within the section rests on the banker.
There is very little evidence relating to the deposit and particulars of cheques deposited and hence it is difficult to hold that the Bank ignored obvious indications and was negligent at that time.
[41G H; 42A; 48G] Commissioner of Taxation vs English Scottish & Austra lian Bank, ; Ladbroke & Co. vs Todd, ; Turner vs London & Provincial Bank, [1903] 2 Legal Decisions Affecting Bankers 33; Mariani & Co. vs Midland Bank, at 582; Lloyds Bank Ltd. vs E.B. Savory & Company, ; Capital & Counties Bank vs Gordon, [1903] AC 240; Barclays Bank Ltd. vs Astley Indus trial Trust Ltd. ; Arab 30 Bank Ltd. vs Ross, ; Karak Rubber Co. Ltd. vs Burden (No. 2), ; Penmount Estates Ltd. vs National Provincial Bank Ltd., ; Motor Traders Guarantee Corpn.
vs Midland Bank Ltd., ; Bharat Bank Ltd. vs Kishanchand Chel laram, AIR 1955 Mad. 402; Sanyasilingam vs Exchange Bank of India, AIR 1948 Bombay 1; Woodbrier vs Catholic Bank, AIR 1958 Kerala 316; Orbit Mining & Trading Co. vs Westminister Bank, ; Underwood vs Bank of Liverpool, ; Bapulal Premchand vs Nath Bank Ltd., AIR 1946 Bom.
482; Lloyds Bank Ltd. vs Chartered Bank of India, Australia & China, and Ross vs London County, Westminister & Parr 's Bank Ltd., , referred to.
|
TION: Criminal Appeal No. 672 of 1989.
From the Judgment and Order dated 16.2.1988 of the Madras High Court in Crl.
Petition No. 12389 of 1987.
R. Mohan and R.A. Perumal for the Appellant.
R.K. Jain, Mrs. Aruna Mathur and A. Mariarputham for the Respondents.
The Judgment of the Court was delivered by M. FATHIMA BEEVI, J.
Special Leave granted.
The appellant married the first respondent on 29.4.
They lived together until 1982 and have two children.
They separated and the legal battle commenced in 1983.
The first respondent moved the City Civil Court for divorce.
The appellant instituted criminal complaint in the court of the Metropolitan Magistrate.
The complaint was taken cognizance of for offences under Sections 494, 496, 498 A, 112, 114, 120, 120 B and 34 IPC against the respondents.
It was al leged that the first respondent married the second respond ent while the proceedings for decree of divorce were still pending, the marriage was performed secretly in the presence of respondent Nos. 3 to 6.
On the application of the first respondent the High Court by the impugned order quashed the proceedings before the Metropolitan Magistrate.
Hence the appeal.
Section 482 of the Code of Criminal Procedure empowers the High Court to exercise its inherent powers to prevent abuse of the process of Court.
In proceedings instituted on complaint exercise of the inherent power to quash the pro ceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive.
If the allegations set out in the complaint do not constitute the offence of which cognizance is taken by the Magistrate it is open to the High Court to quash the same in exercise of the inherent powers under Section 482.
It is not, however, necessary that there should be a meticu lous analysis of the case, before the trial to find 167 out whether the case would end in conviction or not.
The complaint has to be read as a whole.
If it appears on a consideration of the allegations, in the light of the state ment on oath of the complainant that ingredients of the offence/offences are disclosed, and there is no material to show that the complaint is mala fide, frivolous or vexa tious.
in that event there would be no justification for interference by the High Court.
The High Court without proper application of the princi ples that have been laid down by this Court in Sharda Prasad Sinha vs State of Bihar, ; ; Trilok Singh and Others vs Satya Deo Tripathi, [1980] 86 CRL.
LJ 882 AIR 1979 SC 850 and Municipal Corporation of Delhi vs Purshotam Dass Jhunjunwala and Others, ; proceeded to analyse the case of the complainant in the light of all the probabilities in order to determine whether a conviction would be sustainable and on such premises arrived at a conclusion that the proceedings are to be quashed against all the respondents.
The High Court was clearly in error in assessing the material before it and concluding that the complaint cannot be proceeded with.
We find there are spe cific allegations in the complaint disclosing the ingredi ents of the offence taken cognizance of.
It is for the complainant to substantiate the allegations by evidence at a later stage.
In the absence of circumstances to hold prima facie that the complaint is frivolous when the complaint does disclose the commission of an offence there is no justification for the High Court to interfere.
We, therefore, allow the appeal, set aside the impugned order and direct that the proceedings before the Magistrate shall be restored and disposed of in accordance with the law.
P.S.S. Appeal allowed.
| IN-Abs | The criminal complaint instituted by the appellant was taken cognizance of by the Magistrate for offences under sections 494, 496,498 A, 112, 114, 120, 120 B and 34 IPC.
It was alleged that the first respondent had married the second respondent while the proceedings for decree of divorce were still pending, and that the marriage was performed secretly in the presence of respondent Nos. 3 to 6.
The High Court, however, on the application of the first respondent quashed the proceedings before the Magistrate.
Allowing the appeal by special leave, HELD: The High Court was in error in assessing the material before it and concluding that the complaint cannot be proceeded with.
[167C D] In proceedings instituted on complaint exercise of the inherent power under section 482 of the Code of Criminal Proce dure by the High Court to quash the proceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive.
It is not necessary that there should be a meticulous analysis of the case, before the trial to find out whether the case would end in conviction or not.
The complaint has to be read as a whole.
[166G; 167A] In the instant case, there were specific allegations in the complaint disclosing the ingredients of the offence taken cognizance of.
It was for the complainant to substan tiate the allegations by evidence at a later stage.
In the absence of circumstances to hold prima facie that the com plaint was frivolous there was no jurisdiction for the High Court to interfere.
[167D E] Sharda Prasad Sinha vs State of Bihar, ; ; Trilok 166 Singh & Ors.
vs Satya Deo Tripathi, AIR 1979 SC 850 and Municipal Corporation of Delhi vs Purshotam Dass Jhunjunwala
|
ivil Appeal No. 4586 of 1989.
From the Judgment and Order dated 14.3.1983 of the Delhi High Court in R.F.A. (O.S.) No. 3 of 1983.
Pallav Shishodiya and D. Bhandari for the Appellant.
V.C. Mahajan, Arun Madan and C.V.S. Rao for the Respondents.
The Judgment of the Court was delivered by RAY, J.
Special leave granted.
Arguments heard.
This is an appeal against the judgment and order passed in R.F.A. (OS) 3 of 1983 on March 14, 1983 by the High Court of Delhi dismissing the Civil Writ Petition in limini against the judgment and decree rendered by Chawla, J. in Suit No. 50 of 1972 on February 12, 1982.
The matrix of this case is stated hereunder.
The appellant M/s Marwar Tent Factory is a firm having its registered office at Jodhpur (Rajasthan) and dealing in the manufacture and sale of tents and tarpaulins.
The firm is a regular supplier of these goods to the defence services of India.
On March 13, 1986 tenders were invited for the supply of tents by the Directorate General of Supplies and Disposals, the respondent No. 2.
Accordingly, the appellant submitted a tender which was accepted by the officer of the Directorate General of Supplies and Disposals on behalf of the President of India.
The said contract was of two kinds of tents 'Flies Inner ' and 'Flies Outer '.
The agreed rate for the 'Flies Outer ' was Rs.225 per tent and the quantity was 19,100.
In accordance with the said terms of the contract the goods were to be inspected at the premises of the firm at Jodhpur and after the same being passed by the Inspector, the goods had to be despatched to the Commandant, C.O.D. Kanpur.
It was further agreed between the 130 parties that 95% of the price was payable on proof of des patch and production of the inspection note.
The balance 5% was to be paid after receipt of the goods in good condition by the C.O.D., Kanpur.
On October 14, 1968, one consignment of 1500 tents was despatched to the C.O.D., Kanpur by the appellant under Railway receipt No. 502671 dated 14.10.1968 and 95% of the price was paid by demand drafts dated 17.10.1968 and 19.5.1969.
The Commandant, C.O.D., Kanpur reported that 224 tents out of a sale consignment had not been received at Kanpur and consequently a sum of Rs.51,912 (being the full price of those 224 tents inclusive of sales tax) was deduct ed from the amounts due to the appellant under another contract.
The appellant made repeated requests and sent repeated reminders for payment of the said sum of Rs.51,912 from the respondent but without any effect.
As such, the appellant filed a suit being Suit No. 50 of 1972 in the High Court at Delhi for recovery of the said principal sum as well as interest on the principal.
The appellant further claimed interest on two other consignments as the price of the said consignments was paid after a great delay.
The two consign ments were of 700 and 1400 tents despatched on August 10, 1968 and August 27, 1968 respectively.
Though 95% of the price was paid, the balance 5% amounting to Rs.24,357 was not paid till December 1, 1971 despite repeated requests and reminders.
The said payment of Rs.24,357 was wrongfully delayed by about three years and a sum of Rs.8,525 was, therefore, claimed as interest @ 12% per annum from 1.1.1969 to 1.12.1971 on the said amount.
The total claim of the appellant was of Rs.74,972 i.e. Rs.51,912 principal sum and Rs. 14.535 as interest on this and Rs.8,525 as interest on the sum of Rs.24,357 wrongfully withheld for three years.
A joint statement was filed by the respondent Nos. 1, 2 & 5 as their interest were identical.
The defence was that 224 tents were received short under railway receipt No. 502671 and the sum of Rs.51,9 12 was rightly deducted from the payment due to the appellant under other contracts.
The respondent Nos. 3 and 4 also filed a joint written statement stating inter alia that only 11 tents were deliv ered short under railway receipt No. 502671 for which the admitted liability was to the tune of Rs.2,475.
This sum had been paid to the C.O.D., Kanpur by debit adjustment.
131 T.P.S. Chawla, J by his judgment and order dated Febru ary 12, 1982 though dismissed the claim of the appellant substantially but in so far as the amount of Rs.2,475 re garding the shortage of 11 terms admitted by respondent Nos. 3 and 4 was concerned, decreed the said sum in favour of the appellant with interest @ 12% per annum from 1.4.1972 till the date of judgment and further interest @ 6% from the date of judgment till the realisation of the amount.
Against the said judgment and decree the appellant preferred an appeal being R.F.A. (OS) No. 3 of 1983 before the Division Bench of the said High Court.
The said appeal was, however, dismissed by the High Court of Delhi by order dated March 14, 1983.
The instant appeal on special leave has been preferred by the appellant against the aforesaid judgment and decree.
The crucial question that requires consideration in this appeal is whether 1500 tents which were loaded in the rail way wagons on October 14, 1968 at Jodhpur for delivery to the respondent No. 5, the Commandant, C.O.D., Kanpur under railway receipt No. 502671 were actually delivered to the respondent No. 5.
It has been held by the Trial Court i.e. learned single Judge, High Court, Delhi that the tents were carried in 3 wagons upto Agra.
The railway line from Jodhpur to Agra was a meter gauge.
Thereafter, from Agra to Kanpur which is a broad gauge line the tents were put into four broad gauge wagons at Agra for onward transmission to Kan pur, as evident from the transmission, register.
It has been found that the railways could not establish the delivery of 224 tents under railway receipt No. 502671 to the Comman dant, C.O.D., Kanpur from the unloading register.
The short age certificate issued by the railways corroborates the entries in the unloading register.
The particulars of the consignment are set out in the heading of this document.
The railway receipt is No. 502671 and the names of the sendor and consignee are also mentioned.
The Traffic Officer, Commandant, C.O.D., Kanpur filed a claim with the railways on February 10, 1969 for 224 packages received short and this claim was made under railway receipt No. 502671.
The plea of the railways was that the shortage was of 11 tents and not of 224 tents.
It has been found by the Trial Court that this plea is falsified by the unloading register, the shortage certificate and the reconciliation statement as also the report made by their Traffic Inspector on December 9, 1970.
Accordingly, it was held that under railway receipt No. 502671 the appellant delivered the full quantity of 1500 tents to the railways but the latter failed to deliver 224 tents out of this consignment to the Commandant, C.O.D., Kanpur and as such the railways are estopped from contending that it was under some other railway 132 receipt.
The Trial Court, however, held that no decree could be passed against the railways because the plaint did not contain any claim for loss or non delivery against the railways.
Secondly, the suit against the railways was barred by time and thirdly since no notice under Section 78 B of the Indian Railways Act was served on the railways by or on behalf of the appellant.
The appellant, however, submitted that the title of the goods passed on to the respondent No. 5, Commandant, C.O.D., Kanpur, the moment the tents were lodged on rail head, Jodhpur as the term of delivery under the contract was F.O.R., Jodhpur.
For any short delivery of the goods made by the railways at Kanpur, the appellant was not responsible and the respondent No. 5, under the terms of the contract is not entitled to deduct the price of the short delivery of tents i.e. 224 tents.
It was for the Commandant, C.O.D., Kanpur to claim damages from the rail ways and the Commandant had actually made a claim as stated hereinbefore to the railways in respect of the short deliv ery.
The learned single Judge, however, found that the abbreviation F.O.R. meant Free on Rail meaning simply that the cost of the carriage of the goods upto the railway wagon is included in the price and must be borne by the seller and the cost of carriage thereafter is to be borne by the buyer.
It has also been held that the risk in the goods would not pass at Jodhpur as expressly stipulated in the general conditions of contract contained in Form DGS & D 68.
These were made applicable by clause 7 in the Schedule of accept ance of tender.
Special emphasis was laid to the condition No. 4 entitled "responsibility of contractor for executing the contract".
The learned Judge has with reference to sub clause (10) of this condition held that the goods shall remain in every respect at the risk of the contractor until their actual delivery to the consignee at the stipulated place and as such the risk of the appellant remains until the goods were actually delivered to the Commandant, C.O.D. Kanpur.
The argument as regards condition No. 14 of the general conditions of contract as well as its sub clause (2) entitled "passing of property" was negatived on the ground that the risk was governed by condition 4(1) of the general conditions of contact.
The claim before the railways being time barred and also no notice under Section 78 B of the Indian Railways Act having been served on the Railways within the stipulated period, the appellant could not claim for damages for breach of contract and for the price of the tents not delivered.
However, in respect of the price of 11 tents the shortage of which was admitted by the railways and for which a sum of Rs.2,475 was paid to the respondent No. 5 by the appellant, it was decreed with interest @ 12% per annum from 1.4.1972 till the date of passing of the decree and also further allowed interest on the said sum @ 6% per annum thereafter till the date of 133 payment.
The respondents, however, did not question the finding of the Trial Court regarding the short delivery of 224 tents at the railway station at Kanpur.
Admittedly, there has been a short delivery of 224 tents out of the consignment of 1,500 tents loaded at Jodhpur railway station in the railway wagon under the said receipt No. 50267 1.
In order to decide and fix the responsibility for pass ing of the decree in respect of the sum of Rs.51,912 being the full price of 224 tents inclusive of sales tax deducted from the amount due to the appellant under another contract by the respondent No. 5, it is pertinent to consider the question when the property in goods passed from the seller to the buyer at Jodhpur when the goods were loaded in rail way wagons for delivery to the consignee at Kanpur.
The learned counsel for the appellant drew our attention to the condition No. 11 of the Schedule of acceptance of tender dated February 29, 1968.
It has been mentioned therein that the terms of delivery was F.O.R., Jodhpur i.e. free on rail at Jodhpur railway station.
It has also been mentioned that before the goods are loaded on railway wagons for delivery to the respondent No. 5 at Kanpur, the Inspector, I.G.S. North India will inspect the same at firm 's premises at Jodhpur and after approval the said goods will be despatched to its destination by placing them in the railway wagons at Jodhpur railway station and the railway receipt has to be sent to the consignee under registered cover immediately after despatch of the stores with full details.
It is also stipulated that 95% of the price of the goods will be paid by the respondent No. 5 on receipt of the railway receipt and the inspection note and the balance 5% will be paid after the same reached at the destination in goods condi tion.
Referring to this term for delivery under clause 11 of the Schedule of acceptance of tender, it has been urged by the learned counsel for the appellant that the delivery was complete at Jodhpur when the/goods were loaded in the goods train for delivery to the respondent No. 5 at Kanpur and property in the goods passed to the buyer as soon as the goods were despatched by railway at Jodhpur.
Thereafter, the risk in respect of the goods despatched remained with the consignee.
The appellant, the consignor is entitled to get the entire price of the 224 tents which were short delivered by the respondent Nos. 3 and 4 to respondent No. 5 at Kanpur in view of the clear finding by the Trial Court that though the entire consignment of 1500 tents was actually loaded in the railway wagons for despatch to the consignee, the re spondent No. 5.
The respondent No. 5 duly filed a claim to the railways, the respondent Nos. 3 and 4 for the short delivery to the tune of 224 tents immediately after taking delivery of the goods.
In order to decide the question as to whether the rights in the goods passed from 134 the seller to the buyer i.e. from the appellant to the respondent No. 5 as soon as the goods were loaded in railway wagons at Jodhpur and the railway receipt was sent to the consignee, it is pertinent to refer to the meaning of the words F.O.R. Jodhpur.
In Haulsbury 's Law of England, 4th Edition (Volume 41) at page 800, para 940 it has been men tioned that: "Under a free on rail contract (F.O.R.) the seller undertakes to deliver the goods into railway wagons or at the station (depending on the practice of the railway) at his own ex pense, and (commonly) to make such contract with the railway on behalf of the buyer as is reasonable in the circumstances.
Prima facie the time of delivery F.O.R. fixes the point at which property and risk pass to the buyer and the price becomes payable." In Benjamin 's Sale of Goods (2nd Edition), at page 1799 it is stated as under: "Stipulations as to time of 'delivery ' provi sions as to the time of delivery in an f.o.r.
contract are taken to refer to the time of shipment and not to the time of arrival of the goods; and this may be so even though the provision in question contemplates the arrival of the goods by a certain time.
Thus in Fre bold and Sturznickel (Trading as Panda O.H.D.V vs Circle Products Ltd. German sellers sold toys to English buyers f.o.b.
Continental Port on the terms that the goods were to be deliv ered in time to catch the Christmas trade.
The goods were shipped from Rotterdam and reached London on November 13; but because or ' an oversight for which the sellers were not responsible the buyers were not notified of the arrival of the goods until the following January 17.
It was held that the sellers were not in breach as they had delivered the goods in accordance with the requirements of the contract by shipping them in such a way as would normally have resulted in their arrival in time for the Christmas trade.
" The question as to the meaning of F.O.R. contract fell for consideration in the case of Girija Proshad Pal vs The National Coal Co. Ltd., AIR 1949 (Calcutta) 472.
P.B. Muk harji, J. as His Lordship then was observed in para 11 as follows: 135 "The words f.o.r. are well known words in commercial contracts.
In my judgment they mean when used to qualify the place of delivery, that the seller 's liability is to place the goods free on the rail as the place of deliv ery.
Once that is done the risk belongs to the buyer.
" Reference may also be made in this connection to the decision of this Court rendered in The Commissioner of Sales Tax, Eastern Division, Nagpur vs Husenali Adamji and Co., [1959] 2 Supp.
SCR 702.
In that case under the terms of the contract the respondent Company whose place of business was situate in Chanda in the erstwhile Central Provinces had to load diverse quantities of 'sawar ' logs on railway wagons and to despatch the same from Chanda and other railway stations in the Central Provinces to Ambernath, a town in the erstwhile Province of Bombay.
Clause 2 of the contract reserved the right of the consignee to examine the goods on arrival at Ambernath and to reject the same if they were found, in the opinion of the factory manager, not to conform with the specifications.
Clause 6 also provided that the goods shall be measured under the supervision of the facto ry 's representative, the decision of the factory manager at Ambernath would be binding on the contractor and by clause 7 the prices of the goods shall be 'F.O.R. Ambernath '.
The question arose was as to when and where the property in the logs passed from the respondent to the consignee and whether the respondent was liable to pay sales tax under the provi sions of the Central Provinces and Berar Sales Tax Act, 1947.
The Sales Tax Department levied the tax on the re spondent on the ground inter alia that the property in the logs passed from the respondent to the factory consignee under section 23 of the Indian when the logs were loaded in the wagons at railway stations within the Central Provinces and the railway receipts taken in the name of the factory were forwarded to the latter.
It was held: "that on a proper construction of the contract as a whole the intention of the parties was that the respondent would send the logs by rail from the different stations in the Cen tral Provinces to Ambernath where the factory manager would inspect, measure and accept the same if in his opinion they were of the de scription and quality agreed upon.
Consequent ly, as the respondent sent the logs and left it to the factory to appropriate to the con tract such of them as they accepted as of contract, quality and description, the proper ty in the logs did not pass to the buyer by 136 the mere delivery to the railway for carriage but passed only at Ambernath when the logs were appropriated by the factory with the assent of the seller within the meaning of section 23 of the Indian Safe of Goods Act, 1930.
" It is also convenient to refer*to the provision of Section 23(2) of the Indian .
This sub section provides that: "(2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have uncondition ally appropriated the goods to the contract." In the instant case, in view of the terms and conditions of the contract embodied in clause 11 of the Schedule of acceptance of tender regarding the place of delivery 'F.O.R. Jodhpur ', the property in the goods passed immediately on from the seller after delivering the goods and loading the same in the railway wagons at Jodhpur for transmission to the buyer, the consignee, without reserving any right of disposal.
The seller is deemed to have unconditionally appropriated the goods to the contract only under section 26 of the said Act, the goods remained at seller 's risk until the property therein is transferred to the buyer.
As stated earlier that the property in goods has been transferred to the buyer by the seller by delivery of the goods and loading the same at Jodhpur in railway wagons.
In this connection reference may be made to Section 39(1) of said Act.
Consid ering the aforesaid provisions of The as well as the terms and conditions of delivery i.e. 'F.O.R. Jodhpur ' the irresistible conclusion that follows is that the property in the goods together with the risk passed from the seller to the buyer i.e. from consignor to the consignee as soon as the goods were loaded in the railway wagons at Jodhpur as per the terms of delivery i.e.F.O.R. Jodhpur.
Therefore, the finding of the Trial Court that the risk throughout ramained with the appellant until the goods were actually delivered to the Commandant, C.O.D., Kanpur is wholly wrong and illegal.
The further finding of the Trial Court that the risk was governed with the condition No. 4(1) of the Schedule of Acceptance of Tender and the property in the goods i.e. the tents did not pass until the same were actually delivered to the Commandant, C.O.D. Kanpur and the Commandant, C.O.D. Kanpur was not liable for loss of the tents during the period of transit by the railways is also illegal and bad.
As stated hereinbefore on considera 137 tion of the place of delivery as well as the terms of deliv ery embodied in clause 11 of the Schedule of Acceptance of Tender, the property in the goods along with the risk in the goods passed from the appellant to the respondent No. 5 when the goods were delivered and despatched by railway wagons at Jodhpur i.e. F.O.R., Jodhpur.
The consignee, Commandant, C.O.D., Kanpur is therefore, liable for the price of 224 tents which was deducted by him from the other bills of the appellant.
The findings of the Trial Court which were con firmed by the Division Bench of the High Court are, there fore, liable to be set aside and the claim of the plaintiff appellant should be decreed.
As regards the claim of interest on the unpaid price of 224 tents amounting to Rs.51,912 for the period from 1.1.1969 to 1.12.1972 @ 12% per annum, the Courts below disallowed the claim on the findings that no claim for the price of the goods had been made against the railways, nor any notice under Section 78 B of the Indian Railways Act had been served on respondent Nos. 3 and 4, and the suit was barred by limitation against the Railways.
We have already held hereinbefore that the appellant is entitled to get not only the price of the goods but also the interest thereon for not making the payment of the price of the goods within a reasonable time.
The interest @ 12% per annum was claimed by the plaintiff appellant on Rs.51,912 being the price of 224 tents for the period from 1.1.1969 to 1.12.1972.
It is appropriate to refer in this connection to the relevant provisions of Section 61(2) of the (Act 3 of 1930) which reads as follows: "61(2): In the absence of a contract to the contrary, the Court may award interest as such rate as it thinks fit on the amount of the price (a) to the seller in a suit by him for the amount of the price from the date of the tender of the goods or from the date on which the price was payable, (b) to the buyer in a suit by him for the refund of the price in a case of a breach of the contract on the part of the seller from the date on which the payment was made.
" In the instant case, undoubtedly, it has been found by the Courts below that the short delivery of 224 tents oc curred during the transmit of the said goods by the rail ways.
It is also an admitted fact that the respondent No. 5, the Commandant, C.O.D. Kanpur deducted the price of the said 224 tents from the other bills of the contractor i.e. the 138 appellant and did not pay the same The appellant has claimed interest in respect of the price of the said goods being not paid to the appellant within a reasonable time from the date of delivery of the goods i.e. for the period from 1.1.1969 to 1.12.1971.
The respondent No. 5 did not dispute the claim of the appellant in this regard.
His only plea was that in the notices under Section 80 of the Code of Civil Procedure served on the respondents the claim of interest was not made and as such the claim of interest could not be allowed.
In the case of B.B. Bose vs National Coal Trading Company, AIR 1966 (Patna) 346, the plaintiff filed a suit for recovery of price of goods sold to the defendant.
Before filing the suit the plaintiff served a demand notice on the defendant.
In the demand notice exhibit 2, no claim for interest was put by the plaintiff.
It was urged on behalf of the defendant that there was no stipulation for payment of interest in case the price remained unpaid in the contract and as such the plain tiff could not claim any interest on the unpaid amount.
This was negatived by the High Court, Patna and it was held: " . .
That is, no doubt, true, but the demand clearly was for the outstanding balance price of coal which the plaintiff had supplied to the defendant.
The supplies had been effected upto the 26th June, 1954, and in the normal course, the price ought to have been paid by the defendant within a reasonable time of the deliveries, but the payment had been delayed for nearly three years and plain tiff was obliged to institute the present suit for recovery of the price.
In such circum stances, it was within the discretion of the court to award interest to the plaintiff at a reasonable rate on the amount of the price under section 61(2) of the .
The price was undoubtedly payable when the notice of demand (exhibit 2) was served by the plaintiff upon the defendant and there can be no doubt that the rate of 6 per cent per annum which the Court awarded was a reasonable rate." Similar question cropped up for decision in the case of M/s M.K.M. Moosa Bhai Amin, Kota vs Rajasthan Textile Mills, Bhawanimandi, Raj LW 77.
In this case the plaintiff filed the suit for price of the goods delivered as well as for interest on the unpaid price.
The claim regarding interest was disallowed by the District Judge on the ground that there was no stipulation for pay ment of interest in case the price of the goods supplied remained unpaid.
It was contended on behalf of the plaintiff that even 139 in the absence of the contract, the plaintiff was entitled to reasonable interest under Section 61(2) of the .
The supply had been effected upto September 18, 1962 and in normal case the price of the goods ought to have been paid by the defendant within a reasonable time of the deliveries but the payment had been delayed for nearly a year which compelled the plaintiff to bring the suit for recovery of the price.
It has been held that in such circum stances, the lower courts should have exercised discretion in favour of the plaintiff and awarded interest on the amount of the price of the goods under Section 61(2) of the .
The High Court of Rajasthan allowed interest @ 6% per annum which was considered to be a reason able rate of interest.
On a conspectus of all the decisions referred to before as well as the provisions of Section 61(2) of the , we are constrained to hold that the plaintiff is entitled to get a decree of interest on the unpaid price from 1.1.1969 to 1.12.1971 @ 6% per annum which is consid ered to be a reasonable rate of interest, as claimed by the plaintiff appellant.
In the premises aforesaid the appeal is allowed and the judgments and the decree of the Courts below in so far as they rejected the claims regarding the price of 224 tents and interest thereon are set aside.
The plaintiff appel lant 's claim for the price of the said goods as well as interest thereon @ 6% per annum for the period from 1.1.1969 to 1.12.1971 is hereby decreed.
The appeal is thus allowed with costs quantified at Rs.4,000.
The claim for interest @ 6% per annum for the period from 1.1.1972 till date of payment of amount unpaid is allowed.
Y. Lal Appeal allowed.
| IN-Abs | The appellant is a firm dealing in the manufacture and sale of Tents and Tarpaulins at Jodhpur in Rajasthan.
It carried on a regular business of supplying these goods to defence services.
The Director General of Supplies and Dis posal invited tenders for the supply of tents and the appel lant firm submitted its tender, which was accepted.
The said contract was of two kinds of tents viz, "Flies Inner" and "Flies Outer", the agreed rate of the latter was Rs.225 per tent and the quantity was 15,000.
As per the terms of the contract, the goods were to be inspected at the premises of the appellant firm and after inspection the same were to be despatched to Commandant, C.O.D., Kanpur.
As regards the mode of payment of the price of the goods, 95% of the price was to be paid on proof of despatch of goods and production of inspection note, and 5% latter.
On October 14, 1968 one consignment of 1500 tents was despatched to C.O.D. Kanpur from Jodhpur by the appellant under Railway Receipt No. 502671 and 95% of the price was paid to the appellant.
The commandant, C.O.D. Kanpur, the consignee reported that 224 tents out of the said sale consignment had not been received at Kanpur and for that reason a sum of Rs.51,912 being the price of 224 tents was deducted from the amounts due to the appellant, under anoth er contract.
The Traffic Officer, Commandant C.O.D. had filed a claim with the railways for short delivery of 224 tents.
Despite repeated requests by the appellant for the payment of the said amount, the same was not paid to it.
As such the appellant filed a suit in Delhi High Court for the recovery of the principal amount as also for the interest thereon.
In the suit, the appellant also claimed interest on two other consignments, as its balance price i.e. 5% amount ing to Rs.24,357 was paid after a delay of 3 years and thus a sum of Rs.8,525 was claimed as interest @ 12% per annum from 1.1.69 to 1.12.71.
Thus the total claim was of Rs.74.972.
128 The defence of Respondents 1, 2 & 5 was that 224 tents were received short and as such a sum of Rs.51,912 its price was rightly deducted from the appellant 's bill.
Respondents 3 & 4 (Railways ' Officials) filed a State ment that only 11 tents were delivered short for which the admitted liability was Rs.2,475, the same having been paid to C.O.D. Kanpur by debit adjustment.
The Trial Judge by his Order dated February 12, 1982 dismissed the claim of the appellant substantially but so for as the amount of Rs.2,475 regarding the shortage of 11 tents was concerned, the same was decreed with interest.
Against the Judgment and Order of the Trial Judge, the appellant preferred an appeal before the Division Bench of the High Court and the same having been dismissed, the appellant has come up in appeal to this Court after obtain ing Special Leave.
Allowing the appeal, this Court, HELD: In view of the terms and conditions of the con tract embodied in clause 11 of the schedule of acceptance of tender regarding the place of delivery "F.O.R. Jodhpur", the property in the goods passed immediately on to the seller after delivering the goods and loading the same in the railway wagons at Jodhpur for transmission to the buyer, the consignee, without reserving any right of disposal.
[136D] On consideration of the place of delivery as well as the terms of delivery embodied in clause 11 of the schedule of Acceptance of Tender, the property in the goods alongwith the risk in the goods passed from the appellant to the Respondent No. 5 when the goods were delivered and dis patched by railway wagons at Jodhpur i.e. F.O.R. Jodhpur.
The consignee, Commandant, C.O.D. Kanpur is, therefore, liable for the price of 224 tents which was deducted by him from the other bills of the appellant.
[137A B] The plaintiff is entitled to get a decree of interest on the price from 1.1.69 to 1.12.1971 @ 6% per annum which is considered to be a reasonable rate of interest as claimed by the plaintiff appellant.
[139C] Girija Proshad Pal vs The National Coal Co. Ltd., AIR 1949 Cal.
472; The Commissioner of Sales Tax, Eastern Divi sion, Nagpur vs 129 Husenali Adamji & Co., [1959] 2 Supp.
SCR 702; B.B. Bose vs National Coal Trading Company, AIR 1966 (Patna) 346 and M/s. M.K.M. Moosa Bhai Amin, Kota vs Rajasthan Textile Mills, Bhawanimandi, Raj.
L.W. 77, referred to.
|
ivil Appeal No. 3658 of 1989.
From the Judgment and Order dated 30.3.1989 of the Patna High Court in C.W.J. No. 34 of 1989.
Pramod Swarup for the Appellants.
M.C. Bhandare (NP), A.K. Goel and Ms. Gyan Sudha Misra for the Respondents.
S.P. Kalra and Shailendra Bhardwaj for All India Insti tute of Medical Sciences.
G.L. Sanghi and A. Sharan for the Intervenor.
The Judgment of the Court was delivered by MISRA, J.
Special leave granted.
Challenge in this appeal is to the order dated 30th of March, 1989 made by the Ranchi Bench of the Patna High Court in a Writ Petition under Article 226 of the Constitution.
The High Court was moved by a set of medical graduates who are respondents before us challenging the prospectus for admission into the post graduate medical admission published by the Controller of Examination cum Additional Director, Health Services Department of Bihar for the year 1989 on the allegation that the prescription that a candidate for the purpose of getting admitted to the Post Graduate Course must complete his or her house 170 job of 12 months on or before 31st May, 1989, was contrary to the directions of this Court in the case of Dr. Dinesh Kumar & Ors.
vs Motilal Nehru Medical College, Allahabad & Ors., ; The High Court found that the time frame set by this Court in the reported order was not ad hered to in the prospectus and, therefore, allowed the writ petition by mandamus directing the State and its officers not to permit any candidate to take the Post Graduate Medi cal Test if he had not the requisite qualification of com pleting 12 months ' house job on 1st May, 1989.
It further quashed the prospectus to the extent that the cut off date of eligibility was fixed as 31.5.1989.
The State of Bihar and its Officers who were respondents in the High Court are in appeal and their main contention is that the All India Entrance Examination for Post Graduate Medical Courses held by the All India Institute of Medical Sciences was not conducted in time as fixed by this Court and intimation of the results was sent late.
It was further argued before us that several States have also not been complying with the time frame indicated by this Court in the reported order and as such the scheme formulated by the Court is not being implemented properly.
In view of such specific allegations, particularly against the examining body which has been entrusted with the work by this Court, notice was issued to the All India Institute of Medical Sciences and the Institute had entered appearance through counsel and has filed its affidavit.
In the reported order it was stated by us: "What remains now to be dealt with is the finalisation of the programme relating to the selection examination.
As already decided the selection examination shall be conducted by the All India Institute of Medical Sciences, New Delhi.
The announcement for holding of the selection examination shall be made on October 1 of every year and a full four weeks ' time would be made available to candidates for making their applications.
After the applica tions are received not later than six weeks from October 1, the same would be scrutinised and duly processed and admit caros would be issued.
Examination shall be held on the second Sunday of January.
The results of examination shall be announced within four weeks from holding of the examination.
Admis sion shall commence two weeks after the decla ration of results.
The last date for taking admission shall be six weeks from the date of the announcement of 171 results but the Head of every institution shall be entitled to condone delay upto seven days for reasons shown and grounds recorded in special cases.
The courses of study shall commence in every institution providing such study throughout the country from May 2.
Notification announcing examination, publica tion of result and allotment of place of admission (keeping preference in view and our directions regarding preference of lady candi dates in places of proximity to residence) shall be published in two successive issues of one national paper in English having large circulation in every State and at least in two local papers in the language of the State as quickly as possible.
" Obviously the relevant directions have not been followed by the examining body for the current year.
Similarly the State of Bihar did not follow the directions of this Court while drawing up its prospectus.
If the courses of study are to commence from May 2, the last qualifying date could not have been fixed as May 31, 1989.
It has been reiterated before us that several States have not been following the directions.
Instead of issuing notice to the States and Union Territories for examining the correctness of the allegations of delay and non compliance of the directions, we have thought it appropriate to indicate that everyone including the States, the Union Territories and other au thorities running Medical Colleges with Post Graduate Courses are bound by our order and must strictly follow the time schedule indicated in paragraph 6 of the order.
We have not proceeded against the defaulting authorities for viola tion of this Court 's order, hoping that there would be no recurrence of it but we would like to administer a warning to everyone that if it is brought to our notice at any time in future that there has been violation, a serious view of such default shall be taken.
We hope and trust that everyone concerned shall comply with the time frame strictly and there would be no lapse in this regard in future.
Counsel for the All India Institute of Medical Sciences has expressed regrets for what has happened and has assured us that there would be no default in future.
Counsel for the respondents has brought to our notice the position that in the previous year the State of Bihar had taken the stand that the extension was not possible in view of this Court 's directions and the State 's stand this year was to the contrary.
Counsel for the State of Bihar has regretted this position.
We find that those who had quali fied beyond the cut off date in the previous year have taken 172 examination in terms of the prospectus of this year along with the new group.
The mistake of the State in fixing a date beyond the cut off date fixed by this Court has obvi ously misled a group of candidates.
In these circumstances, we are of the view that it is in the interest of all that the mistake committed by the State of Bihar should be con doned and on the basis of the result of the selection exami nation with 31st of May, 1989, as the cut off date, admis sions for this year should be permitted.
We agree with the High Court that the view it has taken on the basis of this Court 's directions was the most appropriate one but in the special circumstances referred to above we have made a departure confined to the present year only.
The appeal is disposed of with these directions.
N.P.V. Petition disposed of.
| IN-Abs | In a Writ Petition filed before the High Court, the respondents, a group of medical graduates, challenged the prospectus for admission to the post graduate medical, courses, for the year 1989, which prescribed 31st May, 1989 as cut off date of eligibility, as contrary to the direc tions of this Court in Dr. Dinesh Kumar & Ors.
vs Motilal Nehru Medical College, Allahabad & Ors., ; Finding that the timeframe set by this Court was not adhered to, the High Court quashed the prospectus to the extent that the cut off date of eligibility was fixed as 31.5.1989.
In the appeal before this Court, the appellants contend ed that as the All India Entrance Examination held by the All India Institute of Medical Sciences was not conducted in time, as fixed by this Court and intimation of the results was sent late, the scheme formulated by the Court was not being implemented properly.
The examining body, in its affidavit, expressed, regrets and assured that there would not be any default in future.
Disposing of the Writ Petition, this Court, HELD: The relevant directions of this Court have not been followed by the examining body for the current year.
Similarly, the State did not follow the directions while drawing up its prospectus.
If the courses of study were to commence from May 2, the last qualifying date could not have been fixed as May 31, 1989.
Everyone including the States, the Union Territories and other authorities running Medical Colleges with Post Graduate Courses are bound by this Court 's order and must strictly follow the time schedule laid down therein in this regard.
A serious view would be taken if any violation of this Court 's 169 order is brought to notice in future.
Everyone concerned should comply with the time frame strictly and there should be no lapse in this regard in future.
[171C; E F] The mistake of the State in fixing a date beyond the cut off date fixed by this Court has misled a group of candidates.
It is in the interest of all that this mistake should be condoned and admissions for this year should be permitted on the basis of the result of the selection exami nation with 31st of May, 1989, as cut off date.
This depar ture is confined to the present year only.
[172A B] Dr. Dinesh Kumar & Ors.
vs Motilal Nehru Medical Col lege, Allahabad & Ors.
|
iminal Appeal No. 76 of 1958.
Appeal by special leave from the judgment and order dated March 4, 1958, of the Patna High Court in Criminal Appeal No. 50 of 1958 and Death Reference No. 3 of 1958 arising out of the judgment and order dated January 18, 1958, of the Court of the 1st Additional Judicial Commissioner of Chotanagpur at Ranchi in Sessions Trial No. XC of 1957.
B. R. L. Iyengar, for the appellant.
1338 R. H. Dhebar for the respondent.
September 19.
The Judgment of the Court was delivered by section K. DAS J.
This is an appeal by special leave.
The appellant is Ratan Gond, aged about 28 years.
Tried on a charge under section 302, Indian Penal Code, he was convicted and sentenced to death by the learned Additional Judicial Commissioner of Ranchi in the State of Bihar.
The learned Additional Judicial Commissioner submitted the record to the High Court of Patna for confirmation of the sentence, as he was required to do under the provisions of section 374 of the Code of Criminal Procedure.
Ratan Gond also preferred an appeal to the High Court.
The appeal and the reference under section 374, Criminal Procedure Code, were heard together by a Division Bench of the said High Court and it accepted the reference and dismissed the appeal thereby confirming the sentence of death passed upon the appellant.
On May 19, 1958, the appellant prayed for and obtained special leave and then filed the present appeal in pursuance of the leave granted to him.
The facts lie within a, narrow compass.
The appellant was a resident of village Urte, Tola Banmunda, police station Kolebera in the district of Ranchi.
One Mst.
Jatri (P. W. 2), who was a widow, also lived in the same village and same Tola.
She had two young daughters, one named Baisakhi and the other named Aghani.
Baisakhi was about nine years old and Aghain about five years old.
The subject of the present appeal is the murder of the girl Baisakhi.
On a Tuesday, May 7, 1957, the two sisters, Baisakhi and Aghani, had gone out to Pluck wild berries in a hilly jungle situated at a short distance from their village, the distance being estimated variously by various witnesses from 300 yards to a little more than a mile.
We may give here some idea of the location of the village and the hilly area near it.
According to the evidence of Rup Ram (P. W. 1), uncle of the two girls, Tola Banmunda consists of about 40 houses.
At a short distance to the north, there is a hilly tract known 1339 as Amtis Chua hill.
Close to the hill, there are jungles on two sides and there is also a spring or well in between the two strips of jungles.
On Tuesday, Mst.
Jatri (P. W. 2) had herself gone to pluck berries known as Keond berries at another place.
When she left the house in the morning, her two daughters were in the house.
Jatri came back at about noon and found Aghani alone in the house.
She enquired from Aghani about the elder sister Baisakhi and Aghani made certain statements to her mother as well as to other persons later that day and the next day.
Aghani, however, died within a few months of the occurrence, before her statements could be recorded in a judicial proceeding.
The courts below have referred to, and the High Court has relied on, the statements of Aghani.
One of the points urged on behalf of the appellant is that the statements of Aghani were not admissible in evidence either under section 32 or section 33 of the Evidence Act (I of 1872).
As we are of the view that this contention is correct, we are omitting all reference to the statements of Aghani in stating the facts of the case.
When Baisakhi did not return to the house even in the evening Mst.
Jatri went in the direction of Amtis Chua hill, but could not find Baisakhi.
Next morning, information was sent to Rup Ram (P. W. 1) about the fact that Baisakhi was missing, Rup Ram having gone to village Targa for making tiles on the preceding Monday.
Rup Ram came back to Banmunda on Wednesday, May 8, 1957.
In the meantime certain other villagers including Dalpat Sai (P. W. 4), mukhia of the village, and Sohar (P. W. 5), chaukidar of the village, had been informed that Baisakhi was missing.
Aghani took Rup Ram and these villagers to the foot of Amtis Chua hill and showed them the spring or well.
This village party found the headless body of Baisakhi at a short distance from the aforesaid spring.
The body was identified by Mst.
Jatri and others as the dead body of Baisakhi by reason of the white saree of yellow border which Baisakhi was wearing, five red " churis " round the right hand, two red " churis " round the 170 1340 left hand, one " bera " round the left hand, one brass ring on the left finger and certain beads of a " mala " which Baisakhi had put on.
When the headless dead body was discovered and identified, Dalpat Sai left some of his companions to guard the dead body and went to the house of the appellant, but did not find him there.
He then sent Rup Ram and the chaukidar to the police station which was at a distance of 43 miles.
He also sent some volunteers of the Gram Panchayat to look for the appellant.
On Thursday, May 9, 1957, at about 10 a.m., Rup Ram and the chaukidar appear ed at the police station of Kolebera and Rup Ram gave an information, which was recorded by the Assistant Sub Inspector of Police.
This information referred to the statements of Aghani and to the other facts which had been discovered by that time.
On the same Thursday, the appellant was found in the house of his sister 's husband in another village called Karmapani.
The appellant was caught hold of by the village volunteers and brought back to village Banmunda on Thursday.
At about 1 or 2 p. m. on that day, he was questioned by Dalpat Sai (P.W.4) mukhia of the Gram Panchayat, Krishna Chandra Singh (P. W. 7), Sarpanch of the Gram Panchayat, and Praduman Singh (P. W. 13), one of the panches of the Panchayat, and it is stated that the appellant made an extra judicial confession to these persons to the effect that he had killed the child Baisakhi for greed of money, as a contractor who was building a, bridge on the Lurki river had offered Rs. 80 for a human head.
The appellant was detained by the aforesaid village authorities till the Assistant Sub Inspector of Police arrived at the village on Friday, May 10, 1957.
The Assistant Sub Inspector arrived at about 3 a.m.
He was taken to the place where the headless dead body of Baisakhi lay.
The Assistant Sub Inspector made an inquest on the dead body and seized the articles found there including 29 beads of the " mala " ' which Baisakhi was wearing and which lay scattered near the place.
The Assistant Sub Inspector of Police arrested the appellant, who was already in custody of the mukhia.
The house of the 1341 Weapon called " balua " was found in the north facing room of the house, between a wall and the roof.
This " balua " had certain blood stains on it, but the stains having disintegrated, the origin of the blood could not be determined.
It is stated that on being questioned where the head of the girl Baisakhi was, the appellant took the Assistant Sub Inspector of Police and some of the villagers to a place at a short distance of 100 yards or so from where the dead body was.
At that place were discovered some strands of bloodstained hair which were seized by the Assistant SubInspector of Police.
The strands of hair looked like the hair on the bead of a female person and the Chemical Examiner later reported that the strands of hair were stained with human blood and "appeared to be scalp hair of human (female) origin morphologically ".
After further investigation by two different Sub Inspectors of Police, the appellant was sent up for trial.
There was an enquiry by a Magistrate of the first class, who, at the conclusion of the enquiry, committed the appellant for trial by the Court of Session.
The defence of the appellant was that he had been falsely implicated.
He denied that he killed Baisakhi near the jungle at Amtis Chua hill.
He further denied that he had made any extra judicial confession to Dalpat Sai, Krishna Chandra Singh and Praduman Singh.
He denied that any blood stained weapon was found in his house by the Assistant Sub Inspector of Police and he also denied that he was absent from his village or was found in the house of his sister 's husband in village Karmapani.
The learned Additional Judicial Commissioner, as also the High Court, rightly stated that the case against the appellant rested on (a) circumstantial evidence and (b) the extra judicial confession stated to have been made by the appellant.
The courts below concurrently held that the extra judicial confession was voluntary and it did not appear to them to have been caused by any inducement, threat or promise having reference to the charge made against 1342 he appellant so as to attract the provisions of section 24 of the Evidence Act.
They further held that the confession, though later denied by the appellant, was sufficiently corroborated by the circumstantial evidence and the confession and the circumstantial evidence read together led to only one reasonable inference ', namely, that the appellant had killed the child Baisakhi in the hope of getting some money.
It is not disputed that in an appeal filed by special leave under article 136 of the Constitution it is not normally open to the appellant to raise questions of fact or to ask for interference by us with concurrent findings of fact, unless the findings are vitiated by errors of law or the conclusions reached by the courts below are so patently opposed to well established principles as to amount to a miscarriage of justice.
Mr. Iyengar for the appellant has urged before us three main points.
Firstly, he has submitted that the extra judicial confession said to have been made by the appellant is not admissible in evidence.
Secondly, he has contended that even if admissible, there is no guarantee of its truth.
Thirdly, he has submitted that even with regard to circumstantial evidence, the courts below have relied on inadmissible evidence, with particular reference to the statements of Aghani, to establish one of the circumstances, namely, that the appellant was last seen with Baisakhi before her murder.
His argument is that the other circumstances established against the appellant, namely, the recovery of the blood stained " balua ", of the blood stained hair and the absence of the appellant from the village on Wednesday, do not carry the case against the appellant far enough so as to complete the chain and make them inconsistent with any hypothesis other than the guilt of the appellant.
He has submitted that in considering the circumstantial evidence in this case the courts below have departed from the well established principle that the circumstances affirmatively proved against an accused person must be of such a character as to be consistent only with his guilt and inconsistent with any reasonable hypothesis of his innocence.
1343 Before we examine the aforesaid submissions, it is necessary to state that the finding of the courts below that Baisakhi was murdered some time between May 7 and May 8, 1957, and that the headless dead body which was discovered on May 8, 1957, was correctly identified as the dead body of the girl Baisakhi has not been challenged before us.
The postmortem examination on the dead body was held on May 11, 1957, and the ante mortem injuries which the doctor found were (1) complete severance of the head from the neck,(2)one incised wound on the left shoulder and (3) anincised wound on the left upper arm.
The doctor 's evidence makes it quite clear that the unfortunate girl was brutally done to death.
The identification of the headless dead body also rests on a very sure foundation.
We have already referred to the clothing, ring, beads, etc., from which the identity of the dead body was established.
The murder of the girl Baisakhi having been clearly established, the courts below rightly applied their mind to a consideration of the principal question in the case, namely, if the appellant was responsible for that murder.
This brings us to a consideration of the submissions made on behalf of the appellant.
We may say at the very outset that we agree with learned counsel for the appellant that the statements of Aghani, who unfortunately died within a few months of the occurrence before her statements could be recorded in a judicial proceeding, were not admissible in evidence either under section 32 or section 33 of the Evidence Act.
Section 33 is clearly out of the way because Aghani made no statements in a judicial proceeding or before any person authorised by law to take her evidence.
The only relevant clause of section 32 which may be said to have any bearing is cl.
(1) which relates to statements made by a person as to the cause of his death or as to any of the circumstances of the transaction which resulted in his death.
In the case before us, the statements made by Aghani do not relate to the cause of her death or to any of the circumstances relating to her death ; on the contrary, the statements relate to the death of her sister.
We are, therefore, of the opinion 1344 that the statements do not come within section 32(1) of the Evidence Act and, indeed, Mr. Dhebar appearing on behalf of the State, has conceded that section 32(1) does not apply to the statements of Aghani.
Excluding the statements of Aghani, what then is the evidence against the appellant ? Firstly, we have the extra judicial confession.
Then, we have the following circumstances which the courts below have held to have been clearly established against the appellant, namely, (a) recovery of the blood stained " balua " from a room of the appellant, (b) recovery of the blood stained strands of hair from a place pointed out by the appellant and (c) disappearance of the appellant from the village immediately after the murder and his arrest in village Karmapani in circumstances mentioned by Maheshwar Sai (P. W. 6).
Lastly, there is another adverse circumstance which arises out of the total denial by the appellant of the recovery of the blood stained " balua " and of his arrest in village Karmapani.
As to the extra judicial confession, two questions arise: is it voluntary, and, if so, is it true ? The appellant denied at a later stage that he had made a confession, but it is not necessary to consider in this case the abstract question as to whether, as against its maker, a conviction can be based on a confession which is found to be voluntary and true.
It is enough to state that usually and as a matter of caution, courts require some material corroboration to such a confessional statement, corroboration which connects the accused person with the crime in question, and the real question which falls for decision in the present case is if the circumstances proved against the appellant afford sufficient corroboration to the confessional statement of the appellant, in case we hold that the confessional statement is voluntary and true.
Let us first see if the confession was voluntary.
Section 24 of the Evidence Act states: "A confession made by an accused person is irrelevant in a criminal proceeding, if the making of the confession appears to the Court to have been caused by any inducement, threat or promise having reference to the charge against the accused person, 1345 proceeding from a person in authority and sufficient, in the opinion of the Court, to give the accused person grounds which would appear to him reasonable for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him ".
Mr. Iyengar has referred us to the evidence of the three witnesses, Dalpat Sai (P.W. 4), Krishna Chandra Singh (P. W. 7), and Praduman Singh (P. W. 13), Mukhia, Sarpanch and Panch respectively of the Gram Panchayat.
We agree with Mr. Iyengar that having regard to the provisions of the Bihar Panchayat Raj Act (Bihar VIII of 1948) the aforesaid three persons can be said to be persons in authority within the meaning of section 24.
The question, however, is are there any circumstances which tend to show that the making of the confession appears to have been caused by any inducement, threat or promise, having reference to the charge against the appellant and proceeding from any one of the aforesaid three persons and sufficient in the opinion of the court to give the appellant grounds which would appear to him to be reasonable for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him.
The courts below have categorically answered this question in the negative.
We have examined the evidence of the three witnesses mentioned above.
That evidence shows that the appellant was brought to the house of Dalpat Sai (P. W. 4) at about 10 a.m. on Thursday (May 9, 1957).
He was questioned for some time; Dalpat Sai (P.W. 4) said that he was questioned for about two hours.
The evidence of Dalpat Sai makes it clear, however, that it was not a process of continuous questioning for two hours.
Ratan was given some food and then, when he was questioned, he kept quiet for some time and then said that he had killed the girl because the contractor who was building the bridge on river Lurki had offered to pay a sum of Rs. 80 for a human head.
Having examined the evidence of the three witnesses who prove the extra judicial confession, we do not come to 1346 a conclusion different from the one arrived at by the courts below.
Mr. Iyengar referred us to the observations made by Cave J. (as he then was) in The Queen vs Thompson(1).
That was a case in which a prisoner was tried for embezzling the money of a company.
It was proved at the trial that, being taxed with the crime by the Chairman of the company, the prisoner said that he had taken the money.
The Chairman stated that at the time of the confession, no threat or promise was made, but he said to the prisoner 's brother, " It will be the right thing for your brother to make a statement " and the court drew the inference that the prisoner, when he made the confession, knew that the Chairman had spoken these words to his brother.
In these circumstances, the learned Judge said: " I prefer to put my judgment on the ground that it is the duty of the prosecution to prove, in case of doubt, that the prisoner 's statement was free and voluntary, and that they did not discharge themselves of this obligation ".
He further added that there were always reasons to suspect those confessions which were supposed to be the offspring of penitence and remorse, and which nevertheless were repudiated by the prisoner at the trial.
It is true that in the case under our consideration the appellant denied to have made the confession which he had made earlier; but we find no such circumstances as were present in Thompson 's case (1), such as the statement of the Chairman of the company to the brother of the prisoner.
It is true that the appellant was brought back from village Karmapani by members of the village volunteer force.
He was taken to the village authorities to whom he made a confession.
The evidence does not even remotely suggest that any threat, promise or inducement was made.
The only circumstance relied on by Mr. Iyengar is that it took about two to three hours from the time when the appellant was brought to the house of the mukhia up to the time when he made his confessional statement.
Mr. Iyengar has relied on In re Kataru Chinna Papiah (2), where a Superintendent of Police questioned the accused person for four hours at night (1) , 18.
(2) A.I.R. 1940 Mad.
136. 1347 and again for two hours in the morning.
It was pointed out that this was a flagrant violation of the relevant rule in the instructions issued to police officers.
All that we need say is that there was no such questioning in the present case.
Another decision to which Mr. Iyengar has invited our attention is Hashmat Khan vs The Crown (1).
We do not think that that decision is of any assistance to Mr. Iyengar.
It was held therein that a mere possibility of there having been some inducement is not sufficient to attract section 24 of the Evidence Act; but only when it appears to the court that the confession has been made as a result of some inducement held out by a person in authority that it becomes irrelevant.
That was a case in which the accused person, when questioned, was told that it would be better for him if he told the truth; it was held that this amounted to an inducement within the meaning of section 24 of the Indian Evidence Act.
As to the truth of the confession, nothing has been brought to our notice which would show that the confessional statement contained any untrue or inaccurate statement.
It is true that the prosecution has given no evidence to show that the contractor who was building the bridge over river Lurki, or for that matter, any contractor, had offered a sum of Rs. 80 for a human head.
In the very nature of things, it is not expected that any contractor, even if he had made such an offer, will admit having done so, and we do not think that the prosecution can be asked to give evidence in support of any such offer.
We recognise that in ordinary and normal circumstances nobody asks for a human head for building abridge; nor is it usual normally for a person to accept such an offer, even if it is made.
We must not forget, however, that we are dealing in this case with aboriginal people who are ,still steeped in superstition.
It is worthy of note that Maheshwar Sai (P. W. 6) said that when the appellant was taken in custody in village Karmapani, he did not even enquire why he was arrested; on the contrary, he offered Rs. 20 and a he goat to the witness and (1) Lah.
171 1348 implored the latter to save him.
Such a statement was again of an incriminatory nature, and if the evidence of Maheshwar Sai is correct, the statement was absolutely voluntary and was not the result of any questioning at all.
For these reasons, we do not think that the reference to an offer of Rs. 80 for a human head in the confessional statement of the appellant necessarily destroys its veracity.
There can be no doubt that the recovery of the blood stained " balua " (even though the origin of the blood could not be determined owing to disintegration) and of the blood stained strands of female hair at the place pointed out by the appellant, are circumstances clearly proved against the appellant.
These circumstances may not be sufficient by themselves to prove that the appellant was the murderer, but there is no doubt that they lend assurance to the confes sional statement of the appellant, assurance of a kind which connects the appellant with the crime in question.
This is a case in which the confession and the circumstances have to be read together.
There is the additional circumstance that soon after the murder the appellant disappeared from his village and when arrested in another village, his conduct was such as to show that he was suffering from a guilty mind.
On the top of all this, there is the total denial by the appellant that any blood stained " balua " was recovered from his house or that he disappeared from the village after the murder.
It is unfortunate that the learned Additional Judicial Commissioner did not ask the appellant to explain the recovery of the blood stained strands of female hair.
That was an important circumstance against the appellant and when the learned Additional Judicial Commissioner examined the appellant under the provisions of section 342 of the Code of Criminal Procedure he should have asked the appellant to explain this circumstance.
We take this opportunity of inviting the attention of the learned Additional Judicial Commissioner to this very serious omission.
Another omission on the part of the learned Additional Judicial Commissioner is his failure to comply with the provisions of section 287 of the Code of 1349 Criminal Procedure.
The examination of the accused recorded by or before the Committing Magistrate does not appear to have been tendered by the prosecutor in the present case; at least we do not find any such statement in the printed paper book.
We are satisfied, however, that no prejudice has been caused.
The Assistant Sub Inspector of Police who gave evidence of the recovery of blood stained hair from a place pointed out by the appellant was not even cross exa mined on the point.
The defence of the appellant was a total denial and even if the recovery of the blood stained strands of female hair was put to the appellant, he would undoubtedly have denied such recovery as having been made at his pointing out the place.
To sum up: we see no reasons to differ from the conclusion arrived at by the courts below that the confessional statement made by the appellant was voluntary and admissible; there are no reasons for thinking that it was not true.
The circumstances clearly proved against the appellant, even excluding the circumstance which rested on the statements of Aghani, afford sufficient corroboration to the confession of the appellant, though denied at a later stage, and the corroboration is of such a nature as to connect the appellant with the murder of the child Baisakhi.
The only reasonable inference which can be drawn from the confession read with the circumstantial evidence is that the appellant killed the child Baisakhi between May 7 and 8, 1957, in the hope of getting some money.
Whether that hope was realised or not is more than we can tell.
The head was never recovered, but there can be no doubt that the dead body was correctly identified to be the dead body of the child Baisakhi.
As to the sentence, in view of the circumstances in which the child Baisakhi was killed, we do not think ,that we shall be justified in interfering with it in the present case.
For these reasons, we hold that the appeal is without merit and must be dismissed.
Appeal dismissed.
| IN-Abs | The appellant was charged with the murder of a girl Baisakhi.
On information given by Aghani, younger sister of the deceased, the headless body of the deceased was re covered.
The appellant absconded but was found in another village and was brought back by the village volunteer force.
On interrogation by the Mukhia, Sarpanch and a panch of the Gram Panchayat the appellant made an extrajudicial confession.
A blood stained cutting weapon was recovered from a room of the appellant.
At his instance some strands of hair were recovered from a place at a short distance 1337 from the place where the dead body had been recovered, which were stained with human blood and appeared to be scalp hair of a human female.
The appellant was convicted and sentenced to death and the High Court upheld the conviction and sentence.
The Courts took into consideration the statements made by Aghani to her mother and to other persons that the deceased was last seen in the company of the appellant.
Aghani, however, died before her statement could be recorded in a judicial proceeding.
It was contended by the appellant that the statements of Aghani were inadmissible, that the extra judicial confession was not relevant and that the circumstantial evidence was not sufficient to establish the guilt of the appellant.
Held, that the statements of Aghani were not admissible either under section 32 or section 33 Of the Evidence Act.
Section 33 had no application as her statement was not made in any judicial proceeding or before any person authorised by law to record the same.
The statements did not relate to the cause of her death or to any circumstances relating to her death but related to the death of her sister and did not fall under cl. 1 of section 32 which was the only clause which could have any bearing on the question.
Held, further, that though having regard to the Bihar Panchayat Raj Act, the Mukhia, Sarpanch and panch of the Gram Panchayat to whom the extra judicial confession was made were persons in authority within the meaning Of section 24 Evidence Act, no threat, promise or inducement for making the confession was proved.
The facts that the appellant was brought back to the Village by the village volunteer force and that it took two or three hours before he made the confession do not indicate that the confession was not voluntary.
There was nothing to show that the confession contained any untrue or inaccurate statement.
The circumstantial evidence may not be sufficient by itself to prove the guilt of the appellant, but it afforded sufficient corroboration to the confession and the corroboration was of such a nature as to connect the appellant with the murder.
|
Criminal Appeal No. 702 of 1989.
From the Judgment and Order dated 4.7.1988 of the Andhra Pradesh High Court in W.P. No. 8610 of 1988.
M.C. Bhandare and Ms. C.K. Sucharita for the Appellant.
Ganesh, section Muralidhar, T.V.S.N. Chari and Raghav for the Respondents.
109 The Judgment of the Court was delivered by K.N. SAIKIA, J.
Special leave granted.
This appeal is from the Judgment and Order of the High Court of Andhra Pradesh at Hyderabad dated 4.7.1988 passed in Writ Petition No. 86 10 of 1988.
The appellant states that he enjoys popularity in his area and that he previously held several important positions in the Cuddapah District of Andhra Pradesh, such as organis ing Secretary of the Andhra Pradesh Congress Committee for several years, a Municipal Councillor from 1982 to 1986 and a Vice Chairman of Cuddapah Municipal Council.
According to him in December 1985 he was elected as a Chairman of the Cuddapah Municipal Council for its residuary term and in March 1987 he was elected to the Municipal Council as an independent candidate defeating the Telugu Desam and Con gress (I) candidates by a large margin.
It is his case that the local leadership of the ruling Telugu Desam Party.
having failed to woo him into their fold he was pressurised through the Excise and Police authorities foisting false cases upon him.
On 13.11.1987, the police having summoned him to the Police Station for taking his photograph as was done in case of criminals, he moved the Andhra Pradesh High Court by Writ Petition No. 79038 of 1987 and the High Court was pleased to issue directions as prayed for, by its order dated 17.12.1987.
Thereafter the excise authorities are stated to have registered some cases against the appellant who applied for and was granted bail on 10.5.1988 rejecting the Excise authorities ' prayer for custody.
Scenting a move to detain the appellant under the provisions of the Andhra Pradesh Prevention of Dangerous Activities of Bootleggers, Dacoits, Drug Offenders, Goondas, Immoral Traffic Offenders and Land Grabbers Act, 1986, hereinafter referred to as 'the Act ', the appellant filed Writ Petition No. 8610 of 1988 on 6.6.1988 in the Andhra Pradesh High Court averting, inter alia, that the successive actions initiated against him were a part of political vendetta.
A learned Single Judge on 8.6.1988 was pleased to direct interim the respondents not to take the appellant into preventive custody for a period of 15 days on basis the cases already registered.
However, on 10.6.1988 the appellant was served the detention order in S.No.
7/1988 dated 3.6.1988 as well as the grounds of deten tion; and he was taken into custody and detained in Secun derabad jail, but was released after four days.
The deten tion order stated that with a view to preventing him from acting in a manner prejudicial to the maintenance of public order, it was 110 necessary to make an order directing that "he shall be de tained.
" The grounds of detention as served upon the appel lant contained altogether 13 grounds ranging a period from 23.11.1974 to 7.5.1988.
The appellant filed on 25.6.1988 in his writ petition a miscellaneous petition being W.P.M.P.S.R. No. 51830, as an additional affidavit, stating, inter alia, that the writ petition was filed by him seeking a direction to the re spondents to refrain from making an order detaining him under the provisions of the Act and the same was admitted and interim direction issued.
But thereafter the detention order in S.No. 7 of 1988 dated 3.6.1988 was served on him on 10.6.1988 and, therefore, he submitted the additional affi davit with reference to the impugned order of detention.
He assailed therein the grounds of detention as vague, stale, non existent and, in any case, irrelevant bearing no reasons for the decision that his detention was necessary to prevent him from acting in a manner prejudicial to the maintenance of public order.
He also assailed the order on grounds of non application of mind by the respondent NO. 2 and absence of nexus between the grounds and maintenance of public order and of non disclosure of any rational basis for formation of such an opinion.
He refuted and denied each of the 13 grounds and prayed that the writ petition be amended by substituting the prayer so as to issue a writ, order or direction and more particularly one in the nature of writ of mandamus declaring the order of the Collector and District Magistrate respondent No. 2 herein in S.R. No. 7 of 1988 dated 3.6.1988 made under Act 1 of 1986 as illegal and void and to pass such other orders as are necessary in the inter ests of justice.
Admittedly no specific order was passed on this miscellaneous petition.
It appears that a Counter Affidavit was filed in the writ petition on behalf of the respondents and the appellant filed a reply affidavit there to.
A Division Bench of the High Court of Andhra Pradesh on reference by the learned Single judge heard the writ peti tion analogously with another writ petition and observing, inter alia, that as an order of detention was made even before the writ petition was filed, held that the prayer in the writ petition had become infructuous; and that there were no extraordinary or special reasons to depart from the normal rule, namely, that in such a case the appellant should first surrender and move for a writ of habeas corpus, and accordingly dismissed the writ petition.
Mr. M.C. Bhandare, the learned counsel for the appellant submits, inter alia, that the High Court erred in dismissing the appellant 's 111 writ petition holding that there were no extraordinary circumstance, or special reasons to depart from the normal rule that the appellant in such a case should first surren der and then move a petition for habeas corpus thereby refusing to grant relief to the appellant against infringe ment of his fundamental right to liberty; and that the grounds of detention were vague, irrelevant, stale and non existent having no relation to the stated purpose of deten tion, and there was mala fide exercise of power and complete non application of mind on the part of the detaining author ity for which the grounds of detention ought to have been rejected and the detention order set aside.
Counsel relies on a decision of the Bombay High Court reported in 1981(1) Crl.
L.J. 767 and one of the Gujarat High Court since re ported in AIR 1978 Gujarat 253.
Counsel further submits that the detention order having not been approved by the State Government as required under section 3(3) of the Act and the appellant 's case having not been placed before the Advisory Board as required under section 10 the detention order ceased to be in force and hence is liable to be quashed.
Mr. M.S. Ganesh, the learned counsel for the respondents submits that the detention order having been passed before the writ petition was filed, the High Court was right in dismissing the same following the court 's practice and procedure; and that there were no extraordinary or special reasons to depart from the normal rule inasmuch as granting relief at such a stage would defeat the very purpose of the Act.
Counsel however, could not deny that the detention order was not approved by the State Government and that the appellant 's case was not placed before the Advisory Board.
The first question to be decided therefore, is whether the High Court was right in dismissing the writ petition holding that the rule or practice of the High Court in such a case was to interfere only where there were extraordinary or special reasons and otherwise to leave the appellant to first surrender and then move a petition for habeas corpus.
From a perusal of the Judgment of the High Court it appears that it analysed the question of maintainability of the writ petition from two view points, namely, of the High Court 's power, and the High Court 's rule or practice.
The High Court correctly analysed the power of the High Court to interfere in such a case under Article 226 of the Constitu tion of India concluding that the High Court had power to interfere.
While tracing the High Court 's evolving rule or practice, the Bench took the view that it was but appropri ate and proper that the 112 court evolved and followed a practice and procedure where it would not ordinarily entertain a challenge to a preventive detention unless the person concerned submitted himself to the order and not to encourage persons against whom orders of preventive detention were made by the competent authority under a valid enactment to avoid the process of law and at the same time seek the protection of law from this Court.
Relying on several decisions of its own, the Court observed: "There is no presumption that any and every order of detention is bad.
The normal rule shall therefore be "surrender to the order first and then approach this Court.
" Only in extraordinary cases, where it appears that the State is exercising its power under a preven tive detention statute for an oblique purpose, or in an outrageous and/or vindictive manner, or where the order of detention is ex facie invalid, would this Court depart from this rule.
Now, what would be such extraordi nary case cannot and, indeed, should not be defined or specified.
It is better left to the sound judgment and decision of this Court.
" The High Court on facts of the appellant 's writ peti tion, observed that the allegations that the entire adminis trative machinery was being misused by the local MLA who happened to be a Cabinet Minister to hound the appellant and that the Collector and District Magistrate was being used as a tool were not correct and, therefore, said: "Once we are of the opinion that there are no extraordinary or special reasons to depart from the normal rule, we will not look into or examine the relevance or correctness of the grounds as we would do in a writ of habeas corpus.
" The writ petition was accordingly dismissed.
Mr. Bhandare submits that when the appellant 's fundamen tal right to liberty was threatened through the machination of a detention order, he approached the High Court for protection and when despite the interim order of the High Court his fundamental right was violated by detaining him, after serving the order of detention on vague, stale, irrel evant and non existent grounds, though he was released after four days, he ought not to have been denied relief on the ground of there having evolved a practice or procedure of the Court not to interfere in such a case except where there were extraordinary or special reasons 113 and to leave the appellant to surrender and then move a petition for habeas corpus.
We find force in this submis sion.
As the detention order was already passed and served and the detenu was already taken into custody during the pendency of the writ petition, these subsequent events having been brought to the notice of the court by a Misc.
application in the form of an Additional Affidavit the same ought to have been dealt with by the High Court.
In Jayantilal Bhagwandas Shah vs The State of Maharash tra, , the challenge was directed towards orders of detention passed under the , but the intended detenus under those orders were not in detention.
The State having raised a preliminary objec tion to the maintainability of the petition on the ground that the habeas corpus jurisdiction under article 226 of the Constitution was exercisable only to examine the legality of a detention where there was a detention and in no other case, a Division Bench of the Bombay High Court took the view that though the writ of habeas corpus might be issued only when there was actual illegal detention, that was not to say that an illegal order of detention could not be successfully challenged.
In para 11 of the report, the Court held: "article 226 is couched in language wide enough to protect a person against an illegal inva sion of his fight to freedom by protecting him while still free and by regaining his freedom for him if he has already been wrongfully detained.
We cannot countenance and do not accept the Advocate General 's submission that the High Courts are impotent to give relief against the prospect of illegal detention and must first require the intended detenu to surrender to the illegal detention.
We are satisfied that the High Courts may under the provisions of article 226 issue a direction, order and writ in the nature of mandamus and/or certiorari quashing an illegal order of detention and may by direction, order and writ in the nature of prohibition enjoin the person threatening the illegal detention from execut ing the threat.
" Accordingly the Court held that it would intervene to strike down an illegal order of detention.
If the court could in matters of personal liberty intervene on the strength of a mere post card, they surely could intervene on the strength of a petition, though they may seek the 114 wrong relief or be phrased in the wrong form.
The position of a person who is actually under illegal detention and of a person who is in imminent jeopardy of illegal detention are not far dissimilar.
We are inclined to agree with this view as we feel that refusal to interfere in such a case may amount to denial of the fundamental right itself.
A Full Bench of the Gujarat High Court in Vedprakash Devkinandan Chiripal vs State of Gujarat, since reported in AIR 1987 Gujarat 253 where the petitioner was said to be detained under the provisions of Prevention of Blackmarket ing and maintenance of Supply of Essential Commodities Act, 1980 and the petitioner having absconded, a notification was issued in the official gazette as provided under section 7(1)(b) of the said Act and the person moved the petition under article 226 of the Constitution of India praying a writ of habeas corpus or a writ of mandamus, the question was whether the petition would be maintainable before the detenu had been served with order of detention and had been de tained in custody, answered the question in the affirmative.
Relying on the decisions in A.K. Gopalan vs State of Madras, ; and Addl.
District Magistrate, Jabalpur vs Shivakant Shukla; , , the Full Bench took the view "that before detention, if writ of mandamus is moved for challenging unauthorised detention order which is al ready passed on the ground that the order is a nullity because it is passed (a) by an incompetent person or (b) it is a mala fide order or (c) it is contrary to the legal procedure prescribed for passing such order, or (d) it is otherwise a nullity for any other reason, for example, passed against a wrong person, it cannot be said that such challenge would be per se not maintainable.
" We are inclined to agree inasmuch as it would be a challenge to an existing order of detention which is posing an imminent threat to a fundamental right of the named person guaranteed under article 21.
There could, therefore, be no reason why in such an exceptional and rare case, detention order already made, and either served or yet to be served, and the person is still free could not be legally brought under challenge.
Article 226(1) of the Constitution of India notwith standing anything in Article 32, empowers the High Court throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government within those territo ries directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other pur pose; and it also envisages 115 making of interim orders, whether by way of injunction or stay or in any other manner in such a proceeding.
Article 21 giving protection of life and personal liberty provides that no person shall be deprived of his life or personal liberty except according to procedure established by law.
For en forcement of one 's right to life and personal liberty resort to Article 226(1) has thus been provided for.
What is the ambit of enforcement of the right? The word 'enforcement ' has also been used in Article 32 of the Constitution which provides the remedy for enforcement of fights conferred by Part III of the Constitution.
The word 'enforcement ' has not been defined by the Constitution.
According to Collins English Dictionary to enforce means to ensure observance of or obedience to a law, decision etc.
Enforcement, according to Webster 's Comprehensive Dictionary, means the act of enforcing, or the state of being enforced, compulsory execu tion; compulsion.
Enforce means to compel obedience to laws; to compel performance, obedience by physical or moral force.
If enforcement means to impose or compel obedience to law or to compel observance of law, we have to see what it does precisely mean.
The right to life and personal liberty has been guaranteed as a fundamental right and for its enforce ment one could resort to Article 226 of the Constitution for issuance of appropriate writ, ' order or direction.
Precisely at what stage resort to Article 226 has been envisaged in the Constitution? When a right is so guaranteed, it has to be understood in relation to its orbit and its infringement.
Conferring the right to life and liberty imposes a corre sponding duty on the rest of the society, including the State, to observe that fight, that is to say, not to act or do anything which would amount to infringement of that right, except in accordance with the procedure prescribed by law.
In other words, conferring the fight on a citizen involves the compulsion on the rest of the society, includ ing the State, not to infringe that right.
The question is at what stage the right can be enforced? Does a citizen have to wait till the right is infringed? Is there no way of enforcement of the right before it is actually infringed? Can the obligation or compulsion on the part of the State to observe the fight be made effective only after the right is violated or in other words can there be enforcement of a fight to life and personal liberty before it is actually infringed? What remedy will be left to a person when his right to life is violated? When a right is yet to be violat ed, but is threatened with violation can the citizen move the court for protection of the right? The protection of the right is to be distinguished from its restoration or remedy after violation.
When right to personal liberty is guaran teed and the rest of the society, including the State, is compelled or obligated not to violate that right, and if someone has threatened to violate it or its violation is imminent, 116 and the person whose right is so threatened or its violation so imminent resorts to Article 226 of the Constitution, could not the court protect observance of his right by restraining those who threatened to violate it until the court examines the legality of the action? Resort to Article 226 after the right to personal liberty is already violated is different from the pre violation protection.
Post viola tion resort to Article 226 is for remedy against violation and for restoration of the right, while pre violation pro tection is by compelling observance of the obligation or compulsion under law not to infringe the right by all those who are so obligated or compelled.
To surrender and apply for a writ of habeas corpus is a post violation remedy for restoration of the right which is not the same as restrain ing potential violators in case of threatened violation of the right.
The question may arise what precisely may amount to threat or imminence of violation.
Law surely cannot take action for internal thoughts but can act only after overt acts.
If overt acts towards violation have already been done and the same has come to the knowledge of the person threat ened with that violation and he approaches the court under article 226 giving sufficient particulars of proximate actions as would imminently lead to violation of right, should not the court call upon those alleged to have taken those steps to appear and show cause why they should not be restrained from violating that right? Instead of doing so would it be the proper course to be adopted to tell the petitioner that the court cannot take any action towards preventive justice until his right is actually violated whereafter alone he could petition for a writ of habeas corpus? In the instant case when the writ petition was pending in court and the appellant 's right to personal liberty happened to be violat ed by taking him into custody in preventive detention, though he was released after four days, but could be taken into custody again, would it be proper for the court to reject the earlier writ petition and tell him that his petition has become infructuous and he had no alternative but to surrender and then petition for a writ of habeas corpus? The difference of the two situations, as we have seen, have difference legal significance.
If a threatened invasion of a right is removed by restraining the potential violator from taking any steps towards violation, the rights remain protected and the compulsion against its violation is enforced.
If the right has already been violated, what is left is the remedy against such violation and for restora tion of the right.
In K.K. Kochunni vs The State of Madras and Ors., [1959] Suppl.
2 SCR 316, where the grievance of the petitioner was that the Madras Marumakkathayam (Removal of Doubts) Act, 1955 (Act 32 of 1955), 117 provided in section 2 of the Act that notwithstanding any decision of court any Sthanam which fulfilled the conditions stated in the section shall be deemed to be and shall be deemed always to have been properties belonging to the tarwad to which the provisions of the Madras Marumakkathayam Act, 1932 shall apply, and thus, unlike other Acts that contemplated some further action to be taken by the State after the enactment had come into force, automatically took away or abridged a person 's fundamental right (as right to property then was) immediately it came into force, a Consti tution Bench of this Court speaking through Das C.J. held that there was no reason why the aggrieved person should not immediately be entitled to seek the remedy under article 32 of the Constitution.
The argument that an application under article 32 could not be maintained until the State had taken or threatened to take any action under the impugned law which again, if remedy to be taken would infringe the petitioner 's fundamental rights, was negatived by this Court holding that in cases arising under those enactments the proprietors could invoke the jurisdiction of this Court under article 32 when the State did or threatened to do the overt act, (emphasis supplied).
It was observed that quite conceivably an enactment may immediately on its coming into force take away or abridge the fundamental rights of a person by its very terms and without any further overt act being done.
The impugned Act was said to be an instance of such enactment.
In such a case, it was held, the infringement of the funda mental right was complete eo instanti the passing of the enactment and, therefore, there could be no reason why the person so prejudicially affected by the law should not be entitled immediately to avail himself of the constitutional remedy under article 32.
It was also observed that to say that a person, whose fundamental right had been infringed by the mere operation of an enactment, was not entitled to invoke the jurisdiction of this Court under article 32, for the en forcement of his fight would be to deny the benefit of a salutary constitutional remedy which was itself his funda mental right.
The same reasoning is applicable to the facts of the instant case inasmuch as the detention order was already passed and served and the appellant was already taken into custody and though released after 4 days the Government could at any time cancel his release under sec tion 15 of the Act.
In the Special Reference No. 1 of 1964, reported in [ ; the Constitution Bench speaking through Gajendragadkar, C.J. held (at page 493): "If a citizen moves this Court and complains that his fundamental fight under article 21 had been contravened, it would 118 plainy be the duty of this Court to examine the merits of the said contention, and that inevitably raises the question as to whether the personal liberty of the citizen has been taken away according to the procedure estab lished by law.
In fact, this question was actually considered by this Court in the case of Pandit Sharma, [1959] Supp. 1 SCR 806." The same law applies to a High Court moved under Article 226 of the Constitution of India against similar contravention.
In M.C. Mehta vs Union of India, [1987] 1 SCC 395, the Constitution Bench speaking through Bhagwati, C.J. said: "We are also of the view that this Court under Article 32(1) is free to devise any procedure appropriate for the particular purpose of the proceeding, namely, enforcement of a fundamental right and under Article 32(2), the Court has the implicit power to issue whatever direction, order or writ is necessary in a given case, including all incidental or ancillary power necessary to secure enforcement of the fundamental right.
The Power of the Court is not only injunctive in ambit, that is, preventing the infringement of a fundamental right, but it is also remedial in scope and provides relief against a breach of the fundamental right already committed vide Bandhua Mukti Morcha case. ; If the court were powerless to issue any direction, order or writ in cases where a fundamental right has already been vio lated, Article 32 would be robbed of all its efficacy, because then the situation would be that if a fundamental right is threatened to be violated, the court can injunct such violation but if the violator is quick enough to take action infringing the fundamen tal right, he would escape from the net of Article 32.
That would, to a large extent, emasculate the fundamental right guaranteed under Article 32 and render it impotent and futile." "Despite the power of the State" says Jean Dabin, "there are always smart people who contrive to violate the laws without incurring the rigours of compulsion; or, again, certain rules are psychologically or technically awkward to apply, so that the machinery of compulsion lends them but insufficient aid.
In any case, actual inefficacy or impo tence of compulsion can affect the validity of the rule even less than disobedience; that validity binds, and continues to bind, by virtue of 119 the very disposition made by the rule.
" Analytical positivist concept of right has been differ ently analysed.
Hohfeld writing on fundamental legal con cepts as applied in judicial reasoning analysis four ideas.
One of those is that a right may be claim right.
P has a right to do X, it means to indicate that Q or everyone else has a duty to let P do X.
The existence of such a duty gives P some sort of claim against Q. Claim rights may be either in personam or in rem.
A claim right in personam co relates to a duty of a person, while claim rights in rem co relate to duties in principle incumbent on everyone.
A right en joyed by one thus co relates to a duty on the part of oth ers.
In Hans Kelsen 's analysis it is usual to oppose the concept of right to the concept of obligation and to cede priority of rank to the former as we speak of rights and duties.
The behaviour of one individual that corresponds to the obligated behaviour of the other is usually designated as a content of a 'right ' as an object of a 'claim ' that corresponds to the obligation.
"The behaviour of the one individual that corresponds to the obligated behaviour of the other, particularly the claiming of the obligated beha viour, is designated as exercising a right." In case of an obligation to tolerate something, the behaviour of the one corresponding to the obligation of the other is spoken of as 'enjoyment ' of the right.
According to Kelsen the 'right ' or a 'claim ' of an individual, is merely the obligation of the other individual or individuals.
When we speak of a right as a legally protected interest, in the words of Kelsen, it refers to a right as the "reflex of a legal obligation".
Right is often understood as a will power conferred by law.
A 'right ' in the sense is present if the conditions of the sanction that constitutes a legal obligation includes a motion, normally of the individual in relation to whom the obligation exists; the motion is aimed at the execution of the sanction and has the form of a legal action brought before the law applying organ.
Then this organ may apply the general norm to effectuate the fight, which is the reflex of the legal obligation by executing the sanction.
The right which is the reflex of legal obligation is equipped with the legal power of the entitled individual to bring about by a legal action the execution of a sanction as a reaction against the non fulfilment of the obligation whose reflex is his right; or as it is sometimes called, the enforcement of the fulfilment of this obligation.
To make use of this legal power of motion is exercise of the right.
In this sense each right of an individual contains a claim to the behaviour of another individual namely to that behaviour to which the second individual is obligated toward the first; the beha viour that constitutes 120 the content of the legal obligation identical with the reflex right.
If an individual, towards which another indi vidual is obligated to a certain behaviour, does not have the legal power to bring about by a legal action the execu tion of a sanction as a reaction against the non fulfilment of the obligation, then the act by which he demands fulfil ment of the obligation has no specific legal effect; the act is legally irrelevant, except for not being legally prohib ited.
Therefore, a 'claim ' as legally effective act exists only when a law exists, which means that an individual has the legal power.
The subject of a right may be not only one individual but two or several individuals, including the State.
In the language of Kelsen the right of an individual is either a mere reflex right the reflex of a legal obligation existing towards this individual; or a private right in the technical sense the legal power bestowed upon an individual to bring about by legal action the enforcement of the ful filment of an obligation existing toward him, that is, the legal power.
From the above analysis it is clear that in the instant case the appellant 's fundamental right to liberty is the reflex of a legal obligation of the rest of the society, including the State, and it is the appellant 's legal power bestowed upon him to bring about by a legal action the enforcement of the fulfilment of that obligation existing towards him.
Denial of the legal action would, therefore, amount to denial of his right of enforcement of his right to liberty.
A petition for a writ of habeas corpus would not be a substitute for this enforcement.
We, therefore, proceed to consider the merits of this case instead of remanding to the High Court to avoid further delay.
Mr. Bhandare 's submission is that the detention order having not been approved by the State Government under sub section (3) of section 3 it had ceased to be in force after 12 days of its being made.
We find force in this submission on the facts of the case.
Section 3 of the Act provides the power to make detention orders.
Sub section (1) thereof empowers the State Government to make a detention order.
Sub section (2) empowers the State Government to authorise a District Magistrate or a Commissioner of Police to exercise the powers conferred by sub section (1) during such period as may be specified in the order not exceeding three months at the first instance with power to extend such period from time to time by any period not exceeding three months at any one time.
Admittedly, the impugned detention order was passed by the District Magistrate in exercise of powers under section 2.
Sub section (3) is to the following effect: 121 "When any order is made under this section by an officer mentioned in sub section (2), he shall forthwith report the fact to the Govern ment together with the grounds on which the order has been made and such other particulars as in his opinion, have a bearing on the matter, and no such order shall remain in force for more than twelve days after the making thereof, unless, in the meantime, it has been approved by the Government.
" Examining the records we find that before the High Court in the Misc.
case W.P.M.P.S.R. 51830 in the form of an Additional Affidavit at para 11 it was urged: "Apart from the infirmities stated above which vitiate the order, statutory requirement of reporting to the Government and obtaining approval of the Government within the pre scribed time has not been complied with.
" In the counter affidavit filed by the Collector and District Magistrate in the High Court to the writ petition as well as the W.P.M.P., there was no reply to para 11 of the W.P.M.P. and it was nowhere stated that the detention order was approved by the State Government.
In this Court in the Special Leave Petition Ground No. V is as follows: "The Hon 'ble High Court has erred in not noting the infirmity in the order of detention inasmuch as the approval of State Government of Andhra Pradesh for the order of the deten tion made by the District Magistrate, Cuddapah was not obtained within the period of 12 days as enjoined under sub section (3) of section 3 of the Act.
The order is therefore non est in law." In the Counter Affidavit of the Collector and District Magistrate there was not even a whisper in denial of this fact.
The learned counsel for the respondents at the heating could not deny before us that the detention order had not been approved by the Government within 12 days.
On his request time was granted to produce materials.
He has now filed reply affidavit on behalf of the respondents to the rejoinder affidavit filed by the appellant.
Scanning this affidavit also we do not find any statement that the deten tion order was approved.
Though the learned counsel submits that it was 122 approved, in view of the above affidavits it cannot be acted upon.
We have, therefore, no other alternative than to hold that the detention order had not been approved by the State Government within 12 days of its being made.
The result is that the order could not claim in force more than 12 days after making thereof and as such must be treated as to have ceased to be in force and non existent thereafter.
Mr. Bhandare then submits that the case of the appellant was not at all referred to the Advisory Board under section 10 of the Act.
This too has not been denied by the learned counsel for the respondents.
Section 10 of the Act provides for reference to the Advisory Board and says: "In every case where a detention order has been made under this Act, the Government shall within three weeks from the date of detention of a person under the order, place before the Advisory Board constituted by them under section 9, the grounds on which the order has been made and the representation, if any, made by the person affected by the order, and in the case where the order has been made by an officer, also the report by such officer under sub section (3) of section 3.
" Section 11 of the Act prescribes the procedure for the Advisory Board.
Under sub section (1) of section 12, in any case where the Advisory Board has reported that there is, in his opinion sufficient cause for the detention of a person, the Government may confirm the detention order and continue the detention of person concerned for such period not ex ceeding the maximum period specified in section 13 as they think fit.
Under sub section (2) thereof in any case where the Advisory Board has reported that there is, in his opin ion, no sufficient cause for the detention of the person concerned, the Government shall revoke the detention order and cause the person to be released forthwith.
Thus section 10 makes it mandatory for the Government to place the ground on which the order has been made and the representation, if any made by the person affected by the order and in the case where the order has been made by an officer also the report by officer under sub section (3) of section 3.
This section prescribes a period of 3 weeks from the date of detention irrespective of whether the person continues to be in deten tion or not.
Therefore, even though the detenu was released, if the detention order was in force, his case was required to be placed before the Advisory Board.
This being a manda tory provision and having not been complied with the deten tion order even if 123 otherwise it was in force, cannot be said to have been in force after three weeks.
Under Article 22 of the Constitu tion of India a person cannot be kept in detention beyond three months without referring his case to an Advisory Board under the appropriate law.
In either case the appellant 's case having not been referred to an Advisory Board the detention order cannot be said to have remained in force after the statutory period.
It is, therefore, not necessary to go into the validity or otherwise of the grounds of detention.
In the result we set aside the impugned Judgment of the High Court and hold that the detention order ceased to be in force after 12 days of making thereof and even if it was in force it ceased to be in force for failure to refer the appellant 's case to Advisory Board within the time pre scribed by law; and accordingly we quash the same.
The appeal is accordingly allowed.
After the Judgment was finalised, another affidavit on behalf of the respondents affirmed by one belonging to the office of the Advocate on Record has been circulated.
This affidavit is not acceptable.
Even if it was accepted it would not affect the ultimate legal position.
R.S.S. Appeal allowed.
| IN-Abs | The appellant is a Municipal Councillor of the Cuddapah Municipal Council.
He was elected to the Council as an independent candidate.
According to him, he enjoys populari ty in his area and had previously held important positions in the District.
He states that the local leadership of the ruling Telugu Desam Party having failed to woo him into their fold, he was pressurised through the Excise and Police authorities foisting false cases upon him.
Scenting a move to detain him under the provisions of the Andhra Pradesh Prevention of Dangerous Activities of Bootleggers, Dacoits, Drug Offenders, Goondas, Immoral Traffic Offenders and Land Grabbers Act, 1986, the appellant filed a writ petition on 6.6.1988 in the High Court, averring inter alia that the successive actions initiated against him were a part of political vendetta.
A learned Single Judge on 8.8.1988 was pleased to direct interim the respondents not to take the appellant into preventive custody for a period of 15 days on the basis of the cases already registered.
However, on 10.6.1988 the appellant was served the detention order dated 3.6.1988 as well as the grounds of detention, and he was taken into custody, but was released after four days.
The appellant filed on 25.6.1988 in his pending writ petition a miscellaneous petition, as an additional affida vit.
He assailed therein the order of detention on various grounds.
A Division Bench of the High Court, on reference by the learned Single Judge, held that the prayer in the writ petition had become infructuous, and that there were no extraordinary or special reasons to depart from the normal rule, namely, that in such a case the appellant should first surrender and move for a writ of habeas corpus.
The Division Bench accordingly, dismissed the writ petition.
Before this Court it was inter alia contended on behalf of the 106 appellant that the High Court erred in holding that there were no extraordinary circumstances or special reasons to depart from the normal rule, thereby refusing to grant relief to the appellant against infringement of his funda mental right to liberty; that the detention order having not been approved by the State Government as required under Section 3(3) of the Prevention of Dangerous Activities Act and the appellant 's case having not been placed before the Advisory Board as required under section 10 thereof, the detention order ceased to be in force and hence was liable to be quashed.
On behalf of the respondent, it was contended that the detention order having been passed before the writ petition was filed, the High Court was right in dismissing the writ petition following the court 's practice and procedure, and that there were no extraordinary or special reasons to depart from the normal rule inasmuch as granting relief at such a stage would defeat the very purpose of the Act.
Counsel, however, could not deny that the detention order was not approved by the State Government and that the appel lant 's case was not placed before the Advisory Board.
Allowing the appeal and quashing the order of detention, this Court, HELD: (1) The position of a person who is actually under illegal detention and of a person who is in imminent jeop ardy of illegal detention are not far dissimilar.
Refusal to interfere in such a case may amount to denial of the funda mental right itself.
[114A].
Jayantiial Bhagwandas Shah vs The State of Maharash tra, , referred to.
(2) There could be no reason why in an exceptional and rare case, detention order already made, and either served or yet to be served, and the person is still free, could not be legally brought under challenge.
[114F] Vedprakash Devkinandan Chiripal vs State of Gujarat, AIR 1987 Gujarat 253.
A.K. Gopalan vs State of Madras, ; ; Addl.
District Magistrate, Jabalpur vs Shivakant Shukla, ; , referred to.
107 (3) For enforcement of one 's right to life and personal liberty resort to Article 226(1) has been provided for.
The word 'enforcement ' has also been used in Article 32 of the Constitution which provides the remedy for enforcement of rights conferred by Part III of the Constitution.
The word 'enforcement ' has not been defined by the Constitution.
[115B] (4) 'Enforce ' means to compel obedience to laws; to compel performance, obedience by physical or moral force.
[115C] (5) Conferring the right to life and liberty imposes a corresponding duty on the rest of the society, including the State, to observe that right, that is to say, not to act or to do anything which would amount to infringement of that right, except in accordance with the procedure prescribed by law.
[115F] (6) Resort to Article 226 after the right to personal liberty is already violated is different from the pre viola tion protection.
Post violation resort to Article 226 is for remedy against violation and for restoration of the right, while pre violation protection is by compelling observance of the obligation or compulsion under law not to infringe the right by all those who are so obligated or compelled.
To surrender and apply for a writ of habeas corpus is a post violation remedy for restoration of the right which is not the same as restraining potential violators in case of threatened violation of the right.
[116B C] (7) Law surely cannot take action for internal thoughts but can act only after overt acts.
If overt acts towards violation have already been done and the same has come to the knowledge of the person threatened with the violation and he approaches the court under article 226 giving sufficient particulars of proximate actions as would imminently lead to violation of right, should not the court call upon those alleged to have taken these steps to appear and show cause why they should not be restrained from violating that right? [116 C D] (8) The difference of the two situations have different legal significance.
If a threatened invasion of a right is removed by restraining the potential violator from taking any steps towards violation, the rights remain protected and the compulsion against its violation is enforced.
If the right has already been violated, what is left is the remedy against such violation and for restoration of the right.
[116F G] (9) In the instant case, the appellant 's fundamental right to 108 liberty is the reflex of a legal obligation of the rest of the society, including the State, and it is the appellant 's legal power bestowed upon him to bring about by a legal action the enforcement of the fulfilment of that obligation existing towards him.
Denial of legal action would, there fore, amount to denial of his right of enforcement of his right to liberty.
A petition for a writ of habeas corpus would not be a substitute for this enforcement.
[120D E] K.K. Kochunni vs The State of Madras and Ors., [1959] Supp.
2 SCR 316; Special Reference No. 1 of 1964; , ; M.C. Mehta vs Union of India, [1987] 1 SCC 395 referred to.
(10) As the detention order was already passed and served and the detenu was already taken into custody during the pendency of the writ petition, these subsequent events having being brought to the notice of the court by a Misc.
application in the form of additional affidavit, the same ought to have been dealt with by the High Court. [113A B] (11) The detention order had not been approved by the State Government within 12 days of its being made, as en joined under subsection (3) of section 3 of the Act.
The result is that the order could not remain in force more than 12 days after making thereof and as such must be treated as to have ceased to be in force and non existent thereafter.
[122A] (12) Even though the detenu was released, if the deten tion order was in force, his case was required to be placed before the Advisory Board.
This being a mandatory provision and having not been complied with, the detention order even if otherwise in force, cannot be said to have been in force after three weeks.
[122H; 123A]
|
t Petition (C) No. 1157 of 1988.
(Under Article 32 of the Constitution of India) R.K. Kapoor, Mrs. Anil Katiyar (not present) for the Peti tioner.
Rajinder Sachar and Mahabir Singh for the Respondents.
The Judgment of the Court was delivered by K. RAMASWAMY, J.
This writ petition under Article 32 of the Constitution is a sequel to the order passed by this Court in Sat Der Parasher, etc.
vs State of Haryana, in Writ Petition Nos. 887 of 1986 and a batch of connected Special Leave Petitions.
Transfer Petitions etc.
in December, 1985.
The State of Haryana made on different dated ad hoc appointments to the posts of Assistant District Attorney.
Applications were invited by the Haryana Public Service Commission to make recruitment to the posts of Assistant District Attorney.
The ad hoc appointees filed writ petitions under Article 32 and also Special Leave Petitions against the judgment of the High Court of Punjab & Haryana.
Their main contention was that they have been regularly recruited though on ad hoc basis after interview by a duly constituted Committee and that they were entitled to be regularised.
This Court while disposing of the cases held that the petitioners therein were appointed only on ad hoc basis till suitable candidates were available for regu lar appointment.
The interim orders passed on different dates were vacated.
It was observed that "if amongst the said petitioners any person has been appointed regularly by the Public Service Commission subsequently he shall hold the post pursuant to the order issued on the recommendation of the Public Service Commission.
This order of dismissal will not affect him.
The petitions are disposed of accordingly.
The candidates who have been selected by the 191 Public Service Commission shall be appointed by the State Government on regular basis and any stay order passed by this Court against their appointment is vacated.
These petitions are accordingly allowed.
Dr. Y.S. Chitale, learned counsel for the State, submits that if any post of the Assistant District Attorney is to be filled up within one year, candidates who are selected by the Public Service Commission but have not been appointed shall be appointed in the order of merit . "The petitioner was, admittedly, selected by the Haryana Public Service Commission, as commu nicated by letter dated May 7, 1986, with his Roll No. 446.
He stood at Serial No. 39 in the order of merit among sixty six selected candidates.
In the counter affidavit filed in the earlier group of petitions by the State of Haryana it was admitted that 39 posts were to be filled from among the selected general candidates.
The petitioner having been selected on merit and assigned the 39th position, was also entitled to be appointed as Assistant District Attorney.
It is the petitioner 's case that the respondents have arbi trarily and illegally denied him his right to appointment as Assistant District Attorney.
It is his case that several representations made in this regard received no considera tion constraining him to approach this Court for issuance of a Writ of Mandamus or order or direction to the respondents to give his due appointment.
In the counter affidavit, it is admitted that the petitioner was selected by the Public Service Commission and he stood at Serial No. 39, but the posts earmarked for the general candidates were 37.
Conse quently, the petitioner could not be appointed.
This Court seeing the specific admission made on the earlier occasion that 39 posts were earmarked for general candidates, called upon the respondents to explain the contradictory stand set up in the present case.
A further affidavit was filed stat ing that averments of earmarking 39 posts for general candi dates is a typographical mistake.
The total number of posts notified were 57, the breakup of which is that 11 posts were reserved for Scheduled Castes, six posts were reserved for Backward Classes and three posts were reserved for NSML and the remaining 37 were to be filled up from general candi dates.
They regretted the typographical error committed in the earlier affidavit.
It is also admitted that subsequent notification was issued by the Public Service Commission to select 27 candidates to fill up 27 posts of Assistant Dis trict Attorneys, but claiming to be, after the expiry of the one year limit set by this Court.
The stand taken by the respondents in their counter affidavit and argued by their counsel is that the direction issued by this Court referred to herein before was strictly adhered to and appointments were given to all the selected candidates.
No vacancy had arisen before the expiry of one year as indicated in the judgment, and therefore, the 192 petitioner could not be appointed as per the undertaking given by the counsel for the State.
The petitioner has no fundamental right to appointment.
He has to apply afresh and take his chance for selection by the Haryana Public Service Commission.
The admitted fact is that the petitioner was one among the selected candidates standing at Serial No. 39 in the order of merit by the Public Service Commission and was recommended for appointment to the post of Assistant Dis trict Attorney.
The counsel for the State had given an unequivocal undertaking that if any vacancies arise within one year from the date of the judgment, the candidates selected and recommended by the Public Service Commission shall be appointed to those posts in the order of merit.
It is uncredible to believe the averment of the State that within one year even one vacancy in the post of Assistant District Attorney had not arisen for appointment when 27 posts were subsequently notified for direct recruitment.
It is not their case that all the 27 vacancies had suddenly arisen on a particular date just after the expiry of one year.
It would be obvious and it is common knowledge that vacancies kept arising as and when the incumbents of such posts either retire or resign or new posts are created.
When this Court had given the direction on the undertaking given by the State that selected candidates would be appointed in vacancies in the said posts that would arise within one year, it was expected that the Haryana State Government would comply with the spirit and substance of the direction, and not to avoid compliance on the technical plea of expiry of the one year period.
We wanted to know the definite dates when the twenty seven vacancies arose but the details have not been placed on the record inspite of the Court 's query.
On the fact situation arising out of the record of the proceeding, it has to be concluded that some of these twenty seven vacancies did arise within the one year period set by this Court in its earlier order but the State Government delayed action to allow the year to run out and to free itself from the purview of the direction.
The Court would not permit the State to avoid implementation of the order made by it on any technical or unjustified stand.
In these circumstances, we are of the considered view that the peti tioner became entitled to be considered for appointment to the post of Assistant District Attorney and given appoint ment in accordance with the rules.
The respondents are, accordingly, directed to appoint the petitioner against one of the posts of Assistant District Attorney subject to physical fitness.
No costs.
N.P.V. Petition disposed of.
| IN-Abs | In a group of cases filed in this Court in connection with recruitment to the posts of Assistant District Attor neys by the State Public Service Commission.
The Respondent State had undertaken that if any post was to be filled up within one year, candidates who were selected by the Public Service Commission but had not been appointed, would be appointed in the order of merit.
However, the petitioner, who was selected by the Public Service Commis sion and, assigned 39th position in the order of merit, was not given the appointment, and a fresh notification was issued by the Public Service Commission for selecting candi dates for 27 posts.
Therefore, the petitioner filed a writ petition in this Court alleging that the respondents had arbitrarily and illegally denied him his right to appoint ment to the posts.
The respondent State contended that since only 37 posts were earmarked for general candidates and no vacancy had arisen before the expiry of one year, the petitioner could not be appointed as per the undertaking given by the State.
Disposing of the Writ Petition, this Court, HELD: When this Court had given the direction on the undertaking given by the State that selected candidates would be appointed in vacancies that would arise within one year, it was expected that the State Government would comply with the spirit and substance of the direction, and not to avoid compliance on the technical plea of expiry of the one year period.
The Court would not permit the State to avoid implementation of the order made by it on any technical or unjustified stand.
[192E F] It is incredible to believe that within one year even one vacancy had not arisen when 27 posts were subsequently notified for direct 190 recruitment.
It would be obvious, and it is common knowl edge, that vacancies keep arising as and when the incumbents of such posts either retire or resign or new posts are created.
On the fact situation arising out of the record of the proceeding, it has to be concluded that some of these 27 vacancies did arise within the one year period set by this Court but the State Government delayed action to allow the year to run out and to free itself from the purview of the direction.
[192C, D F] The petitioner, therefore, became entitled to be consid ered for appointment to the post of Assistant District Attorney and given appointment in accordance with the rules.
The respondents would accordingly appoint the petitioner against one of the posts subject to physical fitness.
[192G]
|
Civil Appeal No. 2542 (NCE) of 1986.
From the Judgment and Order dated 24.1.1986 of the Orissa High Court in Election Petition No. 7 of 1985.
S.P. Singh and S.K. Jain for the Appellant.
G.L. Sanghi, M.A Firoz and R.K. Mehta for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal from the judgment of a learned Single Judge of the Orissa High Court dismissing Election Petition No. 7 of 1985 filed by the appellant in that Court.
The facts of the case have been fully set out in the impugned judgment of the High Court and hence, little pur pose would be served in setting them out here again.
It should be sufficient to note only the few facts required to be set out to appreciate the controversy arising before us.
The election in question was to the Legislative Assembly of the Orissa State from 74 Gopalpur (SchedUled Caste) Assembly Constituency.
This election was held in March 1985.
The last date for filing the nomination papers was February 8, 1985.
The date of scrutiny was 102 as February 9, 1985.
The last date for withdrawal of the nominations was February 11, 1985, February 10, 1985 being a Sunday.
The appellant duly filed his nomination papers for the seat and along with the other papers, he filed an at tested copy of the relevant part of the electoral roll relating to 67 Sorada Assembly Constituency in which he was an elector.
This was required because he was standing for election from a constituency other than the one in which he was an elector.
On an objection by one of the candidates, the said nomination paper was rejected for non compliance with section 33(5) of the Representation of the People Act, 1951 (hereinafter referred to as "the said Act").
The con tention of the appellant is that he had produced before the Returning Officer an attested copy of the relevant part of the electoral roll of the constituency in which he was an elector and hence, the rejection of his nomination paper on the ground of non compliance with section 33(5) of the said Act was wrong and bad in law.
As we have already pointed out, it is common ground that what the appellant produced before the Re.turning Officer was an attested copy of the relevant part of the electoral roll of the constituency in ' which he was an elector and that copy admittedly was dated July 13, 1983.
There is a finding that the appellant had obtained the said copy on July 19, 1983 although he sought to contend that he had obtained it on July 19, 1984.
The correctness of that find ing has rightly not been assailed before us.
Section 15 of the Representation of the People Act, 1950 (hereinafter referred to as "the 2950 Act") provides that for any con stituency there shall be an electoral roll which shall be prepared in accordance with the provisions of that Act under the directions and supervision of the Election Commission.
It is the admitted position in the case before us that the electoral roll of the Orissa Legislative Assembly, was directed to be revised and was, in fact, revised as on January 1, 1984 and the supplementary electoral roll notify ing the changes to be incorporated on the revision was published and available before February 1985.
Section 21 of the 1950 Act deals with the preparation and revision of electoral rolls.
Sub section (1) of that section states that the electoral roll for each constituency shall be prepared in the prescribed manner by reference to the qualifying date and shall come into force immediately upon its publication according to law.
Clause (a) of sub section (2) of that section provides unless otherwise directed by the Election Commission the electoral roll shall be revised in the pre scribed manner with reference to the qualifying date before each General Election to the House of the People or to the Legislative Assembly of a State.
The provisions 103 of Rule 22 of the Registration of Electors Rules, 1960 (hereinafter referred to as "the said Rules of 1960") read with the provisions of Rules 15 to 21 A thereof show that when the electoral roll has to be revised the names of persons inadvertently omitted have to be included and the names of dead electors and of persons who ceased to be or are not ordinarily resident in the constituency have to be deleted from the electoral roll and so on.
After this, the officer concerned prepares the list of amendments to be carried out to the electoral roll.
Provisions are also made for the correction of any clerical or printing errors in the earlier roll.
After the completion of this task, either the entire revised electoral roll is to be prepared or the amendments in the existing electoral roll have to be made and incorporated in the electoral roll and published sepa rately along with the original electoral roll.
A complete electoral roll is made available for inspection and a notice to that effect is displayed in Form No. 16.
Rule 22(2) of the said Rules of 1960 lays that on such publication, the roll together with the list of amendments shall be the electoral roll of the constituency.
Subrule (3) of Rule 22 of the said Rules of 1960 shows that these amendments may be incorporated and an integrated roll may be published subject to any general or special directions issued by the Election Commission.
It is clear on the reading of these provisions that the publication of the integrated roll is not essential for the revision of the electoral roll to be complete and the electoral roll with the amendments duly published be comes the final electoral roll for the constituency.
In the present case, it is clear that what the appellant produced before the Returning Officer was not an attested copy of the final electoral roll for the said constituency for the election in question although the final roll was available.
What he produced was an attested copy of the electoral roll as it stood on July 21, 1983 and the production of such attested copy of the relevant part of the electoral roll as it stood before the final revision cannot amount to compli ance with the provisions of sub section (5) of section 33 of the said Act.
His nomination was, therefore, rightly reject ed.
We are supported in our views by the decision of this Court in Ranjit Singh vs Pritam Singh & Ors., ; It was held that: "When section 33(5) refers to a copy of the rele vant parts of the electoral roll, it means a part as defined in rule 5.
A complete copy would carry the various amendments made in the roll and enable the Returning Officer to see whether the name of the candidate continued in the roll for the whole of the relevant period." 104 In the aforesaid judgment, it has been held that when section 33(5) of the said Act refers to a copy of the rele vant part of the electoral roll, it means a part as defined in Rule 5 of the said Rules of 1960.
The complete copy would carry the various amendments made in the roll to enable the Returning Officer to see whether the name of the candidate continues in the roll.
Learned counsel for the appellant placed a strong reli ance on the decision of this Court in Jagannath Ramchandra Nunekar vs Gene Govind Kadam & Ors., [1988] 3 Judgments Today 662.
That judgment is, however, clearly distinguisha ble on facts.
In that case, a certified copy of the relevant entry in the electoral roll was furnished to the appellant on January 8, 1986 which was only one day before the date on which he filed his nomination paper.
The presumption would, therefore, arise that such a certified copy would be of the relevant entry in the final electoral roll and that presump tion was justified on the actual facts.
That decision has no application to this case where a certified copy of the relevant part of the electoral roll was applied for and obtained several months before the revision of the electoral roll.
The ratio of the judgment cited is, therefore, not applicable to the case before us.
In the result, the appeal fails and is dismissed with costs.
N.P.V. Appeal dismissed.
| IN-Abs | The appellant was a candidate for election to the Legis lative Assembly.
As he was standing for election from a constituency other than the one in which he was an elector, he filed an attested copy of the relevant part of the elec toral roll relating to the constituency in which he was an elector, along with the nomination paper.
On an objection by one of the candidates, the Returning Officer rejected the.
appellant 's nomination paper for non compliance with Section 33(5) of the Representation of the People Act, 1951.
The appellant filed an Election Petition before the High Court, which dismissed the same.
In the appeal filed before this Court, the appellant contended that since he had produced before the Returning Officer an attested copy of the relevant part of the elec toral roll of the constituency in which he was an elector, the rejection of his nomination paper on the ground of non compliance with Section 33(5) of the said Act was wrong and bad in law.
Dismissing the appear, this Court, HELD: The publication of the integrated roll is not essential for the revision of the electoral roll to be complete and the electoral roll with the amendments duly published becomes the final electoral roll for the constitu ency.
[103D] In the instant case, admittedly, the electoral roll of the State Assembly was directed to be revised and was, in fact, revised as on January 1, 1984 and the supplementary electoral roll notifying the 101 changes to be incorporated on the revision was published and available before February 1985.
[102F] However, what the appellant produced before the Return ing Officer was not an attested copy of the final electoral roll for the said constituency although the final roll was available, but only an attested copy of the electoral roll as it stood on July 21, 1983.
The production of such attest ed copy of the relevant part of the electoral roll as it stood before the final revision cannot amount to compliance with the provisions of sub section (5) of Section 33 of the said Act.
His nomination was, therefore, rightly rejected.
[103F] Ranjit Singh vs Pritam Singh & Ors., ; , relied on.
Jagannath Ramchandra Nunekar vs Gene Govind Kadam & Ors., [1988] 3 Judgments Today 662, distinguished.
|
(Civil) No. 2 123 of 1982.
(Under Article 32 of the Constitution of India).
184 R.K. Garg and H.K. Puri for the Petitioners.
D.P. Mukherjee, G.S. Chatterjee, Ms. C.K. Sucharita, Ms. A. Subhashini and S.R. Grover for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
The Parliament enacted the (hereinafter called the Act) with the object of abolition of contract labour in respect of such categories as may be notified by the Appropriate Government in the light of criteria laid down in the Act and also regulating the service conditions of contract labour where abolition is not possible.
Section 10 of the Act which is relevant is as under: "Prohibition of employment of contract labour (1) Notwithstanding anything contained in this Act, the appropriate Government may, after consultation with the Central Board or, as the case may be, a State Board prohibit, by noti fication in the Official Gazette, employment of contract labour in any process; operation or other work in any establishment.
(2) Before issuing any notification under sub section (1) in relation to an establish ment, the appropriate Government shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors such as (a) Whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the estab lishment; (b) Whether it is of perennial nature, that is to say, it is of sufficient duration having regard to the nature of industry, business, manufacture or occupation carried on in that establishment; (c) Whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto; 185 (d) Whether it is sufficient to employ consid erable number of whole time workmen.
Explanation If a question arises whether any process or operation or other work is of perennial nature, the decision of the appro priate Government thereon shall be final.
" In exercise of the powers under Section 10(1) of the Act, the Government of West Bengal issued a notification dated February 9, 1980 prohibiting the employment of con tract labour in 16 departments covering 65 jobs in the establishments of M/s. Indian Iron and Steel Co. Ltd. (hereinafter called the company) situated at Burnpur in the State of West Bengal.
The list of the departments and the jobs is given in the schedule attached to the notification and paragraph 9 therein, relating to the Brick Department, is as under: "Cleaning and stacking and other allied jobs except loading and unloading of bricks from wagons and trucks.
" It is thus obvious that the job of loading and unloading of bricks from wagons and trucks in the Brick Department has been specifically excluded from the beneficial purview of the notification.
The said action of the State Government has been challenged in this writ petition under Article 32 of the Constitution of India by the affected workmen on the ground that the petitioners have been subjected to hostile discrimination so much so that the workmen doing the same job in other departments and allied jobs in the same depart ment have been rescued from the archaic system of contract labour whereas the petitioners have been singled out and left to be grinded under the pernicious effect of this primitive system.
The action according to the petitioners is arbitrary, discriminatory and is violative of Article 14 of the Constitution of India.
Mr. R.K. Garg, learned counsel appearing for the peti tioners has contended that the job of loading and unloading is not peculiar to the Brick Department rather such jobs are being operated in the stores (iron and steel), Traffic (steel) and Coke ovens Departments.
The benefit of notifica tion dated February 9, 1980 has been extended to the loaders in all these departments.
He further argued that the work of stacking is directly dependent on the loading and unloading of bricks.
The two jobs according to him are allied and incidental and as such the workmen holding these jobs cannot be treated differently.
186 The learned counsel for the respondents on the other hand has argued that the job of loading and unloading of bricks in the Brick Department is not of perennial nature, the supply of bricks is intermitent depending upon the requirement, availability of bricks as also the availability of the wagons and trucks.
It is further submitted that the decision of the appropriate Government to the effect that the job is not of perennial nature is final under the Act.
It is surprising that more than forty years after the independence the practice of employing labour through con tractors by big companies including public sector companies is still being accepted as a normal feature of labour em ployment.
There is no security of service to the workmen and their wages are far below than that of the regular workmen of the company.
This Court in Standard Vaccum Refining Co. of India Ltd. vs Its Workmen, ; and Catering Cleaners of Southern Railway vs Union of India & Anr., ; has disapproved the system of contract labour holding it to be 'archaic ', 'primitive ' and of 'baneful nature '.
The system, which is nothing but an im proved version of bonded labour, is sought to be abolished by the Act.
The Act is an important piece of social legisla tion for the welfare of labourers and has to be liberally construed.
It is not denied that the bricks handled by the Brick De partment are used in furnaces of the company as refractory.
Therefore the work done by the Brick Department including loading and unloading of bricks is incidental to the indus try carried on by the company.
It is also not denied that the petitioners are employed as contract labour by the company for the last 15/20 years.
Then where is the justifi cation to treat the petitioners differently and deny them the right of regular appointment? We may examine the case from another aspect.
The peti tioners have specifically averred in paras 7 and 11 of the writ petition that the job of loading and unloading of bricks is allied and incidental to the job of stacking of bricks.
Para 7 is as under: "It is submitted that loading and unloading of bricks from wagons and trucks is an essential feature of; and/or a job allied and/or incidental to the job of stacking of bricks.
It is further submitted that the job of loading and unload ing of bricks from wagons and trucks cannot be separated from the job of stacking and other allied jobs in the case of the petitioners.
" 187 Further para 11 is as under: "It may be stated here that"stacking" as such was never the job of contract labour.
The job of stacking and the job of loading and unload ing of bricks are job ancillary, including and/or supplemented to each other.
It may be made clear that the job of stacking and/or loading and unloading of bricks has to be done by competent and technical hands.
The bricks used in the furnace are a very costly and technical material requiring perfect dimen sions and precision These bricks are also imported from outside India.
Such bricks are manufactured indigenously too, but depending upon the consumption and demand, the bricks arc purchased locally and/or imported from outside India.
Such a costly material has to be handled by skilled workmen.
The job of loading and unloading of such bricks their stacking is done by skilled workmen and this work cannot be done by casual labour which may be engaged disengaged as contract labour depending upon the sweet will of the manage ment.
It is submitted that loading and unload ing and stacking of bricks are jobs which are supplementary to each other carried out by the same set of workmen and is essential for the day to day production.
The petitioners submit that it is not possible to engage one set of workmen for stacking and another set of work men for loading and unloading of bricks.
" In the counter affidavit on behalf of the company filed by its Dy.
Chief Personnel Manager, there is no specific denial to the above averments.
Though it has been stated that the petitioners are not doing the job of stacking the bricks, there is no denial nor any averment or material on the record to show that the job of loading and unloading of bricks is not incidental or allied to the stacking of the bricks.
Even otherwise we fail to understand how the stack ing of bricks is a job which is not incidental to loading and unloading.
The purchase of bricks, transportation to the factory, unloading, stacking and use in the furnace are the jobs in one continuing process and it is difficult to accept that these jobs are not incidental or allied to each other.
That being so all the workmen performing these jobs are to be treated alike.
On the same reasoning it cannot be said that the loader 's job is not, and other jobs in the Brick Department are, of perennial nature.
In any case there is no material or basis to show that the job of loading and un loading of bricks is not of perennial nature.
188 We, therefore, see no justification for excluding the job of loading and unloading of bricks from wagons and trucks from the purview of the notification dated February 9, 1980.
We allow the writ petition and strike down the words "except loading and unloading of bricks from wagons and trucks" in paragraph 9 of the said notification issued by Government of West Bengal being discriminatory and as such violative of Article 14 of the Constitution of India.
We direct that the petitioners and other workers doing the job of loading and unloading of bricks from wagons and trucks in the Brick Deptt.
be treated at par, with effect from the date of nonfication, with those who are doing the job of cleaning and stacking m the said department.
It is further directed that the workmen doing the job of loading and unloading who have been retrenched during the pendency of the writ petition be put back into service with all back wages and consequential benefits.
There shall be no order as to costs.
P.S.S. Petition allowed.
| IN-Abs | Section 10(1) of the empowered the appropriate Government to prohibit employment of contract labour in any process, operation or other work in any establishment.
The Government of West Bengal issued a notification on February 9, 1980 under section 10(1) of the Act prohibiting the employment of contract labour in certain departments in the establishments of M/s Indian Iron and Steel Company Ltd. Paragraph 9 of the Schedule thereto listing the departments, included cleaning and stacking and other allied jobs in the brick department, except loading and unloading of bricks from wagons and trucks.
In the writ petition, the affected workmen assailed this action of the State Government in excluding them from the beneficial purview of the notification as arbitrary, dis criminatory and violative of Article 14 of the Constitution.
It was contended for them that the job of loading and un loading was not peculiar to the brick department alone, that the work of stacking was directly dependent on the loading and unloading of bricks, and that the two jobs being allied and incidental the workmen holding these jobs could not be treated differently.
For the respondents, it was contended that the job of loading and unloading of bricks in the brick department was not of perennial nature, the supply of bricks being intermittent depending upon the requirement, avail ability of bricks as also the availability of the wagons and trucks.
Allowing the writ petition, HELD: 1.1 The is 183 an important piece of social legislation for the welfare of the labourers and has to be liberally construed.
[186D] Standard Vacuum Refining Co. of India Ltd. vs Its Work men; , and Catering Cleaners of Southern Railway vs Union of India & Anr., ; , referred to. 1.2 In the instant case, it was not denied that the bricks handled by the brick department were used in furnaces of the company as refractory.
Therefore, the work done by the brick department including loading and unloading of bricks was incidental to the industry carried on by the company.
It was also not denied that the petitioners were , employed as contract labour by the company for the last 15/20 years.
There was, therefore, no justification to treat the petitioners differently and deny them the right of regular appointment.
[186E F] 1.3 The purchase of bricks, transportation to the facto ry, unloading, stacking and use in the furnace were the jobs in one continuing process.
It could not thus be said that all these jobs were not incidental or allied to each other.
That being so, all the workmen performing these jobs were to be treated alike.
On the same reasoning it could not be said that the loader 's job was not, and other jobs in the brick department were, of perennial nature.
There was, therefore, no justification for excluding the job of loading and un loading of bricks from wagons and trucks from the purview of the notification dated February 9, 1980.
[187G 188A] 2.
The words "except loading and unloading of bricks from wagons and trucks" in paragraph 9 of the Schedule to the notification are struck down being discriminatory and as such violative of Article 14 of the Constitution of India.
[188A B] [The petitioners and co workers to be treated at par with effect from the date of notification with those who were doing the job of cleaning and stacking in the brick department, and such of them who have been retrenched during the pendency of the writ petition to be put back into serv ice with all back wages and consequential benefits.] [188B C]
|
ivil Appeal No. 3901 of 1981.
From the Judgment and Order dated 22.1.1987 of the Rajasthan High Court in S.B. Civil Revision No. 672 of 1983.
V.M. Tarkunde and L.K. Pandey for the Appellant.
J.P. Goyal, R.K. Gupta, K.K. Gupta, (NP) and Rajesh, (NP) for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
This appeal by special leave is directed against the judgment of Rajasthan High Court dismissing a civil revision application filed by the appellant in the following circumstances.
The appellant, a registered Society, filed the suit out of which this appeal arises in the court of the District Judge, Jaipur City in respect of an immovable property through its the then Secretary which was numbered as Suit No. 11 of 1973.
The counsel engaged by the appellant were Sri Satya Narain Sharma and Sri Shyam Bihari Agarwal.
The suit was later transferred to the court of Additional Dis trict Judge No. 1, Jaipur City where it was renumbered as Suit No. 116 of 1974.
After the institution of the suit, an election of the office bearers of the Society was held on 1.6.1973 and according to the appellant 's case one Sri Laxman Das Swami was elected as the Secretary.
On 4.9.74 a prayer for withdrawing the suit was made by one Hari Narain Swami through another lawyer claiming to have been elected as the Secretary of the Society.
In support of his claim of having been elected as the Secretary of the Society Hari Narain Swami produced certain documents on the basis of which the Trial Court allowed the suit to be withdrawn.
According to the case of the appellant, Hari Narain Swami was not elected as the Secretary and had no locus standi to withdraw the suit.
Since no notice was given of his applica tion for withdrawal of the suit either to the then Secretary Laxman Das Swami or to the learned advocates Sri Satya Narain Sharma or Sri Shyam Bihari Agarwal, through whom the suit had been instituted, none of them had any knowledge of the order passed by the court.
Later, in the next election, another Secretary named Jeeva Nand Swami was elected, and when he 236 learnt about the fate of the suit, an application was filed for recalling the order of withdrawal and restoring the suit to its file.
The prayer was contested and the trial court rejected the application.
The appellant Society challenged the order before the High Court by a petition under section 1 15 of the Code of Civil Procedure which was also dismissed by the impugned judgment.
The trial court after holding that the appellant 's application filed under section 15 1 of the Code of Civil Proce dure, was not maintainable, proceeded further to consider the question as to who was the duly elected Secretary of the Society, entitled to prosecute or withdraw the suit and accepted the case of Hari Narain Swami.
The High Court has agreed with the trial court that the application under section 15 1 of the Code of Civil Procedure was not maintainable.
While agreeingwith the argument of the appellant that the trial court had committed several serious errors in deciding the question as to who was the elected Secretary of the Society on the relevant date in favour of the respondent the High Court observed that the mistake could not be corrected in the present situation.
It has been contended by Mr. Tarkunde, the learned counsel for the appellant, that the application under section 15 1 of the Code of Civil Procedure, for restoration of the suit was maintainable and the error committed by the trial court while recording the finding on the merits of the case was such which the High Court ought to have rectified.
The learned advocate representing the respondents has strenuous ly argued that the trial court has no jurisdiction to recall its order permitting the withdrawal of the suit under its inherent power and the High Court has rightly held that the only remedy of the appellant is to file a fresh suit.
The finding recorded by the trial court on the merits of the case has also been relied upon.
The learned counsel for the appellant has challenged the correctness of the trial court 's finding in favour of the respondent 's case that Hari Narain Swami had been duly elected as the Secretary of the appellant Society and had, therefore, full authority to withdraw the suit, on several grounds.
Since we are of the view that the case has to go back to the trial court for reconsideration of the evidence on this point, we do not propose to deal with the argument on behalf of the appellant in detail, except mentioning one of them.
It has been stated that a dispute, relating to the election of the Secretary of the Society, had arisen between the parties which ultimately went before the Registrar of the Cooperative Societies, who decided the matter in 237 favour of Laxman Das Swami and against Hari Narain Swami.
A writ petition filed thereafter by Hari Narain Swami before the High Court (registered as C.W.P. No. 1406 of 1975) was dismissed.
It is said that the trial court failed to appre ciate the impact of the judgments of the Registrar and the High Court which has vitiated ' the impugned decision.
In reply, it has been argued by the learned counsel for the respondents that the High Court in C.W.P. No. 1406 of 1975 did not decide the dispute finally and left it to be settled by the civil court.
Beyond pointing out that even according to the impugned judgment of the High Court the errors in the judgment of the trial court are serious, we do not consider it appropriate to deal in detail with the arguments of the learned counsel, as the disputed question has to go back for reconsideration.
The main question which requires consideration, however, is whether the trial court has jurisdiction to cancel the order permitting the withdrawal of the suit under its inherent power, if it is ultimately satisfied that Hari Narain Swami was not the Secretary of the appellant Society and was, therefore, not entitled to withdraw the suit.
The position is well established that a court has inherent power to correct its own proceedings when it is satisfied that in passing a particular order it was misled by one of the parties.
The principle was correctly discussed in the judg ment in Sadho Saran Rai and Others vs Anant Rai and Others, AIR 1923 Patna 483, pointing out the distinction in cases between fraud practised upon the court and fraud practised upon a party.
Let us consider the cases in which consent decrees are challenged.
If a party makes an application before the Court for setting aside the decree on the ground that he did not give his consent, the court has the power and duty to investigate the matter and to set aside the decree if it is satisfied that the consent as a fact was lacking and the court was induced to pass the decree on a fraudulent repre sentation made to it that the party had actually consented to it.
However, if the case of the party challenging the decree is that he was in fact a party to the compromise petition filed in the case but his consent has been procured by fraud, the court cannot investigate the matter in the exercise of its inherent power, and the only remedy to the party is to institute a suit.
It was succinctly summed up in the aforementioned case that the factum of the consent can be investigated in summary proceedings, but the reality of the consent cannot be so investigated.
The principle has been followed in this country for more than a century.
In Vilakathala Raman vs Vayalil Pachu, 27 Madras Law Jour 238 nal Reports 172, the trial court had vacated its previous order regarding satisfaction of decree on the ground that the same was obtained by the judgment debtor 's fraud on the court.
The High Court, while confirming the order, said that in the exercise of inherent power under section 15 1 of the Code of Civil Procedure a court can vacate an order obtained by fraud on it.
Reliance had been placed on an old decision of Bombay High Court of 1882 and a Madras decision of 1880.
In Basangowda Hanmantgowda Patil and Others vs Churchigirigowda Yogangowda and Another, I.L.R. 34 Bombay 408, the defendant applied to the court to set aside a compromise decree on the ground that he had not engaged the lawyer claiming to be representing him and had not authorised him to compromise the suit.
The court accepted his plea and ruled that it is the inherent power of every court to correct its own pro ceedings when it has been misled.
Similar was the view of the Calcutta High Court in several decisions mentioned in Sadho Saran 's case (supra).
The ratio has been later fol lowed in a string of decisions of several High Courts.
The same principle applies where a suit is permitted to be withdrawn on the basis of a prayer purported to have been made on behalf of the plaintiff.
The courts below were, therefore, not right in holding that the application of the appellant invoking the inherent jurisdiction of the court was not maintainable.
If the appellant 's case is factually correct that Hari Narain Swami was not its elected secretary and was, therefore, not authorised to withdraw the suit, the prayer for withdrawing the suit was not made on behalf of the appellant at all and the impugned order was passed as a result of the court being misled.
Such an order cannot bind the appellant and has to be vacated.
The trial court was thus clearly wrong in dismissing the appellant 's application as not maintainable, and the High Court should have inter vened in its revisional power on the ground that the trial court had failed to exercise a jurisdiction vested in it by law.
So far the finding of the trial court that Hari Narain Swami was not the elected Secretary of the appellant Society with authority to withdraw the suit is concerned, the same suffers from several errors and requires a recon sideration.
Even in the view of the High Court that is the position, but it declind to exercise its revisional power on the assumption that it had no jurisdiction to do so.
We, therefore, allow the appeal, set aside the impugned judg ments of the trial court and the High Court and r. emit the matter to the trial court for reconsideration of the case on merits.
The parties shall be allowed to lead further evi dence in support of their cases.
The costs will abide the final result in the litigation.
G.N. Appeal allowed.
| IN-Abs | The appellant, a registered society, instituted a suit through its Secretary in respect of an immovable property.
Afterwards, the election of the office bearers for the Society was held and one 'X ' claiming to be the Secretary of the Society filed an application for withdrawing the suit and the trial court allowed the same.
In the subsequent election, one 'Y ' was elected as Secretary and he filed an application for recalling the order of withdrawal and for restoring the suit.
The applica tion was contested and the trial court rejected the applica tion.
The appellant challenged the order before the High Court by way of a petition under section 115 CPC.
The High Court observed that the trial court had committed several serious errors in deciding the question as to who was the elected Secretary of the Society on the relevant date in favour of the respondent but held that the mistake could not be corrected.
This appeal by special leave, is against the High Court 's judgment.
On behalf of the appellant, it was argued that the trial court failed to appreciate that 'X ' was not the elect ed Secretary of the Society, as was held by the Registrar of Cooperative Societies, and that 'X ' did not also succeed before the High Court in this regard.
And hence, he was not competent to withdraw the suit.
It has been contended that the error committed by the trial court ought to have been rectified by the High Court.
234 The respondents argued that the only remedy available to the appellant was to file a fresh suit.
It was contended that the High court rightly did not decide the dispute finally regarding election of 'X ' and left it to be settled by the Civil Court.
Allowing the appeal and remitting the matter to the trial court, this Court, HELD: 1.1 The position is well established that a court has inherent power to correct its own proceedings when it is satisfied that in passing a particular order it was misled by one of the parties.
[237D] 1.2 If a party makes an application before the Court for setting aside the decree on the ground that he did not give his consent, the court has the power and duty to investigate the matter and to set aside the decree if it is satisfied that the consent as a fact was lacking and the court was induced to pass the decree on a fradulent representation made to it that the party had actually consented to it.
However, if the case of the party challenging the decree is that he was in fact a party to the compromise petition filed in the case but his consent had been procured by fraud, the court cannot investigate the matter in the exercise of its inherent power, and the only remedy to the party is to institute a suit.
1237F G] 1.3 So far as the finding of the trial court that X was the elected Secretary of the appellant Society with authori ty to withdraw the suit is concerned, the same suffers from several errors and requires reconsideration.
Even in the view of the High Court that is the position, but it declined to exercise its revisional power on the assumption that it had no jurisdiction to do so.
The courts below were, there fore, not right in holding that the application of the appellant invoking the inherent jurisdiction of the court was not maintainable.
If the appellant 's case is factually correct that X was not its elected Secretary and was, there fore, not authorised to withdraw the suit, the prayer for withdrawing the suit was not made on behalf of the appellant at all and the impugned order was passed as a result of the court being misled.
Such an order cannot bind the appellant and has to be vacated.
High Court should have intervened in its revisional power on the ground that the trial court had failed to exercise ajurisdiction vested in it by law.
[238F G; D E] Sadho Saran Rai and Ors.
vs Anant Rai and Ors.
, AIR 1923 Patna 483; Vilakathala Raman vs Vayalil Pachu, 27 Madras Law Journal Reports 172 and Basangowda Hanmantgowda Patil and Anr.
vs 235 Churchugirigowda Yogangowda and Anr., I.LR 34 Bombay 408, approved.
|
ivil Appeal No. 4756 of 1989.
From the Judgment and Order dated 6.9.1985 of the Madhya Pradesh High Court in Civil Misc.
Petition No. 465 of 1984.
S.K. Agnihotri for the Appellant.
S.K. Gambhir for the Respondent.
The Judgment of the Court was delivered by K.N. SINGH, J.
Special leave granted.
This appeal is directed against the order of the High Court of Madhya Pradesh, Jabalpur, Gwalior Bench dated 6.9.1985 quashing the State Government 's order dated 21.8.1984 pre maturely retiring the respondent from service.
The respondent was holding the post of Deputy Director of Geology and Mining in the State of Madhya Pradesh.
The State Government constituted a committee for screening the service roll of its employees for considering the question of compulsory retirement on attaining the age of 35 years.
The Screening Committee which 250 included Shri S.S. Dave, Director of Geology and Mining Department of the Government of Madhya Pradesh, on examining the service records of the respondent made recommendation to the Government for his pre mature retirement.
Pursuant to the Screening Committee 's recommendation the State Govern ment by its order dated 21.8.1984 retired the respondent compulsorily from service under Rule 56 of the Fundamental Rules.
The respondent challenged the validity of the State Government 's order by means of a writ petition under Article 226 of the Constitution before the High Court (Gwalior Bench).
The High Court quashed the State Government 's order on the finding that the participation of Shri S.S. Dave in the deliberation of the Screening Committee vitiated its recommendation and also consequently order of the State Government on the doctrine of bias.
The High Court further held that since Shri S.S. Dave had on an earlier occasion awarded adverse remarks against the respondent he was biased in law and therefore he was disqualified to be a member of the Screening Committee and his participation in the Screen ing Committee rendered his recommendation invalid.
The High Court placed reliance on the decision of this Court in A.K. Kraipak & Ors. etc.
vs Union of India, After hearing learned counsel for the parties at length we are of the opinion that this appeal must succeed.
The object and purpose of Fundamental Rule 56 conferring power on the Government to prematurely terminate the service of a Government servant is to ensure efficiency in the adminis tration by weeding out dead wood officials who may have outlived their utility as observed by this Court in J.N. Sinha vs Union of India, [1971] 1 SCR 791.
While exercising this power the State Government constituted a high powered Committee consisting of senior officials of the State Gov ernment and S.S. Dave being the Head of Department of Geolo gy and Mining was a member of the Screening Committee.
As Head of Department he was the best person to assess the efficiency and utility of employees working in the Depart ment of Geology and Mining.
His presence in the Committee was necessary to have a fair and correct assessment of the work and conduct of the employees of that Department for the purposes of making recommendations to the Government.
While it is true that as Head of Department he had awarded adverse remarks to the respondent on an earlier occasion but that does not mean that he had any malice against the respondent, in fact no malice had been pleaded by the respondent against S.S. Dave.
As Head of Department Dave had performed his duty in recording his opinion in the respondent 's character roll as no other person was entitled under the rules to adjudge his work and 251 conduct.
No doubt bias and malice both vitiate decision of an authority.
But by no stretch of imagination Dave could be held to have been biased against the respondent merely because on an earlier occasion he had in the performance of his duties awarded an adverse remark to the respondent.
The High Court committed serious error in holding that malice in law was writ large on the face of the proceedings of the Screening Committee, although no malice in fact had been pleaded against him.
In coming to that conclusion the High Court placed reliance of Kraipak 's case.
As a member of the Screening Committee Shri Dave was performing duty as signed to him under the rules and Government order for screening records of the officers.
He had no personal inter est in the matter and there was no conflict between his personal interest and his duties as member of the Screening Committee, therefore there could not be any question of bias or malice in law.
In Kraipak 's case an officer who was himself a candidate for selection was a member of the selec tion committee and selection was held to be vitiated on the ground that there was a conflict between that officer 's personal interest and his duties as he was judge of his own cause.
The principles laid down in Kraipak 's case do not apply to the facts of the instant case.
We are therefore of the opinion that Dave 's presence in the Screening Committee did not vitiate the recommendation made by the Committee in any manner, consequently the State Government 's order could not be quashed.
The High Court had no valid reason to hold that the Screening Committee was not properly constituted and that its recommendations were unconstitutional.
We accordingly allow the appeal, set aside the order of the High Court, and dismiss the respondent 's writ petition but we make no order as to costs.
Although we have upheld the State Government 's order but we would like to observe that since the respondent had been reinstated in service after the High Court order and he has now retired from service on attaining the age of superannua tion, the State Government should not take any steps for reducing his pension by treating him to have retired with effect from 21.8.1984.
P.S.S. Appeal allowed.
| IN-Abs | The respondent was sought to be retired compulsorily from service by an order dated August 21, 1984 on attaining the age of 55 years under Rule 56 of the Fundamental Rules, pursuant to the Screening Committee 's recommendation.
He challenged the said order in a writ petition under Article 226 of the Constitution.
The High Court quashed the said order on the finding that the participation of the Head of the Department in the deliberation of the Screening Committee had vitiated its recommendation, and order of the State Government on the doctrine of bias, since he had on an earlier occasion award ed adverse remarks against the respondent.
Allowing the appeal by special leave, the Court, HELD: 1. 'The presence of Head of Department in the Screening Committee did not vitiate its recommendation.
Consequently the State Government 's order could not be quashed.
[251E] 2.1 The object and purpose of Fundamental Rules 56 conferring power on the Government to prematurely terminate the service of a Government servant is to ensure efficiency in the administration by weeding out dead wood who may have outlived their utility.
In the instant case, while exercis ing this power the State Government had constituted a high powered Screening Committee consisting of senior officials of the State Government and the Head of the Department.
[250D F] 2.2 The Head of Department bad performed his duty in recording _ opinion in the respondent 's character roll as no other person was entitled under the rules to adjudge re spondent 's work and conduct.
As 249 a member of the Screening Committee he was performing duty assigned to him under the rules and Government order for screening records of the officers.
He was the best person to assess the efficiency and utility of employees working in his department.
He had no personal interest in the matter and there was no conflict between his personal interest and his duties as member of the Screening Committee.
Therefore, there could not be any question of bias or malice in law.
[250H, 251C, 250F] J.N. Sinha vs Union of India, [1971] 1 SCR 791, referred to.
A.K. Kraipak & Ors.
vs Union of India, , distinguished.
Since the respondent had been reinstated in service after the High Court order and he has now retired from service on attaining the age of superannuation, the State Government should not take any steps for reducing his pen sion by treating him to have retired with effect from August 21, 1984, [251F G]
|
vil Appeal Nos.
18083 of 1985.
From the Judgment and Order dated 12.9.1983 of the Rajasthan High Court in D.B. (Civil) Spl.
Appeal Nos.
35 of 1982, 76, 268 and 270 of 1983.
S.K. Bagga for the Appellants.
B.D. Sharma for the Respondents.
The Order of the Court was delivered by 247 VENKATARAMIAH, CJ.
In these appeals the appellants have questioned the validity of Section 15 (as amended) of the Rajasthan Imposition of Ceiling on Agricultural Holdings Act, 1973.
It is not disputed that this Act was enacted by the Rajasthan Legislature for bringing about Agrarian Re forms in the State of Rajasthan.
The validity of some of the provisions of the Act came up for consideration before this Court in Bansidhar vs State of Rajasthan, ; before a Constitution Bench of this Court and this Court made declaration that the Rajasthan Imposition of Ceiling Agricultural Holdings Act, 1973 was a legislation which was made for the purpose of bringing out Agrarian Reform.
In view of the above finding, it is clear that the provisions including section 15 (as amended) contained therein are protected by Article 31(A)(1)(a) of the Constitution notwithstanding the fact that some of these provisions contravened Articles 14 and 19.
The Grounds urged in respect of the appeal are that Section 15 (as amended) in question was violative of Article 14.
Since the provisions of the Act as already stated are protected by Article 31(A)(1)(a), the attack does not sur vive.
The High Court was therefore right in upholding the validity of Section 15 of the Act.
Therefore, there is no ground to interfere with the Judgment of the High Court.
These appeals fail and are dismissed.
Interim orders passed if any, in these cases stand vacated.
T.N.A. Appeals dis missed.
| IN-Abs | In these appeals on the question: whether section 15 (as amended) of the Rajasthan Imposition of Ceiling on Agricul tural Holdings Act, 1973 was violative of Article 14 of the Constitution of India.
Dismissing the appeals, this Court, HELD: Rajasthan Imposition of Ceiling on Agricultural Holdings Act, 1973 was a legislation which was made for the purpose of bringing about agrarian reforms.
The provisions of the Act including section 15 (as amended) are protected by Article 31(A)(1)(a) of the Constitution.
Therefore, the attack that section 15 of the Act was violative of Article 14 of the Constitution does not survive.
The High Court was right in upholding the validity of section 15 of the Act.
[247B; C D] Bansidhar vs State of Rajasthan, ; , followed.
|
vil Appeal Nos.
8068 10 of 1986.
From the Judgment and Order dated 16.3.1985 of the Punjab & Haryana High Court in Civil W.P. No. 2050 2054 of 1984.
M.S. Gujral and Prem Malhotra for the Appellants.
Kapil Sibal, M.R. Sharma, S.K. Mehta, Vinod Mehta, Atul Nanda and M.K. Dua for the Respondents.
The Judgment of the Court was delivered by V. RAMASWAMI, J.
One Bishan Das who is the father of respondents 2 to 5 and another by name Muhari Ram whose legal representative are respondents 6 and 7, owned consid erable extent of 212 land in Pakistan.
He died on April 11, 1948 after he migrat ed to India.
After his death the Rehabilitation Department allotted 124 standard acres and 4 1/4 unit of evacuee land on 26th August, 1949.
The five sons of Bishan Das were treated as entitled to this land as heirs and successors of the displaced person and accordingly mutation was allowed by the rehabilitation authorities on February 17, 1953 in favour of the five sons showing each of them entitled to 24 standard acres and 13 units of land.
Permanent rights in regard to this allotted land were also conferred by the authorities under the provisions of the said Displaced Persons (Compensation and Rehabilitation) Act in the names of the sons of Bishan Das on January 2, 1956.
These lands were in the occupation of different tenants against whom the five brothers initiated ejectment proceedings by filing applications under section 9(1)(i) of Punjab Security of Land Tenures Act, 1953 (hereinafter called 'the Act ') for ejectment on the ground that each of them is a "small land owner" as defined in Section 2(2) of the Act and that they required the land for self cultivation.
The Assistant Col lector, Hissat rejected the application.
The owners ' appeals were dismissed by the Collector on January 4, 1965.
Their revision also was rejected by the Commissioner of Ambala Division on October 26, 1965.
Their further revision to the Financial Commissioner also met with the same fate on May 17, 1966.
Thereafter the land owners moved the High Court by a writ petition under Article 226 and 227 of the Constitu tion on the ground that the land had been allotted to them in lieu of the land owned by their father Bishan Das in Pakistan and consequently the permissible area of each of them is to be computed under the proviso to Section 2(3) of the Act and so computed the holding of each of the five were well below the permissible limit of 30 standard acres pre scribed thereunder.
The writ petition was dismissed but the L.P. Appeals filed against the same came up for considera tion before a full Bench of the High Court of Punjab and Haryana.
The High Court held that in view of the explanation to the proviso the heirs and successors of the displaced persons to whom land were allotted could not claim the benefit of the proviso and that the permissible area under the substantive part of section 2(3) is 60 ordinary acres.
The decision of the full Bench is reported in 1967 Punjab Law Reporter 913.
Against this decision the respondent land owners preferred appeals to this Court.
By a judgment dated December 15, 1978 in Munshi Ram & Ors '.
vs Financial Commissioner, Haryana & Ors.
, ; this Court confirmed the view of the full Bench.
However, this Court accepted and argument on behalf of the land owners that in computing the permissible area of each of the land owners the uncultivated area of 'banjar jadid ', 'banjar kadim ' and 'gair mumkin ' lands as on April 213 15, 1953 could not be included.
As the authorities under the Act had illegally and wrongfully included these types of uncultivated lands orders of the various authorities were set aside and the case was remanded to the Collector con cerned of Hissar District with a direction that he should ascertain the extent of the 'banjar jadid ', 'banjar kadim ' and 'gair mumkin ' of the land owners allottees at the rele vant date, namely, April 15, 1953 and recompute their per missible area after excluding such land.
It is now ascer tained that so computed each of the land owners were holding at the relevant date less than 60 acres.
When these proceed ings were pending simultaneously applications filed by the tenants under section 18 of the Act for purchase of the surplus area were also being considered by the various authorities.
When that matter came up before the Financial Commissioner, Haryana, in surplus area cases after noting the judgment of the Full Bench of the High Court in the land owners case, the Financial Commissioner set aside the orders of the Collector and remanded the tenants cases for purchase of surplus land with a direction that the Collector must decide the case of surplus area after allowing the permissible 60 acres to the land owners.
Thereafter.
the Collector took up consideration of the surplus area cases in the light of the remand order.
However, by his Order dated February 2, 1978 the Collector held that the land owners should include in the permissible area all the 'banjar ' lands which have since been brought under cultivation and accordingly directed the land owners to produce the list of permissible area.
On appeal by the land owners the Financial Commissioner remanded the cases to Collector with a direc tion that he must decide the cases after excluding all 'banjar lands '.
The tenants filed petitions against this Order to the Financial Commissioner.
By the time these cases came up for orders the Supreme Court had decided the land owners eviction cases on December 15, 1978 (supra).
There fore, the revision petitions were dismissed.
However, the Collector was asked to determine the permissible area with reference to relevant date, viz., April 15, 1953.
By his Order dated May 6, 1982 the Collector determined the area held by each of the land owners, after excluding the 'ban jar ' lands as less than the permissible area and that, therefore, no area owned by them could be declared surplus and accordingly dismissed the purchase application filed by the tenants.
The Commissioner by his order dated April 18, 1983 confirmed this decision of the Collector.
The tenants went in revision before the Financial Commissioner.
It was again argued before the Financial Commissioner that he should not have allowed the 'banjar ' area to be excluded from their holding since they had subsequently been brought under cultivation.
The Financial Commissioner agreed with the land 214 owners that 'banjar ' lands could not be treated as 'lands ' for the purpose of computing the permissible area, that the relevant date for purpose of determining the permissible area is April 15, 1953 and in that view dismissed the pur chase applications filed by the tenants.
The tenants having failed in the writ petition filed by them questioning the dismissal of their purchase applications, have filed these five appeals.
The main contention of Mr. Gujral, learned counsel for the petitioner in these cases was that in determining the question whether a person is a small land owner for the purpose of the Act the entire land owned by him whether cultivated or not cultivated and whether it is 'banjar ' or any other land shall be taken into account.
If the total extent of the land so calculated is above the permissible area, then unless the land owner has made the reservation as contemplated in sections 3, 4, 5 and 5A, he incurs the penalty under section 5C and the 'permissible area ' will be reduced to 10 standard acres and then again he cannot also choose these 10 standard acres but the tenants would have the option to purchase any land of the land owner including the land under the personal cultivation of the land owner, leaving only 10 standard acres.
The point in this form was never raised before and, therefore, the learned counsel for the respondent objected to the counsel raising it for the first time in this Court.
But since it is a question of law and the facts were not in dispute we have permitted the counsel to raise this point.
It is not in dispute that the land owners had not made any reservation under sections 3, 4 and 5 originally nor did they make it after section 5A was introduced, though their lands were situated in more than one Patwar Circle within section 5A.
However, the stand taken by the land owners was that they were small landowners having less than 60 acres and, therefore, they were not obliged to make any reserva tion and section 5C would not be attracted at all.
The following proposition have been settled by the decisions of this Court in Bhagwan Das vs State of Punjab,[1966] 2 SCR 510 and MunshiRam vs Financial Commis sioner, Haryana, (supra).
The relevant date for determining the permissible area and the surplus area is April 15, 1953 the date on which the Punjab Security of Land Tenures Act, 1953 came into force and not the date on which the eviction application was filed.
If a person is a small land owner at the commencement of the Act, his status is not altered by reason of improvements in the value of his land or re allotment of land on compul sory consolidation of holdings.
215 3.
Banjar Kadim, Banjar Jadid and Gair Mumkin cannot be taken into account while computing the permissible area and surplus area under the Act.
Banjar Kadim and Banjar Jadid do not fall within the purview of the definition of 'land ' under the Act as they are not being occupied or let for agricultural purposes or purposes subservient to agriculture.
Permissible area under the substantive part of section 2(3) for a person who is not a displaced person is sixty ordinary acres.
The concept of standard acre being a meas ure of area convertible into ordinary acres of any class land according to prescribed scales with reference to the quantity of the yield and quality of the soil, has been introduced in the definition of permissible area to emphasise the qualitative aspect of a land holding and the maximum limit of sixty acres its quantitative aspect.
Section 2(2) of the Act defining small land owner reads as follows: "Small land owner means land owner whose entire land in the State of Punjab does not exceed the 'permissible area '.
Explanation In computing the area held by any particular land owner the entire land owned by him in the State of Punjab, as entered in the record of rights, shall be taken into account, and if he is a joint owner only his share shall be taken into account.
" The learned counsel for the appellant wanted us to understand and interpret the words "entire land" with refer ence to the definition of the word 'land ' in section 2(8) and that sub clause reads as follows: " 'Land ' and all other terms used, but not defined in this Act, shall have the same meaning as are assigned to them in the Punjab Tenancy Act, 1887 (XVI of 1887).
' Section 4(1) of the Punjab Tenancy Act, 1887 defines land as follows: 216 " 'Land ' means land which is not occupied as the site of any building in a town or village and is occupied or has been let for agricul tural purposes or for purposes subservient to agriculture, or for pasture, and includes the sites of buildings and other structures on such land".
This Court had held in Munshi Ram vs Financial Commissioner, (supra) that banjar kadim and banjar jadid do not fall within the purview of definition of land under the Act as they are not being occupied or let for agricultural purposes or for purposes subservient to agriculture.
It necessarily follows that in calculating the total extent held by a person on the date of the Act for purposes of determining whether a person is a small land owner, these banjar lands cannot be taken into account.
We are also not impressed with the argument that a land owner shall make a reservation under the Act in all cases irrespective of whether he is a small land owner or not.
Section 3 of the Act speaks of a small land owner who by virtue of an allotment made after the commencement of the Act under the "comes to hold more than the permissible area of the land".
The section enables and provides that in such a case the small landowner may select out of the entire area held by him as a land owner land not exceeding the permissible area and reserve it for himself.
The section thus implies that as a small land owner he was not obliged to make any reserva tion.
But when by reason of allotment made subsequently under the he "comes to hold more than the permissible area", he was given an option to select out of the entire land, land to the extent of permissible area and to reserve to himself, again emphasising that holding more than the permissible area as a necessary requirement to oblige a landowner to make a selection or reservation.
Section 4 deals with the case where the person was not a small land owner but has made a reservation under the original 1950 Act which was repealed and replaced by the 1953 Act.
This provision ena bles him to make a fresh selection and reservation if his allotment under the had been modified or revised since his earlier reserva tion.
Section 5 of the Act provides: "Any reservation before the commencement of this Act, shall cease to have effect and subject to the provisions of sections 3 and 4 any land owner who owns land in excess of the permissible area may reserve out of the entire land held 217 by him in the State of Punjab as land owner, any parcel or parcels not exceeding the per missible area by intimating his selection in the prescribed form and manner to the patwari of the estate in which the land reserved is situate or to such other authority as may be prescribed." This again requires only a land owner who owns land in excess of the permissible area to make a fresh selection and reservation to an extent not exceeding the permissible area.
Section 5A also deals with a case where a land owner holding in excess of the permissible area but it is with reference to a land owner who has land situate in more than one patwar circle.
Section 5B authorised a land owner who was holding lands in excess of the permissible area but has not previ ously exercised the right of reservation, to select and reserve the permissible area for his own purposes within the extended period mentioned in that section.
The need to make a reservation would thus arise only when the land owner on the relevant date held land in excess of the permissible area.
This Court in Gurbux Singh vs State of Punjab, AIR 1964 SC 502 accepted that: "The main purpose of the Act seems to be to: (i) provided a 'permissible area ' of 30 stand ard seems to a land owner/tenant, which he can retain for self cultivation; (ii) provide security of tenure to tenants by reducing their liability to ejectment as specified in section 9; (iii) ascertain surplus areas and ensure re settlement of ejected tenants on those areas; (iv) fix maximum rent payable by tenants, and (v) confer fights on tenants to pre empt and purchase their tenancies in certain circum stances.
" Thus the Act is also intended to place a ceiling on holding of land by fixing a maximum area permissible to be held by a land owner.
In other words the excess over the permissible area shall be available as surplus area to be dealt with under the provisions of the Act.
Then again section 9(1)(i) of the Act dealing with the liability of a tenant for 218 eviction states that "tenants on the area reserved under this Act or is a tenant of a small land owner" is liable for eviction.
If in every case irrespective of whether the person is a small land owner or not he had to make a reser vation then the later portion of this clause referring to a tenant of small land owner was absolutely not necessary.
The right of reservation given to a person who holds land in excess of the permissible area is, among others, to give him an option to select that land which he would like to retain for himself and avoid one of the consequences of enabling the tenant to choose under section 18 of the Act any land including that which is under the personal cultivation of the land owner.
It may be mentioned that section 18 of the Act itself specifically provides that the right to purchase is available to a tenant only against a land owner "other than a small land owner".
In our view, therefore, it is not necessary and the Act does not make it obligatory, on pain of consequences provided under section 5C, for a small land owner to make a reservation under sections 3, 4, 5, 5A or 5B.
It was then contended by the learned counsel for the appellant that an area of 0.33 ordinary acres had been excluded in determining total extent held by the land owner on the ground that area was under old tenants and that it should not have been excluded.
This point was not raised at any stage.
No facts relating to this area is available on record and, therefore, we cannot permit the counsel to raise this point for the first time in this Court.
In the result the appeals fail and they are dismissed.
However, the parties will bear their respective costs in all the appeals in this Court.
Y. Lal Appeals dis missed.
| IN-Abs | These appeals are by tenants against the land owners.
One Bishan Das owned considerable extent of land in Pakistan.
He died on April 11, 1948 after he had migrated to India.
After his death the Rehabilitation Department allot ted 124 standard acres and 4 I/4 units of evacuee land to Respondents Nos. 2 to 5 his sons and to Nos. 6 & 7 who were the legal heirs of one his deceased son.
Each of the five sons was deemed entitled to 24 standard acres and 13 units of land and accordingly mutuation in respect of each of them was allowed by the Rehabilitation Department.
Permanent rights in regard to the allotted land were also conferred by the authorities on the said respondents.
Thereupon the said respondents land owners initiated ejectment proceedings under sec.
9(1)(i) of the Punjab Security of Land Tenures Act, 1953 against the tenants who were then in occupation of the Lands in question on the ground that each one of them was a small land owner as defined in Section 2(2) of the Act and that they required the land for self cultivation.
The Assistant Collector, Hissar rejected the application.
Their appeals were dismissed by the Collector on 4.4.1965.
Their revision preferred before the Commissioner, Ambala Division was also rejected.
Land owners ' further revision to Finan cial Commissioner also failed whereupon they filed a Writ Petition before the High Court on the ground that the land had been allotted to them in lieu of the land owned by their father in Pakistan and consequently the permissible area of each of them was to be computed under the proviso to section 2(3) of the Act, and so computed the holding of each of the five was well below the permissible limit of 30 standard acres prescribed thereunder.
The High Court dismissed the Writ petition.
Respondents preferred Letters Patent Appeals wherein the High Court held that in view of the Explanation to the proviso to section 2(3), the heirs and successors of the displaced persons to whom lands were allotted could not claim the benefit of the proviso and that the permissi 210 ble area under the substantive part of section 2(3) was 60 ordinary acres, The respondents preferred appeals to this Court.
This Court confirmed the view of the High Court.
However this Court accepted an argument advanced on behalf of the re spondents land owners that in computing the permissible area of each of the land owner, the uncultivated area of "banjar Jadid", "banjar Kadim" and "gair Mumkin" lands as on April 15, 1953 could not be included.
As the authorities had wrongly included these types of lands, their orders were set aside and the case was remanded to the Collector concerned with a direction that should ascertain the extent of "banjar Jadid", "banjar Kadim" and "gair mumkin" lands of the Re spondents allotted as on 15.4.1953.
When these proceedings were pending, applications filed by the appellants tenants under section 18 of the Act for purchase of surplus area also came to be considered by the authorities.
When the matter came up before the Financial Commissioner he set aside the orders of the Collector and remanded the appel lants tenants cases for purchase of surplus land with a direction that the Collector must decide the cases of sur plus area after allowing the permissible 60 acres to the land owners.
In a subsequent proceedings, the Financial Commissioner directed the Collector to determine the permis sible area after excluding all "banjar lands".
The tenants filed Petitions before the Financial Commissioner against the order.
However by the time these cases came up for orders, this Court had decided the land owners ' eviction cases viz in Munshi Ram & Ors.
vs Financial Commissioner.
Haryana & Ors., ; As such the revision Petitions were dismissed and the Collector was asked to determine the permissible area with reference to relevant date viz., April 15, 1953.
By his order dated 6.5.82 the Collector accordingly determined the area held by each of the land owner after excluding the "banjar lands", as less than the permissible area and found that no area owned by them could be declared surplus and on that footing dismissed the purchase applications filed by the appellantstenants.
Their Petitions having been dismissed by the Authorities under the Act, they fried Writ Petitions questioning the dismissal of their purchase applications.
The High Court having dismissed the Writ Petitions, they have filed these appeals.
Dismissing the appeals, this Court, HELD: The Punjab Security Land Tenures Act 1953 is intended to 211 place a ceiling on holding of land by fixing a maximum area permissible to be held by a land owner.
In other words the excess over the permissible area shall be available as surplus area to be dealt with under the provisions of the said Act.
[217H] In calculating the total extent held by a person on the date of the Act for purposes of determining whether a person is small land owner, the banjar lands cannot be taken into account.
[216C] The need to make a reservation would arise only when the land owner on the relevant date held land in excess of the permissible area.
[217C] The right of reservation given to a person who holds land in excess of the permissible area is, among others to give him an option to select that land which he would like to retain for himself and avoid one of the consequences of enabling the tenant to choose under section 18 of the Act any land including that which is under the personal cultiva tion of the land owner.
[218B] It is not necessary and the Act does not make it obliga tory, on pain of consequences provided under section 5C, for a small land owner to make a reservation under sections 3, 4, 5, 5A or 5B. [218C] Bhagwan Das vs State of Punjab, ; Gurbux Singh vs State of Punjab, AIR 1964 SC 502, referred to.
|
ivil Appeal No. 1945 of 1974.
From the Judgment and decree dated 9.10.1973 of the Madras High Court in L.P.A. No. 78 of 1969.
section Padmanabhan, K.M.M. Khan and Vineet Kumar for the Appellant.
Vepa Sarathy and Ramesh N. Keshwani for the Respondents.
The Judgment of the Court was delivered by M. FATHIMA BEEVI, J.
1.
This is an appeal by special leave against the judgment and decree dated the 9th October, 1973 of the High Court of Judicature at Madras in Letters Patent Appeal No. 78 of 1969.
The appellant was the first defendant in O.S. No. 53 of 1959 in the Munsiff 's Court Chingleput.
The respondents are the legal representatives of Munisubba Reddi, the plain tiff therein.
That suit was instituted on 11.2.1959 for recovery of possession of the suit property with mesne profits.
The suit was decreed by the trial court on 7.11.1960.
The first appellate court by the revised judgment dated the 5th August, 1961 in A.S. No. 21 of 1961 reversed the decree.
The second appeal preferred by the plaintiff was dismissed by the High Court in S.A. No. 426 of 1965 on 31.1.1969.
However, the Division Bench of the High Court allowed the Letters Patent Appeal filed by the plaintiff.
It is necessary to set out few facts for the purpose of this appeal.
The suit property having an extent of 13 acres and 42 1/2 cents originally belonged to one Dasu Reddi.
He conveyed possession of the land to one Varada Reddi under an oral agreement of sale on 10.7.1946.
A deed of sale was drawn up on 17.7.1947, but Dasu Reddi died before it could be registered.
Thereafter his sons Rajaram Reddi 196 and Ramalinga Reddi executed exhibit A. 1 sale deed in favour of Munisubba Reddi on 6.10.1949.
Varada Reddi, aggrieved, instituted O.S. No. 78 of 1949 against Munisubba Reddi and his vendors for specific performance of the contract for sale, asserting his possession in pursuance of the agreement dated 10.7.1946.
Varada Reddi died pending the suit.
Mu thukrishna Reddi was impleaded as his legal representative.
That suit was decreed in his favour on 13.12.1952.
The decree became final, but was not executed.
In the present suit the plaintiff Munisubba Reddi alleged that he was put in possession of the land by Mu thukrishna Reddi after the said decree under an arrangement evidenced by exhibit A.4 dated 12.12.1955 and while in posses sion, the defendants Achal Reddi and others trespassed into the property in 1956.
Achal Reddi contested the suit denying the petitioner 's title and the alleged trespass and claiming that Muthukrishna Reddy had orally transferred his rights and conveyed possession to him for valuable consideration.
The trial court in granting the petitioner a decree for possession found that the plaintiff 's title under the sale deed of 1949 as against his vendors was made perfect and title did not pass to Muthukrishna Reddi as he did not choose to execute the decree and the petitioner was in possession within 12 years prior to the suit.
It was found that the first defendant Achal Reddi has no title to the suit property and that he is not in possession of the same.
The first appellate court by the judgment dated 5.8.1964 rendered after the remand considered the question of title as well as possession and held: "If Muthukrishna Reddi had enforced the decree in O.S. No. 76/1949 for specific performance against the plaintiff and his vendors, that would have put an end to the title of the plaintiff under exhibit A. 1.
As already stated, the decree was allowed to lapse leaving the title of the plaintiff under exhibit A. 1 unaf fected.
The title that vested in the plaintiff on 6.6.1949 continued to remain with him thereafter for the above reasons.
As against this, the defence contention that the 1st defendant under an oral agreement, became the owner of the properties cannot stand.
My finding, therefore, is that the plaintiff has title to the properties under exhibit A.1." The learned Judge, however, found that the plaintiff was not in possession of the suit land in 1955 and the plaintiff having neither 197 proved possession nor dispossession at anytime was not entitled to a decree.
In S.A. No. 426 of 1965 these concurrent findings of the trial court as well as the first appellate court on the question of plaintiff 's title had not been challenged.
The only question raised therein and considered by the learned Single Judge was whether the plaintiff was in possession within 12 years of suit in order to enable him to recover possession and whether for that purpose he could say that his vendors and before him, Dasu Reddi were in possession of the property and consequently he could add that period to the period before 6.6.1949, the date of sale in his favour.
The learned Judge was of the view that if Varada Reddi 's possession was permissive, then the possession should be deemed to have continued with the original owner Dasu Reddi and thereafter his sons, but if on the other hand the pos session of Varada Reddi was adverse even as against the original owner, the plaintiff would not be entitled to add the period before 6.6.1949 and such possession could not enure to his benefit.
After referring to the decision in Annamalai Chettiar and Another vs Muthiah Chettiar and Another, ILR 19651 Madras 254 the learned Judge held that Varada Reddi 's possession was adverse to Dasu Reddi from 10.7.1946, on the assumption that a sale had been effected orally even on 10.7.1946 leaving only execution of the sale deed to be done later.
This assumption of the learned Single Judge was found to be faulty by the Division Bench.
The Division Bench noticed that all that the plain tiff has to prove is that he or his predecessor in title was in possession at any time between 11.2.1947 and 11.2.1959.
If between 11.2.1947 and 17.7.1947 the possession of Varada Reddi was possession held on behalf of Dasu Reddi then it could be held that the plaintiff 's predecessor in title had been in possession within 12 years prior to the suit.
The Division Bench held that the transaction of 10.7.1946 was in fact and in law only an oral agreement for sale and that on the assumption that it was an oral sale the learned Single Judge failed to apply the legal position as enunciated in Annamalai vs Muthiah, (Supra).
They observed that possession as held by Varada Reddi subsequent to 10.7.1946 and before he instituted the suit in 1949 for specific performance was in the consciousness that it was only possession on behalf of the real owner.
Even if the execution of an infructuous sale deed on 17.7.1947 by Dasu Reddi in favour of Varada Reddi is assumed to have altered the complexion of events in any manner, the possession by Varada Reddi from 1.7.1946 upto 17.7.1947 at least was clearly possession held on behalf 198 of Dasu Reddi, the predecessor in title of the plaintiff.
If the plaintiff 's predecessor had been in possession of the suit property on 17.7.1947, that is to say within 12 years prior to the institution of the present suit on 11.2.1959, there can be little doubt that the plaintiff must succeed on the question of possession as well.
In this view the judg ment of the learned Single Judge was reversed.
There is no controversy that the plaintiff has to establish subsisting title by proving possession within 12 years prior to the suit when the plaintiff alleged dispos session while in possession of the suit property.
The first appellate court as well as the second appellate court pro ceeded on the basis that the plaintiff is not entitled to succeed as such possession has not been proved.
The concur rent findings that the plaintiff had title inspite of the decree for specific performance obtained against him, when that decree had not been executed are not assailed by the appellant in the High Court.
The appellant cannot, there fore, urge before us on the basis of the findings in the earlier suit to which he was not a party that exhibit A. 1 sale deed is one without consideration and does not confer valid title on the plaintiff.
The sole question that has been considered by the High Court is that of subsisting title.
We have to consider whether the question of law as to the character of the possession Varada Reddi had between 10.7.1946 and 17.7.1947 is adverse or only permissive.
In the case of an agreement of sale the party who obtains possession, acknowledges title of the vendor even though the agreement of sale may be invalid.
It is an acknowledgement and recognition of the title of the vendor which excludes the theory of adverse possession.
The well settled rule of law is that if person is in actual possession and has a right to possession under a title involving a due recogni tion of the owner 's title his possession will not be regard ed as adverse in law, even though he claims under another title having regard to the well recognised policy of law that possession is never considered adverse if it is refera ble to a lawful title.
The purchaser who got toto possession under an executory contract of sale in a permissible charac ter cannot be heard to contend that his possession was adverse.
In the conception of adverse possession there is an essential and basic difference between a case in which the other party is put in possession of property by an outright transfer, both parties stipulating for a total divestiture of all the rights of the transferor in the property, and in case in which, there is a mere executory agreement of trans fer both parties contemplating a deed of transfer to be executed at a later point of time.
In the latter case the principle of estoppel applies estopping the transferee from contending that his possession, while the contract remained executory in stage, 199 was in his own right and adversely against the transferor.
Adverse possession implies that it commenced in wrong and is maintained against right.
When the commencement and continu ance of possession is legal and proper, referable to a contract, it cannot be adverse.
In the case of an executory contract of sale where the transferee is put in possession of the property in pursuance of the agreement of sale and where the parties contemplate the execution of a regular registered sale deed the animus of the purchaser throughout is that he is in possession of the property belonging to the vendor and that the former 's title has to be perfected by a duly executed registered deed of sale under which the vendor has to pass on and convey his title.
The purchaser 's possession in such cases is of a derivative character and in clear recognition of and in acknowledgement of the title of the vendor.
The position is different in the case where in pursuance Of an oral transfer or a deed of transfer not registered the owner of a property transfers the property and puts the transferee in possession with the clear animus and on the distinct understanding that from that time onwards he shall have no right of title to the property.
In such a case the owner of the property does not retain any vestige of right in regard to the property and his mental attitude towards the property is that it has ceased to belong to him altogether.
The transferee after getting into possession retains the same with the clean animus that he has become the absolute owner of the property and in complete negation of any right or title of the transferor, his enjoyment is solely as owner in his right and not derivatively or in recognition of the title of any person.
So far as the vendor is concerned both in mind and actual conduct, there is a total divestiture of all his right, title and interest in the property.
This applies only in a case where there is a clear manifestation of the intention of the owner to divest himself of the right over the property.
On the other hand in the case of an executory contract the possession of the transferee until the date of registration of the conveyance is permissive or derivative and in law is deemed to be on behalf of the owner himself.
The correctness of the decision in Annamalai vs Muthiah (supra) cannot, therefore, be doubted.
The parties are concluded by the finding of the Division Bench that the transaction of 10.7.1946 between Dasu Reddi and Varada Reddi is only an agreement for sale and not an oral sale of the property.
If that be so the possession of Varada Reddi in pursuance of such an agreement of sale and in the expectation that there would be a com plete divestiture of all the rights of the owner in his favour on execution of a regular sale deed, until the execu tion of the sale deed, 200 was only possession on behalf of Dasu Reddi.
Such possession having been within a period of 12 years prior to the present suit, the plaintiff succeeds in having established the possession of his predecessor ininterest within 12 years prior to the date of the suit.
The plaintiff is, therefore, entitled to a decree in his favour.
The decision of the Letters Patent Bench of the High Court is correct and we confirm the same.
The appeal is accordingly dismissed with costs.
G.N. Appeal dismissed.
| IN-Abs | A, the owner of the land in question, conveyed posses sion of it to B under an oral agreement of sale.
A deed was drawn up within about a week, but before it could be regis tered, A died and his sons executed a sale deed in respect of the land, in favour of C. Aggrieved, B instituted a suit against C and A 's sons for specific performance.
B died during the pendency of the suit and his son D was impleaded as his legal representative.
The suit was decreed in favour of D.
Though the decree became final, it was not executed.
C filed a suit alleging that he was put in possession by D and that E and others trespassed into the property.
E contested the suit on the ground that D had orally trans ferred his rights and conveyed possession to him for valu able consideration.
The Trial Court decreed the suit.
On appeal, the first appellate court held that C was not enti tled to a decree.
On appeal to the High Court, the Learned Single Judge held that B 's possession was adverse to A on the assumption that a sale had been effected orally leaving only execution of the sale deed to be done later and so, C would not be entitled to add the period before the sale in his favour on 6.6.49 for the purpose of calculating the period of posses sion for 12 years, prior to the suit, and that such posses sion could not enure to his benefit under the .
However, the concurrent findings of the Trial Court and the first Appellate Court on the question of C 's title had not been challenged.
The Division Bench reversed the above judgment holding that the Learned Single Judge failed to apply the correct legal position on the assumption that the transaction of 10.7.46 was only an oral sale.
This appeal by special leave has been filed by E against the judgment of the Division Bench.
194 Dismissing the appeal, this Court, HELD: 1.
If a person is in actual possession and has a right to possession under a title involving a due recogni tion of the owner 's title his possession will not be regard ed as adverse in law, even though he claims under another title having regard to the well recognised policy of law that possession is never considered adverse if it is refera ble to a lawful title.
The purchaser who got into possession under an executory contract of sale in a permissible charac ter cannot contend that his possession was adverse.
Adverse possession implies that it commenced in wrong and is main tained against right.
When the commencement and continuance of possession is legal and proper, referable to a contract, it cannot be adverse.
[198F G; 199A] 2.1 In the case of an executory contract of sale where the transferee is put in possession of the property in pursuance of the agreement of sale and where the parties contemplate the execution of a regular registered sale deed and animus of the purchaser throughout is that he is in possession of the property belonging to the vendor and that the former 's title has to be perfected by a duly executed registered deed of sale under which the vendor has to pass on and convey his title.
The purchaser 's possession in such cases is of a derivative character and in clear recognition of and in acknowledgement of the title of the vendor.
The position is different in the case where in pursuance of an oral transfer or a deed of transfer not registered the owner of a property transfers the property and puts the transferee in possession with the clear animus and on the distinct understanding that from that time onwards he shall have no right of title to the property.
In such a case the owner of the property does not retain any vestige of right in regard to the property and his mental attitude towards the property is that it has ceased to belong to him altogether.
The transferee after getting into possession retains the same with the clear animus that he has become the absolute owner of the property and in complete negation of any right or title of the transferor, his enjoyment is solely as owner in his right and not derivatively or in recognition of the title of any person.
So far as the vendor is concerned both in mind and actual conduct, there is a total divestiture of all his right, title and interest in the property.
This applies only in a case where there is a clear manifestation of the intention of the owner to divest himself of the right over the property.
On the other hand in the case of an executory contract the possession of the transferee until the date of registration of the conveyance is permissible or derivative and in law is deemed to be on behalf of the owner himself.
[199B F] 195 2.2 In the instant case, the parties are concluded by the finding of the Division Bench that the transaction of 10.7.46 was only an agreement for sale and not an oral sale of the property.
[199G] Annamalai Chettiar and Another vs Muthiah Chettiar and Another, ILR 19651 Madras 254 approved.
|
ivil Appeal No. 2967 of 1986.
From the Judgment and Order dated 28.7.1986 of the Allahabad High Court in W.P. No. 1793 of 1980.
Satish Chandra, R.B. Mehrotra, S.K. Mehta, Atul Nanda and Aman Vachher for the Appellant.
J.M. Khanna, R.B. Misra and Ms. Anil Katiyar for the Respondents.
The Judgment of the Court was delivered by SINGH, J.
This appeal is directed against the judgment and order of the High Court of Allahabad dated July 28, 1986 dismissing the appellant 's petition under Article 226 of the Constitution challenging the order of the Commissioner Varanasi Division dated February 13, 1980 setting aside the order of Municipal Board, Jaunpur appointing the appellant as Tax Inspector.
The Municipal Board, Jaunpur issued advertisement invit ing applications for appointment to the post of Tax Inspec tor.
The advertisement stated that the existing employees of the Revenue Department of the Municipal Board were eligible for consideration along with outsiders.
Hari Mohan Respond ent No. 3 who was the senior most Tax Collector working in the Municipal Board, Jaunpur was called for interview but he refused to appear for the interview on the plea that the post of Tax Inspector should have been exclusively filled by promotion and as he was the seniormost Tax Collector he should be promoted without considering any outsider.
The Municipal Board ignored, his claim and selected the appel lant, and appointed 204 him to the post of the Tax Inspector by the order dated 11.3.78.
Respondent No. 3 thereafter filed a claim petition before the Services Tribunal constituted under the U.P. Public Services Tribunals Act, 1976 but subsequently he withdrew the same on 23.12.79.
Thereafter he filed a repre sentation to the Prescribed Authority i.e. the Commissioner Varanasi challenging appellant 's appointment to the post of Tax Inspector.
The Commissioner by his order dated 13.2.80 set aside the order of the Municipal Board and cancelled the appellant 's appointment on the ground that the Respondent No. 3 was entitled to promotion in pursuance to the direc tions contained in the Government Order dated 10.4.50.
The appellant filed a writ petition under Article 226 of the Constitution before the High Court challenging the order of the Commission.
A learned Single Judge (B.D. Agarwal, J.) of the High Court of Allahabad dismissed the writ petition and affirmed the order of the Commissioner on the findings that the appellant 's appointment was made in violation of the Government Order dated 10.4.50.
Hence this appeal.
After heating learned counsel for the parties at length we are of the opinion that the High Court committed manifest error in upholding the order of the Commissioner.
The basic question which arises for consideration is whether the post of Tax Inspector, under the provision of the U.P. Municipal ities Act, 1916 (hereinafter referred to as the 'Act ') or any rules framed thereunder or under the Government Order dated 10.4.1950 the post of Tax Inspector was required to be filled by promotion only and not by direct recruitment.
The Prescribed Authority i.e., the Commissioner as well as the High Court both proceeded on the assumption that the Govern ment Order dated 10.4.50 had been issued by the State Gov ernment in exercise of its supervisory powers under section 71 of the Act and as such it was binding on the Municipal Board, and the directions contained therein required the Municipal Board to fill up the post of Tax Inspector exclusively by promotion and not by direct recruitment.
In making the appellant 's appointment as a direct recruit, the Municipal Board acted in violation of the directions contained in the aforesaid Government Order, therefore, the appellant 's appointment was rendered illegal.
The High Court upheld the order of the Prescribed Authority on these findings.
Learned counsel for the appellant urged that the directions con tained in the Government Order dated 10.4.50 were ultra vires the State Government 's powers under section 71 of the Act.
He placed reliance on Ramesher Prasad and Other vs Municipal Board, Pilibhit, AIR 1958 All. 363.
The learned counsel further urged that the aforesaid decision was approved by two other learned Judges of the High Court in 205 Ram Kripal Garg vs State of U.P., Writ Petition No. 4556 of 1965 dated 16.9.66 and Inder Bahadur vs Municipal Board, Mirzapur and Others, Writ Petition No. 235 of 1970 dated 20.10.72 holding that the Government Order dated 10.4.50 was ultra vires.
These decisions were placed before the learned Single Judge but he did not agree with the view taken in the aforesaid decisions instead he took a contrary view in holding that the Government Order dated 10.4.50 was valid and it required the Municipal Board to fill up the post of Tax Inspector only by promotion.
It is well settled princi ple of judicial discipline as has been reiterated in a number of decisions of this Court that if a. Single Judge, disagrees with the decision of another Single Judge, it is proper to refer the matter to a larger Bench for an authori tative decision.
But in the instant case the learned Judge acted contrary to the well established principles of judi cial discipline in ignoring those decisions.
Section 71 of the Act before its amendment in 1964 did not confer power on the State Government to issue any direc tion regulating the conditions of service of Municipal employees.
The view taken by the High Court in Ramesher Prasad case and followed in other two cases, is correct.
The High Court placed reliance on the Government Orders dated 27.4.57, 9.12.59 and 30.1.72 in holding that the directions contained in Government Order dated 10.4.50 were binding on the Municipal Board.
We have gone through the aforesaid Government Orders and Notifications but we find nothing therein to clothe the Government Order dated 10.4.50 with statutory character.
A Government Order declared ultra vires by High Court could not be revived by any subsequent Govern ment Order without there being any statutory power for the same.
Moreover the aforesaid Government Orders and Notifica tions do not contain any direction requiring the Municipal Board to fill up the post of Tax Inspector exclusively by promotion.
The High Court committed error in upholding the Commissioner 's order.
We have closely scrutinised the Government Order dated 10.4.50 (Annexure 1 to the petition) with the assistance of the counsel for the parties.
But even after conceding super visory power to the State Government to issue directions laying down conditions of service of Municipal employees, we do not find any directions therein requiring a Municipal Board to fill the post of Tax Inspector only by promotion and not by direct recruitment.
Learned counsel for the respondent placed reliance on paragraphs 5 and 6 of the Government Order in support of his contention that the post of Tax Inspector was required to be filled by promotion only.
Paragraphs 5 and 6 of the Government Order read as under: 206 "5.
In the case of the posts mentioned in the annexure promotions should, as a rule, be made from the lower to the higher posts or grades, as the case may be, in the same class of Service Subject to the general orders con tained in the above paragraphs.
The prevailing practice 'of transferring at random officials in one class of service to another should be stopped.
When direct recruitment to any post speci fied in the annexure had to be made it will be governed by the educational qualifications shown therein.
Recruitments to posts from outside should, however, as far as possible be made by inviting applications through adver tisement in the press and making a selection therefrom preferably be means of a competitive test.
Local Bodies may also be advised to form a Committee consisting of the Chairman or the President, the Executive Officer or the Secre tary, as the case may be, and the principal administrative officer of the department concerned, to make a selection from among the applicants for a vacant post by interviewing the after a competitive test.
The actual appointment will, however, be made by the competent authority.
" In order to ascertain the correct scope of the aforesaid paragraphs it is necessary to refer to the entire content of the Order.
It appears that the U.P. Pay Committee made certain recommendations prescribing minimum qualifications in respect of employees of Local Bodies.
The State Govern ment accepted the recommendations of the Pay Committee by its Resolution dated March 29, 1949 and in pursuance thereof it issued the Government Order dated 10.4.50 prescribing minimum qualifications for the employees of Local Bodies mentioned in the Schedule to the Order which included the post of Tax Inspector.
Paragraph 2 of the Order directed that future vacancies on the promotion post will not ordi narily be given from a lower to higher post unless the officials holding the lower post, possess the requisite educational qualifications prescribed for the higher post.
Paragraph 3 directed that the posts of Head Clerks or Office Superintendent should be filled by promotion only from among the educationally qualified Head Clerks.
It further directed that under no circumstances the posts of Head Clerks or Office Suptdt.
be filled by direct recruitment from outside.
Paragraph 4 directed the Municipal Boards to discontinue the posts of Sectional Head Clerks and to create posts of Office Head Clerks.
Paragraphs 7 and 8 of the Order do not contain any directions 207 with regard to the question of promotion.
Paragraph 5 as quoted earlier directed that promotion as a rule should be made from the lower to the higher post or grade in the same class of service subject to the directions contained in other paragraphs of the Order which means subject to the employee possessing the minimum qualifications prescribed for the higher post and the higher post should not be filled by transferring employees belonging to other class of serv ice.
Paragraph 6 directed that in case of direct recruitment to any post as specified in the annexure of the Order it should be governed by the educational qualifications pre scribed in the Order and recruitment should be made in accordance with the procedure prescribed therein by consti tuting a committee and inviting applications.
Paragraphs 5 and 6 as quoted above do not contain any directions requir ing Municipal Board to fill the post of Tax Inspector exclu sively by promotion.
Though paragraph 3 as already noted directed that under no circumstances the post of Head Clerk or Office Suptdt. should be filled up by the direct recruit ment from outside, no such direction for the post of Tax Inspector was issued, therefore it was open to the Municipal Board to make appointment to the post of Tax Inspector either by direct recruitment or by promotion.
In the instant case, the Municipal Board, Jaunpur gave opportunity to its employees working in the revenue class of service to appear for selection to the post of Tax Inspector in competition with outsiders.
Respondent No. 3 however, did not avail the opportunity for which he himself is to be blamed.
The Municipal Board, in our opinion, acted within its jurisdiction in making appointment to the pOSt Of Tax Inspector by direct recruitment.
The Commissioner, as well as the High Court committed error in taking a contrary view.
Subsequently, the Act was amended and the statutory rules i.e., the U.P. Palika Centralised Service Rules have been framed regulating the conditions of service of Municipal employees and appointment to the post of Tax Inspector is regulated by Statutory Rules.
The High Court committed serious error in upholding the order of the Government dated 13.2.80 in setting aside the appellant 's appointment without giving any notice or oppor tunity to him.
It is an elementary principle of natural justice that no person should be condemned without hearing.
The order of appointment conferred a vested right in the appellant to hold the post of Tax Inspector, that right could not be taken away without affording opportunity of hearing to him.
Any order passed in violation of principles of natural justice is rendered void.
There is no dispute that the Commissioner 's Order had 208 been passed without affording any opportunity of hearing to the appellant therefore the order was illegal and void.
The High Court committed serious error in upholding the Commis sioner 's Order setting aside the appellant 's appointment.
In this view, Orders of the High Court and the Commissioner are not sustainable in law.
We accordingly, allow the appeal and set aside the Order of the High Court as well as the Commissioner.
There will be no order as to costs.
T.N.A. Appeal allowed.
| IN-Abs | The Municipal Board, Jaunpur invited applications for the post of Tax Inspector.
The employees working in the Revenue Department of the Municipal Board were eligible for consideration alongwith the outsiders.
Respondent No. 3, the seniormost Tax Collector in Municipal Board, was called for interview but he refused to appear on the plea that the post of Tax Inspector should be exclusively filled by promotion and being the seniormost Tax Collector he should be promoted without considering any outsider.
Ignoring his claim the Municipal Board selected and appointed the appellant to the post of Tax Inspector.
Respondent No. 3 represented to the Commissioner challenging the appellant 's appointment.
The Commissioner set aside the order of the Municipal Board and cancelled the appellant 's appointment holding that pursuant to the directions contained in the Government 's Order dated 10.4.50, Respondent No. 3 was entitled to promotion.
The appellant challenged the Commissioner 's order before the High Court by filing a writ petition.
Disagreeing with the decision of another Single Judge, a Single Judge of the High Court dismissed the writ petition, and affirmed the order of the Commissioner on the findings that the appellant 's ap pointment was made in violation of the Government 's Order dated 10.4.50.
Hence this appeal.
202 Allowing the appeal and setting aside the order of the High Court, this Court, HELD: 1.
The orders of the High Court and the Commis sioner are not sustainable in law.
[208B] 1.1.
It is a well settled principle of judicial disci pline that if a Single Judge disagrees with the decision of another Single Judge, it is proper to refer the matter to a larger Bench for an authoritative decision.
But in the instant case, the learned Single Judge of the High Court acted contrary to the well established principles of judi cial discipline in ignorning those decisions.
[205B C] 2.
Section 71 of the U.P. Municipalities Act, 1916 before its amendment in 1964 did not confer power on the State Government to issue any direction regulating the conditions of service of Municipal employees.
[205D] Ramesher Prasad and Ors.
vs Municipal Board, Pilibhit, A.I.R. 1958 All. 363; Ram Kripal Garg vs State of U.P., Writ Petition No. 4556 of 1965 dated 16.9.66 and Inder Bahadur vs Municipal Board, Mirzapur and Ors.
, Writ petition No. 235 of 1970 dated 20.10.1972 approved.
I Even after conceding supervisory power to the State Government to issue directions laying down conditions of service of Municipal employees, there are no directions in the Government Order dated 10 4 50 requiring a Municipal Board to fill the post of Tax Inspector only by promotion and not by direct recruitment.
Therefore, it was open to the Municipal Board to make appointment to the post of Tax Inspector either by direct recruitment or by promotion.
[205G; 207D] 2.2 In the instant case, the Municipal Board gave oppor tunity to its employees working in the revenue class of service to appear for selection in competition with outsid ers.
Respondent No. 3 however did not avail the opportunity for which he himself is to be blamed.
The Municipal Board acted within its jurisdiction in making appointment to the post of Tax Inspector by direct recruitment.
[207E] 2.3 A Govt.
Order declared ultra vires by the High Court, could not be revived by any subsequent Govt.
Order without there being any statutory power for the same.
[205E] 3.
It is an elementary principle of natural justice that no person 203 should be condemned without hearing.
The order of appoint ment conferred a vested right in the appellant to hold the post of Tax Inspector, that right could not be taken away without affording an opportunity of hearing to him.
Any order passed in violation of the principles of natural justice is rendered void.
In the instant case, there is no dispute that the Commissioner 's order had been passed with out affording any opportunity of hearing to the appellant.
Therefore the order was illegal and void.
The High Court committed serious error in upholding the Commissioner 's order setting aside the appellant 's appointment without giving any notice or opportunity to him.
[207G H; 208A]
|
iminal Appeal No. 79 of 1956.
Appeal by special leave from the judgment and order dated September 7, 1955, of the Patna High Court in Criminal Appeal No. 370 of 1954, arising out of the judgment and order dated July 26, 1954, of the Court of the Special Judge at Bhagalpur in Special Case No. 14 of 1954.
B. R. L. Iyengar, for appellant No. 1.
section P. Sinha and P. C. Agarwala, for appellant No. 2.
R. C. Prasad, for the respondent.
August 18.
The Judgment of the Court was delivered by SINHA J.
This appeal by special leave is directed against the concurrent judgments and orders of the courts below, convicting the two appellants under section 120B read with section 165A, Indian Penal Code, and sentencing them to rigorous imprisonment for 18 months, and to pay a fine of Rs. 200 each, and in default of payment of fine, to undergo further rigorous imprisonment for 6 months.
A separate conviction under section 165A has been recorded in respect of the first appellant, Badri.
Under this head, he has been sentenced to rigorous imprisonment for 18 months, the sentence to run concurrently with the sentence under the common charge.
The facts as found by the courts below, which could not be successfully challenged before us, areas follows: The second appellant, Ramji Sonar, is a goldsmith by profession and runs a shop on the main road in the village Naogachia.
In that village there is a police station and the shop in question is situated in between the police station building and the residential quarters of the Inspector of police, who was the First Informant in the case, resulting in the conviction and 1143 sentences of the appellants as stated above.
The first appellant, Badri, runs a school for small boys in the same village about 50 yards away from the shop a foresaid of the second appellant.
On August 22,1953, the First Informant, who, holding the position of an Inspector of police, was in charge of the police station, made a seizure of certain ornaments and molten silver from a vacant building in front of the house of the second appellant, Ramji.
Those ornaments were being melted by six strangers coining from distant places, with implements for melting, said to have been supplied by Ramji.
The seizure was made on the suspicion that the ornaments and the molten silver were stolen property, which were to be sold to Ramji in a shape which could not be identified with any stolen property.
After making the seizure list of ' the properties, thus seized, the police officer arrested Ramji, as also the other six strangers.
Ramji was .released on bail that very day.
Police investigations into the case, thus started, followed.
During that period, on August 24, 1953, at about 7 30 p.m., the Inspector was on his way from his residential quarters to the police station, when both the appellants accosted him on the road, and Ramji asked him to hush up the case for a valuable consideration.
The Inspector told them that he could not talk to them on the road, and that they should come to the police station.
Thereafter, the Inspector reported the matter to his superior officer, the D.S.P. (P.W. 8), and to the sub inspector, P.W. 9, attached to the same police station.
On August 31, the same year, the first appellant, Badri, came to the police station,.
saw the Inspector in the central room of the thana, and offered to him a packet wrapped in a piece of old newspaper, containing Rs. 500 in currency notes.
He told the Inspector, (P. W. 1), that the second appellant, Ramji, had sent the money through him in pursuance of the talk that they had with him in the evening of August 24, as a consideration for hushing up the case that was pending against Ramji.
At the time the offer was made, a number of police officers besides a local merchant, (P.W. 7), were present there.
The Inspector at once 1144 drew up the first information report of the offer of the bribe on his own statement and prepared a seizure list of the money, thus offered, and at once arrested Badri and put him in the thana lock up.
After the usual investigation the appellants were placed on their trial, with the result indicated above.
Both the courts below have found that the prosecution case, a summary of which has been given above, has been proved by good and reliable evidence, and that the defence case that the prosecution was started by the inspector out of spite and in order to defend himself against the consequences of wrongfully arresting Ramji, was unfounded.
We are not impressed with the halting criticism of the evidence adduced in this case on behalf of the prosecution and accepted by the courts below.
Ordinarily, this Court does not interfere with concurrent findings of fact.
The only serious question raised in this appeal is the point raised on behalf of the second appellant, Ramji, as to whether the statement made by the first appellant, Badri, on August 31, 1953, that he had been sent by the second appellant with the money to be offered by way of bribe to the police officer, was admissible against him.
The learned counsel for the appellant was not able clearly to formulate his grounds of objection to the admissibility of that piece of evidence, which is the basis of the charge against both the accused persons.
Section 10 of the Indian Evidence Act, is a complete answer to this contention.
The section is in these terms: " 10.
Where there is reasonable ground to believe that two or more persons have conspired together to commit an offence or an actionable wrong, anything said, done or written by any one of such persons in reference to their common intention, after the time when such intention was first entertained by any one of them, is a relevant fact as against each of the persons believed to be so conspiring, as well for the purpose of proving the existence of the conspiracy as for the purpose of showing that any such person was a party to it. " The incident of August 24, when both the appellants 1145 approached the inspector with the proposal that he should hush up the case against the second appellant, for which he would be amply rewarded, is clear evidence of the two persons having conspired to commit the offence of bribing a public servant in connection with the discharge of his public duties.
There cannot, therefore, be the least doubt that the court had reasonable grounds to believe that the appellants had entered into a conspiracy to commit the offence.
Therefore, the charge under section 120B had been properly framed against both of them.
That being so, anything said or done by any one of the two appellants, with reference to the common intention, namely, the conspiracy to offer bribe, was equally admissible against both of them.
The statement made by the first appellant on August 31, that he had been sent by the second appellant to make the offer of the bribe in order to hush up the case which was then under investigation, is admissible not only against the maker of the statement the first appellant but also against the second appellant, whose agent the former was, in pursuance of the object of the conspiracy.
That statement is admissible not only to prove that the second appellant had constituted the first appellant his agent in the perpetration of the crime, as also to prove the existence of the conspiracy itself.
The incident of August 24, is evidence that the intention to commit the crime had been entertained by both of them on or before that date.
Anything said or done or written by any one of the two conspirators on and after that date until the object of the conspiracy had been accomplished, is evidence against both of them.
It was faintly suggested on behalf of the second appellant, that the charge under section 120B of the Indian Penal Code, had been deliberately added by the prosecution in order to make the first appellant 's statement of August 31, admissible against the second appellant, as otherwise it could not have been used as evidence against him.
As already indicated, the incident of August 24, is a clear indication of the existence of the conspiracy, and the court was perfectly justified in drawing up the charge under section 120B also.
It is no 1146 answer in law to say that unless the charge under that section had been framed, the act or statement of one could not be admissible against the other.
Section 10 of the Indian Evidence Act, has been deliberately enacted in order to make such acts and statements of a co conspirator admissible against the whole body of conspirators, because of the nature of the crime.
A conspiracy is hatched in secrecy and executed in darkness.
Naturally, therefore, it is not feasible for the prosecution to connect each isolated act or statement of one accused with the acts or statements of the others, unless there is a common bond linking all of them together.
Ordinarily, specially in a criminal case, one person cannot be made responsible for the acts or statements of another.
It is only when there is evidence of a concerted action in :furtherance of a common intention to commit a crime, that the law has introduced this rule of common responsibility, on the principle that every one concerned in a conspiracy is acting as the agent of the rest of them.
As soon as the court has reasonable grounds to believe that there is identity of interest or community of purpose between a number of persons, any act done, or any statement or declaration made, by any one of the co conspirators is, naturally, held to be the act or statement of the other conspirators, if the act or the declaration has any relation to the object of the conspiracy.
Otherwise, stray acts done in darkness in prosecution of an object hatched in secrecy, may not become intelligible without reference to the common purpose running through the chain of acts or illegal omissions attributable to individual members of the conspiracy.
It was also suggested that the statement made by the first appellant on August 31, about the purpose of the payment, having been made after the payment, was not admissible in evidence because the object of the conspiracy had been accomplished before the statement in question was made.
Reliance was placed in this connection upon the decision of their Lordships of the Judicial Committee in Mirza Akbar vs The King Emperor.(1).
But that decision is itself an answer to the (1) (1940) L.R. 67 I.A. 336.
1147 contention raised.
The payment was made, and the statement that it was being made with a view to hushing up the case against the second appellant is a part of the same transaction, that is to say, the statement accompanied the act of payment of the bribe.
Hence, it cannot be said that the statement was made after the object of the conspiracy had already been accomplished.
The object of the conspiracy was the hushing up of the criminal case against the second appellant by bribing the public servant who was in charge of the investigation of the case.
The object of the conspiracy was yet far from being accomplished when the statement in question was made.
The leading case on the subject is that of R. vs Blake (1).
That decision is an authority both for the positive and the negative aspects of the question.
It lays down what is admissible and what is not admissible.
It held that the documents actually used in effectuating the objects of the conspiracy, were admissible, and that those documents which had been created by one of the conspirators after the object of the conspiracy had been achieved, were not admissible.
section 10 of the Indian Evidence Act is on the same lines.
It is manifest that the statement in question in the present case was made by the first appellant in the course of the conspiracy, and accompanied the act of the payment of the money, and is clearly covered by the provisions of section 10, quoted above.
It must, therefore, be held that there is no substance in the only question of law raised in this appeal.
It is, accordingly, dismissed.
Appeal dismissed.
| IN-Abs | The appellants were prosecuted on charges under section 120B read with section 165A of the Indian Penal Code, for having conspired to commit the offence of bribing a public servant in connection with the discharge of his public duties.
The case against them was that on August 24, 1953, when the Inspector of Police who was in charge of the investigation of a case in which the second appellant was involved, was on his way to the police station, the appellants accosted him on the road and the second appellant asked him to hush up the case for valuable consideration.
Some days later, on August 31 the first appellant offered to the Inspector at the police station a packet containing Rs. 500 in currency notes and told him that the second appellant had sent the money through him in pursuance of the talk that they had with him on August 24, as a consideration for hushing up the case.
The courts below accepted the evidence adduced on behalf of the prosecution and convicted the appellants.
On appeal by special leave it was contended that the court had no reasonable grounds to believe that the appellants had entered into a conspiracy to commit the offence and that the statement of August 3 I was not admissible against the second appellant because (1) the charge under section 120B had been deliberately added in order that the act or statement of the one would be admissible against the other, and (2) the object of the conspiracy, namely the payment of the hush money, had been accomplished before the statement in question was made: Held, (1) that the incident of August 24 was evidence that the intention to commit the offence had been entertained by both the appellants on or before that date showing a clear indication of the existence of the conspiracy, and that the statement made by the first appellant on August 31 was admissible not only to prove that the second appellant had constituted the first appellant his agent in the perpetration of the crime but also to prove the existence of the conspiracy ; the court was therefore justified in drawing up the charge under section 120B along with that under section 165A of the Indian Penal Code.
(2)that the payment of the bribe and the statement of August 31 accompanying it, were part of the same transaction, having been made in the course of the conspiracy, and the 1142 statement in question was therefore admissible under section 10 of the Indian Evidence Act.
Mirza Akbar vs The King Emperor, (1940) L. R. 67 I. A. 336 and R. vs Blake, ; , relied on.
|
ivil Appeal No. 365 of 1981.
From the Judgment and Order dated 23.3.
1978 of the Gujarat High Court in First Appeal No. 236 of 1971.
R.F. Nariman, P.H. Parekh and M.K. Pandit for the Appellant.
R.P. Bhatt, C.V. Subba Rao, P.P. Srivastava, Mrs. H. Wahi and M.N. Shroff, (NP) for the Respondents.
The Judgment of the Court was delivered by V. RAMASWAMI, J.
The plaintiff Bhavnagar Municipality are the appellants.
The suit was filed by the plaintiff for a declaration of its title and for possession of the suit property described in the schedule to the plaint.
They had also prayed for damages for wrongful occupation in respect of a portion of the property and rent for another portion, for the period from 1st January, 1964 till possession of the property is delivered to the plaintiff.
The defendants are the Union of India and.
the State of Gujarat.
The suit property is described in two parts in the schedule to the plaint.
The first part consist of a large extent of vacant land which is referred to in these proceedings as Parade Ground.
The second part is covered by Survey Nos. 162, 163, 164 and 165 on which structures of old Lancer 's lines, are standing and certain evacuees were Occupying at the time of the suit.
This second part is sometimes referred to as Lancers quarters and also sometimes ' as Rasala Lines.
The plaintiffs ' case was that by Resolution No. 37 dated 19th January, 1984 published in the Bhavnagar Darbar Gazette dated 24th January, 1948: ".
The Bhavnagar State bestowed the rights of the State of Bhavnagar to effect sales of land in the Municipal area of Bhavnagar City in Bhavnagar Municipality and by a further Order No. 77 of dated the 29th of February, 1948 the State vested the said lands except four plots of land mentioned therein in the Bhavnagar Municipality . " 222 The further case of the plaintiff was that by virtue of these orders the entire suit lands mentioned in the plaint have: "vested in and belongs to the plaintiff who entered into and remained in possession thereof till recently." And that subsequent to the erstwhile State of Bhavnagar merging in the United States of Kathiawar which was subse quently known as the State of Saurashtra, the Government of Saurashtra recognised the aforesaid Resolutions dated 19th January, 1948 and 29th February, 1948.
The further case of the plaintiff was the Government of India claiming to be the owner of the Parade Ground, in or about June, 1961 fixed the boundary marks and that the Government of India 's entry into possession constitute wrongful encroachment.
The plaintiff claimed damages for this wrongful occupation of the Parade Ground from 1st January, 1964 till they vacate the wrongful encroachment and hand over possession to the plaintiff.
So far as the Lancer quarters or Rasala Lines is con cerned it was stated in the plaint that the structures in the land covered by the Survey numbers referred to in part 2 of the schedule to the plaint did not belong to the plain tiff, that the same were occupied by the State Lancers and subsequently by the refugees, and that the plaintiff allowed the land and the structures thereon to be used free by the Government.
However, they were entitled to recover rent or compensation in respect of this land for the period from 1st January, 1954 till delivery of possession.
The Union of India filed a written statement which was adopted by the State of Gujarat.
it was contended by the defendants that the Parade Ground was used by the Ex Bhavna gar state forces and that barracks and other military build ings used for accommodation of the Ex Bhavnagar state forces known as Lancer 's Lines were in existence for a long time prior to 1948 in the suit property known as Rasala Lines and that consequent upon the Bhavnagar State acceding to the Indian Union and consequent on the Federal Financial Inte gration of States, accommodation, lands and buildings in the use or occupation of the Ex state forces were transferred to the Government o[ india and became its property.
The Board of officers consisting of six members including Executive Engineer, Public Works Department as representative of the State of Saurashtra was constituted and the buildings known as infantry lines and Lancer 's lines were taken over on 7th June, 195 1 by the Government of India.
They further stated that the 223 State of Saurashtra admitted the ownership of the suit property and the structures vested in the Defence Ministry from the date of Financial integration and when the State of Saurashtra, (as it was then known) required the land of the Parade Ground for this use that was handed over to the Saurashtra Government on 7th July, 1952 by the military engineers of the Government of India.
The defendants denied that either the Resolution No. 37 dated 19th January, 1948 or Resolution No. 77 dated 29th February, 1948 vested in the plaintiff the land of the Parade Ground or the lands and buildings known as Rasala Lines.
The defendants also denied that they were trespassers or liable to pay damages and rent in respect of the suit property.
The Trial Court held that the plaintiff had proved its title to the suit land and that they were in possession in the suit property till 7th July, 1952 when physical posses sion was handed over by the military engineers of the Gov ernment of India to the State Public Works Department of the State of Saurashtra.
Since the suit was filed on 3rd March, 1964 the suit was not barred under section 65 of the Limita tions Act, 1963.
However, on the ground that in respect of Rasala Lines the plaintiff have admitted that they did not own the buildings thereon, they are not entitled to recover possession of the lands covered by the Survey numbers de scribed in the second part of the schedule to the plaint.
Accordingly, the suit for possession was decreed in respect of the Parade Ground and dismissed in respect of the Rasala Lines.
The first defendant Union of India, filed an appeal to the High Court of Gujarat against this judgment and decree of the Trial Court and the Bhavnagar Municipality filed cross objections in so far as the suit was dismissed in respect of the land comprised in the Rasala Lines.
The High Court dismissed the cross objections filed by the Municipal ity holding that Resolution No. 37 dated 19th January, 1948 was confined to open lands and not to lands below standing structures and that, therefore, the cross objections relat ing to the Rasala Lines could not be sustained.
The High Court however allowed the appeal of the Union of India in the view that even assuming that by virtue of the Resolution No. 37 dated 19th January, 1948 the title to the Parade Ground had come to be vested in the Municipality, there was nothing on record to show that the Municipality was formally handed over the land in question, that its right over the land was never recognised by the Union of India or the State Government and that the various documents filed in this case, would go to show that as early as July, 1950 these lands and other properties which were in occupation of the 224 erstwhile state military had been taken over and remained under the control of the Defence Ministry of the Union of India and that the possession was handed over by the Union of India to the State Government on 7th July, 1952 for use.
The High Court also held since the plaintiff had not shown possession of the suit building within 12 years prior to 3rd March, 1964 when the suit was filed, the suit was also liable to be dismissed as barred by limitation, and that therefore it was not necessary either to deal with the argument of the defendants that the vesting that was contem plated in the Resolution 37 dated 19th January, 1948 and Resolution 77 dated 29th February, 1948 was not intended to be vesting in its full amplitude, but was meant only to appoint the Municipality as agent of the State to dispose of the land.
The plaintiff Municipality have filed this appeal under Article 136(1) of the Constitution against this judg ment of the High Court of Gujarat.
The learned counsel for the appellant contended that the High Court should have given a finding on title as Article 65 of the is applicable to this case since the suit was filed on 3rd March, 1964, and that on the finding of the Trial Court in favour of the plaintiff on the question of title in respect of 'Parade Ground ', and in the absence of specific plea of adverse possession in the writ ten statement, the Trial Court 's decree should have been confirmed.
He also assailed the finding of the High CoUrt on the question whether the plaintiff was handed over or taken possession of the suit property in pursuance of the Resolu tion dated 19th January, 1948.
We are of opinion that the learned counsel for the appellant is well founded in his contention that Article 65 of the is applicable in this case as the suit was filed on 3rd March, 1964 but the Act had come into force on 1st January, 1964.
Therefore, since the suit is for possession based on title to the suit property and the defendants had denied title, of the plaintiff, it is necessary for the Court to give a finding on title of the plaintiff even if the defendants in possession had not pleaded adverse possession.
We also think that it is just and necessary that we ourself consider the question of title and that it is not necessary to remand the case for that purpose.
We, therefore, proceed to consider the question of title of the plaintiff to the suit proper ties.
In order to understand the nature and implication of the Resolution No. 37 and the other documents relied on by the learned counsel for the appellants in support of the claim of title of the Municipality for the Parade Ground and the land in Rasala Lines or Lancer quarters it is necessary to trace briefly the constitutional history of accession and 225 integration of the Indian States with the Union of India.
The federal scheme embodied in the Government of India Act, 1935, was the first effort to provide for a constitutional relationship between the Indian States and the Government of India on a federal basis.
Section 311 of the Government of India Act, 1935 defined as 'Indian State ' as meaning any territory not being part of 'British India '.
whether de scribed as a State, an Estate, a Jagir or otherwise.
Part II of the Government of India Act, 1935 provided for the estab lishment of a Federation of India by accession of Indian States.
In spite of the protracted negotiations that fol lowed the enactment of Government of India Act the Federa tion envisaged under the Act could not come into existence in view of the States not opting for accession.
But by the setting up of the new dominions under the Indian Independ ence Act, 1947 the suzerainty of the British Crown over indian States lapsed along with it all functions, obliga tions, powers, rights, authority or jurisdiction exercisable by the Crown.
However, the proviso to section 7 provided that effect shall, as nearly as may be continued to be given by the Dominion Government, to the provisions of any agree ment between the Indian State and the Crown in regard to matters specified therein until the same are denounced by either of the parties.
It was in this background the Domin ion Government of India created a new department called the State Department on the 5th July, 1947 to deal with matters arising between the Central Government and the Indian States.
This department was in charge of Sardar Patel.
After persistent negotiations and persuation, barring three States, all the Indian States in the geographical limits of India had acceded to the Indian Dominion by 15th August, 1947.
The integration of States however did not follow uniform pattern in all cases.
Merger of States in the prov inces geographically contiguous to them was one form of integration; the second was the conversion of States into Central administered areas.
The third category are those cases where several small groups of States which could be consolidated into sizeable units by uniting them to form unions of States on the basis of full transfer of power from the rulers to the people.
This form of consolidation of States was adopted in Kathiawar covering 222 States and Estates with varying territories and jurisdiction.
The scheme for the constitution of the United State of Kathia war, later known as Saurashtra was finalised and the cove nant was signed on 23rd January, 1948 and the new State of Saurashtra inaugurated on the 15th February, 1948, vide Government of India, Ministry of States, "White Paper on Indian States".
The financial integration was simultaneously taken up with accession and territorial integration.
The Indian States Finances 226 Enquiry Committee headed by Shri V.T. Krishnamachari was constituted by Resolution dated 27th October, 1948 of the Government of India and the recommendations were incorporat ed in the Constitution.
On the adoption of the new Constitu tion of India the process of territorial integration of States thus became complete.
Under the new Constitution all the constituent units both Provinces and States were classi fied into three classes.
namely, Part 'A ' States which correspond to the former Governor 's Provinces; Part 'B ' States which comprised the Union of States and the States of Hyderabad, Mysore and Jammu and Kashmir; and Part 'C ' States which correspond to the former Chief Commissioners ' Prov inces.
This territorial integration of States is effected by defining in Article 1 of the Constitution that the territo ries of India include the territories of all the States specified in Parts A, B and C of the First Schedule.
Thus with the inauguration of the new Constitution on the 26th November, 1949 the merged States have lost a11 vestiges of existence as separate entitles.
With the accession and completion of territorial and financial integration and the Part 'B ' States forming part of Indian Union, the lands and buildings in the use or occupation of the former Indian State Governments, have distinguished from the private properties of the rulers, were transferred and vested in the Government of India and became its property.
The documents which the learned counsel for the plain tiff strongly relied in support of title to the suit proper ty are Resolution No. 37 dated 19th January, 1948 and Reso lution No. 77 dated 29th February, 1948.
A translation of these documents which are in Gujarati, have been marked as exhibit 87 and they reads as under: "It may be noted by your Honourable Highness that we have personally made application regarding some matter regarding our Bhavnagar State in respect of the Scheme of making one State of Saurashtra: Kathiawar: and the fol lowing arrangement is required to be made.
1,2,3,4 5.
The right of the State to sell the land in the limit of the Municipalities of Bhavnagar City and of the District Towns (Kasba) vested hereby in the Municipalities concerned hence forth; and the amount of the rent and lease of the Town Planning area shall be given to the Bhavnagar City 227 Municipality henceforth.
Sheth Abdul Hussain Gulamhussain and Sheth Masumali Zafarali has given their plot for Mahatma Gandhi Mandir.
And they have made application for getting the plot of the land of the same area for building their own houses.
I have made recommendation thereunder for giving the same to them without taking Premium (Sukhadi).
And if the recommen dation which I have made is accepted the said approval may not get disturbed in these rights are given to Municipality.
6, 7, 8, 9, 10, 11, 12, 13, 14.
Forwarded with compliments to the Honourable Your Highness for passing necessary order in favour with kindness, regarding the implemen tation accordingly in respect of the approval of the scheme of the above stated Paragraphs No. 1 to 14 after going through the above stated facts.
Sd/ Anantrai Prabhashanker, Chief Diwan Sansthan Bhavnagar H.D.R. No. 37 Upon considering all the facts stated above, under the above recommendation, the schemes according to the Darakast made in the afore said paragraphs from 1 to 14 are sanctioned.
Papers returned to Chief Diwans.for informa tion and for necessary action to be taken.
19.1.1948 Sd/ Krishkumarsinhji Maharaj section Bhavna gar." "The right of the State to sell the land in the limits of the Municipalities of Bhavnagar City and of the District Towns (Kasba) has been vested in the Municipalities concerned under the Di.
R. No. 37 dated 19.1.1948 of His Highness.
228 It is deemed proper to make clarification that the council of Ministers had decided to keep in reserve the below mentioned lands in Bhav nagar for the use of the State.
Therefore the same are not included in the lands handed over to the Municipality.
Particulars of the lands: 1.
Open land of Gangajalia Talav situated at South side of the theatre and the temple and wire fencing done near Gangajalia Talav.
The open square plot (Chogan) situated opposite to Gangnath Mahadev Towards Darbar Hall and Nakubag.
The open square plot (Chogan) opposite to Darabari Motor Garrage.
A triangular piece of the land opposite to Sir Takhatsinhji Hospital near Kailasbaug.
Information regarding this resolution may be sent to the parties concerned.
29.3.48 Sd/ Jadanji K. Mode chief Minister" The translation also does not appear to be accurate, as in another translation made, which were filed with the special leave petition the first operative portion is translated as follows: "the right of the State to sell the land be transferred to the Municipalities of proper Bhavnager and other Municipalities of Kasbas, and the rent which is being realised of the plots of Town Planning Area henceforth be realised by Bhavnagar Municipality.
" Again the first paragraph of Resolution No. 77 is translated as: "Proper Bhavnagar and Kasba Municipalities have been given the right of the State to sell the land within the limits of the Municipality as in H.D.R. No. 37 dated 19.1.1948.
" In fact, in the suit notice under section 80, Civil Proce dure Code the 229 plaintiff have stated that these orders "bestowed the rights of the then State of Bhavnagar to effect the sales of land in the Municipal area.
" We have already noticed that the Saurashtra State was formed by consolidation of several small States.
The scheme referred to in the first paragraph was the scheme of consol idation of the States into United States of Saurashtra.
The 14 proposals in that letter were the arrangements that were required to be made in order to give effect to the scheme.
There should have been number of Municipalities in the States which had merged into a union under the covenant.
The land within the limits of Municipalities referred to in the orders extracted above were the lands of the Government of the States concerned because obviously the covenants of accession and integration under the scheme of forming Union of States could not deal with the private properties of the rulers.
The right to sell such lands of the State Government were with the Government concerned.
It is that right in our view, that was given to the Municipalities after the forma tion of the Union of the United States of Saurashtra.
It cannot be treated, therefore, as a transfer of title in respect of those lands to the municipality but the right to execute the sale deed in respect of those lands of the Government was transferred or vested in the Municipalities concerned.
It amounts conferring an authority or authorising the Municipalities to execute the sale deeds in respect of Government lands situate within the Municipality, which should normally have been done by the State Government.
The subsequent correspondance and orders of the Government also show that the Government of India understood and treated these orders only as authorisation or transferring of power to execute sale deeds and collect rent in respect of Govern ment lands situated within the Municipality.
The Government had treated those orders as liable for cancellation or modification.
If the effect of those orders were transfer and vesting of title in the Municipalities, no question divesting of title would or could arise.
Resolution 77 itself was subsequent to Resolution 37 but excluded certain lands from the scope of Resolution 37.
This could only be on the basis that the title had not vested in the Municipali ties under Resolution 37.
Again this authorisation itself was cancelled by the Government of Gujarat under Order No. LMN 546 14576 A.G. dated 26.3.63.
But since a number of Municipalities made representation to the Government to reconsider the same, the Government reconsider the entire case and decided that the right to sell plots of land given under Resolution No. 37 dated 19th January, 1948 by the State of Bhavnagar to all 230 the Municipalities of Old Bhavnagar States, and the right to give the same on rent lease and to take the income therefrom shall be enjoyed by the Municipalities subject to the condi tions mentioned in the letter of the Government dated 10th August, 1965.
These conditions read as follows: "1.
The right to sell the land and to give it on rent lease and to get the out come there from shall apply to the land of the Government coming within the limit to the Municipality decided fixed on the date of the Order of the State of Bhavnagar i.e. dt.
19.1.48.
And the same shall not apply to the land falling within the extended limit if the limit of the Municipality is increased.
The procedure to be followed for giving this land in sale or on rent lease shall generally be followed according to the rules of Government, that is to say public auction shall be made.
If the approximate value of the land to be given on sale or on rent lease comes to Rs.25 per sq.
metre or it is more than that the sale or the lease land shall be considered final after permission of the revenue department of the Government for sale or lease is obtained.
The sale or rent lease of this land shall be done according to the purpose decided in the scheme following the Town Development Scheme of the Municipality, that is to say if the locality is fixed in the development scheme for industrial or residential purpose the land of the suit locality shall be given for that particular purpose.
And if some lands are fixed to be reserved for keeping open or for the purpose of garden or for some public purpose in the development scheme, the said land shall not be given on sale or on lease for private purpose.
The Municipalities shall have to deposit the income obtained from sale or rent lease of the land of the aforesaid land of the Govern ment, in a separate fund and the same shall be used for the work of the development of the city town" These conditions are inconsistent with the plaintiff 's case of absolute 231 ownership in themselves.
We have, therefore, no doubt that what was conferred on the Municipality under Resolution 37 dated 19th January, 1948 was only a right or an authorisa tion to sell the land as representing the Government but not a vesting of the title itself in the Municipality.
The other documents relied on by the learned counsel in support of his contention that the title itself should have been vested in the Municipality may now be noticed.
exhibit 95 dated 2lst July, 1950 is a copy of the proceedings of the Board of Officers of the Defence Department in which they have described detailed inventory of Defence department assets, accommodations, installations, furniture, fitting and connected stores pertaining to Saurashtra state forces in Bhavnagar.
In this while referring to the suit lands which was stated to be in their possession a remark has been made to the effect: "The Bhavnagar Municipality claims the land in question on the basis that the whole assets of the Bhavnagar town planning Department had been transferred to them by the orders of his Highness, Bhavnagar, State in 1948 and they are collecting the Revenue from the farmers.
The claim will subsequently have to be veri fied.
" We are unable to see how on the basis of this letter the Municipality could claim a title.
At best it may be treated as evidence that in July, 1950 the Municipality made a claim for the land.
But at the same time it may be pointed that the document is evidence against the Municipality in so far as it treated the properties as belonging to the Defence Department of the Government of India and that the Defence Department were in possession of the same.
In the two let ters exhibit 73 dated 30.11.1950 and exhibit 72 dated 15.6. 1951 which are communications from the Government of Saurashtra it is only stated that suit lands do not vest to the Govern ment of Saurashtra.
As seen earlier, possession of the lands were handed over by the Government of India to the State Government only on 7.7.
1952 and, therefore, these letters cannot be of any help to the appellant.
However, it may be mentioned, that the Government of Saurashtra have corrected themselves in their communication dated 6th May, 1952 and stated that the claim of the plaintiff that the lands were vested in Bhavnagar Municipality was erroneous and that the land is vested and is in the possession of Government of India.
The plaintiff have also admitted that the structures in Rasala Lines are not shown to be that of the Municipality in the Municipal records and even in the plaint they did not claim the 232 structures as belonging to the Municipality.
In the suit notice the plaintiff have also not claimed that they "en tered into and remained in possession" of the land as stated in the plaint para 5.
It is also in evidence that these buildings were there long before 1948 and that, therefore, the land alone could not have been vested in the Municipali ty without buildings.
In fact, the Resolution No. 37 dated 19th January, 1948 which is relied on does not make any distinction and it refers to only lands and not buildings.
We, therefore, agree with the finding of the High Court that possession of the land was also not taken by the Municipali ty at any time.
It is not open to the appellant to rely on the principle that possession follows title.
In this case not only there is evidence to show that physical possession was with the defendant but also there could not be any legal possession with the plaintiff as the title to the land is not vested in them.
Since the suit itself is for possession based on title and the plaintiff have not proved title it is not necessary for the defendant to plead or prove adverse possession.
In the result the appeal fails and it is dismissed.
However, the parties will bear their respective costs in this Court.
Y. Lal Appeal dis missed.
| IN-Abs | The plaintiff appellant had flied a suit against the defendentsrespondents for a declaration of its title and for possession of the suit property mentioned in the schedule to the plaint which consisted of two parts; the first part related to a large extent of vacant land known as parade ground and the second part pertained to survey Nos. 162 to 165 on which stood structures of old Lancer 's Lines and certain evacuees were occupying the same at the time of institution of the suit.
The second part is known both as Lancers Quarters and Rasala Lines.
In the suit the plaintiff also claimed damages for wrongful occupation of a portion of the property and rent for another portion for the period from 1st January 1964 till delivery of possession.
The Plaintiffs ' case was that by virtue of Resolution No. 37 dated 19.1.1984 and Resolution No. 77 dated 29.2.48 pub lished in Bhavnagar Darbar Gazette the entire suit lands vested in and belonged to the plaintiff who entered into and remained in possession thereof.
According to the plaintiff the Government of India claiming to be the owner of the Parade Ground, in or about June 1961, fixed the boundary marks and thus the entry of the Government of India consti tuted wrongful encroachment.
As regards the Lancers ' Quar ters, it was stated in the plaint that they did not belong to the plaintiff, that the same were occupied by the State Lancers and subsequently by the refugees and that the plain tiff allowed the land and the structures thereon to be used free by the Government.
However the plaintiff asserted that it was entitled to recover rent or compensation in respect thereof from 1.1.54 till delivery of possession.
The defendents denied the claim of the plaintiff and pleaded that consequent upon the Bhavnagar State acceding to the Indian Union and consequent on the Federal Financial Integration of State, the accommodation, lands and buildings in the use or occupation of the Ex State forces were trans ferred to the Government of India and became its property.
The defendents respondents denied that the suit land vested in the plaintiff on the strength of the Resolution afore said.
220 The Trial Court held that the plaintiff had proved its title to the suit land and that it was in possession of the suit property till 7.7.1952.
It also held that the suit having been filed on 3rd March 1964, the same was not barred under section 65 of the Limitation Act.
As regards Rasala Lines, the trial Court did not uphold the claim of the plaintiff, because of its admission that it did not own the buildings standing thereon.
As such the Trial Court decreed the suit for possession in respect of Parade Ground alone and dismissed the same in respect of Rasala Lines.
The first defendant Union of India preferred an appeal to the High Court against the decree of the trial Court and the plaintiff flied cross objections in so far as the suit was dismissed in respect of Rasala Lines.
The High Court dismissed the cross objection filed by the appellant but allowed the appeal of the Union of India holding inter alia that there was nothing on record to show that the Municipal ity was formally handed over 'he land in question and that its right over the land was never recognised by the Union of India or the State Government.
The High Court also held that the suit was liable to be dismissed as being time barred.
Hence this appeal by the plaintiff Municipality by Special Leave.
Dismissing the appeal, this Court, HELD: With the accession and completion of territorial and financial integration and part 'B ' states forming part of Indian Union, the lands and buildings in the use or occupation of the former Indian State Government, as distin guished from the private properties of the Rulers, were transferred and vested in the Government of India and became its property.
[226D] The right to sell such lands of the State Government were with the Government concerned.
It is that right that was given to the Municipalities after the formation of the Union of the United States of Saurashtra.
It cannot be treated therefore, as a transfer of title in respect of those lands to the municipality but the right to execute the sale deed in respect of those lands of the Government was transferred or vested in the municipalities concerned.
This authorisation itself was later cancelled by the Government of Gujarat under Order dated 26.3.63.
[229C D; G] Possession of the land was also not taken by the munici pality at any time.
It is not open to the appellant to rely on the principle that possession follows title.
[232B] 221 Not only there is evidence to show that physical posses sion was with the defendants but also there could not be any legal possession with the plaintiff as the title to the land is not vested in them.
Since the suit itself is for posses sion based on title and the plaintiffs have not proved title it is not necessary for the defendent to plead or prove adverse possession.
1232C]
|
ition No. 1395 of 1987.
(Under Article 32 of the Constitution of India).
N.A. Palkhiwala, T.R. Andhyarujina, Soli J. Sorabjee, R. Dada, section Ganesh, J.R. Gagrat, R.B. Aggarwala, P.G. Gokhale, V.B. Aggarwala, R.J. Gagrat, R.B. Hathikhanawala, R.F. Nariman, P.H. Parekh, Sanjay Bhartari, M.K. Menon, R.K. Dhillon, Ms. Rohini Chhabra, Ms. Sunita Sharma and Ms. Ayesha Misra for the Petitioners.
K. Parasaran, Attorney General, B. Datta, Addl.
Solici tor General, Dr. V. Gauri Shankar, S.K. Dholakia, P.S. Poti, G.A. Shah, V. Jaganatha Rao, K. Sudhakaran, Ms. A. Subha shini, B.B. Ahuja, H.K. Puri, A Subba Rao, A.S.Bhasme, K.R. Nambiar, M.N. Shroff, M. Veerappa, R. Mohan, R. Ayyamperumal and J.P. Mishra for the Respondents.
The following judgments of the Court were delivered: 927 VENKATACHALIAH, J.
In these writ petitions under Article 32 of the Constitution of India, petitioners who are engaged in, or associated with, the Hotel Industry in India chal lenge the constitutional validity of the Expenditure Tax Act, 1987 (Central Act 35 of 1987).
The Act envisages a tax at 10 per cent ad valorem on 'chargeable expenditure ' in curred in the class of Hotels wherein "room charges" for any unit of residential accommodation are Rupees Four Hundred per day per individual.
The 'Chargeable expenditure ' as defined in Section 5 of the Act include expenditure incurred in or payments made in such class of hotels in connection with the provision of any accommodation, residential or otherwise, food or drink whether at or outside the hotel; or for any accommodation in such hotel on hire or lease; or any other services envisaged in that Section.
However, any expenditure incurred in or paid for in "foreign exchange" or by persons who enjoy certain diplomatic privileges and immunities are exempt.
The challenge to the vires of the 'Act ' is on grounds of lack of legislative competence and of violation of the rights under Article 14 and 19(1)(g).
Union of India seeks to sustain the legislative competence to enact the impugned law under Article 248 read with Entry 97 of List I of the Seventh Schedule.
Writ Petition No. 1395 of 1987 is quite comprehensive as to the array of parties and may generally be regarded as representative of the contentions urged in support of the challenge.
The first petitioner therein is "The Federation of Hotel & Restaurant Association of India" which is said to be a representative body of over 1,000 member petitioners in India.
Petitioners 2 to 5 are said to be the Regional Associations of the Federation and Petitioners 6 and 7 are two Hotel companies which own several hotels in India.
Petitioners 8 and 9 are Indian citizens who are the direc tors and shareholders of petitioners 6 and 7 respectively.
Petitioner 10, is a practising chartered accountant who claims to use the services in the several Hotels in India owned by the members of the Federation.
The array of peti tioners is quite comprehensive so as to include all inter ests affected so as to satisfy the requisite standing to sue from all points of view.
The Expenditure Tax Bill No. 90 of 1987, preceding the impugned Act was introduced in the Union Legislature on 21.8.1987.
It became an Act on 14.9.1987.
It extends to the whole of India except the State of Jammu and Kashmir.
The requisite notification under Section 1(3) of the Act was issued on 14.10.1987 appointing 1.11.1987 928 as the date on which the Act shall come into force.
The Expenditure Tax Bill No. 90 of 1987 states the following as its objects and reasons: "The Bill seeks to impose a tax on expenditure incurred in hotels were the room charges for any Unit of residential accommodation are four hundred rupees or more per day per individual.
This tax will be levied at the rate of ten per cent of the expenditure incurred in connection with provi sion of any accommodation, food, drinks, and certain other categories of services.
This tax will not apply to expendi ture incurred in foreign exchange or in the case of person enjoying diplomatic privileges." (Emphasis supplied) 4.
A brief survey of the provisions of the Act is perhaps necessary to apprehend and assess the grounds of challenge in their true perspective.
Section 4 is the charg ing section which says: "Subject to the provisions of this Act, there shall be charged on and from the commencement of this Act, a tax at the rate of ten per cent of the chargeable expenditure.
" The expression 'chargeable expenditure ' is defined in clauses (a), (b), (c) and (d) of Section 5, which read: "For the purposes of this Act, chargeable expend iture means any expenditure incurred in, or payments made to, a hotel to which this Act applies, in connection with the provision of, (a) any accommodation, residential or otherwise; or (b) food or drink by the hotel, whether at the hotel or outside, or by any other person at the hotel; or (c) any accommodation in such hotel on hire or lease; or (d) any other services at the hotel, either by the hotel or by any other person, by way of beauty parlour, health 929 club, swimming pool or other similar services." (Rest of the provisions of Section 5 are omitted as unnecessary for the present) The expression 'Assessee ', 'Hotel ', 'Room charges ' are some of the material expressions defined in the interpreta tion clause.
2(1) "assessee" means a person responsible for collecting the expenditure tax payable under the provisions of this Act.
2(6) "Hotel" includes a building or part of a building where residential accommodation is, by way of business, provided for a monetary consideration.
2(10) "room charges" means the charges for a unit of residential accommodation in a hotel and includes the charges for (a) furniture, air conditioner, refrigerator, radio, music, telephone, television, and (b) such other services as are normally included by a hotel in room rent, but does not include charges for food, drinks and any services other than those referred to in sub clauses (a) and (b).
Section 3 is the crucial provision which lays down the differentia for the classification of the Hotel to which the 'Act ' applies.
Section 3 is the crucial provision which lays down the differentia for the classification of the Hotel to which the 'Act ' applies.
That section provides that the 'Act ' shall apply in relation to any 'chargeableexpenditure ', incurred in a hotel wherein the "room charges" for any unit of resi dential accommodation at the time of incurring of such expenditure are Rs.400 or more per day per individual.
The levy of tax is confined to such class of Hotels which satis fy that statutory standard.
Where, however, composite charges are payable in respect of both residential accommo dation and food, then the "room charges" for purposes of determination of the criteria attracting the Act shall have to be apportioned in the manner to be prescribed.
Section 3 930 enables the assessing officer to determine the 'room charges ' on such reasonable basis as he may deem fit where: .lm60 "(i) a composite charge is payable in respect of residential accommodation, food, drinks and other services, or any of them, and the case is not covered by the provi sions of sub section (2), or (ii) it appears to the Income tax Officer that the charges for residential accommodation, food, drinks or other services are so arranged that the room charges are under stated and other charges are overstated," Sections 6 and 24 envisage and provide for the authori ties to administer Act and engrafts the machinery and proce dure of the Income tax Act.
Section 6(1) says: "Every Director of Inspection, Commissioner of Incometax, Commissioner of Income tax (Appeals), Inspecting Assistant Commissioner of Income tax, Income tax Officer and Inspector of Income tax shall have the like powers and perform the like functions under this Act as he has and performs under the Income tax Act, and for the exercise of his power and the performance of his functions, his jurisdiction under this Act shall be the same as he has under the Income tax Act." Section 24 provides: "The provisions of the following sections and Schedules of the Income tax Act the Income tax (Certificate Proceedings) Rules, 1962, as in force from time to time, shall apply with necessary modifications as if the said provisions and the rules referred to expenditure tax instead of to income tax: 2(43B) and (44), 118, 125, 125A, 128 to 136 (both inclusive), 138, 140, 144A, 159 to 163 (both inclusive), 166, 167, 170, 171, 173 to 179 (both inclusive), 187, 188, 189, 220 to 227 (both inclusive), 229, 231, 232, 237 to 245 (both inclusive), 254 to 262 (both inclusive) 265, 266, 268, 269, 278B, 278C, 278D, 278E, 281, 281B, 282, 283, 284, 287, 288, 288A, 288B, 289 to 293 (both inclusive), the Second 931 Schedule and the Third Schedule: Provided that references in the said provisions and rules to the "assessee" shall be construed as references to an assessee as defined in this Act." Section 8(1) provides that every "person responsible for collecting" the tax as defined in Section 2(8) shall, before the expiry of four months from the 31st day of March in each year furnish or caused to be furnished to the Income tax Officer, in the prescribed form and varified in the pre scribed manner a return in respect of the immediately pre ceding financial year showing (a) the aggregate of the payments received in respect of "chargeable expenditure"; (b) the amount of the tax collected; (c) the amount of the tax paid to the credit of the Central Government; and (d) such other particulars as may be prescribed.
The incidence of the tax is on the persons who incur the "chargeable expenditure" in the class of hotels to which the Act applies.
Section 7 enjoins upon the "person responsible for collecting" the duty to collect the taxes and pay the same to the credit of the Central Government.
The "room charges" of Rs.400 per day per individual stipulated in Section 3 is the differentium which keeps apart the class of hotels to which the Act applies.
Petitioners say that Sec tion 3 merely defines the place, viz., the Hotel where a room carries a charge of Rs.400 per day marked on it and the rest of the incidents and consequences of the provisions of the 'Act ' envisage the levy of a tax on the 'luxuries ' provided at such a place.
The legislation, it is urged, is squarely within Entry 62 of List II within the State power.
The Act, it is contended, does not impose an "Expenditure Tax" but taxes 'Luxuries '.
Even if the legislation has an "expenditure dampening" objective and seeks to inhibit, by creation of disincentives, ostentatious and wasteful expend iture, the classification, it is said, has no rational basis.
Persons similarly situated and who incur the same extent and degree of expenditure on the same luxuries are differentiated on the sole basis that in one case the ex penditure is incurred in a Hotel where one of the rooms has a charge of Rs.400 per day per individual marked for it, while in the other though equally wasteful expenditure is incurred in a more luxurious Restaurant, the latter expendi ture is exempt.
It is urged that even if more sophisticated and expensive food and drinks and other services, envisaged in clauses (a) to (d) of Section 5, are provided in a hotel or catering establishment which falls out side the class, the expenditure incurred thereon is unaffected by the law.
932 This aspect of under inclusiveness is assailed as violative of Article 14.
Petitioners further contend that the several provi sions of the Act which impose certain statutory obligations of an onerous nature, the breach of which are visited with penal consequences, render the law an unreasonable restric tion on the petitioners ' fundamental rights under Article 19(1)(g).
The contentions urged in support of the petitions admit of being noticed and formulated in the following terms: (a) The 'Act ', in its true nature and character, is not one imposing an 'Expenditure Tax ', as known to Law, accepted notions of Public Finance, and to legislative practice but is, in pith and substance, either a tax on Luxuries falling within Entry 62 of List II of the Seventh Schedule; or a tax on the consideration paid for the purchase of goods consti tuting an impost of the nature envisaged in entry 54 of List II, and clearly outside the legislative competence of the Union Parliament; (b) that even if the 'Act ' is held to impose a tax which is "sui generis" or a "non discript", tax with respect to which the Union Parliament is competent to make a law under Arti cle 248 and Entry 97 of List I, then, at all events, the 'Act ' is violative of Article 14 in as much as the differen tium on which the Hotels are classified is arbitrary and unintelligible has no rational nexus with the taxing policy under the 'Act '.
(c) that the 'Act ' is violative of Petitioners ' fundamental right under Article 19(1)(g) as it imposes unreasonable onerous restrictions on their freedom of busi ness.
Re. ' Contention (a): Sri Palkhivala, learned Senior Counsel for the petition ers, contended that the appellation of 'Expenditure Tax ' given to the impost is a misnomer as the concept of "Expend i ture Tax" as known to law and recognised by the theorists of public finance is not a tax on a few stray items of expendi ture but is a term of Art which has acquired a technical import as 'nomen juris ' and that the import envisaged by the Act, in its true nature and character, is no more and no less than a tax on Luxuries under Entry 62 list II within the State 's exclusive power.
Learned Counsel urged that the delicate balance in the demarcation in 933 a federal polity of legislative powers between the Union and the States would impose on the Union, the repository of the residuary power, the sensitive task of recognising both the line of demarcation as well as the constitutional mandate and a disciplined reluctance not to cross it.
The contention as to lack of legislative competence emphasises two aspects one with a negative implication and the other of a positive import.
Negatively, it is urged that the impost is not, and does not satisfy the concept of an "Expenditure tax" which has a technical connotation both in law and in public finance.
A tax on certain stray items of expenditure is not, it is contended, a general "expenditure tax".
The nomenclature of the levy is really a mere iII fitting legal mask for what is really a tax under Entry 62 list I. The nomenclature of the tax, it is urged, is irrele vant in deciding its true nature and character.
It belongs to the rudiments of the subject, says the learned counsel, that a constitutional grantee of a power cannot enlarge its own by choosing for the legislation enacted in exertion of that power, a nomenclature that corresponds to and semanti cally subsumes with the grant.
Shri Palkhivala submitted that the true nature and concept of "expenditure tax", as known to the theories of public finance has a specific, well accepted legal connotation and is a tax levied on income or capital spent or "consumed" in distinguishment of income or capital "saved".
It is this concept of 'expenditure tax ', as a fiscal tool, which has certain social and economic objec tives informing its policy.
The present impost and its incidents, it is urged, have no rational connection with the concept of "expenditure tax" known to and accepted by the principles of public finance and recognised by established Legislative practice.
Referring to the economists ' concept of "expenditure tax", learned counsel referred us to the report of the Study Group "On taxation of Expenditure" (Government of India, Ministry of Finance, April 1987) "An expenditure tax is generally taken to mean a direct tax on personal con sumption, i.e., the total annual consumption (minus an exemption, if any) of an individual tax payer or family.
This implies that the tax will be payable in the year in which consump tion takes place.
One can conceive of the tax base being computed by adding up all items of expenditure, which are by law defined as consumption e x p e nditure, . . . . . . . . . or, alternatively, by summing up all the receipts and substracting therefrom expenses of earning 934 income as well as outflows in the form of savings (going into different types of invest ments, including repayment of past loans).
In practice, the latter method would be prefera ble." (Emphasis Supplied) "India has the distinction, shared with Sri Lanka, of having actually experimented with a direct tax on consumption expenditure though the idea itself had caught the imagination of many tax theorists in developed countries, some of whom had developed practical systems for implementation.
In both India and Sri Lanka, the tax was introduced on the basis of the recommendations of Prof. Nicholas Kaldor.
Prof. Kaldor had been invited to come to India by the Indian Statistical Institute to make an investigation of the Indian tax system in the light of the revenue requirements of the Second Five Year Plan.
In his report, he recommended the introduction of a direct tax on personal consumption expenditure as a limb of a comprehensive and self checking system comprising the income tax, (which was already in operation in India), a tax on capital gains (which had been tried for two years in the post war period and then withdrawn), an annual tax on net wealth, a general gift tax and a tax on personal expenditure.
He envisaged that these five levies would be assessed simultane ously on the basis of a single comprehensive return, . . " (Emphasis Supplied) "Under the scheme of expenditure taxation suggested by Prof. Kaldor, a taxpayer would not be required to give any detailed account of his outlays on consumption but only a statement of his total outlay as part of a comprehensive tax return showing all his receipts, investments, etc., and all the items for which he claimed exemption . " "In India too, although the expendi ture tax was tried twice and was given up, there has been a revival of interest in making expenditure the base for personal taxation.
In particular, it has been maintained that India should seriously consider moving towards a progressive expenditure tax for three impor tant reasons: 935 (a) it will promote savings; (b) it would be, on the whole, more equitable than the present or any practicable form of income tax; and (c) it will significantly reduce the inducement for direct tax evasion." In Musgrave on 'Public Finance ', referring to the concept of Personal Expenditure Tax, it is stated: " .
In analogy to the income tax, the taxpayer would determine his total consumption for the year, subtract whatever personal exemptions or deductions were allowed, and apply a progressive rate schedule to the remaining amount of taxable consumption".
(Emphasis Supplied) Sri Palkhivala also referred to certain passages of Nicholas Kaldor "On Expenditure Tax" and the same eminent economists report on "Indian Tax Reform", to reinforce the submission that the conceptualisation of 'Expenditure Tax ', as a fiscal tool for economic regulation, has a specific and definite connotation and the "Tax" so conceptualised by experts on public finance is an entirely different idea from the one built into the present legislation.
The very concept of 'Expenditure Tax ' envisaged in the impunged legislation, it is urged, is unknown to accepted principles of public fi nance and is the result of a grave misconception as to the essential nature and incidents of what in law and legisla tive practice is recognised as 'Expenditure Tax '.
The whole exercise, learned counsel said, is a draft on credibility and that the Finance Minister 's speech on the Bill leaves no doubt that what the Government wanted from the law was really a tax on "Luxuries".
The impost, it is urged, is not susceptible of any other legitimate understanding than that it is in substance and effect, a tax on "Luxuries" within the States ' power.
Sri Palkhivala emphasised the relevance of what was implicit in the observations of this court in Azam Jha Bahadur vs Expenditure Tax Officer, ; made while upholding the legislative competence of the Union Parliament to enact the Expenditure Tax Act 1957, as referable to the residuary Entry 97 of List I. The implica tion of the observations of this Court at page 479 of the report, according to learned counsel, is that what distin guished 936 an "expenditure tax" from a levy under Entry 62 of List II, was that the scheme of taxation took into account the total ity of expenditure over a unit of time, as distinct from sums laid out on stray purchases of luxuries.
Shri Palkhivala, then, submitted that the notion of expenditure tax, as recognised by legislative practice is a relevant factor.
In Croft vs Dunphy, Lord Mc Millan held that when power is conferred on the legislature on a particular topic it is important, in determining the scope of the power, to have regard to what, in legislative practice, is ordinarily treated as embraced within the topic and particularly in legislative practice of the State which has conferred the power.
In Wallace Brothers & Co. Ltd. vs CIT, Bombay City, [1948] L.R. 75, IA 86 Lord Uthwatt re ferred to the permissibility and, indeed, the importance to refer to the legislative practice as to what is ordinarily treated as within the topic of legislation in understanding the scope of a legislative power.
The notion of expendi ture tax in the scheme of the Expenditure Tax Act, 1957, would, it is urged, detract from such legislative practice.
The second limb of the argument is that the impost is clearly of the nature of a tax on luxuries within Entry 62 of List I.
The simple test, according to the argument, is whether, if a State legislature had enacted a similar law it would not have been held to be within its competence under Entry 62 of List II? The answer would, according to the submission, be in emphatic affirmation, Referring to the concept of a luxury tax, learned counsel referred to the New Encyclopaedia Britanica Vol. 7 which referring to "luxury tax" says: "Luxury tax, excise levy on goods or services considered to be luxuries rather than necessities.
Modern examples are taxes on jewellery and perfume.
Luxury taxes may be levied with the intent of taxing the rich, as in the case of the late 18th and early 19th century British taxes on carriages and man servants; or they may be imposed in a deliber ate effort to alter consumption patterns, either for moral reasons or because of some national emergency.
In modern times, the revenue production of luxury taxes has proba bly overshadowed the moral argument for them.
Furthermore, the progressive nature of the early taxes began to be lost as more lower income people 's "luxuries" were taxed in the interest of generating additional revenue; an example is the amusement tax.
" 937 On the analogy of the wealth tax envisaged by Entry 86 of List I it was urged that even as the concept of "wealth" for the imposition of a tax thereon is not the individual components of the assets of the assessee but a totality of all assets which the assessee owns, so is the concept of "expenditure" which does not consist of a few stray items of expenditure but a systematised reckoning of expenditure for and during a particular unit of time.
It was then urged that recourse to the residuary power under Article 248 read with Entry 97 of List I should be the very last refuge and would be available if, and only if, the other entries in the State and concurrent lists do not cover the topic.
Reliance was also placed on the observations of the Federal Court in Subrahmanyan Chettiar vs Muttuswami Goun dan, AIR 1941 FC 47 where it was held: "But resort to that residual power should be the very last refuge.
It is only when all the categories in the three Lists are absolutely exhausted that one can think of falling back upon a nondescript." Shri Palkhivala recalled the following words of caution sounded by Chinnappa Reddy, J. in International Tourist Corporation vs State of Haryana; , " . .
Before exclusive legisla tive competence can be claimed for Parliament by resort to the residuary power, the legisla tive incompetence of the State legislature must be clearly established.
Entry 97 itself is specific that a matter can be brought under that entry only if it is not enumerated in List II or List III and in the case of a tax if it is not mentioned in either of those lists.
In a Federal Constitution like ours where there is a division of legislative subjects but the residuary power is vested in Parliament, such residuary power cannot be so expansively interpreted as to whittle down the power of the State legislature.
That might affect and jeopardise the very federal princi ple.
The federal nature of the constitution demands that an interpretation which would allow the exercise of legislative power by Parliament pursuant to the residuary powers vested in it to trench upon State legislation and which would thereby destroy or belittle state autonomy must be rejected . " 938 Sri Palkhivala also sought to demonstrate how, looked at from another angle, the levy presents an anomalous situation by splitting up a transaction which would otherwise be one of sale of goods and isolating the price of the goods for separate treatment as a distinct subject matter for levy of expenditure tax, thus robbing the State power of its sub stance.
Learned Advocate General for the State of Kerala who intervened made submissions which while being substantially on the lines of the petitioners ' contentions, however, sought to qualify that legislative competence to the extent of operation of the 'Act ' in the Union territories could be sustained.
Learned Attorney General on the contrary, submitted that the law, in pith and substance, is not one "with re spect to" Luxuries under Entry 62 List I and the tax on expenditure, as the legislature has chosen to conceive it, is referrable to residuary power.
Learned Attorney General said that the economists ' concept of such a expenditure tax is at best an idea of the manner of effectuation of fiscal programme and is no limitation on the legislative power.
Indeed, if a topic is not shown to fall within the fields of legislation in Lists II or III, no further inquiry is neces sary in order to support the legislative competence of the Union to legislate on the topic.
The purpose of incorporat ing a separate List for the Union, as observed in Union of India vs H.S. Dhillon, ; at 671 is: ". . there is some merit and legal effect in having included specific items of List I for when there are three lists it is easier to construe List II in the light of Lists I and II.
If there had been no List 1, many items in List 11 would perhaps have been given much wider interpretation than can be given under the present scheme.
Be that as it may, we have the three lists and a residuary power and therefore it seems to us that in this context ira Central Act is challenged as being beyond the legislative competence of Parliament, it is enough to enquire if it is a law with respect to matters or taxes enumerat ed in List II.
If it is not, no further ques tion arises.
" (Emphasis Supplied) Learned Attorney General characterised the petitioners ' contention that the impugned impost is really a tax on luxuries or that one 939 aspect of the taxable event in the sale of goods had imper missibly been isolated for the creation of an artificial idea 'expenditure ', suffers from certain basic fallacies.
The legislative powers, it is urged, recognise the demarca tion of distinct aspects of the same matter as distinct topics of legislation and that the present challenge to legislative competence overlooks the dichotomy of distinct aspects of the same matter constituting distinct fields of legislation, the line of demarcation, though sometimes thin and subtle, being real.
Learned Attorney General further contended that the measure adopted for the levy of the tax does not necessarily determine its essential character and that the object on which the expenditure is laid out might be an item of luxury or it might not be one; or the "expend iture" might constitute the price of the goods but, what is taxed is the "expenditure" aspect which, in itself, is susceptible of recognition, as a distinct topic of legisla tion.
We have bestowed our careful consideration to these rival contentions.
The principal question is whether the tax envisaged by the impugned law is within the legislative competence of the Union Parliament.
In that sense, the constitutionality of the law becomes essentially a question of power which in a federal constitution, unlike a legally omnipotent legislature like the British Parliament, turns upon the construction of the entries in the legislative lists.
If a legislature with limited or qualified jurisdic tion transgresses its powers, such transgression may be open, direct and overt, or disguised, indirect and covert.
The latter kind of trespass is figuratively referred to as "colourable legislation", connoting that although apparently the legislature purports to act within the limits of its own powers yet, in substance and in reality.
it encroaches upon a field prohibited to it, requiring an examination, with some strictness, the substance of the legislation for the purpose of determining what is that the legislature was really doing.
Wherever legislative powers are distributed between the Union and the States, situations may arise where the two legislative fields might apparently overlap.
It is the duty of the Courts, however difficult it may be, to ascertain to what degree and to what extent, the authority to deal with matters falling within these classes of sub jects exists in each legislature and to define, in the particular case before them, the limits of the respective powers.
It could not have been the intention that a conflict should exist; and, in order to prevent such a result the two provisions must be read together, and the language of one interpreted, and, where necessary modified by that of the other.
The Judicial Committee in Prafulla Kumar Mukherjee and Ors.
vs Bank of Commerce, referred to with approval the 940 following observations of Sir Maurice Gwyer CJ.
in Subrah manyan Chettiar 's case: "It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind observance to a strict ly verbal interpretation would result in a large number of statutes being declared in valid because the legislature enacting them may appear to have legislated in a forbidden sphere.
Hence the rule which has been evolved by the Judicial Committee, whereby the im pugned statute is examined to ascertain its 'pith and substance ', or its 'true nature and character, ' for the purpose of determining whether it is legislation with respect to matters in this list or in that.
" This necessitates as an "essential of federal Government the role of an impartial body, independent of general and regional Governments", to decide upon the meaning of deci sion of powers.
The Court is this body.
The position in the present case assumes a slightly different complexion.
It is not any part of the petitioners ' case that 'expenditure tax ' is one of the taxes within the States ' power or that it is a forbidden field for the Union Parliament.
On the contrary, it is not disputed that a law imposing 'expenditure tax ' is well within the legislative competence of Union Parliament under Article 248 read with Entry 97 of List I.
But the specific contention is that the particular impost under the impugned law, having regard to its nature and incidents, is really not an 'expenditure tax at all as it does not accord with the economists ' notion of such a tax.
That is one limb of the argument.
The other is that the law is, in pith and substance, really one imposing a tax on luxuries or on the price paid for the sale of goods.
The crucial questions, therefore, are whether the economists ' concept of such a tax qualifies and conditions the legislative power and, more importantly, whether "ex penditure" laid out on what may be assumed to be "luxuries" or on the purchase of goods admits of being isolated and identified as a distinct aspect susceptible of recognition as a distinct field of tax legislation.
In Lefroy 's 'Canada 's Federal System ' the learned author referring to the "aspects of legislation" under Sections 91 and 92 of the 941 Canadian Constitution i.e., British North America Act 1867 observed that "one of the most interesting and important principles which have been evolved by judicial decisions in connection with the distribution of Legislative Power is that subjects which in one aspect and for one purpose fall within the power of a particular legislature may in another aspect and for another purpose fall within another legisla tive power.
Learned author says: ". . that by 'aspect ' must be understood the aspect or point of view of the legislator in legislating the object, purpose, and scope of the legislation that the word is used subjectively of the legislator, rather than objectively of the matter legislated upon." In Union Colliery Co. of British Columbia vs Bryden, See.
at 587, Lord Haldane said: "It is remarkable the way this Board has reconciled the provisions of section 91 and section 92, by recognizing that the subjects which fall within section 91 in one aspect, may, under another aspect, fall under section 92." Indeed, the law 'with respect to ' a subject might inci dentally 'affect ' another subject in some way; but that is not the same thing as the law being on the latter subject.
There might be overlapping; but the overlapping must be in law.
The same transaction may involve two or more taxable events in its different aspects But the fact that there is an overlapping does not detract from the distinctiveness of the aspects.
Lord Simonds in Governor General in Council vs Province of Madras, P.C. at 193 in the con text of concepts of Duties of Excise and Tax on Sale of Goods said: " . .
The two taxes the one levied on a manufacturer in respect of his goods, the other on a vendor in respect of his sales, may, as is there pointed out, in one sense overlap.
But in law there is no overlapping.
The taxes are separate and distinct imposts.
If in fact they overlap, that may be because the taxing authority, imposing a duty of excise, finds it convenient to impose that duty at the moment when the excisable article leaves the factory or workshop for the first time on the occasion of its sale . " 15.
Referring to the "aspect" doctrine Laskin 's "Canadian Constitutional Law" states: 942 "The 'aspect ' doctrine bears some resemblance to those lust noted but, unlike them, deals not with what the 'mat ter ' is but with what it 'comes within ' . . " (p. 115) " . . it applies where some of the consti tutive elements about whose combination the statute is concerned (that is, they are its 'matter '), are a kind most often met with in connection with one class of subjects and others are of a kind mostly dealt with in connection with another.
As in the case of a pocket gadget compactly assembling knife blade, screwdriver, fishscaler, nailfile, etc., a description of it must mention every thing but in characterizing it the particular use proposed to be made of it determines what it is." (p.1 16) " . .
I pause to comment on certain correlations of operative incompatibility and the 'aspect ' doctrine.
Both grapple with the issues arising from the composite nature of a statute, one as regards the preclusory impact of federal law on provincial measures bearing on constituents of federally regulated con duct, the other to identify what parts of the whole making up a 'matter ' bring it within a class of subjects . . " (p. 117) The distinction between what is "ancil lariness" and what "incidentally affecting" the treatise says: " .
There is one big difference though it is little mentioned.
Ancillariness is usually associated with an explicit 'statu tory provision of a peripheral nature; talk about 'incidentally affecting ' crops up in connection with the potential of a non differ entiating statute to affect indiscriminately m its application matters assertedly immune from control and others.
But it seems immaterial really whether it is its words or its works which draw the flotsam within the statute 's wake." .lmo (p.115) 16, Referring to the flexibility in the modes of effec tuating a tax in view of innate complexities in the fiscal adjustment of diverse 943 economic factors inherent in the formulation of a policy of taxation and the variety of policy options open to the State, J Rauls in "Modern Trends in Analytical and Normative Jurisprudence" (Introduction to Jurisprudence by Lord Lloyd of Hampstead & Freeman, 5th Edn.) observed: " . .
In practice, we must usually choose between several unjust, or second best, arrangements; and then we look to nonideal theory to find the least unjust scheme.
Some times this scheme will include measures and policies that a perfectly just system would reject.
Two wrongs can make a right in the sense that the best available arrangement may contain a balance of imperfections, an adjust ment of compensating injustices.
" Adverting to "Expenditure dampening" policies and the choice of measures designed to reduce the aggregate demand for goods and services, the "Dictionary of Economic Terms" by Allan Gilpin says: "Expenditure dampening Policies: Government measures designed to reduce the aggregate demand for goods and services in the communi ty.
The measures may consist of raising taxes (q.v.) lowering government expenditure or curtailing hire purchase or other credit facilities.
EXPENDITURE SWITCHING POLICIES.
Expenditure switching Policies: Government measures designed to influence the pattern of expenditure by the community.
For example, the taxing of imported goods may effect a switch of expenditure from imported to homeproduced goods; devaluation of the nation 's currency may have the same effect as imports become more expensive.
See EXPENDITURE DSAMPENING POLICIES." Learned Attorney General also referred to the following observations in The British Tax System (by J.A. Kay M.A. King) to indicate that a tax on expenditure need not neces sarily be an expenditure tax in the economists ' reckoning of things: "An annual expenditure tax, which seeks to measure an individual 's spending in each separate year of assessment, poses very serious administrative problems, because 944 it requires that his assets be assessed annu ally . " " . .
But there is a much easier way of reaching a more accurate answer.
You simply measure how much foreign currency you took with you, add the amount of currency you bought while abroad, and substract what was left when you got back.
You measure, not the expenditure itself, but the sources of the expenditure, and can thus achieve a simple and reliable measure on the basis of a small number of recorded (and readily verifiable) transactions.
" It is trite that the true nature and character of the legislation must be determined with reference to a question of the power of the legislature.
The consequences and effect of the legislation are not the same thing as the legislative subject matter.
It is the true nature and character of the legislation and not its ultimate economic results that matters.
Indeed, as an instance of different aspects of the same matter, being the topic of legislation under different legislative powers, reference may be made to the annual letting value of a property in the occupation of a person for his own residence being, in one aspect, the measure for levy of property tax under State law and in another aspect constitute the notional or presumed income for purpose of income tax.
Petitioners ' reference to legislative practice as determining the scope of the present legislation does not assist them.
There are two infirmities in the contention.
The first is that the question of legislative practice as to what a particular legislative entry could be held to embrace is inapposite while dealing with a tax which is sui generis or non descript imposed in exercise of the residuary powers so long as such tax is not specifically enumerated in Lists II & III.
Secondly, there is no conclusive material indicat ing that the appropriate legislature had limited the notion of a tax of this kind within any confines.
It is relevant to recall the words of Lord Uthwatt in Walace Brothers case in ; at 402; "The point of the reference is emphatically not to seek a pattern to which a due exercise of the power must conform.
The object is to ascertain the general conception involved in the words in the enabling Act.
" But as observed in Navinchandra Mafatlal vs CIT, Bombay City, 945 [1955] 1 SCR 829 the meaning the word "income" is given in the Income tax Act is not determinative of its content as an entry in a legislative list.
Das J. observed: " . .
It is, therefore, clear that none of the authorities relied on by Mr. Kolah estab lish what may be called a legislative practice indicating the connotation of the term "in come", apart from the Income tax statute.
In our view, it will be wrong to interpret the word "income" in entry 54 in the light of any supposed English legislative practice as contended for by Mr. Kolah . . " (p. 835) 17.
In Union of India vs H.S. Dhillion, ; at 61 this Court dealt with the scope of the Residuary power under Entry 97 List I. Referring to following observations of Lord Loreburn in AttorneyGeneral for Ontario vs Attorney General, for Canada (See: at 581: "Now, there can be no doubt that under this organic instrument the powers distributed between the Dominion on the one hand and the provinces on the other hand, cover the whole area of self government within the whole area of Canada.
It would be subver sive of the entire scheme and policy of the Act to assume that any point of internal selfgovernment was withheld from Canada." (Emphasis Supplied) It was held that the last portion of the above excerpt applied a fortiori to the Constitution of the Sovereign, Democratic Republic.
Sikri CJ.
proceeded to observe (See: ; at 61): " .
If this is the true scope of residu ary powers of Parliament, then we are unable to see why we should not, when dealing with a Central Act, enquire whether it is legislation in respect of any matter in List II for this is the only field regarding which there is a prohibition against Parliament.
If a Central Act does not enter or invade these prohibited fields there is no point in trying to decide as to under which entry or entries of List I or List III a Central Act would rightly fit in.
" Then, considering the includibility of the value of agricul tural 946 property in the wealth of the assessee under the Wealth Tax Act despite the exclusionary words in Entry 86, List I the learned Chief Justice said: " . .
We are definitely of the opinion, as explained a little later, that the scheme of our Constitution and the actual terms of the relevant articles, namely, article 246, article 248 and Entry 97 List I, show that any matter, including tax, which has not been allotted exclusively to the State Legislatures under List II or concurrently with Parliament under List III, falls within List I, including Entry 97 of that list read with article 248.
" It was held that the subject did not fall under Entry 49 List II and that despite the exclusion in Entry 86 List I the Union, as the repository of the residuary power, had the competence to legislate as long as the topic was not allot ted to or within the State power.
It was further observed: "It seems to us unthinkable that the Constitutionmakers, while creating a sovereign democratic republic, withheld certain matters or taxes beyond the legislative competency of the legislatures in this country either legis lating singly or jointly . . " " . .
There is no principle that we know of which debars Parliament from relying on the powers under specified entries 1 to 96, List I, and supplement them with the powers under Entry 97 List I and article 248, and for that matter powers under entries in the Concurrent List." (p. 74) 18.
The subject of a tax is different from the measure of the levy.
The measure of the tax is not determinative of its essential character or of the competence of the legisla ture.
In M/s. Sainik Motors vs State of Rajasthan, 17 the provisions of a State law levying a tax on passengers and goods under Entry 56 of List I were assailed on the ground that the State was, in the guise of taxing passengers and goods, in substance and reality taxing the income of the stage carriage operators or, at any rate, was taxing the "fares and freights", both outside of its powers.
It was pointed out that the operators were required to pay the tax calculated at a rate related to the value of the fare and freight.
Repelling the contention, Hidayatullah J. speaking for the Court said: 947 " .
We do not agree that the Act, in its pith and substance, lays the tax upon income and not upon passengers and goods.
Section 3, in terms, speaks of the charge of the tax "in respect of all passengers carried and goods trans ported by motor vehicles", and though the measure of the tax is furnished by the amount of fare and freight charged, it does not cease to be a tax on passengers and goods . . " Indeed, reference may be made to the following statement in Encyclopaedia Britannica (Vol.
14 page 459) on 'Luxury Tax ': "A different approach to luxury taxation, much less frequently found, seeks to single out the luxury component of spending on a given object rather than taxing specified goods and services as luxuries.
One example of this is the Massachusetts 5% tax on restaurant meal of $1 or more . " (Emphasis supplied) 19.
The submissions of the learned Attorney General that the tax is essentially a tax on expenditure and not on Luxuries or sale of goods falling within the State power, must, in our opinion, be accepted.
As contended by the learned Attorney General, the distinct aspect namely, 'the expenditure ' aspect of the transaction falling with the Union power must be distinguished and the legislative compe tence to impose a tax thereon sustained.
Contention (a) is, in our opinion, unsubstantial and, accordingly, fails.
Re: Contention (b): It is urged that the application of the Act is confined to hotels where the "room charges" for any unit of residen tial accommodation are Rs.400 or more per day per individu al, while expenditure of greater magnitude and quantum incurred in other hotels is not exigible to the tax, either because such room charges are less than Rs.400 or because the establishment which, though providing food and drink and other services envisaged by Section 5, may not provide residential accommodation.
This distinction, it is said, is violative of the constitutional pledge of equality.
The averments in this behalf in the memorandum of writ petition are these: "There is no basis or intelligible differentia for discriminating between the levy of the tax on expenditure over food or drink provided by a hotel and the food or drink provided by 948 a restaurant or eating house not situated in a hotel (or in a hotel to which the Act does not apply) even though the cost of food or bever age is higher than that on similar items in an applicable Hotel.
There is also no intelligi ble differentia for discriminating between levying of tax on expenditure on food and drinks outside the hotel which is provided by the hotel and not levying tax on expenditure on food and drinks incurred outside the hotel but which is not provided by the hotel, even though the latter expenditure may be more greater than the former . " "The arbitrariness and lack of intelligible differentia is even more apparent in respect of clause 5(d) read with Exception (c).
To give an example, if a shop or office is owned by the hotel in the hotel, any expenditure incurred in such a shop or office would at tract expenditure tax but if such a shop or office is not owned or managed by the hotel even though situated in the hotel premises, such expenditure in by the hotel would not be liable to the impugned expenditure tax." "By way of illustration it may be pointed out that in the City of Bombay there are numerous restaurants like, Talk of the Town, China Garden, Gazebo and Gaylord which are similarly situated in every way to restau rants located in applicable hotels, from the point of view of their decor, furnishing, the range of the menu, the pricing of the items, the standards of service.
The clientele of such restaurants are also as affluent as the class of people who patronise restaurants which are located in applicable hotels.
Fur ther more, many of the said independent res taurants are far more luxurious and expensive than restaurants and/or dining rooms attached to applicable hotels in the City of Bombay which have one or more rooms charging a daily tariff of rupees 400 or more per person.
" It is now well settled though taxing laws are not out side Article 14, however, having regard to the wide variety of diverse economic criteria that go into the formulation of a fiscal policy legislature enjoys a wide latitude in the matter of selection of persons, subject matter, events, etc., for taxation.
The tests of the vice of discrimination in a taxing law are, accordingly, less rigorous.
In examin ing the allegations 949 of a hostile, discriminatory treatment what is looked into is not its phraseology, but the real effect of its provi sions.
A legislature does not as an old saying goes, have to tax everything in order to be able to tax something.
If there is equality and uniformity within each group, the law would not be discriminatory.
Decisions of this Court on the matter have permitted the legislatures to exercise an ex tremely wide discretion in classifying items for tax pur poses, so long as it refrains from clear and hostile dis crimination against particular persons or classes.
But, with all this latitude certain irreducible desid erata of equality shall govern classifications for differen tial treatment in taxation laws as well.
The classification must be rational and based on some qualities and character istics which are to be found in all the persons grouped together and absent in the others left out of the class.
But this alone is not sufficient.
Differentia must have a ra tional nexus with the object sought to be achieved by the law.
The State, in the exercise of its Governmental power, has, of necessity, to make laws operating differently in relation to different groups or class of persons to attain certain ends and must, therefore, possess the power to distinguish and classify persons or things.
It is also recognised that no precise or set formulae or doctrinaire tests or precise scientific principles of exclusion or inclusion are to be applied.
The test could only be one of palpable arbitrariness applied in the context of the felt needs of the times and societal exigencies informed by experience.
Classifications based on differences in the value of articles or the economic superiority of the persons of incidence are well recognised.
A reasonable classification is one which includes all who are similarly situated and none who are not.
In order to ascertain whether persons are similarly placed, one must look beyond the classification and to the purposes of the law.
In Jaipur Hosiery Mills Ltd. vs State of Rajasthan, a notification under the Rajasthan Sales tax Act, 1950, exempting from tax the sale of garments which did not exceed Rs.4 per piece was assailed.
This court found the classification permissible.
It was held: " . .
It has to be borne in mind that in matters of taxation the Legislature possesses the large freedom in the matter of classifica tion.
Thus wide discretion can be exercised in selecting persons or objects which will be taxed and the statute is not open to attack on the mere ground that it 950 takes some persons or objects and not others.
it is only when within the range of its selec tion the law operates unequally and cannot be justified on the basis of a valid classifica tion that there would be a violation of Arti cle 14.
" In Hiralal vs State of UP, ; this Court said: " . it is open to the legislature to define the nature of the goods, the sale or purchase of which should be brought to tax.
Legislature was not incompetent to separate the processed or split pulses from the unsplit or unprocessed pulses and treat the two as separate and independent goods." " . .
But the legislature has wide powers of classification in the case of taxing stat utes." (p. 510) " . .
The classification between the processed or split pulses .and unprocessed or unsplit pulses is a reasonable classifica tion.
It is based on the use to which those goods can be put.
Hence, in our opinion, the impugned classification is not violative of article 14." (p. 511) In State of Gujarat vs Sri Ambika Mills Ltd., ; Mathew J. said: "Statutes are directed to less than universal situations.
Law reflects distinction that exist in fact or at least appear to exist in the judgment of legislations those who have the responsibility for making law fit fact.
Legislation is essentially empiric.
It ad dresses itself to the more or less crude outside world and not to the neat, logical models of the mind.
Classification is inherent in legislation.
To recognize marked differ ences that exist in fact is living law; to disregard practical differences and concen trate on some abstract identities is lifeless logic." "In the utilities, tax and economic regulation cases, there are good reasons for judicial self restraint if not judicial deference to legislative judgment.
The legislature after all has the affirmative responsibility.
The Courts have only the 951 power to destroy, not to reconstruct.
When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the ex perts, and the number of times the judges have been overruled by events self limitation can be seen to be the path to judicial wisdom and institutional prestige and stability." (p. 784) In G.K. Krishnan vs Tamil Nadu, [1975] 2 SCR 715 Mathew J. referred to the following observations of the Supreme Court of U.S.A. in San Antonio School District vs Bodrigues,: "Thus we stand on familiar ground when we continue to acknowledge that the Justices of this Court lack both the expertise and the familiarity with local problems so necessary to the making of wise decisions with respect to the raising and disposition of public revenues.
Yet, we are urged to direct the States either to alter, drastically the present system or to throw out the property tax altogether in favour of some other form of taxation.
No scheme of taxation, whether the tax is imposed on property, income, or pur chases of goods and services, has yet been devised which is free of all discriminatory impact.
In such a complex arena in which no perfect alternatives exist, the Court does well not to impose too rigorous a standard of scrutiny lest all local fiscal schemes become subjects of criticism under the Equal Protec tion Clause." (p. 729) In I.T.O. vs N. Takim Roy Limbe, ; it was held: " . .
Given legislative competence, the legislature has ample freedom to select and classify persons, districts, goods, proper ties, incomes and objects which it would tax, and which it would not tax.
So long as the classification made within this wide and flexible range by a taxing statute does not transgress the fundamental principles underly ing the doctrine of equality, it is not vul nerable on the ground of discrimination merely because it taxes or exempts from tax some incomes or objects and not others.
Nor the mere fact that tax falls more heavily on some in the same category, is by itself a ground to render the law invalid.
It is only 952 when within the range of its selection, the law operates unequally and cannot be justified on the basis of a valid classification, that there would be a violation of Article 14." In the present case, the bases of classification cannot be said to be arbitrary or unintelligible nor as being without a rational nexus with the object of the law.
A hotel where a unit of residential accommodation is priced at over Rs.400 per day per individual is, in the legislative wisdom, considered a class apart by virtue of the economic superior ity of those who might enjoy its custom, comforts and serv ices.
This legislative assumption cannot be condemned as irrational.
It is equally well recognised that judicial veto is to be exercised only in cases that leave no room for reasonable doubt.
Constitutionally is presumed.
These words of James Bradley Thayer may be recalled: "This rule recognizes that, having regard to the great, complex ever unfolding exigencies of government, much which will seem unconsti tutional to one man, or body of men, may reasonably not seem so to another; that the constitution often admits of different inter pretations; that there is often a range of choice and judgment; that in such cases the constitution does not impose upon the legisla ture any one specific opinion, but leaves open this range of choice; and that whatever choice is rational is constitutional." (Emphasis Supplied) [See: Supreme Court Statecraft; The Rule of Law and Men: Wallace Mendelson: p. 4. ] Thayer also referred to the words of a Chief Justice of Pennsylvania way back in 1811 which are also worth recall ing: "For weighty reasons, it has been assumed as a principle in constitutional construction by the Supreme Court of the United States, by this court, and every other court of reputa tion in the United States, that an Act of the legislature is not be declared void unless the violation of the constitutional is so manifest as to leave no room for reasonable doubt.
" In Secretary of Agriculture vs Central Roig Refining Co., ; the Supreme Court of USA said: 953 " . .
This court is not a tribunal for relief for crudities and inequities of compli cated experimental economic Legislation.
" In M/s Hoechst Pharmaceuticals Ltd. vs State of Bihar, ; it was observed: " . .
On questions of economic regulations and related matters, the court must defer to the legislative judgment.
When the power to tax exists, the extent of burden is a matter for the discretion of the law makers.
It is not the function of the Court to consider the propriety or justness of the tax or enter upon the reality of Legislative policy.
If the evident intent and general operations of the tax legislation is to adjust the burden with a fair reasonable degree of equality, the con stitutional requirement is satisfied . . " 22.
It is contended that the standards and measures for the computation of the "chargeable expenditure" under the Act is vague and arbitrary.
It is pointed out that the expression or "other similar services" in clauses (d) of Section 5 is non specific and vague.
This argument does not commend itself to us.
It is true that when the statute says "other similar services" it does not contemplate that the "other services" shall, in all respects, be the same.
If they were the same then words would, indeed, be unnecessary.
These were intended to embrace services like but not iden tical with those described in the preceding words.
The content of the expression "other similar services" following, as it does, the preceding expressions "by way of beauty parlour, health club, swimming pool or . " has a definite connotation in the interpretation of such words in such statutory contexts.
The matter is one of construction whether any particular service falls within the section and not one of constitutionality.
We find contention (b) also not acceptable either.
Re: Contention (c): It is urged that the provisions of the Act impose an unreasonable restriction on the petitioners ' fundamental right under Article 19(1)(g).
It is averred in the petition: 954 ".
The various taxes to which the hotel industry is subject to are mentioned in the earlier part of this Petition.
Thus in respect of food and beverages consumed in a hotel, the element of taxes representing sales tax and the present Expenditure Tax works out, for example in Maharashtra, to as much as thirty five per cent.
Likewise, in respect of the room tariff, element of tax works out, for example in Gujarat, to as much as thirty seven per cent.
The details of the said calculations are given in Exhibit 'D ' annexed to this Petition.
The hotel industry today is subject to an extremely heavy dose of taxation in the shape of incometax and even the recent tax on works contracts.
The Petitioners say that the tourism, industry is now not in a position to sustain any additional burden and the impugned tax is literally the last straw on the camel 's back . " " It is also contended: " . .
Several of the hotels belonging to members of Petitioners Associations have entered into long term contracts for supply of food and beverages and for providing accommo dation.
The execution of such contracts would become onerous and even impossible in view of the levy of the present Expenditure Tax.
There is no provision in the Act or any separate legislation whereby hotels can pass on such a tax to persons who have contractually agreed to avail of any services at contracted rates . . " 24.
A taxing statute is not, per se, a restriction of the freedom under Article 19(1)(g).
The policy of a tax, in its effectuation, might, of course, bring in some hardship in some individual cases.
But that is inevitable, so long as law represents a process of abstraction from the generality of cases and reflects the highest common factor.
Every cause, it is said, has its martyrs.
Then again, the mere excessiveness of a tax or even the circumstances that its imposition might tend towards the diminution of the earnings or profits of the persons of incidence does not, per se, and without more, constitute violation of the rights under Article 19(1)(g).
Fazal Ali J., though in a different con text, in Sonia Bhatia vs State of U.P. & Ors., at 258 observed: " . .
The Act seems to implement one of the most important constitutional directives contained in Part IV of 955 the Constitution of India.
If in this process a few individuals suffer severe hardship that cannot be helped, for individual interests must yield to the larger interests of the community or the country as indeed every noble cause claims its martyr.
" Contention (c) is also insubstantial.
In the result, for the foregoings reasons, these petitions fail and are dismissed.
However, in the circum stances of the case there will be no order as to costs.
RANGANATHAN, J. 1.
I have perused the judgment of my learned brother Venkatachaliah, J. in this batch of writ petitions as well as in the two connected batches of matters viz. CA Nos. 338 and 339 of 1981 and WP Nos.
254 261 of 1981.
I respectfully agree with his conclusions in all these matters but wish to add a few words, primarily in so far as the constitutional validity of the Expenditure Act, 1987 is concerned.
As my learned brother has set out, analysed and discussed in detail the provisions of the various statutes, the validity of which is in question, I shall avoid a repe tition of the same and confine myself only to the considera tion of the crucial issues for determination.
The contentions of the assessees in the three batches of cases above referred to, prima facie, sought to make out a state of direct collision between a group of State enact ments on the one hand and a couple of Central enactments on the other, which cannot be averted save by declaring one set of the enactments to be invalid.
The powerful, if also "diplomatic", endeavour of the learned Attorney General, appearing for the Union of India, was to show that these sets of enactments are not really on a collision course at all but, on the contrary, are proceeding on parallel lines and that each of the sets of legislations is quite safe from attack on the ground of legislative incompetence.
Whether this contention is acceptable and both sets of enactments can be saved or whether one of the two has to give way to the other is the question for consideration in these batches of cases.
The set of State enactments which blazed the trial (to be followed up by others) and hence are prior inpoint of time, is that comprising of various statutes passed by several States in India.
The specific State legislation which are in challenge in the petitions and appeals before us (as indicated in the brackets at the end) are: 956 (a) Gujarat Tax on Luxuries (Hotels and Lodging Houses) Act (No. 24 of) 1977.
(C.A. 338,339/1981; W.P. Nos. 7990, 8338, 8339, 9110of 1981) (b) Tamil Nadu Tax on Luxuries in Hotels and Lodging Houses Ordinance, 1980 followed by an act (Act No. 6 of 1981) (WP 162/82) (c) Karnataka Tax on Luxuries (Hotels and Lodging Houses) Act (No. 22 of) 1979.
(WP 1271 2/82) (d) West Bengal Entertainments and Luxuries (Hotels and Restaurants) Tax Act (No. 21 of) 1972.
(WP 5321/85) The States of Uttar Pradesh, Maharashtra and Kerala have also passed similar enactments, being the: (a) Uttar Pradesh Taxation and Land Revenue Laws Act, (No. 8) of 1975; (b) Maharashtra Tax on Luxuries (Hotels & Lodging Houses) Act (XLI of) 1987; and (c) Kerala Tax on Luxuries in Hotels and Lodging Houses Act (No. 32 of) 1976 repealing Kerala Ordinance No. 5 of 1976.
The above statutes have apparently been enacted by the various State Legislatures in exercise of the legisla tive powers conferred on them under article 246(3) of the Constitution, read with Entry 62 of List II in the Seventh Schedule to the Constitution of India, which runs: "62.
Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling." (Some aspects thereof are also sought to be related to Entry 54 of List II, but as this stands on the same footing as Entry 62 for the purposes of the present case, no separate reference is made to Entry 54 hereinafter).
This is clear because the short title to each of the above 957 enactments describes it as an Act to provide for the "impo sition" or "the levy and collection" of a tax on "luxuries" or "entertainment and luxuries" in or provided in "hotels" or "hotels and restaurants" or "hotels and lodging houses".
Although "luxuries and entertainments" may be provided or availed of in various ways and could all be made the subject matter of a tax by virtue of the entry above referred to, these enactments are confined only to one type of such entertainments and luxuries viz. those provided in hotels, restaurants or lodging houses as defined under the relevant enactments.
Also, only certain specified classes of enter tainments or luxuries provided in such places are brought to tax.
The details of the imposition, levy and collection of the taxes vary with the enactments and need not be repeated here.
It is quite clear from the scheme of the legislations that they all fall within the scope of Entry 62 of List II set out earlier.
My learned brother has held so and I agree.
Indeed, their validity would, perhaps, have gone unchal lenged but for the enactment of Parliament of the Hotel Receipts Tax, 1980, (hereinafter referred to as 'the 1980 Act ').
When, in pursuance of the 1980 Act, a tax on some of the receipts of a hotelier was sought to be charged w.e.f.
1st February, 1981, it was but natural for some of the affected hoteliers to rush to Court for relief against this two pronged taxation of their receipts.
Writ petitions were filed challenging the competence of both sets of enactments and these have now come up for final hearing.
It must, however, be mentioned here that the levy of the Hotel Re ceipts Tax was withdrawn after a year; nevertheless it was in operation for one assessment year and hence the challenge to its validity is not purely academic.
The validity of the 1980 Act has been upheld by my learned brother as traceable to Entry 82 of List I in the Seventh Schedule to the Consti tution.
Taxes on income other than agricultural income.
I respectfully agree.
The relief conferred by the withdrawal of the 1980 Act was, however, short lived; it was only a "lull before the storm" which descended on all hoteliers in the form of the Expenditure Tax Act, 1987 (hereinafter referred to as 'the 1987 Act ').
Before referring to this enactment, the validity of which has been challenged in writ petition No. 1393 of 1987, it will be convenient to run back on the time machine by a period of three decades.
Mr. Nicholas Kaldor, Reader in Economics in the University of Cambridge, was the proponent of a levy styled as "Expenditure Tax".
When the Government of India requested him, sometime in the firties, 10 have a look at the system of direct taxation prevailing in this country and make his recommendations for a comprehensive scheme 958 of tax reform, he suggested, inter alia, the levy of an "expenditure tax".
His opinion was that such a levy, supple menting an income tax levy at rates lower than those preva lent then, would enable the Government to more effectively harness its resources.
In the course of arguments before us, copious references have been made to passages from Nicholas Kaldor 's book ( 'An Expenditure Tax ' published by George Allen & Unwin Ltd. of U.K.) and his 'Survey Report on Indian Tax Reform ' (published by the Government of India) out it will be sufficient to mention here that Prof. Kaldor 's report was implemented by Parliament by enacting the Expend iture Tax Act, 1957 (hereinafter referred to as 'the 1957 Act ').
The validity of the above Act was challenged before this Court but unsuccessfully.
The decision of this Court is reported as Azarnjah vs E.T.O., ; The nature and scope of the Act have been dealt with in the above decision and it is unnecessary to repeat the same here.
The 1957 Act was withdrawn after a few years; to be precise, with effect from assessment year 1965 66.
It was given up both because it was found to be too cumbersome and difficult to administer and also because the yield of reve nue therefrom was not substantial due to the limited number of assessees it covered.
After it was given up, as already mentioned, the 1980 Act occupied the field for a very short time, the pendency of writ petitions challenging its validi ty having perhaps largely contributed to its withdrawal.
After some interval, now, Parliament has come in with the 1987 Act.
The ambit and scope of this Act along with, on the one hand, its distinguishing features, as contrasted with the 1957 and 1980 Acts and its similarities, when compared to the State legislations, on the other, have been brought out in the judgments of brother Venkatachaliah J. and do not need repetition here.
It is in this background that we have to determine the pith and substance of the 1987 Act and decide whether Parliament had the legislative competence to enact the same or not.
The short question that one has to answer in these cases is whether the levies in question by the States and the Union can both stand or whether we have to treat the levies as either tax on 'luxuries ' or as tax on 'income ' or 'expenditure ' and thus uphold one of them but not both.
I do not think there can by any doubt at all that, in the context of the social and economic conditions that prevailed in India, it was a luxury for any person to stay in hotels charging high rents and providing various types of facili ties, amenities and conveniences such as telephone, televi sion, air conditioner, etc.
The decision of this Court in Abdul Kadir & Sons vs State of Kerala, ; , and 959 in particular, the discussion at pages 699 to 701 places this beyond all doubt.
This aspect has also been discussed by Thakkar, J. of the Gujarat High Court (as His Lordship then was) in the judgment under appeal and I am in agreement with his reasonings and conclusion that the Gujarat statute has been validly enacted in exercise of the powers available to the State legislatures under Entry 62 of List I1.
This applies equally to the other impugned State enactments as well. 9.
It has been argued that the monetary ceilings for the rents have been fixed at such low figures that even tempo rary stay at a not so comfortable hotel or lodging house, when a person is constrained to go outside his hometown, will become a luxury, according to these standards.
Indeed some statistics have been supplied by the Gujarat petition ers in support of such a contention.
But this, I think, is a matter which must be left to legislative determination.
As is well known the legislature has, particularly in a taxing statute, a considerable amount of latitude and there is nO material to hold that, in fixing the standards of indication of luxury the legislature, has not applied its mind.
In fact, the figures have been amended from time to time and, one has to presume that the legislature had good reason for fixing these standards.
The State legislations are there fore, clearly, within the competence of the State legisla tures and are not liable to be challenged.
It seems equally cleat that the pith and legislation of the 1980 Act is, as held by Venkatachaliah, J. traceable to Entry 82 of List I.
In interpreting the scope of the legislative entries in the three lists, we have to keep in mind that, while on the one hand, it is desirable that each entry in each of the lists should receive the broadest interpretation, it is equally important, on the other, that the three lists should be read together and harmoniously.
Our attention was drawn to some of the entries in List II which show that the legislative power in respect thereof are to be exercised subject to the powers of Parliament envis aged under List I, vide entry Nos. 2, 17, 22, 23, 24, 26, 27, 32, 33 and 50.
There is no doubt that these entries have to be read subject to the entries of List I which have been mentioned or the powers of Parliament referred to therein.
These, however, are instances of entries which, on their very language, are controlled by entries in List I.
But even apart from these instances, the language of clause (1) and (3) of article makes it clear that the power of the State legislature to make laws with respect to any of the matters enumerated in List II is subject to the exclusive power of Parliament to make laws with respect to any of the matters enumerated in List I. Hence, if a matter is 960 covered by an entry in the Union List, no restrictions can be read into the power of Parliament to make laws in regard thereto.
This is so far as the general power of legislation is concerned.
As pointed out by this Court in Sundararami er 's case; , at pp.
1479 and 1490), the legislative entries are so arranged that the power to enact laws in general and the power to impose taxes are separately dealt with.
The subject matters of taxation available to Parliament are.
enumerated in entries 82 to 97 of List I, those available to the State legislatures in entries 45 to 63 of List II and those available to both in entry 44 of List III.
Under section 246(1) Parliament has exclusive power to make laws with respect to any of the matters and this includes the power to impose taxes enumerated in List I.
In this situation and in view of the fact that the 1980 Act is, in pith and substance, a tax on income, its constitutional validity can be in no doubt at all.
But can the Union enactment of 1987 also be support ed for the same reasons, as imposing an expenditure tax which, as held in Azam Jha 's case; , , falls within the scope of Entry 97 of List I? Sri Palkiwala says it cannot be.
His first contention is that the tax levied by the 1987 Act is not, in fact and in truth, an expenditure tax.
He says that it is not sufficient for the legislature to give such a description or label to a tax proposed to be levied by it as does not fall under List II and claim that it should be upheld under Entry 97.
The tax sought to be imposed should be one which has real existence and recogni tion in the world of economics.
According to him, the eco nomic concept of an expenditure tax is of a tax that is levied not on isolated items of expenditure but one on the totality of the expenditure incurred by an assessable enti ty, just as income tax has gained recognition as a tax on the total income of a taxable entity.
That was the concept of the expenditure tax which Nicholas Kaldor had in mind, which was embodied in the 1957 Act and which, hence, was endorsed with approval by this Court.
A tax on a few items of expenditure, it is said, is not necessarily the same as an expenditure tax.
Referring to the decisions of this Court upholding the levy of Wealth Tax and Gift Tax in as far as it affected agricultural lands: Gift Tax Officer vs D.H. Nazareth etc.; , and Union of India vs H.S. Dhillon; , , it is submitted that the decisions may well have been different had they been concerned with an imposition only on "lands and buildings" by reference to their capital value or only on "agricultural lands" on the occasion of a gift.
It is difficult to accept the contention that the tax cannot be considered to be an expenditure tax because it is not on "expenditure" 961 generally but is restricted to specific types of expendi ture.
There is, no legal, judicial, economic or other con cept of expenditure tax that would justify any such restric tive meaning.
If, conceptually, the expenditure incurred by a person can be a subject matter with reference to which a tax can be levied, there is no reason why such taxation should not be restricted only to certain items or categories of expenditure and why its base should necessarily be so wide as to cover all expenditure incurred by an assessable entity.
After all, even under the 1957 Act, all expenditure of all persons was not liable to tax.
It substantially covered only certain types of assessees and certain types of expenditure (for several types of expenditure were exempted) and that too only when it exceeded certain limits.
The analogy of the Income tax or Wealth Tax or Gift Tax Acts also does not really help us.
Though they are enactments which cover a larger area of the subject matter taxed, that was because the legislature found it expedient to do so and not because they were obliged to cover the entire area of income, wealth or gift.
An Act imposing a tax, for example, on hotel receipts alone or dividends alone or on capital gains alone will not be any the less a tax on income within the scope of Entry 82 of List I.
Likewise even if the legis lature had confined its levy of wealth tax only to certain assets such as lands and buildings or the Gift Tax Act had levied a tax only on gifts of agricultural land, they would not have ceased to fall within the scope of the relevant entries of the Union List, so long as, in pith and sub stance, they are found respectively to be taxes on the capital value of the assets in question or on the transac tion of gift.
The Central Excise Act, for example, does not levy excise duty on the manufacture and production of all goods and additional excise duty is levied only in respect of certain goods.
So also, in regard to sales tax.
It is indeed even possible to say that no tax levy in respect of any subject matter can or does operate universally without any exceptions or exemptions.
Selection of objects and goods for taxation is the essence of any tax legislation and any limitation of the nature suggested is an unwarranted cur tailment of this selective power of taxation of Parliament.
There is also no established legislative practice which would enable one to limit the concept of an expendi ture tax in the manner suggested.
So far as expenditure tax is concerned, the only legislation earlier in force was the 1957 Act which was in force for a period of eight years.
Such short lived legislation can hardly furnish the founda tion of an argument to limit the scope of legislative power to the manner in which it was exercised under that enact ment.
If, after withdrawing this legislation, Parliament considered that it was not worthwhile or possible to impose a tax on all expenditure and that it would 962 be sufficient, expedient or necessary to impose such a levy only on lavish spending in certain directions, that cannot certainly be precluded on any theory of established legisla tive practice, as was done in State of Madras vs Gannon Dunkerley Co., ; in respect of sales tax.
In that case the legislative trend prevalent over decades was relied upon in interpreting the expression "sale of goods" used in the Constitution.
But there the Court was concerned with a legal term, "sale", which had acquired a definite connotation in law and in legislative instruments and that analogy cannot be availed of to interpret the scope of Entry 97.
On the other hand, even a fairly long established legis lative practice under which income tax levy by the Centre was restricted to items of income stricto sensu (as con trasted with capital gains) was not considered sufficient to place that type of restriction on the interpretation of the expression "taxes on income" used in the Central Legislative List: vide, Navinchanda Mafat Lal vs CIT, [1955] 1 SCR 829.
Not only that, the validity of later definitions of "income" under the Income tax Act which have a much wider ambit has been upheld as covered by the above legislative entry.
See, in this context, the decisions in Naynit Lal vs AAC, ; , Bhargava vs Union, ; and Bhag wandas vs Union; , There is not even that much of legislative practice, so far as expenditure tax is concerned, which would justify our importing any limitation on the concept of a "tax on expenditure" under Entry 97 of List I. A perusal of the decision of this Court upholding the validity of the 1957 Act Azam Jha 's case; , does not also justify the reading in of any such limita tion.
The wider coverage of the tax made it easier for the Court to pin point its subject matter as "expenditure" and to treat it as a matter falling under the residuary entry, but it does not justify the inference sought to be drawn that a tax cannot be said to be a tax with reference to "expenditure" because it does not tax expenditure in general but confines itself to certain types or categories of ex penditure.
Once it is granted that the tax need not exhaust the entire universe of the subject matter, the extent of the subject matter that should be covered or selected for impos ing tax should be entirely left to Parliament.
subject only to any criteria of discrimination or unreasonableness that may attract the provisions of Part III of the Constitution.
The fact that the 1987 Act seeks to tax only the expenditure on items which can be described as luxuries is, however, used by Sri Palkiwala to support his other conten tion (which has really troubled me considerably) that the pith and substance of both sets of legislations is the same, that they both impose a tax only on luxuries or 963 entertainments and that the distinction sought to be made on behalf of the Revenue that one is a tax on 'luxuries ' while the other is a tax on the expenditure incurred by a person on luxuries is only a distinction between "Tweedledum" and "Tweedledee".
The object and effect of a tax on luxuries is only to curb expenditure on luxuries and such a tax may be imposed, levied or collected either from the provider of luxuries or the person who enjoys them.
The object of an expenditure tax is also similar and that can also be levied either on the person who spends the moneys directly, or through some other person, or even from the person who benefits by the incurring of such expenditure.
The provision of a luxury and the payment for it are only obverse sides of the same coin and cannot, from any practical point of view, be considered as two separate and independent subject mat ters of taxation.
It is a well settled proposition that the entries in the legislative lists should be given the broad est of connotation and, hence, a tax on luxuries by refer ence to the expenditure thereon will fall clearly under the entry in the State List.
The pith and substance of both sets of legislation, therefore, fails only under entry No. 62 of the State List.
This being so, Entry 97 of List I will have no applicability at all; that can be called in aid only to cover matters not specifically enumerated or taxes not mentioned in List II or III.
It is, therefore, not possible.
it is urged, to sustain the validity of the 1987 Act by reference to Entry 97 of List I. 15.
The learned Attorney General sought to meet this contention in two ways.
He first urged that the pith and substance of the two legislations are different.
A tax on 'luxuries ' measured by reference to the amount charged or paid therefore is totally different from a tax to curb opu lent or ostentatious expenditure even though the categories of expenditure brought in for taxation by a particular statute may be restricted.
The latter cannot be described as a tax on 'luxuries ' and does not fall within the scope of Entry 62 of the State List and, in the absence of any refer ability to any other entry of List II ', it is safe from attack under Article 248(2) and will also be covered, if need be, by Entry 97 of List I.
The second argument is that, after the decision in Azatn Jha 's case; , holding that a "tax on expenditure" will be legislation covered by Entry 97 in List I, the constitutional position is the same as if, before item 97, a specific entry had been inserted in List I (say, Entry No. 96A) which reads "Taxes on expenditure".
The result, he says, is that the Central legislation will be squarely covered by an entry in List I and so we need not embark on any investigation as to whether it falls or does not fall under any entry in List II or List III.
964 16.
It seems to me that there is a fallacy in the second line of argument addressed by the learned Attorney General.
I do not think that the legislative lists can be interpret ed, as suggested by him, on the assumption that there is a deemed entry, "Taxes on Expenditure".
added to List I as a result of the decision in Azam Jha 's case ; One cannot add entries to the legislative lists on the basis of decisions of this Court.
In Azam Jha 's case, the pith and substance of the Act considered did not fall under any of the entries in List II or III.
That being so, this Court upheld it by reference to Entry No. 97 describing the tax, having regard to its pith and substance, as a tax on expend iture.
Here, however, we have a legislation which covers only certain types of expenditure and the contention of the petitioners is that ,these are all items of expenditure pertaining to luxuries.
The decision in Azam Jha 's case cannot help us to determine whether the legislation before us should be construed as imposing a tax on expenditure or one on luxuries.
If, in spite of its dealing with only certain types of expenditure relatable to luxuries, it can be said to be, in pith and substance, not a tax on luxuries, then we may hold that parliament can legislate with refer ence to it and, for purposes of convenience, take advantage of its description as a tax on expenditure to rest it on Entry 97 of List I.
In other words, Entry 97 of List I cannot come to our rescue unless we are in a position to say that the substance of the Central legislation in question is not a tax on luxuries, entertainments or amusements.
This takes us to the first part of the argument of the learned Attorney General.
Is there a tenable and true distinction between the tax on expenditure levied by the Act and a tax on luxuries? Are Parliament and the State Legislatures dealing with the same 'matter ' and taxing one and the same thing, though describing it differently or are they taxing two different matters or things? Sri Palkiwala says that the subject matter of taxation is 'luxury ' and that it is meaningless to consider the expenditure incurred on it as a separate and distinct subject matter.
The acceptance of such an argument, he says, will lead to double taxation in respect of almost every matter on earth.
For instance, A may be taxed on the salary or interest or dividend paid to him by B as his income and, at the same time, B can be asked to pay a tax on the expenditure incurred by him by way of such salary, interest or dividend payment.
A can be asked to pay a wealth tax on the capital value of the assets acquired by him and also asked to pay an expenditure tax on the money spent on such acquisition.
A can be asked to pay a sales tax on the goods sold by him to B and also asked to pay or collect a tax on the expenditure incurred by B to purchase the same.
965 Such instances, he says, can be multiplied and will reduce the argument to an absurdity.
The Attorney General, on the other hand, submits that the question whether both legislation relate to the same matter does not bring out correctly the controversy in issue.
He says that if the expression "matter", in this context, is understood in its widest sense.
it will create chaos in the matter of interpretation of the lists.
Accord ing to him, for applying the doctrine of pith and substance we have to understand the expression 'matter ' not in a 'gross ', but in a 'rare ' sense.
He develops this contention by invoking, to his aid, what may be called the 'aspect ' rule as explained in certain text books and judicial deci sions.
A.H.P. Lefroy in his 'Canadian Constitution ' observes, at p. 98: "Sec.
Aspect of legislation: Subjects which in one aspect and one purpose fall within section 92 of the Federation Act and so are proper for provincial legislation may.
in another aspect and for another purpose fall within section 97 and so be proper for Dominion legislation.
And as the cases which illustrate the principle show, by 'aspect ' here must be understood the aspect or point of view of the legislator in legislating, the object, purpose and scope of the legislation.
The word is used subjectively of the legislator, rather than objectively of the matter legislated upon." To similar effect is the passage from Laskin 's "Canadian Constitutional Law" extracted in the judgment of Venkatacha liah, J. the Federal Court in the C.P. & Berar Act case also touches upon the 'aspect ' theory at p. 49: "Here are two separate enactments, each in one aspect conferring the power to impose a tax upon goods; and it would accord with sound principles of construction to take the more general power, that which extends to the whole of India as subject to an exception created by the particular power, that which extends to the Province only." (emphasis added) A similar reference to the 'aspect ' of legislation can be seen in Kerala State Electricity Board vs Indian Aluminium Co., at p. 573 4. 966 "The argument of the learned Solicitor General appearing on behalf of the Kerala Electricity Board in support of his submission that the legislation falls under Entries 26 and 27 of List II may be summarised as follows: Those entries do not enable the State Legislatures to legislate with regard to all conceivable goods like arms, ammunition, atomic minerals etc.
as was argued by Mr. Sen. A legislature while legislating with regard to matters within its competence should be deed to know its limits and its legislative authority and should not be deemed to be legislating beyond its jurisdiction.
One thing that has always got to be kept clear in one 's mind is that there may be more than one aspect with regard to a particular subject matter".
(emphasis added) Relying on this principle, backed by these observations, the learned Attorney General submits that, properly understood, the pith and substance of the 1987 Act is 'expenditure ', not 'luxuries '.
At first blush, the argument of the learned Attorney General may sound a little subtle and somewhat artificial but, on some reflection, legislative competence will indeed be seen to vary with different aspects of a subject matter as understood in a wide sense.
This can be seen from some of the decided cases.
The first triumvirate of cases that arose in India under the Government of India Act, viz.
In re Central provinces & Berar Act XIV of 1953, ; Province of Madras vs Boddu Paidanna & Sons, and G.G. in Council vs Province of Madras, , were concerned with the question whether the impugned tax was one on the sale of goods or an excise duty.
Interpreting the word 'subject matter ' in a broad sense it could perhaps be said that both were taxes with respect to goods.
But this concept alone was not sufficient to dispose of the case because the relevant legislative entries did not talk of taxes with respect to goods but referred to taxes in respect of two different activities referable to goods (conveniently described as the 'taxable event '), one the manufacture and production of goods and the other with sale thereof.
In the light of these legislative entries the two different activi ties could properly regarded as two different matters for taxation and the relevant legislation was held to be one concerned with 'sale ' and not with 'manufacture '.
In other words, there could be two enactments "each in one aspect conferring the power to impose a tax upon goods".
The legis lation was held not to be vitiated merely because there was an element of overlapping in that both excise duty and sales tax became 967 leviable on the same assessee in respect of the same goods and by reference to the same sale price when the first sale after manufacture occurs, one by reference to the 'manufac ture ' aspect and the other by reference to the 'sales ' aspect.
This bifurcation of the two different aspects per taining to goods was justified by the language of the legis lative entries themselves which referred separately to the different sets of activities and put them down in different legislative lists.
Again, on the same principle, the manu facture of electricity may attract excise duty at the point of its captive consumption (under Entry 84 of List I) and also a tax on the consumption or sale of electricity (refer rable to Entry 53 of List II).
The power to levy taxes with respect to 'property ' has created similar problems.
All States (or corporations and municipalities therein) levy a property tax on the owner or occupier which is almost universally measured by refer ence to its annual value (viz. the rent it would fetch if let from year to year).
The Income tax Act also charges a tax on the same basis.
In other words, in a realistic and practical sense, the tax was levied by both legislatures on the same amount and with reference to the same matter.
But both levies have been upheld under the 1935 Act, the former as a 'tax on lands and buildings, hearths and windows ' (Entry 42 of List II) and the latter as a tax on income (under Entry 84 of List I.) Ralla Ram pointed out that they were different types of levies one on the land and buildings (generally, but not necessarily, measurable by reference to the income derived or capable of being derived) and the other on the income (actually or notionally) derived from it.
The pith and substance of the former, it was said, was not 'income ' (from the property) though the tax was levied on the basis thereof.
Expressed differently, it could be said that, though both were taxes with respect to proper ty, they touched different aspects of the above subject matter; the first was a tax on the aspect of ownership or occupation of property; the second on the aspect of income from property.
The decision of this Court in Bhagwan Dass Jain vs Union, ; is also to the same effect.
The Hingir Rampur Coal Co. case ; was concerned with the validity of an Orissa Act which sought to levy a cess not exceeding 5% of the valuation of the coal stacked at pit 's mouth.
The question was whether this was in pith and substance a duty of excise (Entry 84 of List I) or a fee to regulate and control the coal mining industry (Entry 66 and 23 of List II).
Here again though the method adopted for recovering the impost was the same as that of an 968 excise duty, the validity of the tax was upheld as it relat ed to the aspect of control over the industry rather than to the aspect of an impost on production of coal.
Sainik Motors case ; furnishes an illustration which comes nearer to the question at issue before us.
In that case a Rajasthan Act purported to levy a tax on passengers and goods measuring it by reference to the fares and freights charged by operators for carriage of such passengers or goods.
If it were to be treated as a tax on 'fares and freights ' it would be a tax on income which the State legislature could not levy.
But, if treated as a tax on passengers and goods carried by road it was valid under Entry 56 of List II.
The validity of the Act was upheld on the latter ground, the court pointing out that the tax was on goods and passengers though measured by reference to fares and freights.
This dichotomy could perhaps also be justified on the basis of the language of Entry 89 of List I.
That entry makes a distinction between the two types of imposts and illustrates that two different aspects of the same matter viz. taxes in respect of vehicles carrying passengers or goods can form separate matters for taxation.
In the light of the above entries and decisions, I think that the learned Attorney General is right in urging that, merely because the 1987 Act as well as the State Acts levy taxes which have ultimate impact on persons who enjoy certain luxuries, the pith and substance of both cannot be considered to be the same.
The object of a tax on luxury is to impose a tax on the enjoyment of certain types of bene fits, facilities and advantages on which the legislature wishes to impose a curb.
The idea is to encourage society to cater better to the needs of those who cannot afford them.
For instance, a luxury tax may, to cite a catchy example, encourage construction of "janata" hotels rather than five star hotels.
Such a tax may be on the person offering the luxury or the person enjoying it.
It may be levied on the basis of the amount received for providing, or the amount paid for or expended for enjoying, the luxury.
Conceivably, it could be on different bases altogether.
The object of an expenditure tax and, that, conceptually, there can be an expenditure tax is borne out by Azam Jha 's case (supra) is to discourage expenditure which the legislature considers lavish or ostentatious.
The object of the first would be to discourage certain types of living or enjoyment while that of the second would be to discourage people from incurring expenditure in 'unproductive or undesirable channels.
If a general Expenditure Tax Act, like that of 1957, had been enacted, no challenge to its validity could have been 969 raised because it incidentally levied the tax on expenditure incurred on luxuries.
The fact that there will be some overlapping then or that here there is a good deal of such overlapping, because the States have chosen to tax only some types of luxuries and the Centre to tax, atleast for the time being, only expenditure which results in such luxuries, should not be allowed to draw a curtain over the basic difference between the two categories of imposts.
For in stance, if the conflict alleged had been between the present State Acts and an Act of Parliament taxing expenditure incurred in the construction of theatres or the maintenance of race horse establishments or the like, there would have been no overlapping at all and the pith and substance of the central tax could well be described as "expenditure" and not "luxuries".
This distinction is not obliterated merely because of the circumstance that both legislatures have chosen to attack the same area of vulnerability, one with a view to keep a check on 'luxuries ' and the other with a view to curb undesirable 'expenditure:.
For these reasons, I agree with my learned brother Venkatachaliah, J. that the validity of the three impugned enactments has to be upheld and these writ petitions and appeals dismissed.
N.P.V. Petitions dismissed.
| IN-Abs | The Expenditure Tax Act, 1987, envisaged a tax at 10% ad valorem on chargeable expenditure incurred in the class of hotels wherein room charges for any unit of residential accommodation were Rs.400 per day per individual.
Section 5 of the Act defined chargeable expenditure to include expend iture incurred in or payments made in such class of hotels in connection with the provision of any accommodation, residential, or otherwise, food or drink whether at or outside the hotel, or for any accommodation in such hotel on hire or lease or any other services envisaged in that Sec tion.
The petitioners, who were engaged in, or associated with the hotel industry challenged the constitutional validity of the Act on grounds of 919 lack of legislative competence and violation of Articles 14 and 19(1)(g) of the Constitution.
It was contended that the Act, in its true nature and character, was not one imposing an expenditure tax, as known to law, accepted notions of Public Finance, and to legislative practice but was, in pith and substance, either a tax on luxuries falling within Entry 62 of List II of the Seventh Schedule, or a tax on the consideration paid for the purchase of goods constituting an impost of the nature envisaged in entry 54 of List II, and was clearly outside the legislative competence of the Union Parliament; that the Act was violative of Article 14 as the basis on which the hotels were classified was arbitrary an unintelligible, having no rational nexus with the taxing policy under the Act, inasmuch as persons similarly situat ed, and who incurred the same extent and degree of expendi ture on the same luxuries, were differentiated on the sole basis that in one case the expenditure was incurred in a hotel where one of the rooms had a charge of Rs.400 per day per individual marked for it, while in the other though equally wasteful expenditure was incurred in a more luxuri ous restaurant, the latter expenditure was exempt, that even if more sophisticated and expensive food and drinks and other services, envisaged in clauses (a) to (d) of Section 5 were provided in a hotel or catering establishment which fell outside the class, the expenditure incurred thereon is unaffected by the law, that the standards and measures for the computation of the chargeableexpenditure under the Act was vague and arbitrary, that the expression 'other similar services ' in clauses (d) of Section 5 was non specific and vague; and that the Act was violative of petitioners ' funda mental right under Article 19(1)(g) as it imposed unreasona ble onerous restrictions on their freedom of business.
The respondent Union of India sought to sustain the legislative competence of Parliament to enact the law under Article 248 read with Entry 97 of List I of the Seventh Schedule, contending that the law, in pith and substance, was not one 'with respect to luxuries under Entry 62, List 1, and the tax on expenditure, as the legislative had chosen to conceive it, was referrable to residuary power, that the economists ' concept of such an expenditure tax was at best an idea of the manner of effectuation of fiscal programme and was no limitation on the legislative power, that the legislative power recognised the demarcation of distinct aspects of the same matter as distinct topics of legislation and that the challenge to legislative competence overlooked the dichotomy of these distinct aspects, the line of demar cation, though sometimes thin and subtle, being real, that the measure adopted for the levy of the tax did not neces sarily determine its essential character and that the object on which the expenditure was laid out might or might not be an item of 920 luxury, or the expenditure might constitute the price of the goods but, what was taxed was the expenditure aspect which, in itself, was susceptible of recognition, as a distinct topic of legislation.
Dismissing the Writ Petitions, this Court HELD: (R.S. Pathak, CJ., Sabyasachi Mukharji, section Natara jan and M.N. Venkatachaliah Per: Venkatachaliah, J.) 1.1 A law imposing the expenditure tax is well within the legislative competence of Union Parliament under Article 248 read with Entry 97 of List I. [940E F] 1.2 The tax envisaged by the Expenditure Tax Act, 1987, is essentially a tax on expenditure and not on luxuries or sale of goods falling within the State power.
The distinct aspect, namely, the expenditure aspect of the transaction failing with the Union power must be distinguished and the legislative competence to impose a tax thereon sustained.
[947D E] 2.1 If a legislature with limited or qualified jurisdic tion transgresses its powers, such transgression may be open, direct and overt, or disguised, indirect and covert.
The latter kind of trespass is figuratively referred to as "colourable legislation", connoting that although apparently the legislature purports to act within the limits of its own powers yet, in substance and in reality, it encroaches upon a field prohibited to it, requiring an examination, with some strictness, the substance of the legislation for deter mining as to what the legislature was really doing.
[939E F] Prafulla Kumar Mukherjee and Ors.
vs Bank of Commerce, , referred to.
2.2 Wherever legislative powers are distributed between the Union and the States, situations may arise where the two legislative fields might apparently overlap.
It is the duty of the Courts, however difficult it may be, to ascertain to what degree and to what extent, the authority to deal with matters failing within these classes of subjects exists in each legislature and to define, in the particular case before them, the limits of the respective powers.
It could not have been the intention that a conflict should exist; and, in order to prevent such a result the two provisions must be read together and the language of one interpreted, and, where necessary modified by that of the other.
[939F G] 921 Union Colliery Co. of British Columbia vs Bryden, at 587; Lefroy Canada 's Federal System., referred to.
2.3 The law 'with respect to ' a subject might inciden tally 'affect ' another subject in some way; but that is not the same thing as the law being on the latter subject.
There might be overlapping; but the overlapping must be in law.
The same transaction may involve two or more taxable events in its different aspects.
But the fact that there is an overlapping does not detract from the distinctiveness of the aspects.
[941E] Governor General in Council vs Province of Madras, at 193 and Laskin Canadian Constitu tional Law, referred to.
2.4 The consequences and effects of the legislation are not the same thing as the legislative subject matter.
It is the true nature and character of the legislation and not its ultimate economic results that matters.
[944C] 2.5 The scope of the present legislation cannot be considered by reference to legislative practice because firstly, the question of legislative practice as to what a particular legislative entry could be held to embrace is inapposite while dealing with a tax which is suigeneris or non descript imposed in exercise of the residuary powers so long as such tax is not specifically enumerated in Lists II ing that the appropriate legislature had limited the notion of a tax of this kind within any confines.
[944E G] Walace Brothers and Company Ltd. vs Commissioner of Income Tax, Bombay City and Bombay Suburban District, [1948] LR 75, IA 86; Navinchandra Mafatlal vs CIT, Bombay City, [1955] 1 SCR 829; Union of India vs H.S. Dhillon, ; at 61; Attorney General for Ontario vs Attorney General for Canada, at 581; Croft vs Dunphy, and Azam Jha Bahadur vs Expenditure Tax Offi cer; , referred to.
2.6 The subject of a tax is different from the measure of the levy.
The measure of the tax is not determinative of its essential character or of the competence of the legisla ture.
[946F G] M/s. Sainik Motors vs State of Rajasthan, ; and Encyclopaedia Britannica on Luxury Tax, Vol.
14 p. 459, referred to.
922 3.1 Though taxing laws are not outside Article 14, however, having regard to the wide variety of diverse eco nomic criteria that go into the formulation of a fiscal policy, legislature enjoys a wide latitude in the matter of selection of persons, subject matter, events, etc., for taxation.
A legislature does not, have to tax everything in order to be able to tax something.
if there is equality and uniformity within each group, the law would not be discrimi natory.
The tests of the vice of discrimination in a taxing law are, accordingly, less rigorous.
[948G H] 3.2 In examining the allegations of a hostile, discrimi natory treatment what is looked into is not its phraseology, but the real effect of its provisions.
The classification must be rational and based on some qualities and character istics which are to be found in all the persons grouped together and absent in the others left out of the class.
Besides, differentia must also have a rational nexus with the object sought to be achieved by the law.
However, no precise or set formulae or doctrinaire tests or precise scientific principles of exclusion or inclusion are to be applied.
The test could only be one of palpable arbitrari ness applied in the context of the felt needs of the times and societal exigencies informed by experience.
[949A, C E] 3.3 Classification based on differences in the value of articles or the economic superiority of the persons of incidence are well recognised.
A reasonable classification is one which includes all who are similarly situated and none who are not.
In order to ascertain whether persons are similarly placed, one must look beyond the classification and to the purposes of the law.
[949E F] Jaipur Hosiery Mills Ltd. vs State of Rajasthan, ; Hiralal vs State of U.P., ; ; State of Gujarat vs Sri Ambika Mills Ltd., ; ; G.K. Krishnan vs Tamil Nadu, [1975] 2 SCR 715; I.T.O. vs N. Takim Roy Limbe, ; ; Secretary of Agriculture vs Central Roig Refining Co.; , ; M/s. Hoechst Pharmaceuticals Ltd. vs State of Bihar, ; and Wallace Mendelson: Supreme Court Statecraft; The Rule of Law and Men, p. 4, referred to.
3.4 In the present case, the bases of classification cannot be said to be arbitrary or unintelligible nor as being without a rational nexus with the object of the law.
A hotel where a unit of residential accommodation is priced at over Rs.400 per day per individual is, in the legislative wisdom, considered a class apart by virtue of the economic superiority of those who might enjoy its custom, comforts and services.
923 This legislative assumption cannot be condemned as irration al.
Judicial veto is to be exercised only in cases that leave no room for reasonable doubt.
Constitutionality is presumed.
[952B C] 3.5 The words "other similar services" in Section 5(d) were intended to embrace services like but not identical with those described in the preceding words.
The content of the expression "other similar services" following, the preceding expressions "by way of beauty parfour, health club, swimming pool or . . "has a definite connotation in the interpretation of such words in such statutory con tents.
The matter is one of construction whether any partic ular service fails within the section and not one of consti tutionality.
[953E F] 4.
A taxing statute is not, per se, a restriction of the freedom under Article 19(1)(g).
The policy of a tax, in its effectuation, might, of course, bring in some hardship in some individual cases.
But that is inevitable, so long as law represents a process of abstraction from the generality of cases and reflects the highest common factor.
The mere excessiveness of a tax or even the circumstance that its imposition might tend towards the diminution of the earnings or profits of the persons of incidence does not, per se, and without more.
constitute, violation of the rights under Article 19(1)(g).
[954F G] Per Ranganathan, J. (Concurring), 5.1 In the context of the social and economic conditions that prevailed in India, it was a luxury for any person to stay in hotels charging high rents and providing various types of facilities, amenities and conveniences such as telephone, television, air conditioner, etc.
An expenditure on something which is in excess of what is required for economic and personal well being would be expenditure on luxury although the expenditure may be of a nature which is incurred by a large number of people including those not economically well off.
[958G H] Abdul Kadir & Sons vs State of Kerala, ; , relied on.
5.2 The legislature has, particularly in a taxing stat ute, a considerable amount of latitude and it cannot be held that, in fixing the standards of indication of luxury, the legislature, has not applied its mind.
In fact, the figures have been amended from time to time and, it has to be pre sumed that the legislature had good reason for fixing these standards.
From the scheme of the legislations, the state legislations fall 924 within the scope of Entry 62, List I and are, therefore, clearly within the competence of the State legislatures and are not liable to be challenged.
[959D; 957C] 6.1 In interpreting the scope of the legislative entries in the three lists, it has to be kept in mind that, while on the one hand, it is desirable that each entry in each of the lists should receive the broadest interpretation, it is equally important, on the other, that the three lists should be read together and harmoniously.
[959E F] 6.2 The power of the State legislature to make laws with respect to any of the matters enumerated in List II is subject to the exclusive power of Parliament to make laws with respect to any of the matters enumerated in List I. Hence, if a matter is covered by an entry in the Union List, no restrictions can be read into the power of Parliament to make laws in regard thereto.
[959G H; 960A] 6.3 The legislative entries are so arranged that the power to enact laws in general and the power to impose taxes are separately dealt with.
Under Article 246(1), the Parlia ment has exclusive powers to make laws with respect to any of the matters, including power to impose taxes, enumerated in List I. [960B C] M.P.V. Sundararamier & Co. vs The State of Andhra Pra desh Another; , at pp.
1479 and 1490, referred to.
It cannot be held that the tax cannot be considered to be an expenditure tax because it is not on expenditure generally but is restricted to specific types of expendi ture.
There is no legal, judicial, economic or other concept of expenditure tax that would justify any such restrictive meaning.
If, conceptually, the expenditure incurred by a person can be a subject matter with reference to which a tax can be levied, such taxation can be restricted only to certain items or categories of expenditure, and its base need not necessarily be so wide as to cover all expenditure incurred by an assessable entity.
Selection of objects and goods for taxation is the essence of any tax legislation and any limitation is an unlimited curtailment of this selective power of taxation of Parliament.
[960H; 961A B, F] 8.1 There is not much of legislative practice which would justify importing any limitation on the concept of a tax on expenditure under entry 97 of List I. Once it is granted that the tax need not exhaust the entire universe of the subject matter, the extent of the subject matter 925 that should be covered or selected for imposing tax should be entirely left to Parliament subject only to any criteria of discrimination or unreasonableness that may attract the provisions of Part 1II of the Constitution.
[962D E, F G] State of Madras vs Gannon Dunkerley Co., ; ; Navinchanda Mafat Lal vs CIT. [1955] 1 SCR 829; Naynit Lal vs AAC, ; ; Harikrishna Bhargava vs Union, ; and Bhagwandas Jain vs Union of India, ; , referred to.
8.2 Legislative lists cannot be interpreted on the assumption that there is a deemed entry "Taxes on Expendi ture" added to List I as a result of the decision in Azam Jha 's case; , Entries cannot be added to the legislative Lists on the basis of decisions of this Court.
In Azam Jha 's case, the pith and substance of the Act con sidered did not fail under any of the entries in List II or III.
However, in the instant case, the legislation coveres only certain types of expenditure.
The decision in Azam Jha 's case cannot help in determining whether the Expendi ture Act 1987 should be construed as imposing tax on expend iture or and on luxuries.
[964A C] Azam Jha Bahadur vs Expenditure Tax Officer, ; distinguished.
Merely because the 1987 Act as well as the State Acts levy taxes which have ultimate impact on persons who enjoy certain luxuries, the pith and substance of both cannot be considered to be the same.
The object of a tax on luxury is to impose a tax on the enjoyment of certain types of bene fits, facilities and advantages on which the legislature wishes to impose a curb.
The idea is to encourage society to cater better to the needs of those who cannot afford them.
Such a tax may be on the person offering the luxury or the person enjoying it.
It may be levied on the basis of the amount received for providing, or the amount paid for or expended for enjoying, the luxury.
Conceivably, it could be on different bases altogether.
The object of an expenditure tax is to discourage expenditure which the legislature considers lavish or Ostentatious.
The object of the first would be to discourage certain types of living or enjoyment while that of the second would be to discourage people from incurring expenditure in unproductive or undesirable chan nels.
If a general Expenditure Tax Act, like that of 1957, had been enacted, no challenge to its validity could have been raised because it incidentally levied the tax on ex penditure incurred on luxuries.
The fact that there will be some overlapping then or that here there is a good deal of such 926 overlapping, because the States have chosen to tax only some types of luxuries and the Centre to tax, atleast for the time being, only expenditure which results in such luxuries, should not be allowed to draw a curtain over the basic difference between the two categories of imposts.
[968E H; 969A B] This distinction is not obliterated merely because of the circumstances that both legislatures have chosen to attack the same area of vulnerability, one with a view to keep a check on 'luxuries ' and the other with a view to curb undesirable 'expenditure '.
[969C] Kerala State Electricity Board vs Indian Aluminium Co., ; In the Central Provinces & Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938, ; Province of Madras vs Boddu Paidanna & Sons, ; G.G. in Council vs Province of Madras, ; Ralla Ram vs East Punjab, ; Bhagwan Dass Jain vs Union, ; ; Hingir Rampur Coal Co. Ltd. vs State of Orissa; , and Sainik Motors vs State of Rajasthan, ; , referred to.
A.H.F. Lefroy: Canadian Constitution and Laskin: Canadi an Constitutional Law, referred to.
|
ivil Appeal No. 3586 of 1988.
From the Judgments and Orders dated 18.8.1987 & 9.11.1987 of the Goa High Court in W.P. No. 92/1986 & Misc.
Civil Application No. 334 of 1987.
Dr. R.S. Kulkarni, S.K. Mehta, Aman Vachher and Atul Nanda for the Appellant.
K.N. Bhat and Mukul Mudgal for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, CJ.
The appellant was appointed as a Headmaster of a school which was being run by the Calangute Don Bosco Educational & Welfare Foundation in 1974 in the State of Goa (which was at the relevant time a Union Terri tory).
Disciplinary proceedings were started against him in accordance with the Grant in aid Code which was in force at that time, since the school was a recipient of the grant as per the Code.
The findings .of, the Dispute Settlement Committee were approved by the director of Education of the Government of Goa by his Order dated July 12, 1984 who permitted the termination of the services of the appellant: The Principal of the Don Bosco High School, therefore, terminated the services of the appellant 254 as Headmaster by his letter dated July 26, 1984 and the said order of termination was challenged by the appellant before the High Court of Bombay, Panaji Bench, Goa in Writ Petition No. 92 of 1986.
The petition was dismissed by the High Court on the ground that the petition was not maintainable under Article 226 of the Constitution of India against the Manage ment of the school, which was a private body.
Aggrieved by the decision of the High Court the appellant has filed this appeal by special leave.
The school in question was a private school and was a recipient of the grant in aid under the Grant in aid Code issued by the Government in exercise of its executive power.
The relevant rule of the Grantin aid Code, i.e., rule 74.2 on which the Management relied read thus: "74.2(1).
The services of an employee appoint ed to a permanent post shall not be terminated except in accordance with the procedure pre scribed hereinunder.
No order of termination, dismissal or imposition of any other penalty shall be passed against such employee unless he has been informed in writing of the grounds on which action is proposed to be taken and has been given an adequate opportunity to defend himself.
The grounds on which the action is proposed to be taken shall be re duced to a form of a specific charge/charges which shall be communicated to the employee together with statement of allegation on which each charge is based.
(iii) Management shall refer the case to the Director of Education in writing, stating the date of the effect of the intended termination with a copy endorsed to the em ployee concerned for his acknowledgement.
The letter endorsed to the employee shall enclose a copy of allegation with complete substanti ating evidence and other documents relevant to the case.
The letter be issued to the employee at least one calendar month prior to the date of effect of intended termination.
The issue of the letter shall be subject to rule 74.1(3).
(v) The Director shall refer the case to the Disputes Settlement Committee within seven days of the receipt of the letter in the Directorate of Education.
The Disputes Settlement Committee shall give a hearing to both the 255 parties and also consider the written state ments, if any, submitted by either or both the parties, and give its decision within fifteen days from the date of reference.
In case any party fails to present the case, the Disputes Settlement Committee shall take an ex parte decision.
(vi) The decision of the Dispute settlement Commit ' tee shall be final and binding on both the parties provided that it shall be open to either party to prefer an appeal to the Administrative Tribunal estab lished under the Goa, Daman and Diu Adminis trative Tribunal Act, 1965 within thirty days of the date of receipt of the decision of the Disputes Settlement Committee.
" Rule 74.2 provides that the service of an employee appointed to a permanent post shall not be terminated except in accordance with the procedure prescribed thereunder and no order of termination, dismissal or imposition of any other penalty shall be passed against such employee unless he has been informed in writing of the grounds on which action is proposed to be taken and has been given an ade quate opportunity to defend himself.
The grounds on which the action is proposed to be taken shall be reduced to a form of a specific charge/charges which shall be communicat ed to the employee together with statement of allegation on which each charge is based.
Then the Management is required to refer the case to the Director of Education in writing, stating the date of the effect of the intended termination with a copy endorsed to the employee concerned for his acknowledgement.
The letter endorsed to the employee shall enclose a copy of allegation with complete substantiating evidence and other documents relevant to the case.
The letter shall be issued to the employee at least one calendar month prior to the date of effect of intended termination.
The issue of the letter shall be subject to rule 74.1(3).
The Director is then required to refer the case to the Disputes Settlement Committee within seven days of the receipt of the letter in the Directorate of Education.
The Dispute Settlement Committee shall give a heating to both the parties and also consider the written statements, if any, submitted by either or both the parties, and give its decision within fifteen days from the date of reference.
In case any party fails to present the case, the Disputes Settlement Committee shall take an ex parte decision.
The decision of the Dispute Settlement Committee shall be final and binding on the parties.
The Dispute Settlement Committee acquires the jurisdiction to hear the case only on a refer ence made to it by the Director of Education.
The order passed in this case by the 256 Director of Education on July 12, 1984 reads thus: "No. DE/Acad.
I/BEZ.
Bo/40/DBHS/Term.
HM/Vol.
III/82 Government of Goa, Daman and Diu, Directorate of Education, Panaji Goa.
Dated: 12.7.1984.
Read: 1.
This office order No. DE/Acad I/BEZ Bo/40/ DBHS/PC15/Term.
HM/Vol.
III/82 3610, dt.
3.9.1982.
Letter No. 17 1 5 82 AE/1115 dt.
26.3.1983 from the Convenor of the Dispute Settlement Committee and Asstt.
Director of Education.
ORDER Whereas a Dispute Settlement Commit tee was constituted to enquire into the pro posed case for Termination of Services of Shri Francis John, the Headmaster of Don Bosco High School, Calangute, Bardez, Goa, vide order referred to above; And whereas the accused Shri F. John participated in the deliberations of the Dispute Settlement Committee along with his nominee for some time and thereafter remained absent from the deliberation of the Committee inspite of all reasonable opportunities given to him by the Convenor; And whereas the said Committee, in majority, has decided that the termination of services of the said Shri F. John, Headmaster of Don Bosco High School, Calangute, is justi fiable.
The undersigned is inclined to agree with the findings of the Dispute Settle ment Committee and it is hereby ordered that the finding of the majority report of the Committee is accepted and the Principal of the School is permit 257 ted to terminate the service of Shri F. John, as per Rule 74 (amended) of the Grant in aid Code and the vacancy so caused be filled up as per Rules.
The Principal is further directed to revoke the order of suspension forthwith under intimation to the undersigned.
Sd/ L. Khisngte Director of Education.
" It was on the basis of the approval given by the Direc tor of.
Education, as stated above, the services of the appellant were terminated.
From a reading of the relevant rule of the Grant in aid Code which is a part of the Public Law of the land it be comes obvious that the reference of the dispute between the Management of the school and the appellant to the Dispute Settlement Committee was made by the Director of Education in exercise of the powers confened on him by the Grant in aid Code, which is issued by the Government in exercise of its executive power, even though it may not have been done under a statute.
The Director of Education who is a public functionary has given his approval to the decision of the Dispute Settlement Committee before it was communicated to the School.
While granting his aproval to the decision the Director of Education is discharging a governmental function as an authority constituted for the said purpose by the Government.
It is obvious that the Management, in the cir cumstances could not have terminated the services of the appellant without the communication received by it from the Director of Education.
In such circumstances it cannot be said that the decision is that of a just private management governed by private law.
It is the part of the process of the public law which affects public exchequer.
When the matter came up before the High Court a prelimi nary objection was taken by the Management regarding the maintainability of the Writ Petition under Article 226 of the Constitution.
The appellant contended in the Writ Petition that the proceedings of the disciplinary Committee are in contraven tion of the principle of natural justice and fair play and the approval given by the Director of Education was unsus tainable.
The appellant relied upon the decision of this Court in Tika Ram vs Mundikota Shikshan Prasarak Mandal & Ors., [1985] 1 SCR 339 and contended that he was not asking for any relief against the private body but he was challeng ing 258 the order of the Director of Education who had granted approval to his removal on the basis of a report submitted to him by the Dispute Settlement Committee and hence the Director of Education, who was a public authority and whose orders had been questioned before the Court was amenable to the jurisdiction of the High Court under Article 226 of the Constitution.
The High Court distinguished the above case by observing in Para 11 of its judgment thus: ".
Mr Kakodkar had placed reliance on Tika Ram vs Mundikota Shiksha Prasarak Mandal, AIR 1984 SC 1621 in support of his proposition that a writ petition would be maintanable in the case of a Headmaster of a private school who is dismissed by the management of a pri vate school.
In Tika Ram 's case, the petition er was not seeking any relief against the management on the basis of the clauses in the Schools Code.
But the Court has observed: 'In the instant case the appellant is seeking a relief not against a private body but against an officer of Government who is always amenable to the jurisdiction of the Court. ' Obviously, no decision of an Officer of the Government is being challenged in the present case and hence, Tika Ram 's case is easily distinguishable.
" With great respect to the High Court we should say that we do not find any substantial difference at all between the facts of this case and the facts involved in the Tika Ram 's case (supra).
In Tika Ram 's case (supra) the facts were these.
The appellant in that case was also working as a Head master in a private school.
On account of certain earlier events the Management instituted a disciplinary enquiry against the appellant and on July 7, 1975, the appellant was informed by the Management that it had imposed on him the punishment of reversion to the post of Assistant Teacher which according to the Management was the substantive post held by him.
Aggrieved by that order of reversion, the appellant filed an appeal before the Deputy Director of Education, Nagpur Division, contending that the enquiry had been vitiated on account of violation of principles of natural justice and that he had never held the post of an Assistant Teacher to which he had been reverted.
After hearing both the parties, the Deputy Director of Education passed an order 259 dated October 3, 1975 setting aside the decision of the Management and remanding the case to the Management for fresh decision on the ground that the enquiry had been vitiated on account of violation of principles of natural justice.
Instead of filing an appeal against that order, the Management filed a review petition before the Deputy Direc tor himself on October 17, 1975.
That was rejected by the Deputy Director by his order dated November 11, 1975 on the ground that no such review could be filed before him.
Against that order the Management filed an appeal before the Director of Education and that was dismissed on May 12, 1976 affirming the order of remand passed by the Deputy Director of Education to reconsider the case.
The Management again filed a petition before the Director of Education to recon sider the case.
This petition for review was allowed by the Director of Education on November 26, 1976 and the order passed by the Deputy Director on October 3, 1975 remanding the case to the Management for a fresh decision was set aside.
Aggrieved by the said order dated November 26, 1976, the appellant filed a writ petition before the High Court of Bombay on the principal ground that the Director had no jurisdiction to review his earlier order May 12, 1976 by which he had dismissed the appeal against the order of the Deputy Director.
The High Court dismissed that writ petition holding that the appellant could not file a writ petition under Article 226 of the Constitution against the order passed by the Director on the ground that the teachers working in private schools could not enforce their right under clause 77 and connected clauses of the School Code which were not statutory rules.
It was against that order the appellant in that case had filed the appeal before the SUpreme Court under Article 136 of the Constitution.
Allow ing the said appeal this Court observed thus: "In the writ petition the appellant was not seeking any relief directly against the man agement on the basis of the clauses in the School Code.
If the management does not obey the order passed by the Deputy Director or the Director, it is open to the State Government to take such action under the School Code as may be permissible.
In such an event, the recognition accorded to the school may be withdrawn or the grant in aid may be stopped.
In the instant case the appellant is seking a relief not against a private body but against an officer of Government who is always amena ble to the jurisdiction of the Court.
The appellant has merely sought the quashing of the impugned order dated November 26, 1976 passed by the Director on review setting aside the order of the Deputy Director.
What .
260 consequences follow from the quashing of the above said order in so far as the management is concerned is an entirely different issue.
In the circumstances, the High Court was wrong in holding that a petition under Article 226 of the Constitution did not lie against the impugned order passed by the director.
We are aware of some of the decisions in which it is observed that no teacher could enforce.
a fight under the School Code which is non statutory m character against the management.
But since this petition is principally direct ed against the order passed in a quasijudicial proceeding by the Director, though in a case arising under the School Code and since the Director had assumed a jurisdiction to review his own orders not conferred on him, we hold that the appellant was entitled to maintain the petition under Article 226 of the Consti tution.
" In the instant case also we are concerned with the Grant in aid Code.
The decision which was challenged before the High Court was the order of the Director of Education dated July 12, 1984 which is fully extracted above.
It is further seen that a copy of the above order has been commu nicated by the Director of Education not merely to the Management of the School but also to the Zonal Officer, North Education Zone, Mapsa and the Grant in aid Section of the Directorate of Education.
If the impugned orders of the director of Education and of the Dispute Settlement Commit tee to which he had referred the case are set aside then the order of termination of service of the appellant, which is pursuant to them would also have to fall.
Any private school which receives aid from the Government under the Grant inaid Code, which is promulgated not merely for the benefit of the Management but also for the benefit of the employees in the School for whose salary and allowances the Government was contributing from the public funds under the Grant in aid Code cannot escape from the consequences flowing from the breach of the Code and particularly where the Director of Education who is an instrumentality of the State is partici pating in the decision making process.
Under these circum stances we find that the High Court was wrong in upholding that the orders of the Director of Education and of the Dispute Settlement Committee were not amenable to the juris diction of the High Court under Article 226 of the Constitu tion since the matter squarely falls within the principles laid down by this Court in Tika Ram 's case (supra).
261 We, therefore, set aside the judgment of the High Court holding that the writ petition was not maintainable before it.
Since the High Court has not gone into the merits of the case we remand the case to the High Court and direct it to hear the writ petition on merits in accordance with law.
The appeal is accordingly allowed, but there shall be no order as to costs.
R.N.J. Appeal al lowed.
| IN-Abs | Disciplinary proceedings were started against the appel lant who was a headmaster in a private school in accordance with the Rule 74.2 of the Grant in aid Code since the school was a recipient of grant as per the code.
The Director of Education approved the findings of the Dispute Settlement Committee and permitted the termination of the appellant by the Principal of the School.
The said order of termination was challenged by the appellant before the High Court of Bombay, Panaji Bench, in a Writ Petition.
The petition was dismissed by the High Court upholding the preliminary objec tion that the petition was not maintainable under Article 226 of the Constitution of India against the management of the School which was a private body.
Aggrieved by the deci sion of the High Court the appellant fried this appeal by special leave.
According to the relevant rule of the Grant in aid Code the management could not have terminated the services of the appellant without the communication received by it from the Director of Education who was a public functionary and was discharging a governmental function as an authority consti tuted for the said purpose by the government.
Obviously in such circumstances it cannot be said that the decision is just that of a private management governed by private law.
The High Court erred in not properly following the ratio of the decision of this Court in Tika Ram 's case the facts of which were not substantially different from the facts of the present case.
This Court while setting aside the judgment of the High Court and remanding the case to the High Court to hear the Writ Petition on merits, 253 HELD: Any private school which receives aid from the government under the Grant in aid Code, which is promulgated not merely for the benefit of the management but also for the benefit of the employees in the school for whose salary and allowances the government was contributing from public funds under the Grant in aid Code cannot escape from the consequences flowing from the breach of the Code and partic ularly where the Director of Education who is an instrumen tality of the State is participating in the decision making process.
[260F G] The High Court was wrong in upholding that the orders of the Director of Education and of the Dispute Settlement Committee were not amenable to the jurisdiction of the High Court under Article 226 of the Constitution of India.
[260G] Tika Ram vs Mundikota Shikshan Prasarak Mandal & Ors., [1985] 1 SCR 339, referred to.
|
vil Appeal No. 1 147 of 1975.
From the Judgment and Order dated 28.12.1973 of the Andhra Pradesh High Court in W.P. No. 4818 of 1973.
With Civil Appeal Nos.
1054 55 of 1976, 1503 and 1546 of 1977 T.S. Krishnamurthy Iyer, C. Sitaramiah, K. Madhava Reddy, Chella Sitaramani, K. Ram Kumar, Mrs. J. Ramachan dran, Mrs. Anjani, TVSN Chari, A.V. Rangam, Jagan Rao and A.V.V. Nair for the appearing parties.
316 The Judgment of the Court was delivered by OZA, J.
This appeal arises out of the judgment of the High Court of Andhra Pradesh in Writ Petition No. 48 18 of 1973 wherein the writ petition filed by the Appellant/Peti tioner was dismissed.
In the writ petition before the High Court the petition er sought mandamus directing the respondent to pay forthwith to the petitioner compensation for the lands surrendered by her under the Andhra Pradesh Ceiling on Agricultural Hold ings Act 1961.
A further direction was sought prohibiting the third respondent from proceeding with the revision under section 19(1) of the Act as amended by Act No. I of 1972 w.e.f. 19.1.72.
Necessary facts are that the petitioner 's husband owned extensive lands in Gadwal.
After the Act came into force the Revenue Divisional Officer, Gadwal issued a notice under section 3(2) of the Act directing the petitioner 's husband to file a declaration of his holdings.
The petitioner 's husband accordingly filed the declaration.
Thereafter he died in 1969 leaving behind the petitioner and three minor children.
The Revenue Divisional Officer held an enquiry under section 6 of the Act and by his order dated 25.1.71 he held that the petitioner 's husband legal representatives were holding 29.72 family holdings in excess of the ceiling area which they were entitled to hold.
A notice was then issued to the petitioner under section 7(2) on 25 ! .71 requiring the petitioner to file a state ment indicating the land which she proposes to surrender.
The petitioner thereupon filed a detailed statement of lands she proposes to surrender on 19.3.71.
The Revenue Divisional Officer on being satisfied after an enquiry that the lands proposed to be surrendered satisfy the requirements of sec.
7(1) and (2) of the Act passed an order on 31.3.71 under section 7(3) of the Act approving the surrender of 7 13.16 acres (an equivalent of 29.72 family holdings) by the petitioner.
Thereafter the petitioner filed an application before the Revenue Divisional Officer for fixation of compensation in respect of lands surrendered by her under section 10 of the Act.
The Revenue Divisional Officer fixed the compensa tion of Rs.6,44,265.09 in respect of lands surrenderd by her.
317 The .Revenue Divisional Officer published a notification containing particulars of the lands surrendered by the petitioner and the compensation payable therefor in the Andhra Pradesh Gazette on 7.7.71 according to section 11 of the Act.
Instead of paying the compensation as determined, the District Revenue Officer Mahboobnagar issued a notice dated 21.3.72 proposing to revise the orders of the Revenue Divi sional Officer dated 15.4.71 fixing compensation of the lands surrendered by the petitioner.
This notice is purport ed to have been issued under section 19 clause 1 of the Act as amended.
The petitioner filed an objection contending that the 3rd respondent had no jurisdiction to revise the order fixing compensation which was passed before, as on the day the Divisional Officer issued notice the order sought to be revised had become final.
In spite of this the 3rd respond ent has not disposed of the revision proceedings and it because of this writ petition was filed before the High Court.
Learned counsel for the appellant contended before us that once under section 7 the land which is in excess of the ceiling limit is determined and a statement of surrender is filed by a holder which is accepted by the Revenue Division al Officer under clause 3 of section 7, the land vests in the State and thereafter the authorities have no jurisdic tion to attempt to revise the compensation or any order which has already been passed under the Act.
Whereas on behalf of the State it was contended that clause 3 of section 7 uses the word "deemed to have been surrendered" which clearly indicates that although by an order passed by Revenue Divisional Officer the proposal made by the holder about the surrender of land is accepted and it is finalised but still it is only deemed surrender as even after this land does not vest in the State but it only vests as has been contemplated under section 8 which clearly lays down that the land which is deemed to have been surrendered under section 7 only vests in the State when it is taken over after payment of compensation in accordance with sec tion 8.
The High Court accepted the contention of the State and it took the view that unless taking over is completed under sec.
8 the land does not vest in the State and therefore it could not be said that the proceedings under this Act has come to an end and at this stage when the land has yet not vested in the State if the authorities have jurisdiction 318 to revise the compensation it could not be said that the authorities have done something beyond their jurisdiction.
The main argument before the High Court and before us on behalf of the appellant is that once under the scheme of the Act an order is passed by the competent authority under section 7 sub clause 3 so far as the holder is concerned he has surrendered the surplus land and what remains under the scheme of section 10 and 11 is only the question of deter mining of compensation and once that is determined there is no option to the authorities but to pay compensation to the person Who has surrendered the holding in accordance with the scheme of section 7 of the Act.
It is not in dispute that the proceedings were taken under Andhra Pradesh Ceiling on Agricultural Holdings Act 1961 and after the declaration was filed the ceiling area was determined in accordance with section 6.
It is also not in dispute that in accordance with section 7 sub clause 2 a notice was served on the petitioner/appellant for filing a statement indicating the land which she proposes to surren der and it is after the statement was filed by the appellant that an order in accordance with sub clause 3 of section 7 was passed.
Section 7 reads: "(1) If the extent of the holding of a person is not more than the ceiling area determined under section 6, he shall be entitled to retain such holding, but if it is more than the ceiling area, he shall be liable to sur render the extent of land in excess of the ceiling area.
(2) The Revenue Divisional Officer shall serve on every person who is liable to surrender land in excess of the ceiling area under sub section (1), a notice specifying therein the extent of land which he has to surrender, and requiring him to file a statement in such manner and within such period as may be pre scribed indicating therein the land which he proposes to surrender.
(3) If the person, on whom a notice is served under sub section (2), files the statement referred to in that subsection, within the prescribed period and Revenue Divisional Officer is satisfied, after making an inquiry in the prescribed manner, that the proposed surrender of the land is in accordance with the provisions of sub sections (1) and (2), he shall pass an order approving the surrender and the 319 said land shall thereupon be deemed to have been surrendered by such person.
(4) If the person, on whom a notice is served under subsection (2), does not file the state ment referred to in that sub section within the prescribed period, or filed such statement within the prescribed period, but does not specify therein the entire extent of land which he has to surrender, the Revenue Divi sional Officer may himself select, in the former case, the entire extent and in the latter case the balance of the extent which such person has to surrender, and pass an order to that effect; and thereupon the said land or the balance of land, as the case may be, shall be deemed to have been surrendered by such person".
The scheme of this section indicates that when the extent of holding of a person is determined under section 6 and if while determining it under section 6 it is found that he is holding more than the ceiling area he shall be liable to surrender the extent of the land which is in excess of the ceiling area.
Sub clause 2 of this section contemplates that the Revenue Divisional Officer will serve a notice on all such persons who are liable to surrender the land in excess of the ceiling area and this notice will specify the extent of the land which he has to surrender and a direction that the person concerned will file a statement indicating the land which the holder proposes to surrender.
Sub clause 3 of the this section contemplates that after the notice under sub clause 2 is served and the person concerned files his statement within the prescribed period, the Revenue Divisional Officer if he is satisfied from the statement filed in response to a notice under clause 2 about the land which the holder proposes to surrender, he shall pass an order approving the surrender of the land.
Sub clause 4 contemplates a situation where after a notice is served under clause 2 the holder does not file a statement as contemplates under clause 3.
It is, therefore, clear that so far as the surplus land which a holder will surrender is concerned it is finally determined when an order under clause 3 of section 7 is passed by the Revenue Divisional Officer but it is signifi cant that in spite of the finality of these proceedings the legislature uses the phrase "thereupon deemed to have been surrendered by such person".
It is significant that instead of using the 320 phrase "have been surrendered" the legislature uses the term "deemed to have been surrendered" and it is clear from these words that something more remains to be done.
Section 8 reads as under: (8) "Where any land is deemed to have been surrendered under section 7 by an owner, the Revenue Divisional Officer may, by order, take over such land on payment of compensation under section 10, and such land shall be disposed of in the prescribed manner by as signment to landless poor persons".
This provides for vesting 'of the land deemed to have been surrendered by the owner.
This terminology used in the heading of the section itself indicates that even after determination of the surplus land which is deemed to have been surrendered ' vesting only takes ' place when something more is done and that is what is provided in this section.
This section authorises the Revenue Divisional Officer to take over the land on payment of compensation, compensation which is determined u/s 10 and land which is deemed to have been surrendered u/s 7 and it is only after this taking over under section 8 'that under the scheme of this section the land vests in the State and thereafter it is provided that such land shall be disposed of in the prescribed manner by assignment to landless poor persons.
A perusal of the scheme of the section therefore clearly indicates that after an order is passed under sub clause 3 of sec.
7 although the proceedings for surrender of the surplus land and the selection of the land which is sought to be surrendered is complete but still it is not surrender but it is only deemed to have been surrendered which clearly indicates that so far as the holder is concerned he has finally got determined the lands which he will surrender as surplus which in due course will vest in the State for distribution to other landless persons but it is also clear from the language of section 8 and also from the language used in sub clause 3 of section 7 that unless the land which is deemed to have been surrendered is taken over by payment of compensation determined under section 10 it does not vest in the State.
The scheme of section 8 therefore indicates that vesting in the State that is taking over by the Revenue Divisional Officer and payment of compensation has to be simultaneous with and an order under section 8.
It, there fore, appears that after proceeding for determination of surplus under section 7 is completed, proceedings for deter mination of compensation will start as is provided in sec tion 10 and it is only when compensation is also finally determined that under section 8 321 taking over will take place after the compensation is paid.
It is, therefore, clear that after the proceedings have been completed in accordance with section 7 sub clause 3 and even after the compensation has been determined but action under section 8 has not been taken it could not be said that the land vests in the State.
The competent authorities can revise the orders passed if an amendment has taken place in between.
It is apparent that in spite of proceedings having come to an end under sub clause 3 of section 7 and that the compensation has been determined still the land remains with the holder who is enjoing the benefits out of the land until action under section 8 is completed.
Under these circumstances therefore the contention advanced by the appellant that when the proceedings are concluded under subclause 3 of section 7 the surrender is complete and the land vests in the State cannot be accepted as admittedly action under section 8 has not been taken.
On the basis of some orders which appear to have been passed under section 10 it was contended that taking over is complete but in these orders only language of section 10 is reproduced.
Section 10 reads as under: "Compensation for lands taken over by the Revenue Divisional Officer: (1) The compensa tion payable for any land taken over by the Revenue Divisional Officer under section 8 or section 9 shall be an amount calculated at the rates specified in the Second Schedule.
Where there are any structures of a permanent nature or trees on such land the value of such struc tures or trees shall be determined by the Revenue Divisional Officer in the manner pre scribed and paid to the person who is entitled thereto.
(2) The compensation payable under sub section (1) shall be paid either in cash or in bonds, or partly in cash and partly in bonds as the Government may deem fit.
The bonds shall be issued on such terms and carry such rate of interest as may be prescribed." But admittedly no order could be produced under section 8.
It is clear that orders under section 8 can only be passed after compensation as determined under section 10 is paid.
322 Therefore no advantage could be taken from these orders under section 10.
It was also alleged on behalf of the State that against these orders under section 10, it were the appellants (some of them) who filed writ petitions in the High court challenging the compensation and thus question of determination of compensation itself remained pending.
Consequently, in our opinion, the High Court was right in rejecting the writ petitions filed by the appellants.
We therefore see no reason to entertain this appeal.
It is therefore dismissed.
No order as to costs.
For the reasons stated above, Civil Appeal Nos.
1054/76, 1055/ 76, 1503/77 and 1546/77 are allowed.
No order as to costs.
P.S.S. Appeal dismissed.
| IN-Abs | Sub clause (2) of section 7 of the Andhra Pradesh Ceiling on Agricultural Holdings Act, 1961 mandates the Revenue Divi sional Officer to serve a notice on every person liable to surrender land in excess of the ceiling area requiring him to file a statement indicating the land which he proposes to surrender.
Sub clause (3) requires the Revenue Divisional Officer to pass orders on that statement approving the surrender, and the said land shall thereupon be deemed to have been surrendered.
Section 8 provides for the Revenue Divisional Officer to take over such land on payment of compensation under section 10.
Section 10 lays down the mode of compensation.
In the instant case, proceedings under section 7(3) of the Act in respect of appellant 's land having concluded the Revenue Divisional Officer had made an order under section 10 fixing the compensation.
The District Revenue Officer howev er instead of making the payment, issued a notice, purport ing to be under section 19(1), as amended, proposing to revise the said order.
The appellant filed a writ petition contending that when the proceedings are concluded under sub clause (3) of section 7 the surrender is complete and the land vests in the State, that what remains under the scheme of section 10 is only the question of determining compensation, and once that is determined the authorities have no jurisdiction to revise the compensation.
On behalf of the State it was contended that cl.
(3) of section 7 uses the words "deemed to have been surrendered" which indicates that although by an order passed by the Revenue Divisional Officer the proposal about the surrender of land is finalised but still it is only 315 deemed surrender, and that the land only vests in the State when it is taken over after payment of compensation in accordance with section 8.
The High Court took the view that unless taking over is completed under section 8 the land does not vest in the State and, therefore, it could not be said that the proceedings under the Act had come to an end and at this stage if the authorities have jurisdiction to revise the compensation it could not be said that the authorities have done something beyond their jurisdiction.
Dismissing the appeals, the Court, HELD: The scheme of section 7 of the Andhra Pradesh Ceiling on Agricultural Holdings Act, 1961 indicates that the sur plus land which a holder will surrender is finally deter mined when an order under cl.
(3) is passed.
However, in spite of the finality of these proceedings the legislature instead of using the phrase "have been surrendered" in the said clause uses the term "deemed to have been surrendered.
" It is clear from these words that something more remains to be done, and that is what is provided in section 8 by authorising the Revenue Divisional Officer to take over the land, which is deemed to have been surrendered, on payment of compensa tion determined under section 10.
It is only after this taking over that the land vests in the State.
[319G; 320A; 320C D] It is, therefore, apparent that orders under section 8 can only be passed after compensation as determined under section 10 is paid, and so far action under section 8 has not been taken it could not be said that the land vests in the State.
The competent authorities can revise the orders passed under section 10 if an amendment has taken place in between.
[321H; 321B] In the instant case, action under section 8 had not been taken.
The High Court was, therefore, right in rejecting the writ petitions.
[321H; 322B]
|
ivil Appeal No. 220 of 1987.
From the Judgment and Order dated 22.5.1986 of the Patna High Court in Civil Writ Jurisdiction Case No. 19 15 of 1986.
Soli J. Sorabjee and Ranjit Kumar for the Appellants.
Sharma and S.K. Jain 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 Judicature at Patna dated May 22, 1986 in Civil Writ Jurisdiction Case No. 19 15 of 1986 quashig the bills issued by the appellants demanding minimum guaranteed charges from the respondents.
The appellants Bihar State Electricity Board, Patna, hereinafter referred to .as 'the Board ', entered into an agreement with the respondent M/s.
Green Rubber Industries, a partnership firm, hereinafter referred to as 'the firm ', on the latter 's application dated 26th July, 1978, for supplying the electricity of 60 KVA and on 13.4.
1981 gave electricity connection.
The firm later applied that it 277 may be given 45 KVA instead of 60 KVA and it deposited the requisite sum of Rs.2700 and a fresh agreement was executed on May 2, 1981.
On May 29, 1981 the firm was given fresh connection of 45KVA.
According to the firm it requested the Board on 19.6.
1981 to cut off the connection.
The firm received the bills for minimum guaranteed charges for the months of June, July, August and September, 1981, though according to it no electricity was consumed by it during that period.
According to the Board on failure to pay the bills, the supply was disconnected on 28th September, 1981.
The firm ultimately received a demand notice in October, 1981 for the minimum guaranteed charges from June, 1981 to August, 1981 amounting to Rs.22,95 1.50p.
The firm having not paid the amount, the Board sent a requisition to the Certificate Officer who sent a notice to the firm on July 6, 1984.
Rejecting the contention of the firm that it was not liable to pay, the Certificate Officer proceeded to pass an order for attachment of the firm 's property wherefore the firm filed a writ petition in the High Court of Judicature at Patna under Article 226 and 227 of the Constitution of India for quashing the bills as well as the certificate proceedings.
Before the High Court the Board contended that the firm was liable to pay the minimum guaranteed charges in terms of the agreement, the disconnection itself having been in terms thereof.
The High Court took the view that the Board itself having effected the disconnection it was not entitled to any charges for the period after September, 1981 and it was not open to the Board to contend that under clause 9 of the agreement it was not open to either party to terminate the agreement of minimum guaranteed charges before the expiry of two years from the date of the agreement.
In that view of the matter, the High Court quashed the bills as well as the certificate proceedings, but allowed the charges for the months of July, August and September, 1981 to be adjusted against the security money.
Mr. Soli J. Sorabjee, the learned counsel for the appel lants, submits, inter alia, that the firm under the agree ment was liable to pay the minimum guaranteed charges irre spective of whether energy was consumed or not during the period of the agreement and that disconnection of the supply on failure of the firm to pay the energy bills would not affect the obligation; and that the High Court fell into error in holding that the Board itself having disconnected the energy supply line it could not claim minimum guaranteed charges thereafter.
278 None appears for the respondents despite notice in the regular as well as substituted manner of service.
The question to be decided is whether despite the fact that the supply line was disconnected on September 28, 1981, the firm was still liable to pay the minimum guaranteed charges under the agreement.
The answer depends on the agreement itself and the relevant provi sions of law.
Clause 4 of the agreement says: "The Consumer shall pay to the Board for the energy so supplied and registered or taken to have been supplied as aforesaid at the appropriate rates applicable to the Con sumer according to the tariffs framed by the Board and enforced from time to time, the present ly enforced tariffs being indicated in the Schedule to this agreement for easy reference.
Such reference is subject to provisions of clause 15 appearing here inafter.
Provided that notwithstanding any thing said above but subject to the provisions of clause 13 hereinafter, the Consumer shall have to pay minimum charges as specified in the above said tariffs framed by the Board and enforced from time to time irrespective of whether energy to that extent has been con sumed or not.
(Such minimum charges are re ferred to as "the minimum guaranteed charges" in other places in this agreement.) That part of minimum guaranteed charges as is not billed monthly, the assess ment for the same will be generally made at the end of the year commencing from the 1st April, and ending with the 31st March of the following year which is the financial year of the Board.
In case any agreement is entered into in between this period the above said part of the minimum guaranteed charges will be proportionate to the period for which the Consumer is connected.
Any bill on account of the minimum guaranteed consumption for the year or part thereof will be submitted by the end of June in each year.
" From a perusal of the above clause it would be clear that the minimum guaranteed charges would be payable by the consumer irrespective of whether energy to that extent has been consumed or not.
Indeed, there would be no need for such a provision if the charges were to 279 depend only on the energy actually consumed.
Clause 5 of the agreement is to the following effect: "(a) Readings of meter shall be taken by the Board once in each month or such other inter vals or times as the Board shall deem expedi ent and the Board 's meter reader shall have access to the consumer 's premises at all reasonable time for the purpose of taking such readings.
The Board shall within reasonable time deliver to the Consumer the bill for energy consumed during the month in accordance with the readings of the meters and subject to the minimum guaranteed charges.
The consumer shall pay the amount under the bill so deliv ered within the due date specified therein as per terms of the tariffs framed by the Board and enforced from time to time.
(b) If the consumer fails to pay the amount of any bill due under this agreement within the due date specified in the bill referred to in clause 5(a) above, he shall pay a surcharge at the rate given in the tariffs framed by the Board and enforced from time to time.
If the amount of such a bill remains unpaid after the due date specified in the bill, the Board may discontinue the supply after giving the Con sumer not less than 7 clear days ' notice.
The service will be reconnected only on receipt of full payment for all obligations outstanding up to the date of reconnection and charges for the work of disconnection and reconnection of service. ' ' On a perusal of this clause there arises no doubt that if the amount of a bill submitted according to law remains unpaid after the due date specified in the bill, the Board may discontinue the supply after giving the consumer not less than 7 clear days ' notice.
There is no dispute about notice in this case.
Clauses 8 and 9 of the agreement deal with its duration and termination.
Clause 8 of the agreement says: "The agreement shall be ordinarily enforced for a period of not less than two years in the first instance (except in exceptional cases in which written consent of the Board will 280 be taken) from the date of commencement of supply, i.e. . . and thereafter shall continue from year to year until the agreement is determined as hereinafter provided.
Note: In case where the date of commence ment of supply is a date subsequent to that of the execution of this agreement, the Board is given power to fill in the date in the blank space.
provided for the same in this clause with prior intimation to the Consumer.
The Consumer can produce his copy of the agreement to have such date filled in by the Board.
" Clause 9 Provides: "(a) The consumers shall not be at liberty to determine this agreement before the expiration of two years from the date of commencement of supply of energy.
The consumer may determine this agreement with effect from any date after the said period of giving to the Board not less than one calendar month 's previous notice in writing in that behalf and upon the expira tion of the period of such notice this agree ment shall cease and determine without preju dice to any right which may then have accrued to the Board hereunder, provided always that the consumer may at any time with the previous consent of the Board transfer or assign this agreement to any other person and upon sub scription of such transfer this agreement shall be binding on the transferee and the Board and take effect in all respects as if the transferee had originally been a party hereto in place of the consumer who shall henceforth be discharged from all liability under or in respect thereof.
(b) In case the consumer 's supply is discon nected by the Board in exercise of its powers under this agreement and/ or law and consumer does not apply for reconnection in accordance with law within the remainder period of the above given compulsorily availing of supply or that of notice whichever be longer, he will be deemed to have given a notice on the date of disconnection in terms of the aforesaid clause 9(a) for the determination of the agreement and on expiry of the above said remainder period of compulsorily availing of supply or notice whichever is longer, this agreement shall cease and determine in the same way as above.
" 281 Thus it is seen that the consumer cannot determine the agreement before expiry of two years and there is nothing to show in this case that he did so after expiry thereof with previous notice.
In fact the supply was disconnected by the Board for default.
What would be its effect on the agree ment? It is seen that in case of disconnection of the supply by the Board in exercise of its powers under the agreement it would be open for the consumer to apply for reconnection in accordance with the law within the remainder period of the above given compulsorily availing of supply or that of notice whichever is longer, he will be deemed to have given a notice on the date of disconnection in terms of aforesaid clause 9(a) for determination of the agreement and on expiry of the remainder period of compulsorily availing of supply or notice, whichever is longer, the agreement shall cease and determine.
It is therefore clear that in the instant case the disconnection on the default of the cosumer having ' been effected on 28.9.1981 and the consumer having not applied for reconnection, it would be deemed to have given a notice on the date of disconnection in terms of clause 9(a) for the determination of the agreement and the agreement must be taken to have ceased and determined either at the end of the notice or at the end of the period of compulsori ly availing of supply i.e. two years of the agreement which ever was longer.
The (fresh) agreement having been executed on May 4, 1981 it would expire on May 1, 1983.
The discon nection having been effected on September 28, 1981 the period of deemed notice of seven days expired before the period of compulsorily availing of supply under the agree ment expired and hence the agreement must be deemed to have determined only on May 1, 1983.
During this period the consumer 's liability to pay the minimum guaranteed charges must be held to have continued.
Mr. Soli J. Sorabjee submits, and we think rightly, that the High Court overlooked this important stipulation in the agreement which was binding on both the parties.
However, as the respondents are not before us, it is necessary to con sider the reasonability of the stipulation as to minimum guaranteed charges as argued by the learned counsel for the appellant Board.
Was there any power of the Board to enter into the agreement? If so, to what extent? The , hereinafter called 'the Act '.
provides the law relating to the supply and use of electrical energy.
As defined in section 2(11) of the Act "State Electricity Board" in relation to any State means the State Electricity Board, if any consituted for the 282 State under section 5 of the (54 of 1948) and includes any Board which functions in that State under sections 6 and 7 of the said Act.
The appellant the Bihar State Electricity Board is a Board.
As defined in section 2(h) "licensee" means any person licensed under to supply energy.
The appellant Board is such a licensee under this provision.
As defined in section 2(c) "consumer" means any person who is supplied with energy by a licensee or the Government or by any other person engaged in the business of supplying energy to the public under this Act or any other law for the time being in force, and in cludes any person whose premises are for the time being connected for the purpose of receiving energy with the works of a licensee, the Government or such other person, as the case may be.
There is no doubt that the respondent was consumer.
The , hereinafter called the 'Supply Act ', is an Act to provide for the realisation of the production and supply of electricity, and generally for taking measures conducive to electrical development and for all matters incidental thereto.
Under sub section (1) of section 23 of the Act, a licen see shall not, in making any agreement for the supply of energy, show any undue preference to any person.
Thus, this section envisages making of an agreement by the licensee with the consumer for the supply of energy.
The instant agreement has, therefore, to be held as one envisaged by this provision.
Was the stipulation to pay minimum guaran teed charges, irrespective of whether energy was consumed or not, reasonable and valid? What is the consideration when less or no energy is consumed? Section 49 of the Supply Act makes provision for the sale of electricity by the Board to persons other than licensees.
Under subsection (1), subject to the provisions of the Supply Act and the Regulations, if any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purpose of such supply frame uniform tariff.
Under sub section (2) thereof nothing m sub sections (1) and (2) shall derogate from the power of the Board if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee, having regard to the geographi cal position of any area, the nature of the supply and purpose for which supply is required and any other relevant factors.
Sub section (2) enumerates the factors to be consi derd by the Board in fixing the uniform tariffs.
283 It is seen that the rule of charging minimum guaranteed charges has been in vogue since long.
In the London Electric Supply Corporation (Limited) vs Priddis, , the agreement between the appellant company and the consumer to supply electricity in clause 4 provided that the "consumer shall have the option at or after the expiration of five years from the date of installation" of purchasing the installation at a price.
7 said: "The consumer shall until purchase as aforesaid pay quarterly to the supply company for the use of the installation 3/4d.
per Board of Trade Unit for every unit of electrical energy supplied to the said premises and the minimum payment in any year shall be Is.
for each eight candle power lamp or its equivalent installed.
" During the period from Mid summer to Michaelmas, 1900, the defendant did not use any electricity supplied by the plaintiff, and the question was whether under the agree ment the defendant was bound to pay the minimum payment provided for by cl. 7, even though in fact he had used none of the plaintiff 's electricity during the quarter.
The Lord Chief Justice in giving judgment said that "it was suffi ciently clear that the installation was put in on the terms that the customer should have the right to purchase the installation after five years, and during that five years the customer should be liable to pay minimum rent whether the current was de facto used or not.
The minimum rent had no reference to the amount of current used, and it was, therefore, clear that the mere fact that the defendant had not taken any current or a small current did not affect the case.
" Channel.
J. concurring said that the "meaning of the clause was that the minimum rent did not merely cover the actual use but the right to use the current.
The customer had to pay for the right to use the current, although he did not in fact use it." In Saila Bala vs Darjeeling Municipality, AIR 1936 Calcutta 265, it was held by a learned single Judge that the minimum charge was not really a charge which had for its basis the consumption of electric energy.
It was really based on the principle that every consumer 's installation involved the licensee in certain amount of capital expendi ture in plant and mains on which he was to have a reasonable return.
He could get a return when the energy was actually consumed, in the shape of payments of energy consumed.
When no such energy was consumed by the consumer, or a very small amount was consumed in a longer period, the licensee was allowed to charge minimum charges by his licence, but those minimum charges were really interest on his capital outlay incurred for the particular consumer.
Natesan, J. in Natesa Chettiar vs The Madras State Electric ity 284 Board, , answering the question whether the provision for the minimum guarantee was just a stipulation by way of penalty or pre determined damages for breach on the part of the consumer or something else, held the view that the minimum fixed was only consideration for keeping the energy available to the consumer at his end; it was not a penalty for not consuming a stated quantity of energy but was a concession shown up to the amount fixed, energy at a specified rates could be consumed free, consump tion beyond only had to be paid for.
The statutory basis for the terms in the agreement providing for minimum annual charge was found in section 22 of the Act and section 48 of the Supply Act.
Section 22 deals with obligation on licensee to supply energy.
The proviso to the section says: "No person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration." Section 48 of the Supply Act empowers the licensee to carry out arrangement under that Act.
In Watkins Mayor & Co. vs Jullundhur Electric Supply Co., AIR 1955 Punj. 133 (136), it was observed that the whole scheme of the Act seems to show that the provision made in any contract for a minimum charge was really to provide for a fair return on the outlay of the licensee, and it was for this reason that the law allowed the contract of this kind to be entered into.
Clause XI A of the schedule to the Act, as it then stood, provided: "A licensee may charge a consumer a minimum charge for energy of such amount and determine in such manner as may be specified by his licence, and such minimum charge shall be payable notwithstanding that no energy has been used by the consumer during the period for which such minimum charge is made." The Court accordingly held that there was nothing illegal in the insertion of the term for payment of a minimum charge in the agreement for 285 supply of energy and held that it had not been made out that it was an unreasonable levy.
A Division Bench of Allahabad High Court, in Hari Shan kar & Ors.
vs U.P. State Electricity Board & Anr., AIR 1974 Allahabad 70, held that when the electrical supply was being made on the footing that the consumer would pay the minimum guaranteed charges that charge was one of the terms and conditions for supply and fixation of that would be included in the fixation rates ;or the supply of electricity.
Simi larly in M/s. Bhagwan Industries Pvt.
Ltd. Lucknow vs U.P. State Electricity Board, Lucknow, AIR 1979 Allahabad 249, a Division Bench held that an agreement for supply of elec tricity with the Board empowered it to revise the rates and that imposition of minimum consumption guarantee charge imposed by new tariff schedule under section 49 of the Supply Act was valid.
A Division Bench of the Andhra Pradesh High Court in Md. Abdul,Gaffar vs Andhra Pradesh Electricity Board, , also held that fixation of monthly minimum charges based on connected load and revisional rates for electrical consumption by non domestic consumers in accordance with the factors in section 49(2) was neither ultra vires nor arbitrary.
The High Court in the case at hand relied on Rajeshwar Singh vs State of Bihar, AIR 1983 Patna 194, wherein it was held that when the disconnection of electric energy was effected by the Board then it could not ask for the minimum guaranteed charges.
That decision must be confined to the facts of that case only.
It is true that the agreement is in a standard form of contract.
The standard clauses of this contract have been settled over the years and have been widely adopted because experience shows that they facilitate the supply of electric energy.
Lord Diplock has observed: "If fairness or reasona bleness were relevant to their enforceability the fact that they are widely used by parties whose bargaining power is fairly matched would raise a strong presumption that their terms are fair and reasonable." Schroder Music Co. Ltd. vs Macaulay, 16 (624).
In such contracts a standard form enables the supplier to say: "If you want these goods or services at all, these are the only terms on which they are available.
Take it or leave it.
" It is a type of contract on which the conditions are fixed by one of the parties in advance and are open to acceptance by anyone.
The contract, which frequently contains many conditions is presented for acceptance and is not open to discussion.
It is settled law that a person who signs a 286 document which contains contractual terms is normally bound by them even though he has not read them, even though he is ignorant of the precise legal effect.
In view of clause 4 having formed one of the stipulations in the contract along with others it cannot be said to be nudurn pactum and the maxim nudum pactum ex quo non oritur actio does not apply.
Considered by the test of reasonableness it cannot be said to be unreasonable inasmuch as the supply of electricity to a consumer involves incurring of overhead installation expenses by the Board which do not vary with the quantity of electricity consumed and the installation has to be contin ued irrespective of whether the energy is consumed or not until the agreement comes to an end.
Every contract is to be considered with reference to its object and the whole of its terms and accordingly the whole context must be considered in endeavouring to collect the intention of the parties, even though the immediate object of enquiry is the meaning of an isolated clause.
This agreement with the stipulation of minimum guaranteed charges cannot be held to be ultra vires on the ground that it is incompatible with the statu tory duty.
Differences between this contractual element and the statutory duty have to be observed.
A supply agreement to a consumer makes his relation with the Board mainly contractual, where the basis of supply is held to be statu tory rather than contractual.
In cases where such agreements are made the terms are supposed to have been negotiated between the consumer and the Board, and unless specifically assigned, the agreement normally would have affected the consumer with whom it is made, as was held in Northern Ontario Power Co. Ltd. vs La Roche Mines Ltd., For the foregoing reasons we have no hesitation in holding that the agreement was reasonable and valid and it was not determined with the disconnection of supply to the respondent firm by the Board on 28th September, 1981 but only accordingly to the stipulations in clause 9(b) of the agreement as discussed above.
The liability to pay the minimum guaranteed charges, therefore, continued till the determination of the contract.
The Board was, therefore, entitled to submit the bills and make the demand on that account, and recover the same according to law.
In the result, the impugned judgment is set aside and the appeal is allowed.
No order as to costs.
Y. Lal Appeal al lowed.
| IN-Abs | The Respondent firm made an application to the appel lantElectricity Board for the supply of 60 KVA electricity and the Board entered into an agreement with the Respondent firm in that behalf and gave electricity connec tion on 13.4.1981.
Thereafter the Respondent firm applied for reduction of electricity from 60 KVA to 45 KVA and a fresh agreement was executed on May 2, 1981 and fresh con nection of 45 KVA was given on 29.5.1981.
It is respondent 's case that it had requested the Electricity Board on 19.6.1981 to cut off the Electricity.
The firm received Bills for minimum guaranteed charges for four months i.e. from June to September 1981.
The firm refuted its liability to pay the bill on the ground that it consumed no electrici ty during the aforesaid period of 4 months.
Consequent upon the firm 's failure to pay the Bill, the Board disconnected the electricity connection on 28.9.1981.
The firm ultimately received a bill for Rs.22,951.50p for the period commencing from June to August 1981.
On the firm 's failure to pay the Bill, the Board sent a requisition to the Certificate Offi cer who sent a notice to the firm on 6.7.1981.
The Certifi cate Officer rejected the plea of the firm that it was not liable to pay the Bill and proceeded to attach the property of the firm.
Being dissatisfied with the action, the re spondent firm filed a Writ Petition in the High Court for quashing the bills as also the certificate proceedings.
The High Court took the view that the Board itself having disconnected the connection, it was not entitled to any charges for the period after September 1981 and it was not open to the Board to contend that under clause 9 of the agreement it was not open to either party to terminate the agreement of minimum guaranteed charges before the expiry of two years from the date of the agreement.
The High Court accordingly quashed, the bills as well as the certificate proceedings but allowed the charges for July, August and September 1981 to be adjusted against the security money.
276 The Electricity Board has therefore filed this appeal after obtaining Special Leave.
Allowing the appeal, this Court, HELD: A supply.agreement to a consumer makes his rela tion with the Board mainly contractual, where the basis of supply is held to be statutory rather than contractual.
In cases where such agreements are made, the terms are supposed to have been negotiated between the consumer and the Board, and unless specifically assigned, the agreement normally would have affected the consumer with whom it is made.
[286D E] The agreement was reasonable and valid and it was not determined with the disconnection of supply to the respond ent firm.
The liability to pay the minimum guaranteed charges, therefore, continued till the determination of the contract.
The Board was therefore entitled to submit the bills and make the demand on that account and recover the same according to law.
[285F G]
|
tion (Civil) No. 1695 of 1987 Etc.
(Under Article , ' 23 of the Consitution of India).
Govind Mukhotey, J.D. Jain and B.B. Sinha for the Petition ers.
Dr. Y.S. Chitale, Mahabir Singh, K.B. Rohtagi and Sha shank Shekhar for the Respondents.
The Judgment of the Court was delivered by OJHA, J.
The petitioners in these writ petitions are licenced dealers having factories and manufacturing units at Panipat in the State of Haryana and consume sheep hair for manufacturing woollen fabrics and blankets.
In order to carry on their trade they purchase sheep hair to get yarn manufactured out of it for being used in its turn for manu facturing woollen fabrics and blankets.
The only question urged in these writ petitions is as to whether sheep hair was an agricultural produce within the meaning of the said 295 term as defined under Section 2(a) of the Punjab Agricultur al Produce Markets Act, 1961 (hereinafter referred to as the Act) so as to attract the provisions of the said Act to it.
The term "agricultural produce" according to its definition contained under Section 2(a) of the Act means all produce, whether processed or not, of agriculture, horticulture, animal husbandry or forest as specified in the Schedule to the Act.
On its plain meaning, therefore, only such produce as is specified in the Schedule to the Act shall fall within the term "agricultural produce".
Section 38 of the Act confers power on the State Government, by notification, to add to the Schedule any other item of agricultural produce or amend or omit any item of such produce specified therein.
The relevant items in the Schedule on which reliance has been placed by learned counsel for the petitioners in sup port of the contention that sheep hair was not an agricul tural produce are items 41.
Wool (Oon), 75.
Goat hair and 76.
Camel hair.
It has been urged by learned counsel for the petitioners that even though Goat hair and Camel hair have been included in the Schedule, Sheep hair had not been so included and consequently sheep hair was not an agricultural produce within the meaning of the Act and the insistence of the authorities that the petitioners should obtain a licence and pay market fee with regard to their transaction in respect of sheephair was unjustified.
With regard to item No. 4 l namely Wool (Oon), it was urged firstly that wool is the manufactured item of sheep hair and not sheep hair itself and secondly the word 'wool ' according to its dictionary meaning is the soft undercoat of various animals including sheep.
Reference in this behalf has been made to the Dic tionary of Scientific and Technical Terms M.C. Graw Hill.
According to it wool is a textile fibre made from raw wool characterised by absorbency, resiliency and insulation.
It further states that wool is the soft undercoat of various animals such as sheep, angora, goat, camel, alpaca, llamma and vicuna.
Having heard learned counsel for the parties, we are not inclined to agree with the submission made by learned coun sel for the petitioners.
Before dealing with the matter further it would be useful to notice at this place that item No. 41 of the Schedule after the word 'wool ' uses the word '0on ' also within brackets which indicates as to what was really intended by the use of the word 'Wool '.
Indeed, in the Hindi version of the Act, item No. 41 of the Schedule uses the word '0on ' only and does not at all use the word 'wool '.
Now to the submissions made by learned counsel for the petitioners, the first submission made by him that the word 'wool ' contemplated manufactured item of 296 sheep hair and not sheep hair itself, it believed even by the dictionary meaning of the said word relied on by him.
Firstly, the raw material out of which a textile fibre is made is also described as raw wool.
Secondly, not only the textile fibre but also the soft undercoat of various animals including sheep has itself been described as wool.
It is, therefore, apparent that not only the textile fibre made out of raw wool but even the soft undercoat of the various animals including sheep, according to the dictionary afore said, would be wool.
Encyclopaedia Britannica, under the heading wool in vol.
23, states: "Animal fibres are usually spoken of as hair, with the exception of the coat of the sheep which is usually termed wool".
A perusal of what has been stated under the heading wool therein would indicate that wool has almost invariably been used in the context of sheep hair.
In Indian Aluminium Cables Ltd. vs Union of India, [1985] 3 SCC page 284 after referring to several earlier decisions of this Court it was held that in determining the meaning or connotation of words and expressions describing an article in a tariff schedule those words and expressions should be construed in the sense in which they are under stood in the trade by the dealer and the customer when goods are marketable.
The same rule of interpretation was reiter ated in Collector of Central Excise, Kanpur vs Krishna Carbon Paper Co., [1989] 1 SCC page 150.
It was held: "It is well settled, as mentioned before, that where no definition is provided in the statute itself, as in this case for ascertaining the correct meaning of a fiscal entry reference to a dictionary is not always safe.
The correct guide, it appears in such a case, is the context and the trade meaning XXXXX The trade meaning is one which is prevalent in that particular trade where the goods is known or traded.
If special type of goods is subject matter of a fiscal entry then that entry must be understood in the context of that particu lar trade, bearing in mind that particular word xxxxx It is a well settled principle of construc tion, as mentioned before, that where the word has a scientific or technical meaning and also an ordinary meaning according to common par lance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clear ly expressed by the legislature.
This princi 297 ple is well settled by a long line of deci sions of Canadian, American, Australian and Indian cases.
Pollock, J. pointed out in Grenfell vs I.R.C., 248 that if a statute contains language which is capable of being construed in a popular sense, such a statute is not to be construed accord ing to the strict or technical meaning of the language contained in it, but is to be con strud in its popular sense, meaning of course, by the words "popular sense" that which people conversant with the subject matter with which the statute is dealing would attribute to it.
The ordinary words in every day use are, therefore, to be construed according to their popular sense.
The same view was reiterated by Story, J. in 200 Chests of Tea (1824) 9 Whea ton US 435,438 where he observed that the legislature does not suppose our merchants to be naturalists, or geologists, or botanists.
" In our opinion, the aforesaid rule of interpretation would apply even to the interpretation of the items of the Schedule to the Act keeping in view the nature and purpose of the enactment.
Interpreting item No. 41 Wool(Oon) of the Schedule in this light there seems to be no mannner of doubt that the word 'wool ' has been used therein only in the sense in which the word '0on ' is understood in the trade by the dealer and the consumer in the popular sense namely that which people conversant with the word '0on ' would attribute to it.
If anyone goes to the market to purchase wool (0on) he would be offered only sheep hair and not goat hair or camel hair or for the matter of that the hair of any other animal.
Indeed, there is intrinsic evidence in the Schedule itself of the fact that in the English version the word 'Wool (0on) ' and in the Hindi version '0on ' only at item No. 41 has been used in the same popular sense namely that of sheep hair.
This intention is apparent from the circum stances that care has been taken to specifically include goat hair and camel hair at items 75 and 76 of the Schedule.
Had Wool (0on) been used at item No. 41 in the comprehensive sense as canvassed by the learned counsel for the petition ers it would have automatically included Goat hair and Camel hair also and the specific inclusion of Goat hair and Camel hair at items 75 and 76 would have been wholly unnec essary.
Consequently, their specific inclusion at items 75 and 76 is a clear indication of the awareness of the fact that the trade meaning of the word 'Wool (0on) ' which is prevalent in the popular sense would be sheep hair alone and as such unless goat hair and camel hair are included as specific items in the Schedule they will not be treated as agricultural produce.
The word 298 'Woo1 (0on) ' has obviously been used at item No. 41 of the Schedule in the aforesaid popular sense and not in the sense used in scientific and technical terminology which the traders and the consumers are not normally supposed to know.
In view of the foregoing discussion, we are clearly of the opinion that sheep hair falls under the item No. 41 of the Schedule namely "Wool (0on)" as contained in the English version and "0on" only as contained in the Hindi version of the Act.
Sheep hair is consequently an agricultural produce within the meaning of the Act so that the various provisions therein with regard to agricultural produce are applicable to sheep hair also.
In the result, we find no merit in these writ petitions.
They are accordingly dismissed but in the circumstances of the case there shall be no order as to costs.
G.N. Petitions dis missed.
| IN-Abs | These writ petitions were filed by licencesed dealers who manufacture woollen fabrics and blankets.
They purchase sheep hair and make them yarn for use in manufacturing the above items.
The challenge is against the insistence of the State Govt.
to treat sheep hair as agricultural produce under the Punjab Agricultural Produce Markets Act, 1961 and requiring the petitioners to obtain licence and pay market fee for transactions in sheep hair.
It has been contended by the petitioners that even though goat hair and camel hair are included in the sched ule, sheep hair is not included and hence sheep hair is not agricultural produce within the meaning of the Act.
As regards item No. 41, Wool (0on) appearing in the schedule, it was contended that wool is a manufactured item of sheep hair and not sheep hair itself and the word "wool" according to its dictionary meaning is the soft undercoat of various animals including sheep.
Dismissing the writ petitions, this Court, HELD: 1.1 Item No. 41 of the schedule after the word "wool" uses the word "0on" also within brackets which indi cates as to what was really intended by the us of the word "wool".
Indeed, in the Hindi version of the Act item No. 41 of the schedule uses the word ' '0on" only and does not at all use the word "wool".
The raw material out of which a textile fibre is made is also described as raw wool.
Not only the textile fibre but also the soft under coat of various animals including sheep has itself been described as wool.
Wool has almost invariably been used in the context of sheep hair.
[295G; 296A] 294 1.2 Interpreting item No. 41 Wool (0on) of the schedule in the light of the above, there seems to be no manner of doubt that the word "wool" has been used therein only in the sense in which the word "0on" is understood in the trade by the dealer and the consumer in the popular sense namely that which people conversant with the word '0on ' would attribute to it.
This intention is apparent from the circumstance that care has been taken to specifically include goat hair and camel hair at items 75 and 76 of the schedule.
Had wool (0on) been used at item No. 41 in the comprehensive sense, it would have automatically included goat hair and camel hair and the specific inclusion of Goat hair and Camel hair at item No. 75 and 76 would have been wholly unnecessary.
Thus the word 'Wool (0on) ' has obviously been used in the popular sense and not in the sense used in scientific and technical terminology which the traders and the consumers are not normally supposed to know.
[297D H; 298A] Indian Aluminium Cables Ltd. vs Union of India, ; and Collector of Central Excise, Kanpur vs Krishna Carbon Paper Co., ; , relied on.
Encyclopaedia Britannica Vol. 23, relied on.
|
it Petition No. 1119 of 1986 etc.
(Under Article 32 of the Constitution of India).
G. Ramaswamy, A.S.G., N.C. Sikri, N.S. Das Bahl, B.D. Sharma, Ms. Madhu Sikri, B.W. Vaidya, R.B. Misra, Ms. A. Subhashini (not present) and Dalveer Bhandari for the ap pearing parties.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
The first of these applications under article 32 of the Constitution is on behalf of the Delhi Reserve Trained Pool Telephone Operators (RTPTOs) asking for a direction to the Mahanagar Telephone Nigam Limited to treat all the telephone operators at par after their absorp tion as regular employees.
Three letters addressed to the learned Chief Justice of this Court have been treated as writ petitions and are the remaining one under article 32 of the Constitution.
The first one (1276/86) is by the Reserve Trained Pool Telephone Operators of Bombay.
They claim the self same relief as asked for in the earlier case; the second one (1623/86) is on behalf of the Reserve Trained Pool Operators in the Department of Posts and they have .claimed relief of being placed at par with regular, permanent or temporary employees in the matter of service conditions.
The third one (1624/86) is on behalf of substi tute employees and casual labourers in the Department of Posts.
They have claimed that substitute employees and casual labourers be paid the same emoluments as regular employees.
331 In an earlier Writ Petition No. 11764 of 1985 filed by the All India Telegraph Engineering Employees Union Class III of Bombay Telephone where the prayer for treating the Reserve Trained Pool Telephone Operators at par with regular staff had also been asked for, this Court made the following order on 1.5.
1986: "The matter is adjourned to 28.7.
1986 to enable the newlyadded respondent No. 3 to file counter affidavit on or before 15.7.
Rejoinder, if any, will be filed within one week thereafter.
Meanwhile, the respondent will pay to the operators drawn from the Reserve Trained Pool of the Telephone Opera tors from Bombay and Delhi Telephones Rs.4.90 per hour provided that the total salary of the Telephone Operators from the Reserve Trained Pool shall not exceed the salary of regularly appointed Telephone Operators.
" On 23.7.
1986, this Court in that Writ Petition further ordered: "The order passed by the Court on 1.5.
1986 shall be final.
The wages shall be paid in accordance with the terms contained in that order.
We, however, make it clear that if the Dearness Allowance and other allowances are varied hereafter the workers concerned shall get D.A. and other allowances accordingly subject to the limit that the total emoluments would not exceed the salary of regularly appointed Telephone Operators.
If the peti tioners have any other grievance they are at liberty to agitate.
This order will apply to all RTPA employees who 'are similarly situated.
" It is the stand of the respondents that that order of this Court has been implemented with effect from 28.7.
After that was done, the RTPTOs of Bombay and Delhi have in their respective Writ Petitions applied for further reliefs as already indicated.
According to the petitioners in these two Writ Petitions, the RTPTOs are entitled to be brought on par with the regular staff for grant of other service bene fits as they have been performing the same duties as per formed by regular operators.
The two petitions have been opposed by the relevant Ministry by filing counter affidavits where the stand taken is that RTPTOs are a special class by themselves with their own incidents of service and they cannot be treated at par with regular employees.
The differences between the two services have been highlighted in the counter affidavits.
332 It is also the stand of the respondents that the order of this Court referred to above dated 28.7.1986 finally dis posed of the major claim raised in the two petitions of the employees of the two Telephone Nigams and fresh action was not appropriate.
It is also pointed out that on 10th of February, 1986, there was an agreement of settlement and the present petition was an attempt to reopen the matter.
On 31.1.
1989, when Writ Petition No. 1276 of 1986 came up for hearing before this Court, the following order was made: "Learned counsel for the petitioners concedes that the regularisation of 21,000 employees in the Department of Telecommunications has been effected but complains that no such proceeding has taken place in respect of the postal employees.
He states that there is pressing need for a parity of service conditions in cluding pay, house rent allowance and other allowances between the temporary employees and the regular employees covered by this catego ry.
The learned Additional Solicitor General of India assures us that the scheme will be finalised latest by first week of April, 1989 and that complete position will be placed before the Court at that stage . " The scheme known as Casual Labourers (Grant of Temporary Status in Regularisation) Scheme has been formulated and put into operation from 1.10. 1989 and a copy thereof has been placed for our consideration.
We find that the scheme is comprehensive and apart from provision for conferment of temporary status, it also specifies the benefits available on conferment of such status.
Counsel for the respondent Nigams have told us that the scheme will be given full effect and other benefits contemplated by the scheme shall be worked out.
In these circumstances, no further specific direction is necessary in the two applications relating to the two Nigams of Bombay and Delhi except calling upon the respondents to implement every term of the scheme at an early date.
The two remaining writ petitions relate to the Depart ment of Posts.
Though an assurance had been held out by the learned Additional Solicitor General that a separate scheme for the postal employees would be prepared and placed before the Court within a time frame, that has not been done.
At the hearing, a note containing tentative proposals and a statement as to what has been done by way of improving the conditions of service have, however, been placed before the Court.
The statement relating to improvements brought about 333 indicates that after April, 1986, about seven thousand RTPs have been absorbed.
Since the RTP category is no more ex panding, only about 2,900 of them remain to be absorbed.
We have been told by learned counsel for the Department that equal number of justified and supernumerary posts are being created and the Ministry 's proposal is in the hands of the Ministry of Finance for approval and is expected to be finalised soon.
This has to be done within a time frame.
and we direct the posts of both the categories to be created by the end of January, 1990, and the process of absorption to be completed by 31.3.
With such absorption made, the RTPs will become regular employees.
All their claims would, thereafter, be regulated on the basis of entitlement in accordance with extant rules.
So far as the claim of earned leave is concerned, we find that Telecommunications Regularisation Rules provide for leave entitlement on pro rate basis one day for every ten days of work.
The same benefit would be admissible to the employees of the Department of Posts as we find no reason to adopt a different basis.
In National Federation of P & T Employees & Anr.
vs Union of India & Anr.
, , this Court direct ed: "The Union of India and other respondents are directed to pay wages to the workmen who are employed as casual labourers belonging to the several categories of employees in the Posts and Telegraphs Department at the rates equiva lent to the minimum pay in the pay scales of the regularly employed workers in the corre sponding cadres but without any increments with effect from February 5, 1986 on which date the first of the above two petitions, namely, Writ Petition No. 302 of 1986 was filed.
The petitioners are entitled to corre sponding dearness allowance and additional dearness allowance, if any, payable thereon.
Whatever other benefits which are now being enjoyed by the casual labourers shall continue to be extended to them .
" It has been stated that in compliance with that direc tion the Department has alredy formulated a scheme for absorption of casual labourers and about a thousand justi fied posts are being created with concurrence of the nodal Ministry.
As per existing recruitment rules, extra depart mental agents are given preference in the matter of absorp tion as Group 'D ' postmen.
Directions have already been issued for their absorption against the vacancies.
It has been pointed out 334 again that casual labourers are being paid bonus while substitutes are not entitled under the existing scheme.
The other note placed before us at the bearing indicates: 1. Justified (by necessity) posts in Groups 'C ' and 'D ' will be created in the administra tive and operative establishments as per the existing norms for creation of posts in con sultation with the Finance Ministry, 2.
On creation of the posts, recruitment will be done following the existing recruitment rules giving preference to extra departmental agents over casual labourers; 3.
If on the basis of established norms, casual labourers are in excess, their services shall be dispensed with in accordance with law; and 4.
If any casual labourers cannot be re trenched straightaway, they shall be paid wages for three months at the existing rates.
This tentative scheme does not take into account the several specific claims advanced by the petitioners in the two writ petitions.
These are House Rent Allowance, City Compensatory Allowance, Bonus and Earned Leave.
There are also demands for weekly off day, postal holiday and materni ty leave.
Weekly off has now been given to RTPs, casual labourers and substitutes under order of this court and the claim does not survive for adjudication.
All these three categories in these two writ petitions are also being given three national Holidays.
For the remaining postal holidays, the claim has been pressed but we are of the view that until absorption, they may not be granted.
It has been agreed before us that the claim of bonus may be left to arbitration or for being dealt with by the Consultative Council.
As regards House Rent Allowances, City Compensatory Allowance and Maternity Leave, we see.
no justification for treating the employees of the Postal Department differently from those covered under the Regularisation Rules in the Telecommunications Department.
Temporary status would be available to the casual labourers in the Postal Department on completion of one year of continuous service with at least 240 days of work (206 days in the case of officers observing five days ' week) and on conferment of temporary status, House Rent Allowance and City Compensatory Allowance shall be 335 admissible.
There would be no justification to withhold Maternity Leave as that is an obligation of the employer under the law and the State as an ideal employer fulfilling the Directive Principles of State Policy envisaged in Part IV of the Constitution should provide the same.
After ren dering three years of continuous service with temporary status, the casual labourers shall be treated at par with temporary Grade 'D ' employees of the Department of Posts and would thereby be entitled to such benefits as are admissible to Group 'D ' employees on regular basis.
So far as the substitutes are concerned, it has been stated to us that orders have been issued for considering their claims against Group 'D ' vacancies and a copy of the Department 's letter has been produced.
We hope and trust that the direction shall be implemented in its true spirit.
The claim on behalf of substitutes ordinarily is not enter tainable but we have been told that there are substitutes who work for long periods continuously.
We are inclined to agree with counsel for the petitioners that in such cases their claims should have been appropriately considered by the Department.
The writ petitions are disposed of with the aforesaid directions without any order as to costs.
R.N.J. Petitions dis posed of.
| IN-Abs | The Petitioners in first two Writ Petitions are Reserve Trained Pool Telephone Operators (RTPTOS) of Delhi and Bombay Mahanagar Telephones who are seeking directions that after their absorption as regular employees following the implementation of the directions of this Court dated 28.7.1986 in an earlier Writ Petition No. 11764 of 1985 filed by the All India Telegraph Engineering Employees Union Class III of Bombay Telephones, they are entitled to be brought on par with the regular Staff for grant of all other service benefits as well since they have been performing the same duties as performed by regular operators.
The other two Petitions pertain to the Department of Posts.
One is by the Reserve Trained Pool Operators (RTPOS) and the other by the Substitute Employees and Casual Labour ers in that Department.
While the RTPOS have claimed relief of being placed at par with regular, permanent or temporary employees in the matter of service conditions, the substi tute employees and casual labourers claim that they be paid the same emoluments as the regular employees.
Disposing of the Petitions, this Court, HELD: The scheme known as Casual Labourers (Grant of Temporary Status in Regularisation) Scheme has been formu lated and put into operation from 1.10.1989.
Hence no fur ther specific direction is necessary as regards applicants covered by the Telephone Nigams of Delhi and Bombay except calling upon the respondents 10 implement every term of the Scheme at an early date.
[332E F] As per existing recruitment rules, extra departmental agents are 330 given preference in the matter of absorption as Group 'D ' postmen.
Directions have already been issued for their absorption against the vacancies.
[333H] The claim to bonus may be left to arbitration or for being dealt with by a Consultative Council.
[334F] After rendering three years of continuous service with temporary status, the casual labourers shall be treated at par with temporary Grade 'D ' employees of the Department of Posts and would thereby be entitled to such benefits as are admissible to Group 'D ' employees on regular basis.
[335B]
|
ivil Appeal No. 4779 of 1989.
From the Judgment and Order dated 3.8.1987 of the Delhi High Court in S.A.O. No. 393 of 1986.
Ashok Sen, Ms. section Janani and Mrs. Urmila Kapoor for the Appellant.
G.C. Lalwani and P.N. Misra for the Respondent.
The Judgment of the Court was delivered by VERMA, J.
Leave granted.
The landlord Shri Shiv Chander Kapoor has preferred this appeal by special leave against the judgment dated August 3, 1987 passed by the Delhi High Court in S.A.O. No. 393 of 1986 whereby the High Court dismissed the landlord 's appeal against the Order dated October 14, 1986 of the Rent Control Tribunal affirming in appeal the order dated August 9, 1985 of the Rent Controller dismissing the landlord 's application dated October 12, 1983 for restoration of possession of the premises let out for residence to the tenant Amar Bose for the limited period of three years w.e.f. June 8, 1980 under section 21 of the Delhi Rent Control Act, 1958 (hereinafter referred as the 'Act ').
The true scope of the enquiry con templated when the tenant assails validity of the Rent Controller 's permission granted under section 21 of the Act for creation of a tenancy for limited period arises for determination in the present case.
The premises is the second floor of the building beating No. 19/10, Old Rajinder Nagar, New Delhi comprising of two rooms, a kitchen, bathroom and lavatory let out for resi dence on a monthly rent of Rs.800 apart from electricity and water charges.
The landlord offered to let out the premises for three years only w.e.f. June 8, 1980 for the reason that it would be needed by his family thereafter when his son got married, to which the tenant consented.
Accordingly, by an agreement in writing between the parties the premises was so let out for the limited period of three years w.e.f June 8, 1980 with the 302 permission of the Rent Controller obtained under section 21 of the Act.
The order of the Rent Controller is as under: "In view of the statements of the parties made above, I am satisfied that there is no collu sion or fraud.
I am also satisfied that the petitioner does not require the suit premises for a limited period of three years.
Permis sion, therefore, is hereby granted to the petitioner Sh.
Shiv Chander Kapoor to let out his premises No. 19/10, situated at Old Ra jinder Nagar, New Delhi, the details of which are given in the site plan Ext.
AI to the respondent for residential purpose for a limited period of three years with effect from 8.6.1980".
On failure of the tenant Amar Bose to restore possession of the premises to the landlord on expiry of the period of limited tenancy, an application dated October 12, 1983 was filed by the landlord before the Rent Controller praying for execution of the aforesaid order by delivery of vacant possession of the premises to the landlord.
The tenant filed his objection to the execution application which was replied by the landlord.
The Rent Controller by order dated August 9, 1985 rejected the landlord 's application taking the view that the permission granted under section 21 of the Act was invalid so that the tenant could not be evicted on expiry of the period of three years.
The landlord 's further appeal to the Rent Control Tribunal and then to the Delhi High Court failed.
Hence this further appeal.
The Rent Controller upheld the tenant 's objection that the landlord 's son being aged only about 19 or 20 years on the date of expiry of the period of limited tenancy while the minimum age prescribed by law for marriage being 21 years the ground that the premises would be needed on the son 's marriage after three years was untenable.
On this basis it was held that creation of tenancy for the limited period of three years amounted to fraud and misrepresenta tion by the landlord rendering invalid the permission grant ed under section 21 of the Act.
This view has been upheld by the Rent Control Tribunal and then the Delhi High Court, treating the grant of permission by Controller to be mechan ical and without application of mind.
The tenant also con tended that the landlord was in possession of the remaining building which comprises of sufficient accommodation to meet the bona fide need of the landlord 's family; and that the premises were constructed in 1972 and the second floor of the building was never occupied by the landlord being let out to other tenants from time to time.
In substance 303 the grounds taken by the tenant were two, namely (1) the landlord 's son was below the prescribed minimum age for marriage of 21 years on the date of the expiry of the period of three years of the limited tenancy which showed that the reason given was false, and (2) absence of bona fide need of the landlord for occupying the premises, namely, the second floor of the building.
The High Court 's order is based only on the first ground.
The scope of enquiry contemplated under section 21 of the Act when the tenant assails validity of the Controller 's permission to create a limited tenancy thereunder was seri ously debated at the heating of this appeal.
On behalf of the appellant/landlord it was urged that the scope is limit ed to examining only the existence of jurisdictional facts which permit grant of permission to creat a tenancy for limited period and no more.
On this basis, learned counsel for the appellant contended that the above first ground alone was within the scope of enquiry which too has been wrongly decided by the High Court on a misconstruction of Section 21.
On the other hand it was contended on behalf of the respondent tenant that the enquiry extends also to examining the other ground viz. existence of landlord 's bona fide need to occupy the premises on expiry of the period of limited tenancy.
The same earlier decisions of this Court on the point were relied on by both sides with equal vehemence in support of the rival contentions.
Section 21 is as under: "Recovery of possession in case of tenancies for limited period. (1) Where a landlord does not require the whole or any part of any premises for a particular period, and the landlord, after obtaining the permission of the Controller in the prescribed mannner, lets the whole of the premises or part thereof as a residence for such period as may be agreed to in writing between the landlord and the tenant and the tenant does not, on the expiry of the said period, vacate such premises, then, not withstanding anything contained in Section 14 or in any other law, the Controller may, On an application made to him in this behalf by the landlord within such time as may be pre scribed, place the landlord in vacant posses sion of the premises or part thereof by evict ing the tenant and every other person who may be in occupation of such premises.
(2) While making an order under sub section (1), the Con 304 troller may award to the landlord such damages for the use or occupation of the premises at such rates as he considers proper in the circumstances of the case for the period from the date of such order till the date of actual vacation by the tenant".
Chapter III of the Delhi Rent Control Act, 1958 compris ing of Sections 14 to 25 contains provisions relating to control of eviction of tenants.
The object of enacting the Rent Control laws is well known and it does not need an elaborate enunciation.
Suffice it ' to say that in view of acute shortage of housing accommodation, more particularly in the bigger cities, these laws have been enacted to regu late the letting of the available premises and an attempt has been made to reconcile the conflicting interests of landlords and the need for the protection of tenants.
Sec tion 14 of the Delhi Rent Control Act gives protection to the tenants against eviction and specifies the grounds on which alone the landlord can obtain an order of the compe tent authority to recover possession of any premises let out to a tenant.
Apparently, it was realised that some premises may be available for being let only for a limited period where the landlord did not require the same during that period alone provided the landlord was assured of restora tion of possession on expiry of the limited period.
However, while enacting a provision permitting the creation of a tenancy for limited period to utilise such premises and alleviate to some extent the suffering of persons needing residential accommodation, it was necessary also to ensure that the provision was not misused by capricious landlords to circumvent Section 14 of the Act.
It was to achieve this dual purpose that Section 21 was enacted in the Delhi Act to encourage landlords who did not need any premises for a limited period only, to let it out for such period with the assurance of restoration of possession at the end of that period without being required to satisfy Section 14 of the Act.
The provision also contains an internal check upon an unscrupulous landlord by requiting the Rent Controller 's permission to be granted in the given circumstances only.
The conditions on which permission can be granted by the Rent Controller under Section 21 are specified in Section 21 itself.
A fortiori when the question arises about the valid ity of the Rent Controller 's permission it can be tested only with reference to the specified conditions subject to which alone permission can be granted by the Controller.
No outside factor can be imported either for grant of the permission thereunder or for adjudicating its validity at a subsequent stage.
Section 21 being in the nature of an exception to the ordinary mode of 305 eviction of tenants prescribed under section 14 of the Act, it must be strictly construed and the scope thereof limited to its contents.
Section 1 of the Act is by itself the complete provision relating to the creation of a tenancy for limited period and recovery of possession on expiry of that period.
Thus, Section 21 is a self contained code in this behalf.
Section 21 permits the creation of a tenancy for limited period "Where the landlord does not require the whole or any part of premises for a particular period"; and it is to be let for 'residence '.
These words of the provision specify the jurisdictional facts which alone permit creation of a tenancy for limited period.
The remaining provision provides the machinery for doing so by an agreement in writing be tween the landlord and the tenant on the basis of which permission of the Controller is obtained.
The provision further says that if On expiry of the said period the tenant does not vacate such premises, then 'notwithstanding any thing contained in Section 14 or in any other law ' the Con troller may on an application by the landlord place the landlord in vacant possession of the premises by evicting the tenant and every other person who may be in occupation of such premises.
The enquiry contemplated at the stage of grant of permission by the Controller under this provision requires the Controller to be satisfied that the landlord does not require such premises for a limited period only; and the said premises is to be let as a residence in terms of an agreement in writing between the landlord and tenant.
On satisfaction of the existence of these facts, the Con troller grants permission for creation of tenancy for a limited period under this provision.
When recovery of pos session of the premises is sought thereafter by the landlord under this provision then the Controller is to restore possession to the landlord "notwithstanding anything con tained in Section 14 or in any other law" subject only to the requirements of this provision.
Obviously it is the existence of a valid permission of the Controller for creation of a tenancy for limited period under this provision which brings into existence a valid limited tenancy and, therefore, such valid permission is a sine qua non of Controller 's jurisdiction to order restora tion of possession on expiry of that period under the second part of Section 21.
It is, therefore, the obligation of the Controller to examine the question of validity of his earli er permission, if such an objection is raised before he orders restoration of possesion to the landlord on expiry of the limited term.
However, that enquiry must be limited only to the existence of the aforesaid jurisdictional facts at the time of grant of permission and no more.
This is quite evident from the expression 'notwithstanding anything con tained in Section 14 or in any 306 other law '.
in the second part of Section 21 itself.
This is the inbuilt safeguard in the provision against its misuse.
We have no doubt that the language of Section 21 of the Act clearly forbids the Controller from embarking on an enquiry beyond the ambit of Section 21 itself which may impinge into the sphere of Section 14 of the Act or any other law.
We have no hesitation in holding that it is the existence of the aforesaid jurisdictional facts at the time of grant of permission to create a limited tenancy which alone is required to be determined by the Controller, if and when, validity of his permission is assailed at a subsequent stage.
This being the scope of his enquiry while granting permission, the scope of enquiry at the subsequent stage cannot be wider.
For this reason any objection to the valid ity of the permission on a ground other than non existence of the jurisdictional facts at the time of grant of permis sion is untenable and beyond the scope of the Controller 's power to examine validity of his earlier permission before directing restoration of possession to the landlord under section 21 of the Act.
In short, the scope of enquiry before the Controller when validity of the permission granted by him is assailed is to determine: whether, the permission accorded by him earlier was not really to the creation of a genuine tenancy for limited period but to a mere pretence of the landlord for circumventing the provisions of Section 147 If so, such an act being a fraud on the statute, it does not bind the tenant whose consent to the sham transaction is obtained taking advantage of his unequal bargaining power, and he can assail the permission.
It is equally plain that the object of enacting Section 21 to permit creation of tenancies for limited period should not be frustrated by unduly enlarging the scope of that enquiry at the behest of a tenant who having given his free consent to the creation of a genuine limited tenancy thereafter attempts to thwart restoration of possession to the landlord by raising untenable pleas in spite of the clear prohibition made by the words "notwith standing anything contained in Section 14 or in any other law" This delicate balance between the two conflicting interests has to be borne in mind, in order to give true effect to Section 21 and thereby to promote the object of its enactment.
We may now refer to the decisions of this Court.
S.B. Naronah vs Prem Kurnari Khanna, ; is the first decision on the point which deals comprehensively with the scope of Section 21 of the Act.
Krishna lyer, J. speak ing for the Bench said as follows: 307 "Parliament was presumably keen on maximising accommodation available for letting, realising the scarcity crises.
One source of such spare accommodation which is usually shy is poten tially vacant building or part thereof which the landlord is able to let out for a strictly limited period provided he has some credible assurance that when he needs he will get it back . .
The problem is felt most for residential uses.
So the law has to make itself credit worthy.
Section 21 is the answer".
"Section 21 overrides Section 14 precisely because it is otherwise hedged in with drastic limitations and safeguards itself against landlords ' abuses . .
What, then, are those conditions and safe guards? The first condition is that the land lord does not require the demised premises "for a particular period" only . .
The Controller must be satisfied that the landlord means what he says and it is not a case of his not requiring the property indefinitely as distinguished from a specific or particular limited period of say one year, two years or five years.
If a man has a house available for letting for an indefinite period and he so lets it, even if he specifies as a pretence, a period or term in the lease, Section 21 cannot be attracted.
On the other hand, if he gives a special reason why he can let out only for a limited period and requires the building at the end of that period . . it is good compliance.
The second condition is that the letting must be made for a resi dential purpose.
The house must be made over 'as a residence ' ." "The fact that a landlord and a potential tenant together apply, setting out the formal ingredients of Section 21, does not relieve the Controller from being vigilant to inquire and satisfy himself about the requisites of the landlord 's non requirement "for a particu lar period" and the letting itself being 'as a residence '.
A fraud on the statute cannot be permitted . . " "If he makes a mindless order the Court, when challenged 308 at the time of execution, will go into the question as to whether the twin conditions for sanction have really been fulfilled.
Of course, there will be a presumption in favour of the sanction being regular, but it will still be open to a party to make out his case that in fact and in truth the conditions which make for a valid sanction were not present . . " " . . the sanction granted under Section 21, if it has been procured by fraud or collu sion, cannot withstand invalidity because, otherwise, high public policy will be given and hostage to successful collusion . .
Collusion between the strong and the weak cannot confer validity where the mandatory prescriptions of the law are breached or betrayed".
(emphasis supplied) S.B. Naronah 's case has thereafter been consistently followed by this Court and treated as the correct analysis of Section 21.
With respect, we concur and reiterate that the scope of Section 21 is succinctly summarised in the above extracts.
There is nothing in this decision to support the respondent tenant 's contention in this appeal that the scope of enquiry is wider permitting determination of the landlord 's bona fide need of the pemises as if such a ground for eviction specified in Section 14 of the Act has to be proved.
Extending the enquiry to that extent will indeed be against the express prohibition enacted in Section 21 it self.
The next decision in V. section Rahi and Anr.
vs Smt.
Ram Chambeli, ; Venkataramiah, J. (as he then was) speaking for the Bench applied the decision in S.B. Naronah 's case and pointed out that even though the initial presumption was that the permission granted by the Control ler under section 21 of the Act was regular yet the material produced should be examined in order to be satisfied that there has not been any misuse of the said provision by the landlord taking advantage of the helpless situation of the tenant due to house scarcity.
Facts of that case show that the scope of enquiry was limited only to examining existence of the jurisdictional facts at the time of grant of permis sion by the Controller.
In Smt.
Dhanwanti vs D.D. Gupta, [1986] 3 SCC 1, it was held on the facts of that case that permissions for letting out to the same tenant for limited period obtained more than once after expiry of each said 309 period was by itself not sufficient to establish that the premises was available for being let out for an indefinite period; without showing absence of landlord 's intention to occupy the premises.
Notice was taken of the common knowl edge that it is not possible for a man to plan his future life with any degree of definiteness and changing circum stances may justify such a course.
The principle applied was the same and the ultimate conclusion was reached on the particular facts of that case.
In Inder Mohan Lal vs Ramesh Khanna, ; , it was held that the presumption of validity of the permission given by the Controller was not rebutted by the tenant since there was no evidence to show non existence of any of the essential conditions which enable the permission to be granted.
The earlier decisions of this Court starting with Naronah 's case were referred and the test indicated therein was applied.
In S.K. Lata vs R.C. Chhiba and Another, ; , the permission given by the Controller for creation of tenancy for a limited period was held to be vitiated on the ground of fraud on statute because the permission was ob tained without disclosing that the tenant had already been inducted under an oral lease and was in possession of the premises prior to the application made before the Control ler.
It was, therefore, held applying the same test that an essential condition for grant of sanction under section 21 by the Rent Controller did not exist.
Now the only remaining point is the requirement of notice during enquiry into validity of the Controller 's permission before ordering restoration of possession to the landlord.
A decision of this Court on this point isJ. R. Vohra vs India Export House (P) Ltd. & Anr.
, ; In J.R. Vohra 's case it was reiterated that the condi tions specified for grant of permission by the Controller under section 21 must be 'truely fulfilled and not by way of any make belief before the Controller grants his permission for the creation of such limited tenancy '.
After reiterating this position the Court proceeded to consider the require ment of a notice to the tenant before issuing warrant of possession in favour of landlord.
It was held that the competing claims of the landlord and the tenant can be harmonised not by insisting upon service of a prior notice on the tenant before the issuance of the warrant of posses sion to evict him but by insisting upon his approaching the Rent Controller during the currency of the limited tenancy for adjudication of his pleas no sooner he discovers facts and 310 circumstances that tend to vitiate ab initio the initial grant of permission.
It was observed that there is no reason for the tenant to wait till the landlord makes his applica tion for recovery of possession to raise his plea.
It was further observed that in case the tenant comes to know, aliunde, of the landlord 's application for recovery of possession even without notice to him, he may raise his plea at that stage and the Controller would enquire into the same but in that situation the tenant may run the risk of getting his plea rejected as an after thought.
It was expressly held in this decision that there is no obligation on the part of the Rent Controller to serve a notice on the tenant before issuing the warrant of possession on the landlord 's applica tion made after expiry of the period of limited tenancy for recovery of possession.
It is obvious from the decision in J.R. Vohra 's case that the tenant is expected to raise such a plea during currency of the limited tenancy and on such a plea being raised by the tenant enquiry into it is contemplated.
Even though it is not expressly said in Vohra 's case, it is implicit that on such an application being made by the tenant requiring adjudication by the Controller, it is the Controller 's obligation to issue notice of the same to the landlord and then to make the adjudication with opportunity to both sides to prove their respective contentions.
As for the requirement of notice to the tenant before issuing the warrant of possession in favour of the landlord on his application for recovery of possession on expiry of the limited tenancy, it appears to us also that no notice to the tenant at that stage is either contemplated or expedi ent.
This appears to be the reasonable view which is in accord with the scheme of Section 21.
Obviously notice is to be given of a fact which may otherwise be not known to the notice.
The period of limited tenancy and the date of its expiry are known to the tenant from the very inception.
The tenant is equally aware of his own default in restoring vacant possession of such premises to the landlord on expiry of that period.
It is only these facts, well known to the tenant, which compel the landlord to apply for recovery of possession pursuant to the tenant 's default.
The plea of invalidity, if any, of Controller 's earlier permission must equally be known to the tenant at least by then coupled with his knowledge that unless a declaration is made at his instance that the Controller 's permission is invalid, he must vacate, the limited tenancy having expired.
Why then should a notice to him at that stage be necessary and for what useful purpose? We cannot think of any good reason to require a notice to the tenant at that stage.
The object of enquiring into the validity of the Controller 's permission under section 21 is only to ensure that essentials of a limited tenancy 311 existed and the same was genuine; and it is not meant to permit raising of frivolous pleas which would frustrate the very object of its enactment.
This view protects the honest tenants and only curbs the frivolous and vexatious pleas.
There is another aspect of the matter.
The Controller 's permission when granted to create a limited tenancy under section 21 of the Act is presumed to be valid unless de clared otherwise.
It is, therefore, for the person assailing its validity to get such a declaration from a proper forum in a proper proceeding.
Unless this is done, the order remains enforceable.
The duty is clearly on the tenant himself to raise the plea of invalidity and unless the order is declared invalid at his instance, it is enforceability cannot be doubted.
In Wade 's Administrative Law, 6th Edn.
at pp 35 1 353, there is an illuminating discussion of this topic.
It has been pointed out that 'void ' is meaningless in an absolute sense; and 'unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders '.
In the words of Lord Diplock, "the order would be presumed to be valid unless the presumption was rebutted in competent legal proceedings by a party entitled to sue".
For the above reasons, we are in respectful agreement with the view taken in J.R. Vohra 's case (supra) that there is no obligation on the Controller to issue notice to the tenant of the landlord 's application for recovery of posses sion made on expiry of the period of tenancy for a limited period under section 21 of the Act, but an enquiry on the tenant 's plea has to be made to the extent indicated, if the tenant assails validity of the Controller 's permission even at that stage.
We shall now consider the merits of this case on the basis indicated above.
The High Court has upheld rejection of the landlord 's application for recovery of possession under section 21 of the Act on the ground that the land lord 's son would be about 19 or 20 years old on expiry of three years period of limited lease but he could not be married till he attained the prescribed minimum age of 21 years which showed that the Controller 's order granting permission was mindless and was obtained by fraud.
The permission has, therefore, been held invalid.
In our opin ion, the High Court as well as the authorities below it misconstrued the requirements of Section 21 of the Act.
It is not a case where the landlord did not have a son who was expected to be 312 married some time after three years.
In substance the reason for availability of the accommodation for the limited period of three years only given by the landlord was that the premises was not needed by the landlord till his son got married some time after three years.
The reason was not to be construed as a statement that the son was to be married exactly on the date on which three years expired.
The date of son 's marriage could not be foreseen or estimated with such precision as to coincide with the date of expiry of the limited lease.
All that has to be seen is whether the period of limited tenancy was indicated by the landlord with refer ence to a foreseeable future event and the estimate of time of its occurrence was not unreasonable.
When the period of limited tenancy is stated on the basis of a future event, the happening of which is reasonably certain at that time though the precise date of the future event cannot be pre dicted with precision, the landlord 's estimate of the period after which the event is expected to happen, unless unrea sonable must be accepted for this purpose as genuine.
This would satisfy the test of a genuine limited tenancy if there be no other factor indicating it to be a mere pretence adopted by the landlord.
This test is fully satisfied in the present case.
Merely because the son 's age then was about one year below the prescribed minimum age for marriage the estimate of landlord that he would not need the premises for three years only till his son 's marriage cannot be treated as a pretence.
One year 's period for settling and arranging performance of the marriage is nothing unusual since exist ence of the basic facts is undisputed.
Existence of this jurisdictional fact to justify the permission has not been negatived and no material has been produced by the tenant to substantiate his plea.
The other ground taken by the respondent tenant is that the existing accommodation available with the landlord is sufficient for the needs of his family.
It is sufficient to state that the enquiry contemplated under section 21 in this behalf is not the same as that for determining existence of the ground of bona fide need of the landlord for an order of eviction under section 14 of the Act, and Section 14 is expressly superceded by Section 21.
This question is, there fore, beyond the scope of the present enquiry.
The respondent tenant also contended that the premises was constructed in 1972 and the landlord had never occupied this premises viz., the second floor of the building for his personal use and had even let out the first floor prior to 1980.
In the present case the respondenttenant did not produce any material to prove letting out of any part of the building much less this premises i.e. second floor of the building.
313 After the arguments were concluded before us and the judg ment was reserved, the respondent has filed an application under order 41 Rule 27 read with Section 15 1 C.P.C. for admitting additional evidence to show letting out of the second floor of the building.
It has been stated that the evidence could not be produced in the Courts below since the objections were not listed for investigation by the Courts.
No cogent ground is shown to permit any additional evidence when no attempt to produce any evidence was made in any of the Courts below upto the High Court or even here till conclusion of the hearing before us.
The application is rejected.
The lease for limited period of three years ex pired in 1983 and more than six years have been spent since then in this litigation at the stage of recovery of posses sion.
The facts of the case indicate that the respondent 's plea is a clear after thought and is baseless.
The absence of existence of any jurisdictional fact not having been proved by the respondent tenant even after objecting to recovery of possession on expiry of the period of limited tenancy there was no ground to refuse restoration of possession to the landlord.
More than twice the period of the limited lease has expired even after the date of expiry of the lease.
We see no reason to delay any more the relief due to the landlord.
Consequently, the appeal is allowed.
The impugned orders passed by the Rent Controller, Rent Control Tribunal and the High Court are set aside and the landlord 's application for recovery of possession is allowed.
The respondent tenant shall also pay Rs.2,000 as costs to the appellant landlord in addition to an amount equal to that calculated on the basis of the monthly rent for the entire period till the date of restoration of possession.
Y. Lal Appeal allowed.
| IN-Abs | This is a land lord 's appeal.
By an agreement in writing between the parties, the second floor of the premises bear ing No. 19/10, Rajinder Nagar, New Delhi was let out to the Respondent for a limited period of three years w.e.f.
June 8, 1980, with the permission of the Rent Controller obtained under section 21 of the Act.
The Respondent tenat having failed to deliver vacant possession of the premises in question, after the expiry of the stipulated period, the appellant moved an application before the Rent Controller for execution of his order by delivery of possession of the premises to him.
The Respondent tenant filed an objection to the said application to which the appellant replied duly.
The Rent Controller rejected the appellant 's application taking the view that the permission granted under section 21 of the Act was invalid and thus the tenant could not be evicted on the expiry of 3 years.
The Rent Controller there by upheld the tenant 's objection that the landlord 's son being aged only 19 or 20 years, on the date of the expiry of the period of limited tenancy while the minimum age pre scribed by law for marriage being 21 years the ground that the premises were needed for the son 's marriage was not tenable.
The Rent Controller accordingly held that creation of limited tenancy amounted to fraud and misrepresantation by the landlord which rendered the permission invalid.
The appellant 's appeal to the Tribunal as also to the High Court having failed, he has filed this appeal after obtaining Special Leave.
The Tribunal and the High Court affirmed the view of the Rent Controller treating the grant of permission by the Controller to be mechanical and without application of mind.
Allowing the appeal, this Court, HELD: The object of enquiring into the validity of the Control 300 ler 's permission under section 21 is only to ensure that essentials of a limited tenancy existed and the same was genuine; and it is not meant to permit raising of frivolous pleas which would frustrate the very object of its enact ment.
This view protects the honest tenants and only curbs the frivolous and vexatious pleas.
[310H; 311A] Controller 's permission when granted to create a limited tenancy under sec.
21 of the Act is presumed to be valid unless declared otherwise.
It is, therefore, for the person assailing its validity to get such a declaration from a proper forum in a proper proceedings.
Unless this is done, the order remains enforceable.
The duty is clearly on the tenant himself to raise the pleas of invalidity and unless the order is declared invalid at his instance, its enforce ability cannot be doubted.
[31lB C] All that has to be seen is whether the period of limited tenancy was indicated by the landlord with reference to a foreseeable future event and the estimate of time of its occurrence was not unreasonable.
[312B] When the period of limited tenancy is stated on the basis of a future event the happening of which is reasonably certain at that time though the precise date of the future event cannot be predicted with precision, the landlord 's estimate of the period after which the event is expected to happen, unless unreasonable must be accepted for this pur pose as genuine.
This would satisfy the test of a genuine limited tenancy if there be no other factor indicating it to be a mere pretence adopted by the landlord.
[312C D] The enquiry contemplated under section 21 in this behalf is not the same as that for determining existence of ground of bona fide need of the landlord for an order of eviction under section 14 of the Act, and section 14 is expressly superseded by section 21.
The scope of enquiry is limited only to the existence of the jurisdictional facts at the time of grant of the permission when its validity is chal lenged subsequently.
[312F] The absence of existence of any jurisdictional fact not having been proved by the respondent tenant even after objecting to recovery of possession on expiry of the period of limited tenancy, there was no ground to refuse restora tion of possession to the landlord.
[313C] S.B. Naronah vs Prem Kumari Khanna, ; ; V.S. Rahi & Anr.
vs Smt.
Ram Chambeli, ; ; Smt.
Dhanwanti vs D.D. Gupta, [1986] 3 SCC 1; Inder Mohan Lal vs 301 Ramesh Khanna; , ; S.K. Lata vs R.C. Chhiba & Anr,, ; and J.R. Vohra vs India Export Hlouse (P) Ltd. & Anr.
, ; , referred to.
|
s the event of redemption happened.
The doc trine of id certum est quod certum reddi potest is clearly applicable to the case.
[290D E] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4754 of 1989.
From the Judgment and Order dated 17.5.1989 of the Rajasthan High Court in S.B. Civil Revision Petition No 450 of 1988.
V.M. Tarkunde, B.L. Kachhawan and Badridas Sharma for the Appelant.
Aruneshwar Gupta and section Kumar for the Respondent.
The Judgment of the Court was delivered by SHARMA, J.
Special leave is granted.
This appeal arises out of a suit filed by the re spondent against her brother, the appellant, for specific performance of an alleged contract of sale dated 23.6.1965 in respect of a house.
The property was under a mortgage and according to the plaintiff 's case, the defendant had agreed to execute a deed of sale on the redemption of the mort 289 gage by her, which she did in 1970.
In spite of her repeated demands the defendant failed to respect the agreement which necessitated the institution of the suit.
The defendant appellant, besides pleading limitation, denied the agreement as also the plaintiff 's allegation that she had redeemed the mortgage.
The question of limitation was taken up by the trial court as a preliminary issue and decided in favour of the plaintiff.
The order has been confirmed by the High Court by the impugned judgment.
The plaintiff served a notice in July 1984 demanding specific performance before filing the suit.
It has been contended on behalf of the appellant that since the alleged agreement is said to have been executed in June 1965, the suit is barred by limitation, and alternatively, even count ing the period of limitation from the alleged redemption in 1970, the suit has been filed after more than 14 years, that is, long after the expiry of three years ' period prescribed under Article 54 of the of 1963.
The High Court has rejected the argument holding that since the cause of action of the suit was dependent on the redemption of the mortgage and no period was fixed within which it was neces sary for the respondent to have redeemed the mortgage, it cannot be said that a date was 'fixed ' within the meaning of the third column of Article 54, which reads thus: Description period of Time from which of suit limitation period begins to run "54.
For specific three years The date fixed for the per performance.
formance, or, if no such date is fixed, when the plaintiff has notice that performance is refused.
" As the notice preceding the suit was admittedly served within three years, the defendant 's plea of limitation was rejected.
The relevant provisions in the alleged agreement of sale as quoted in the judgment of the trial court reads as follows: 290 "This house is under mortgage with Jethmal Bastimal for Rs. 1000.
When you will get this house, the description of which is given below, redeemed from M/s Jeth Mat Bastimal and take the papers of the registry in your pos session, on that day I will have the sale deed of the said house, written, executed and registered in your favour." (emphasis supplied The question is whether a date was 'fixed ' for the perform ance of the agreement and in our view the answer is in the affirmative.
It is true that a particular date from the calander was not mentioned in the document and the date was not ascertainable originally, but as soon as the plaintiff redeemed the mortgage, it became an ascertained date.
If the plaintiff had, immediately after the redemption, flied the suit, could it be thrown out on the ground that she was not entitled to the specific performance asked for? We do not think so.
She would have been within her rights to assert that she had performed her part of the contract and was entitled to insist that her brother should complete his part.
The agreement is a typical illustration of a contin gent contract within the meaning of section 31 of the and became enforceable as soon as the event of redemption (by the plaintiff hereself) happened.
We agree with the view of the Madras High Court in R. Muniswami Goundar and Another vs
B.M. Shamanna Gouda and Others, expressed in slightly different circum stances.
The doctrine of id certurn est quod certum reddi potest is clearly applicable to the case before us which in the language of Herbert Broom (in his book dealing with legal maxims) is that certainty need not be ascertained at the time; for if, in the fluxion of time, a day will arrive which will make it certain, that is sufficient.
A similar question had arisen in Duncombe vs The Brighton Club and Norfolk Hotel Company, , relied upon in the Madras case.
Under an agreement, the plaintiff had supplied some furniture to the defendant for which payment was made but after .some delay.
He claimed interest.
The rule at Common Law did not allow interest in such a case, and the plaintiff in support of his claim relied upon a statutory provision which could come to his aid only if the price was payable at a certain time.
Blackburn, J. observed that he did not have the slightest hasitation in saying that the agreement contemplated a particular day, which, when the goods were delivered would be ascertained, and then the money would be payable at a certain time; but rejected the plaintiff 's demand on the ground that the price did not become payable by the written instrument at a certain time.
The other learned Judges did not agree with him, and held that the statute did 291 not require that the document should specify the time of payment by mentioning the day of payment.
If it specified the event upon which the payment was to be made, and if the time of event was capable of being ascertained, the require ments of the section were satisfied.
The same is the posi tion in the case before us.
The requirement of Article 54 is not that the actual day should necessarily be ascertained upon the face of the deed, but that the basis of the calcu lation which was to make it certain should be found therein.
We, accordingly, hold that under the agreement the date for the defendant to execute the sale deed was fixed, although not by mentioning a certain date but by a reference to the happening of a certain event, namely, the redemption of the mortgage; and, immediately after the redemption by the plaintiff, the defendant became liable to execute the sale deed which the plaintiff was entitled to enforce.
The period of limitation thus started running on that date.
The case is, therefore, covered by the first part of Article 54 (third column) and not the second part.
The learned counsel for the respondent relied on several decisions in support of the opinion of the High Court in the impugned judgment but they do not appear to help him.
In Sathula Venkanna vs Namuduri Venkatakrishnayya and Another, , it was observed that in cases where a right to enforce specific performance vests in a third party to whom the ascertainment of the date on which performance becomes due need not necessarily be known, the doctrine certum est quod certum reddi potest does not apply.
Without expressing their final opinion the learned Judges observed that it might be right to apply the doctrine be tween the actual parties to the contract who would get the benefit and be subject to the liabilities under that con tract; "but in cases where a person is entitled to bring a suit on the contract who may not and need not, and very likely may not be aware of the date becoming fixed", the doctrine could not apply.
In Kruttiventi Mallikharjuna Rao vs Vemuri Pardhasaradhirao, AIR 1944 Madras 2 18, the vendor promised to execute the sale deed when both of his brothers, who were studying elsewhere, returned to the village.
It was held that it was not a case where it could be said that a date was fixed for the performance of the contract as the event mentioned therein was too indefinite to be regarded as fixing a date.
The performance was dependant on both the brothers of the vendor coming to the village, in which the intending purchaser had no say at all.
Apart from the ques tion of limitation, the defendant could not effectively rely upon such a clause to defeat the very contract.
In Kashi Prasad vs Chhabi Lal and Others, AIR 1933 Allahabad 410(2), the plaintiff created two usufructuary mortgages and there after a third mortgage in 292 favour of the defendants for a sum of Rs.8,500.
Out of this sum an amount of Rs.6,000 was left with the mortgagees for payment to the earlier creditors.
The suit was instituted on the allegation that the defendants had failed to redeem the earlier mortgages.
The plaintiff prayed for a direction to the defendants to redeem the mortgages.
The document did not indicate as to the time when the defendants were obliged to redeem the earlier mortgages, and a plea of limitation was taken on the ground that the date was fixed by necessary implication and could be ascertained by reference to the surrounding circumstances.
In this background the court observed that the use of the word 'fixed ' implies that it should be fixed definitely and should not be left to be gathered from surrounding circumstances of the case.
All these cases are clearly distinguishable.
For the reasons mentioned above, the impugned judg ments of the High Court and the trial court are set aside and the suit is dismissed.
The appeal is accordingly al lowed, but the parties are directed to bear their own costs throughout.
P.S.S. Appeal allowed.
| IN-Abs | The period of limitation of three years for specific performance of a contract begins to run under the third column of Article 54 of the from the date fixed for the performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused.
Under an agreement dated June 23, 1965 the plaintiff respondent, sister of the defendant appellant, undertook to redeem the disputed property under mortgage and the appel lant agreed to execute the sale deed of the said property in her favour on the date she took papers of the registry in her possession.
She redeemed the property in 1970.
The appellant, however, failed to respect the agreement in spite of repeated demands.
The respondent served a notice in July 1984 demanding specific performance before filing the suit.
The appellant pleaded limitation.
The trial court decided the issue in favour of the respondent.
That order was confirmed by the High Court on the view that since the cause of action of the suit was dependent on the redemption of the mortgage and no period was fixed within which it was necessary for the respondent to have redeemed the mortgage, it could not be said that a date was ' 'fixed" within the meaning of the third column of Article 54.
Allowing the appeal by special leave, HELD: 1.1 The requirement of Article 54 of the Limita tion Act, 1963 is not that the actual day should necessarily be ascertained upon the face of the deed, but that the basis of the calculation which was to make it certain should be found therein.
[291A B] 1.2 In the instant case, under the agreement the date for the appellant to execute the sale deed was fixed, al though not by mentioning 288 a certain date but by a reference to the happening of a certain event, namely, the redemption of the mortgage; and, immediately after the redemption by the respondent, the appellant became liable to execute the sale deed which the respondent was entitled to enforce.
The period of limitation thus started running on that date.
The case, is, therefore, covered by the first part of Article 54 (third column) and not the second part.
[291B C] R. Muniswami Goundar & Anr.
B.M. Shamanna Gouda & Ors., and Duncombe vs The Brighton Club Sathula Venkanna vs Namuduri Venkatakrishnayya & Anr., ; Kruttiventi Mallikharjuna Rao vs Vemuri Pardhasaradhirao, AIR 1944 Madras 218 and Kashi Prasad vs Chhabi Lal & Ors '., AIR 1933 Allahabad 410 (2) distin guished 2.
The agreement in the instant case is a typical illustration of a contingent contract within the meaning of section 31 of the
|
ivil Appeal No. 4802 of 1989.
From the Judgment and Order dated 7.9.1987 of the Bombay High Court in First Appeal No. 24 of 1986.
Anil Dev Singh, C. Ramesh, C.V.S. Rao and P. Parmeshwa ran for the Appellants.
S.K. Mehta, Dhruv Mehta, Aman Vachher, Atul Nanda and S.M. Satin for the Respondent.
The Judgment of the Court was delivered by K. JAGANNATHA SHETrY, J.
Special Leave granted.
This case raises yet another variant of a vexed ques tion.
Does Section 23(2) of the Land Acquisition Act, 1984 (as amended by Act 68 of 1984) providing for higher solatium proprio rigore apply to award made subsequent to 24 Septem ber 1984 even though the acquisition commenced prior to the said date.
The appeal also raises another important question as to the applicability of section 23(IA) providing addi tional amount of compensation to award made in such acquisi tion proceedings.
The facts are not in dispute and may be stated as follows: By notification under section 4 of the Land Acquisition Act, 1894 (the 'Act ') published in the Government Gazette on 26 October 1967, the State Government declared its intention to acquire the land belonging to the respondent for estab lishing Naval Air Station Dabolim.
On 23 February 1968, notification under section 6 was published in the Gazette.
On 5 March 1969 the Land Acquisition Officer declared award determining compensation at the rate of 40 paise per square meter with solatium at 15 per cent.
The claimant had sought reference under section 18 of the Act and reference was duly made to the Civil Court (District Judge).
On 339 28th May 1985, the Court after investigation of the claim awarded compensation at Rs.3 per square meter.
The Court also awarded solatium at 15 per cent and interest at 6 per cent from the date of taking possession till payment of compensation.
Not being satisfied, the claimant preferred an appeal to the High Court seeking further enhancement of compensation and also solatium at 30 per cent.
This claim was apparently based on the new provisions introduced by the Amending Act 68 of 1984.
The High Court accepted the appeal and granted the reliefs in the following terms: "The impugned award dated 28th May, 1986, is modified.
The appellant is entitled to the added benefits.
In that he shall be entitled to have the compensation at the rate of 12% of the market value from the date of section 4 notification till the date of possession or the date of award, whichever is earlier.
The appellant is further entitled to interest at the rate of 9% for the first year from the date of taking over possession and thereafter at the rate of 15% per annum till the date of deposit or payment as the case may be.
The appellant shall be entitled to further 15 per cent solatium in addition to the 15 per cent already granted to him.
To the extent indicat ed above, the award shall stand modified.
" The High Court has thus granted three more reliefs to the claimant: (i) Additional amount at the rate of 12 per cent of the market value from the date of notification under section 4 till the date of taking over possession; (ii) interest at the rare of 9% for the first year from the date of taking possession and 15 per cent for the subsequent years; and (iii) solatium at 30 per cent on the market value.
There is no grievance made in this appeal as to the second of the reliefs granted to the claimant.
The claimant is entitled to the interest under section 28 of the Act.
The challenge is only against the first and the third of the said reliefs.
They were evidently given under the amended sections 23(IA) and 23(2) of the Act.
We will first take up the question of solatium.
On 30 April 1982, the corresponding Bill of the Amending Act 68 of 1984, namely, Land Acquisition (Amendment) Bill 1982, was introduced in Parliament.
On 24th September 1984 it became law as the Land Acquisition (Amendment) Act, 68 of 1984, when it received assent of the President.
Before the amend ment, Section 23(2) provided solatium at 15 340 per cent on the market value.
After amendment by Act 68 of 1984 solatium was raised to 30 per cent on the market val ued.
Section 23(2) now reads: "23(2) In addition to the market value of the land, as above provided, the Court shall in every case award a sum of (thirty per centum) on such market value, in consideration of the compulsory nature of the acquisition." The question herein is whether the higher solatium is attracted to the present case.
Section 23(2) has been given limited retrospectivity by supplying transitional provisions under section 30(2).
Section 30(2) reads: "30.
Transitional provisions: (1) xxxxxx xxxxxxx xxxxxxxx (2) The provisions of sub section (2) of Section 23 of the principal Act, as amended by clause (b) of Section 15 and Section 18 of this Act respectively, shall apply, and shall be deemed to have applied, also to, and in relation to, any award made by the Collector or Court or to any order passed by the High Court or Supreme Court in appeal against any such award under the provisions of the princi pal Act after the 30th day of April, 1982 (the date of introduction of the Land Acquisition (Amendment) Bill, 1984, in the House of the People) and before the commence ment of this Act." The scope of retrospective operation of Section 23(2) was first explained in Kamalajammaniavaru vs Special Land Acquisition Officer, A two Judge Bench held that the award of 30 per cent solatium will apply only where the award appealed against was made by the Collector of Court during the period between 30 April 1982 and 24 September 1984.
This decision was rendered on 14 February 1985.
Shortly thereafter there was another decision by a three Judge Bench in Bhag Singh vs Union Territory of Chand igarh; , There a contrary view was ex pressed.
It was held that even if an award is made by the Collector or Court on or before 30 April, 1982, and an appeal against such award is pending before the High Court or the Supreme Court on 30 April 1982 or is filed subsequent to that date, 30 per cent solatium under section 23(2) should be 341 allowed.
In taking that view, Bhag Singh overruled Kamala jammannavaru and approved of the opinion expressed in anoth er three Judge Bench in State of Punjab vs Mohinder Singh, But the recent Constitution Bench in Union of India vs Raghubir Singh, ; has overruled Bhag Singh and Mohinder Singh and reiterated the view ex pressed in Kamalajammanaivaru.
Pathak, CJ., speaking for the Court in Raghubir Singh case rounded off his discussion thus (at 782): "We think that what Parliament intends to say is that the benefit of section 30(2) will be available to an award by the Collector or the Court made between the aforesaid two dates or to an appellate order of the High Court or of the Supreme Court which arises out of an award of the Collector or the Court made between the said two dates.
The word 'or ' is used with reference to the stage at which the proceeding rests at the time when the benefit under section 30(2) is sought to be extended.
If the proceeding has terminated with the award of the Collector or of the Court made between the aforesaid two dates, the benefit of section 30(2) will be applied to such award made between the aforesaid two dates.
If the pro ceeding has passed to the stage of appeal before the High Court or Supreme Court, it is at that stage when the benefit of section 30(2) will be applied.
But in every case, the award of the Collector or of the Court must have been made between April 30, 1982 and September 24, 1984." In stating thus, the decision has set at rest the con troversy as to entitlement of higher solatium to cases pending as on the date of commencement of the Amending Act.
Section 23(2) was held to apply to awards made in between 30 April 1982 and 24 September 1984.
Obviously they must be awards in acquisition commenced prior to the said dates.
The award may be of the Collector or Court.
One or the other must receive thirty per cent solatium on the market value of the land.
More important, that the higher solatium could also be given by the High Court or the Supreme Court in appeals against such award.
But these decisions do not solve the problem presented here.
The award with which we are concerned does not fall within the interregnum i.e. between 30 April 1982 and 24 September 1984.
To repeat the facts: The acquisition com menced on 26 October 1967 when the notification under sec tion 4(1) of the Act was published.
On 5 March 342 1969 the Collector made the award and on 28 May 1985 the reference court made the award.
Both the awards, thus appar ently fall outside the period prescribed under section 30(2).
Counsel for the appellant on the aforesaid facts rules out the applicability of section 30(2) in the first place.
Secondly, he also ruled out the applicability of section 23(2).
The first contention was based on the plain terms of Section 30(2) and the second on the ground that section 23(2) with its isolated splendour is not retrospective in operation.
He thus submitted that the claimant 's case could not be saved for higher solatium either under Transitional Provisions or by amended Section 23(2) of the Act and it was gone both ways.
This submission reminds us of the words of Shakespeare in the Merchant of Venice, where Luncelot tells Jessica: "Truely then I fear you are damned both by father and mother.
When I shun scylla your father, I fail into charybdis your mother.
Well, you are gone both ways." (The Merchant of Venice 3.5).
The submission that Section 23(2) by itself has no retrospective operation seems to be justified.
It is signif icant to note that section 23(2) forms part of a scheme of determining compensation for land acquired under the Act.
It provides 30 per cent solatium on the market value of the land in consideration of the compulsory nature of the acqui sition.
It thus operates on the market value of the land acquired.
The market value of the land is required to be determined at the date of publication of the notification under section 4(1).
It cannot be determined with reference to any other date.
That has been expressly provided for under section 23(1) of the Act.
In the instant case, section 4(1) notification was published on 20 October 1967.
The Amending Act 68 of 1984 came into force on 24 September 1984.
The amended section 23(2) by itself is not retrospec tive in operation.
It can not proprio vigore apply to awards in respect of acquisition proceedings commenced prior to 24 September 1984.
If, therefore, section 30(2) does not cover the present case, then amended Section 23(2) has no part to play.
This in effect is the result of the plain meaning rule of interpreting Section 30(2) of the Amending Act 68 of 1984.
But then, it would seem very odd indeed and anomalous too to exclude the present case from the operation of sec tion 30(2).
Section 30(2) is the Transitional 343 Provisions.
The purpose of incorporating Transitional Provi sions in any Act or amendment is to clarify as to when and how the operative parts of the enactments are to take ef fect.
The Transitional Provisions generally are intended to take care of the events during the period of transition.
Mr. Francis Bennion in his book on Statutory Interpretation (14 Edition, p. 442) outlines the purpose of such provisions: "189.
Transitional Provisions Where an Act contains substantive, amending or repealing enactments, it commonly also in cludes transitional provisions which regulates the coming into operation of those enactments and modify their effect during the period of transition.
Where an Act fails to include such provisions expressly, the Court is required to draw such inferences as to the intended tran sitional arrangements as, in the light of the interpretative criteria, it considers Parlia ment to have intended.
" The paramount object in statutory interpretation is to discover what the legislature intended.
This intention is primarily to be ascertained from the text of enactment in question.
That does not mean the text is to be construed merely as a piece of prose, without reference to its nature or purpose.
A statute is neither a literary text nor a devine revelation "Words are certainly not crystals, trans parent and unchanged" as Mr. Justice Holmes has wisely and properly warned.
(Town vs Eisher; , , 425, 1918).
Learned Hand, J., was equally emphatic when he said.
"Stat utes should be construed, not as theorems of Euclid, but with some imagination of the purposes which lie behind them." (Lenigh Valley Coal Co. vs Yensavage, 2 at 553.) Section 30(2) provides that amended provisions of Sec tion 23(2) shall apply, and shall be deemed to have applied, also to, and in relation to, any award made by the collector or Court between 30 April 1982 and 24 September 1984, or to an appellate order therefrom passed by the High Court or Supreme Court.
The purpose of these provisions seems to be that the awards made in that interregnum must get higher solatium in as much as to awards made subsequent to 24 September 1984.
Perhaps it was thought that awards made after the commencement of the Amending Act 68 of 1984 would be taken care of by the amended Section 23(2).
The case like the present one seems to have escaped attention by innocent lack of due care in the drafting.
344 The result would be an obvious anomaly as will be indicated presently.
If there is obvious anomaly in the application of law the Court could shape the law to remove the anomaly.
If the strict grammatical interpretation gives rise to absurd ity or inconsistency, the Court could discard such interpre tation and adopt an interpretation which will give effect to the purpose of the legislature.
That could be done, if necessary even by modification of the language used.
[See: Mahadeolal Kanodia vs The Administrator General of West Bengal, The legislators do not always deal with specific controversies which the Court decide.
They incorporate general purpose behind the statutory words and it is for the courts to decide specific cases.
If a given case is well within the general purpose of the legis lature but not within the literal meaning of the statute, then the court must strike the balance.
The criticism that the literal interpretation of Section 30(2), if adhered to would lead to unjust result seems to be justified.
Take for example; two acquisition proceedings of two adjacent pieces of land, required for the same public purpose.
Let us say that they were initiated on the same day a day sometime prior to 30 April 1982.
In one of them the award of the Collector is made on 23 September 1984 and in the other on 25 September 1984.
Under the terms of Sec tion 30(2) the benefit of higher solatium is available to the first award and not to the second.
Take another example; the proceedings of acquisition initiated, say, in the year 1960 in which award was made on 1 May 1982.
Then the amended Section 23(2) shall apply and higher solatium is entitled.
But in an acquisition initiated on 23 September 1984, and award made in the year 1989 the higher solatium is ruled out.
This is the intrinsic illogicality if the award made after 24 September 1984, is not given higher solatium.
Such a construction of Section 30(2) would be vulnerable to attack under Article 14 of the Constitution and it should be avoided.
We, therefore, hold that benefit of higher solatium under section 23(2) should be available also to the present case.
This would be the only reasonable view to be taken in the circumstances of the case and in the light of the pur pose of Section 30(2).
In this view of the matter, the higher solutium allowed by the High Court is kept undis turbed.
This takes us to the second question which we have formulated at the beginning of the judgment: Whether the claimant is entitled to additional amount of compensation provided under Section 23(IA) of the Act? This is equally a fundamental question and seemingly not covered by any of the previous decisions of this Court.
345 Section 23(IA) reads as follows: "In addition to the market value of the land, as above provided, the court shall in every case award an amount calculated at the rate of twelve per centum per annum on such market value for the period commencing on and from the date of the publication of the notifica tion under Section 4, sub section (!), in respect of such land to the date of award of the Collector or the date of taking possession of the land, whichever is earlier.
Explanation: In computing the period referred to in this sub section any period or periods during which the proceedings for the aquisition of the land were held up on account of any stay or injunction by the order of any court shall be excluded.
" The objective words used in this sub section are similar to those that are used in Section 23(2).
It enjoins a duty on the Court to award the additional amount at twelve per cent on the market value of the land for the period prescribed thereunder.
But this again is a part of the scheme for determining compensation under Section 23(1) of the Act.
It also operates on the market value of the land acquired.
It is plainly and distinctly prospective in its operation since market value has to be determined as on the date of publica tion of notification under section 4(1).
But the legislature has given new starting point for operation of section 23(IA) for certain cases.
That will be found from Section 30 sub section l(a) and (b) of the Transitional Provisions.
They read as follows: Section 30: Transitional Provisions: (1) The provision of sub section (IA) of Section 23 of the principal Act, as inserted clause (a) of section 15 of this Act, shall apply, and shall be deemed to have applied, also to, and in relation to: (a) every proceeding for the acquisition of any land under the principal Act pending on the 30th day of April 1982 the date of intro duction of the Land Acquisition (Amendment) Bill 1982 [in the House of the People] in which no award has been made by the Collector before that date.
346 (b) every proceeding for the acquisition of any land under the principal Act commenced after that date, whether or not an award has been made by the Collector before the date of commencement of this Act.
" Entitlement of additional amount provided under Section 23(1A) depends upon pendency of acquisition proceedings as on 30 April 1982 or commencement of acquisition proceedings after that date.
Section 30 sub section (1)(a) provides that additional amount provided under Section 23(IA) shall be applicable to acquisition proceedings pending before the Collector as on 30 April 1982 in which he has not made the award before that date.
If the Collector has made the award before that date then, that additional amount cannot be awarded.
Section 30 sub section (1)(b) provides that section 23(l A) shall be applicable to every acquisition proceedings commenced after 30 April 1982 irrespective of the fact whether the Collector has made an award or not before 24 September 1984.
The final point to note is that Section 30 sub section (1) does not refer to Court award and the Court award is used only in section 30 sub section (2).
In the case before us, on 26 October 1967, the notifica tion under section 4 was issued.
On 5 March 1969 the Collec tor made the award.
The result is that on 30 April 1982 there was no proceedings pending before the Collector.
Therefore, section 30 sub section (1)(a) is not attracted to the case.
Since the proceedings for acquisition commenced before 30 April 1982, section 30 sub section (1)(b) is also not applicable to the case.
Here, the case is really gone by both ways.
It cannot be saved from Scylla or Charybdis.
The claimant is, therefore, not entitled to additional amount provided under Section 23( I A).
Before we part with the case, it is important that we should refer to two authorities of the High Courts which have taken contrary view.
As to the applicability of Section 23(IA) to pending cases, the Karnataka High Court in Special Land Acquisition Officer, Dandeli vs Soma Gopal Gowda, AIR 1986 Karnataka 179 at 183 (FB) has expressed the view that for giving an addi tional amount calculated at the rate of 12 per cent per annum on the market value of the land, no distinction could be made respecting lands acquired before or after the coming into force of the Amending Act.
In all pending cases whether on reference or on appeal, the Court is required to apply the provisions of Section '23(1A) in determining compensa tion payable to claimants.
For this conclusion the Court relied upon the judgment of this Court in 347 Bhag Singh case.
The Bombay High Court in Jaiwant Laxman P. Sardesai etc.
vs Government of Goa, Daman and Diu and Ant., AIR 1987 Bom 214 at 217 (FB) has also accepted a similar line of reasoning.
In fact the reasons are so much similar, the cases look like twins.
Both the High Courts have focussed attention on the terms and phraseology used in Section 30 sub section (1) namely," . . shall apply, and shall be deemed to have applied, also to, and in relation has also been proceedings for acquisition . . ".
The conclusion has also been rested on the mandatory words of Section 23(lA).
It was said that it enjoins a duty on the court to award the amount in every case and that mandate of the legislature could not be ignored.
The decision of this Court in Bhag Singh appears to be the single motive force guiding the approach and reaching the conclusion.
But it may be noted that the aforesaid phraseology used in Section 30 sub section (1) is quite similar to that used in Section 30 sub section (2).
The scope of those words has already been examined and no more need to be stated in that regard since Bhag Singh has been overruled in Raghubir Singh.
The view taken by the High Courts of Karnataka and Bombay therefore, could no longer be cosidered as good law and the said decisions are accordingly overruled.
In the result, the appeal is allowed in part.
The judg ment of the High Court is modified and the compensation award under Section 23(IA) is deleted.
The judgment and decree in other respects are kept undisturbed. ' In the circumstances of the case, we make no order as to costs.
Y. Lal Appeal allowed.
| IN-Abs | By a notification issued under Section 4 of the Land Acquisition Act and published in the Government Gazette on 26.10.1967, the State Government declared its intention to acquire the land of the Respondent on 23.2.1968.
A notifica tion under section 6 of the Act was published in the Gazette and on 5.3.1969.
The Land Acquisition Officer declared award, determining compensation at the rate of 4 paise per square meter with solatium at 15 per cent.
At the instance of the respondent claimant, a reference under section 18 of the Act was made to the Distt.
judge on May 28, 1985.
The Civil Court awarded compensation at Rs.3 per square meter and also awarded solatium at 15 per cent and interest at 6 per cent from the date of taking possession of the land by the State till payment of compensation.
Being dissatisfied, the Respondent preferred an appeal to the High Court seeking enhancement both of compensation and solatium at the rate of 30 per cent.
The High Court allowed the appeal, and granted three reliefs viz; (1) Additional amount at the rate of 12 per cent of the market value from the date of the notification under section 4 till the date of taking over possession; (2) interest at the rate of 9 percent for the first year from the date of taking possession and 15 per cent for the subse quent.
years and (3) Solatium at 30 per cent on the market value.
The appellant has thus filed the instant appeal after obtaining Special Leave.
There is no grievance as regards the interest awarded.
The challenge relates to the grant of enhanced solatium and the additional amount of compensation.
Appellants ' conten tion is that sections 30(2) and 23(2) are not at all at tracted and the claim of the Respondent on the said two counts is not sustainable.
337 Partly allowing the appeal, this Court, HELD: Section 30(2) provides that the amended provisions of section 23(2) shall apply, and shall be deemed to have applied, also to, and in relation to, any award made by the Collector or Court between 30th April 1982 and 24th Septem ber 1984, or to an appellate order therefrom passed by the High Court or Supreme Court.
The purpose of these provisions seems to be that the awards made in that interregnum must get higher solatium in as much as to awards made subsequent thereto.
[343G H] If there is obvious anamoly in the application of law, the Court could shape the law to remove the anamoly.
The Legislatures do not always deal with specific controversies which the Court decide.
They incorporate general purpose behind the statutory words and it is for the Courts to decide specific cases.
If a given case is well within the general purpose of the legislature but not within the liter al meaning of the statute, then the Court must strike the balance.
So construing the Court held that benefit of higher solatium under section 23(2) should be available also to the present case.
[344A C] In the instant case, on October 26, 1967, the notifica tion under section 4 was issued.
On March 5, 1969, the Collector made the award.
The result is that on April 30, 1982 there was no proceeding pending before the Collector.
Therefore Section 30, sub section (1)(a) is not attracted to the case.
Since the proceedings for acquisition commenced before 30th April 1982 Section 30, sub section (1)(b) is also not applicable to the case.
The case is therefore really gone by both ways.
The claimant is therefore not entitled to additional amount provided under Section 23(IA).
[346E F] The purpose of incorporating Transitional Provisions in any Act or amendment is to clarify as to when and how the operative parts of the enactments are to take effect.
The transitional provisions generally are intended to take care of the events during the period of transition.
[343A] Kamalajammaniavaru vs Special Land Acquisition Offi cer, ; Bhag Singh vs Union Territory of Chandigarh, ; ; State of Punjab vs Mohinder Singh, ; Union of India vs Raghubir Singh, ; ; Towne vs Eisher, ; ,425, 1918; Lenigh Valley Coal Co. vs Yensavage, at 553; Mahadeolal Kanodia vs The Administrator General of West Bengal, ; , referred to.
338 Special Land Acauisition Officer, Dandeli vs Soma Gopal Gowda, AIR 1986 Karnataka 179 at 183 (FB); Jaiwant Laxman P. Sardesai etc.
vs Government of Goa Daman & Diu & Anr.
, AIR 1987 Bom.
214 at 217 (FB), overruled.
|
Appeal No. 87 of 1957.
Appeal from the judgment and decree dated December 1, 1955, of the Allahabad High Court in Special Appeal No. 18 of 1955, arising out of the judgment and order dated November 30, 1954, of the ' said Court in Civil Misc.
Writ No. 355 of 1952.
H. N. Sanyal, Additional Solicitor General of India, G. C. Mathur and C. P. Lal, for the appellants.
P. R. Das and B. P. Maheshwari, for the respondent.
B. P. Maheshwari, for Agra Bullion Exchange (Intervener).
K. Veeraswami and T. M. Sen, for the State of Madras (Intervener).
R. C. Prasad, for the State of Bihar (Intervener).
H. N. Sanyal, Additional Solicitor General of India, B. Gopalakrishnan and T. M. Sen, for the Union of India (Intervener).
September 23.
The Judgment of the Court was delivered by BHAGWATI J.
The facts leading up to this appeal lie within a narrow compass.
The respondent is a firm registered under the Indian Partnership Act dealing in Bullion, Gold and Silver ornaments and forward contracts in Silver Bullion at Banaras in the State of Uttar Pradesh.
For the assessment years 1948 49, 1949 50 and 1950 51 the Sales Tax Officer, Banaras, the appellant No. 1 herein assessed the respondent to U. P. Sales Tax on its forward transactions in Silver Bullion.
The respondent had deposited the sums of Rs. 150 12 0, Rs. 470 0 0 and Rs. 741 0 0 for the said 1352 three years which sums were appropriated to wards the payment of the sales tax liability of the firm under the respective assessment orders passed on May 31, 1949, October 30, 1950 and August 22, 1951.
The levy of sales tax on forward transactions was held to be ultra vires, by the High Court of Allahabad by its judgment delivered on February 27, 1952, in Messrs. Budh Prakash Jai Prakash vs Sales Tax Officer, Kanpur (1) and the respondent by its letter dated July 8, 1952, asked for a refund of the amounts of sales tax paid as aforesaid.
The appellant No. 2, the Commissioner of Sales Tax, U. P., Lucknow, however, by his letter dated July 19, 1952, refused to refund the same.
The respondent thereafter filed in the High Court of Allahabad the Civil Misc.
Writ Petition No. 355 of 1952 under article 226 of the Constitution and asked for a writ of certiorari for quashing the aforesaid three assessment orders and a writ of mandamus requiring the appellants to refund the aforesaid amounts aggregating to Rs. 1,365 12 0.
The judgment of the Allahabad High Court was confirmed by this Court on May 3, 1954, in Sales Tax Officer, Pilibhit vs Budh Prakash Jai Prakash () and the writ petition aforesaid was heard by Chaturvedi J.
The learned judge by an order dated November 30, 1954, quashed the said assessment orders in so far as they purported to assess the respondent in respect of forward contracts in silver and also issued a writ of mandamus directing the appellants to refund the amounts paid by the respondent.
The appellants filed a Special Appeal No. 18 of 1955 in the High Court of Allahabad against that order of the learned Judge.
A Division Bench of the said High Court heard the said appeal on December 1, 1955.
It was argued by the Advocate General on, behalf of the appellants that the amounts in dispute were paid by the respondent under a mistake of law and were therefore irrecoverable.
The Advocate General also stated categorically that in that appeal he did not contend that the respondent ought to have (1) (1952) A.L.J 332.
(2) [I955] 1 S.C.R. 243.
1353 proceeded for the recovery of the amount claimed otherwise than by way of a petition Under article 226 of the Constitution.
The High Court came to the conclusion that section 72 of the applied to the present case and the State Government must refund the moneys unlawfully received by it from the respondent on account of Sales Tax.
It accordingly dismissed the appeal with costs.
The appellants then applied for a certificate under article 133(1)(b) of the Constitution which certificate was granted by the High Court on July 30, 1956, on the Advocate General 's giving to the Court an undertaking that the State will, in any event, pay the costs, charges and expenses incurred by or on behalf of the respondent as taxed by this Court.
This appeal has accordingly come up for hearing and final disposal before us at the instance of the Sales Tax Officer, Banaras, appellant No. 1, the Commissioner, Sales Tax, U.P., Lucknow, appellant No. 2 and the State of U.P., appellant No. 3.
The question that arises for our determination in this appeal is whether section 72 of the applies to the facts of the present case.
The learned Additional Solicitor General appearing for the appellants tried to urge before us that the procedure laid down in the U.P. Sales Tax Act by way of appeal and/or revision against the assessment orders in question ought to have been followed by the respondent and that not having been done the respondent was debarred from proceeding in the civil courts for obtaining a refund of the monies paid as aforesaid.
He also tried to urge that in any event a writ petition could not lie for recovering the monies thus paid by the respondent.
Both those contentions were, however, not available to him by reason of the categorical statement made by the Advocate General before the High Court.
The whole matter had proceeded on the basis that the respondent was entitled to recover the amount claimed in the writ petition which was filed.
No such point had been taken either in the grounds of appeal or in the statement of case filed before us in this Court and we did not feel justified in allowing the 1354 learned Additional Solicitor General to take this point at this stage.
Section 72 of the is in the following terms: " A person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it.
" As will be observed the section in terms does not make any distinction between a mistake of law or a mistake of fact.
The term " mistake " has been used without any qualification or limitation whatever and comprises within its scope a mistake of law as well as a mistake of fact.
It was, however, attempted to be argued on the analogy of the position in law obtaining in England, America and Australia that money paid under a mistake of law could not be recovered and that that was also the intendment of section 72 of the .
The position in English law is thus summarised in Kerr on " Fraud and Mistake " 7th Edn., at p. 140: " As a general rule it is well established in equity as well as at law, that money paid under a mistake of law, with full knowledge of the facts, is not recoverable, and that even a promise to pay, upon a supposed liability, and in ignorance of the law, will bind the party.
" The ratio of the rule was thus stated by James L. J. in Rogers vs Ingham(1) : " If that proposition were trite in respect of this case it must be true in respect to every case in the High Court of Justice where money has been paid under a mistake as to legal rights, it would open a fearful amount of litigation and evil in the cases of distribution of estates, and it would be difficult to say what limit could be placed to this kind of claim, if it could be made after an executor or trustee had distributed the whole estate among the persons supposed to be entitled, every one of them having knowledge of all the facts, and having given a release.
The thing has never been done, and it is not a thing which, in my opinion, is to be encouraged.
Where people have a (1) ,356.
1355 knowledge of all the facts and take advice, and whether they get proper advice or not, the money is divided and the business is settled, it is not for the good of mankind that it should be reopened. " (See also National Pari Mutual Association Ltd. vs The King (1) and Pollock on Contract, 13th Edn., at pp.
367 & 374).
The American doctrine is also to the same effect as appears from the following passage in Willoughby on the Constitution of the United States, Vol. 1, p. 12: " The general doctrine that no legal rights or obligation can accrue under an unconstitutional law is applied in civil as well as criminal cases.
However, in the case of taxes levied and collected under statutes later held to be unconstitutional, the tax payer cannot recover unless he protested the payment at the time made.
This, however, is a special doctrine applicable only in the case of taxes paid to the State.
Thus, in transactions between private individuals, moneys paid under or in pursuance of a statute later held to be unconstitutional, may be recovered, or release from other undertakings entered into obtained.
" The High Court of Australia also expressed a similar opinion in Werrin vs The Commonwealth (2) where Latham C. J. and MacTiernan J. held that money paid voluntarily under a mistake of law was irrecoverable.
Latham C. J. in the course of his judgment at p. 157 relied upon the general rule, as stated in Leake on Contracts, 6th Edn.
(1911), p. 63 " that money paid voluntarily, that is to say, without compulsion or extortion or undue influence and with a knowledge of.
all the facts, cannot be recovered although paid without any consideration.
" It is no doubt true that in England, America and Australia the position in law is that monies paid voluntarily, that is to say, without compulsion or extortion or undue influence and with a knowledge of all facts, cannot here covered although paid without any consideration.
Is the position the same in India ? (1) (2) 172 1356 It is necessary to observe at the outset that what we have got to consider are the plain terms of section 72 of the as enacted by the Legislature.
If the terms are plain and unambiguous we cannot have resort to the position in law as it obtained in England or in other countries when the statute was enacted by the Legislature.
Such recourse would be permissible only if there was any latent or patent ambiguity and the courts were required to find out what was the true intendment of the Legislature.
Where, however, the terms of the statute do not admit of any such ambiguity, it is the clear duty of the courts to construe the plain terms of the statute and give them their legal effect.
As was observed by Lord Herschell in the Bank of England vs Vagliano Brothers (1) : " I think the proper course is in the first instance to examine the language of the statute and to ask what is its natural meaning uninfluenced by any considerations derived from the previous state of the law, and not to start with enquiring how the law previously stood, and then, assuming that it was probably intended to leave it unaltered, to see if the words of the enactment will bear an interpretation in conformity with this view. " "If a Statute, intended to embody in a code a particular branch of the law, is to be treated in this fashion, it appears to me that its utility will be almost entirely destroyed, and the very object with which it was enacted will be frustrated.
The purpose of such a statute surely was that on any point specifically dealt with by it, the law should be ascertained by interpreting the language used instead of, as before, by roaming oyer a vast number of authorities in order to discover what the law was, extracting it by a minute critical examination of the prior decision. . .
This passage was quoted with approval by their Lordships of the Privy Council in Narendranath Sircar vs Kamal Basini Dasi (2) while laying down the proper mode of dealing with an Act enacted to codify a particular branch of the law.
(1) , 144.
(2) Cal.
563, 571.
1357 The Privy Council adopted a similar reasoning in Mohori Bibee vs Dhurmodas Ghose (1) where they had to interpret section 11 of the .
They had before them the general current of decisions in India that ever since the passing of the the contracts of infants were voidable only.
There were, however, vigorous protests by various judges from time to time; and there were also decisions to the contrary effect.
Under these cir cumstances, their Lordships considered themselves at liberty to act on their own view of the law as declared by the Contract Act, and they had thought it right to have the case reargued before them upon this point.
They did not consider it necessary to examine in detail the numerous decisions above referred to, as in their opinion the " whole question turns upon what is the true construction of the Contract Act itself ".
They then referred to the various relevant sections of the and came to the conclusion that the question whether a contract is void or voidable presupposes the existence of a contract within the meaning of the Act and cannot arise in the base of an infant who is not " competent to contract.
" In Satyabrata Ghose vs Mugneeram Bangur & Co. (2), section 56 of the came up for consideration by this Court.
B. K. Mukherjea J. (as he then was) while delivering the judgment of the Court quoted with approval the following observations of Fazl Ali J. in Ganga Saran vs Ram Charan (3): " It seems necessary for us to emphasise that so far as the courts in this country are concerned, they must look primarily to the law as embodied in sections 32 and 56 of the .
and proceeded to observe : " It would be incorrect to say that section 56 of the Contract Act applies only to cases of physical impossibility and that where this section is not applicable, recourse can be had to the principle of English law on the subject of frustration.
It must be held also that to the extent that the deals (1) (1902) L.R. 30 I.A. 114.
(2) ; (3) ; , 52. 1358 with a particular subject, it is exhaustive upon the same and it is not permissible to import the principles of English law dehors these statutory provisions.
The decisions of the English courts possess only a persuasive value and may be helpful in showing how the courts in England have decided cases under circumstances similar to those which have come before our courts.
" It is, therefore, clear that in order to ascertain the true meaning and intent of the provisions, we have got to turn to the very terms of the statute itself, divorced from all considerations as to what was the state of the previous law or the law in England or elsewhere at the time when the statute was enacted.
To do otherwise would be to make the law, not to interpret it.
(See Gwynne vs Burnell (1) and Kumar Kamalranjan Roy vs Secretary of State (2).
The courts in India do not appear to have consistently adopted this course and there were several decisions reached to the effect that section 72 did not apply to money paid under a mistake of law, e.g., Wolf & Sons vs Dadyba Khimji & Co. (3) and Appavoo Chettiar vs section 1.
Co. (4).
In reaching those decisions the courts were particularly influenced by the English decisions and also provisions of section 21 of the which provides that a contract is not voidable because it was caused by a mistake as to any law in force in British India.
On the other hand, the Calcutta High Court had decided in Jagdish Prasad Pannalal vs Produce Exchange Corporation Ltd. (5), that the word " mistake " in section 72 of the included not only a mistake of fact but also a mistake of law and it was further pointed out that this section did not conflict with section 21 because that section dealt not with a payment made under a mistake of law but a contract caused by a mistake of law, whereas section 72 dealt with a payment which was either not under a contract at all or even if under a contract, it was not a cause of the contract.
(1) (2) L. R. 66 I. A. 1, 10.
(3) Bom.
631, 649.
(4) A.I.R. 1929 Mad.
(5) A.I.R. 1946 Cal.
1359 The Privy Council resolved this conflict in Shiba Prasad Singh vs Srish Chandra Nundi(1).
Their Lordships of the Privy Council observed that the authorities which dealt with the meaning of " mistake " in the section were surprisingly few and it could not be said that there was any settled trend of authority.
Their Lordships were therefore bound to consider this matter as an open question, and stated at p. 253: " Those learned judges who have held that mistake in this context must be given a limited meaning appear to have been largely influenced by the view expressed in Pollock and Mulla 's commentary on section 72 of the , where it is stated (Indian Contract & Specific Relief Acts, 6th Edn., p. 402): " Mistake of law is not expressly excluded by the words of this section; but section 21 shows that it is not included ".
For example, Wolf & Sons vs Dadyaba Khimji & Co. (2).
Macleod J. said referring to section 72 " on the face of it mistake includes mistake of law.
But it is said that under section 21 a contract is not voidable on the ground that the parties contracted under a mistaken belief of the law existing in British India, and the effect of that section would be neutralized if a party to such a contract could recover what he had paid by means of section 72 though under section 21 the contract remained legally enforceable.
This seems to be the argument of Messrs. Pollock and Mulla and as far as I can see it is sound.
" In Appavoo Chettiar vs South Indian Rly. (3), Ramesam and Jackson JJ. say: " Though the word ' mistake ' in section 72 is not limited it must refer to the kind of mistake that can afford a ground for relief as laid down in sections 20 and 21 of the Act. .
Indian law seems to be clear, namely, that a mistake, in the sense that it is a pure mistake as to the law in India resulting in the payment by one person to another and making it equitable that the payee should return the money is no ground for relief." Their Lordships have found no case in which an opinion that ',mistake" in section 72 must be given a limited meaning has been based on any other ground.
In their (1) (1949) L.R. 76 I.A. 244.
(2) Bom.
(3) A.I.R. 1929 Mad.
1360 Lordships ' opinion this reasoning is fallacious.
If a mistake of law has led to the formation of a contract, section 21 enacts that that contract is not for that reason voidable.
If money is paid under that contract, it cannot be said that that money was paid under mistake of law ; it was paid because it was due under a valid contract, and if it had not been paid payment could have been enforced.
Payment " by mistake " in section 72 must refer to a payment which was not legally due and which could not have been enforced ; the " mistake " is thinking that the money paid was due when, in fact, it was not due.
There is nothing inconsistent in enacting on the one hand that if parties enter into a contract under mistake in law that contract must stand and is enforceable, but, on the other hand, that if one party acting under mistake of law pays to another party money which is not due by contract or otherwise, that money must be repaid.
Moreover, if the argument based on inconsistency with section 21 were valid, a similar argument based on incon sistency with section 22 would be valid and would lead to the conclusion that section 72 does not even apply to mistake of fact.
The argument submitted to their Lordships was that section 72 only applies if there is no subsisting contract between the person making the payment and the payee, and that the does not deal with the case where there is a subsisting contract but the payment was not due under it.
But there appears to their Lordships to be no good reason for so limiting the scope of the Act.
Once it is established that the payment in question was not due, it appears to their Lordships to be irrelevant to consider whether or not there was a contract between the parties under which some other sum was due.
Their Lordships do not find it necessary to examine in detail the Indian authorities for the wider interpretation of " mistake " in section 72.
They would only refer to the latest of these authorities, Pannalal vs Produce Exchange Corp. Ltd. (1), in which a carefully reasoned judgment was given by Sen J.
Their Lordships agree with this judgment.
It may be well to add that their (1) A.I.R. 1946 Cal.
1361 Lordships ' judgment does not imply that every sum paid under mistake is recoverable, no matter what the circumstances may be.
There may in a particular case be circumstances which disentitle a plaintiff by estoppel or otherwise.
" We are of opinion that this interpretation put by their Lordships of the Privy Council on section 72 is correct.
There is no warrant for ascribing any limited meaning to the word I mistake ' as has been used therein and it is wide enough to cover not only a mistake of fact but also a mistake of law.
There is no Conflict between the provisions of section 72 on the one hand and sections 21 and 22 of the on the other and the true principle enunciated is that if one party under a mistake, whether of fact or law, pays to another party money which is not due by contract or otherwise that money must be repaid.
The mistake lies in thinking that the money paid was due when in fact it was not due and that mistake, if established, entitles the party paying the money to recover it back from the party receiving the same.
The learned Additional Solicitor General, however, sought to bring his case within the observations of their Lordships of the Privy Council that their judgment did not imply that every sum paid under mistake is recoverable no matter what the circumstances might be and that there might be in a particular case circumstances which disentitle a plaintiff by estoppel or otherwise.
It was thus urged that having regard to the circumstances of the present case, (i) in so far as the payments were in discharge of the liability under the U.P. Sales Tax Act and were voluntary payments without protest and also (ii) inasmuch as the monies which had been received by the State of U. P. had not been retained but had been spent away by it, the respondent was disentitled to recover the said amounts.
Here also, we may observe that these contentions were not specifically urged in the High Court or in the statement of case filed by the appellants in this court; but we heard arguments on the same, as they were necessarily involved in the question whether section 72 of 1362 the applied to the facts of the present case.
Re: (i): The respondent was assessed for the said amounts under the U. P. Sales Tax Act and paid the same; but these payments were in respect of forward transactions in silver.
If the State of U. P. was not entitled to receive the sales tax on these transactions, the provision in that behalf being ultra vires, that could not avail the State and the amounts were paid by the respondent, even though they were not due by contract or otherwise.
The respondent committed the mistake in thinking that the monies paid were due when in fact they were not due and that mistake on being established entitled it to recover the same back from the State under section 72 of the .
It was, however, contended that the payments having been made in discharge of the liability under the U. P. Sales Tax Act, they were payments of tax and even though the terms of section 72 of the applied to the facts of the present case no monies paid by way of tax could be recovered.
We do not see any warrant for this proposition within the terms of section 72 itself.
Reliance was, however, placed on two decisions of the Madras High Court reported in (1) Municipal Council, Tuticorin vs Balli Bros. (1) and (2) Municipal Council, Rajahmundry vs Subba Rao (2).
It may be noted, however, that both these decisions proceeded on the basis that the payments of the taxes there were made under mistake of law which as understood then by the Madras High Court was not within the purview of section 72 of the .
The High Court then proceeded to consider whether they fell within the second part of section 72, viz., whether the monies had been paid under coercion.
The court held on the facts of those cases that the payments had been voluntarily made and the parties paying the same were therefore not entitled to recover the same.
The voluntary payment was there considered in contradistinction to payment under coercion and the real ratio of the decisions was that there was no coercion or duress exercised by the authorities for (1) A.I.R. 1934 Mad.
(2) A.I.R, 1937 Mad.
1363 exacting the said payments and therefore the payments having been voluntarily made, though under mistake of law, were not recoverable.
The ratio of these decisions, therefore, does not help the appellants before us.
The Privy Council decision in Shiba Prasad Singh vs Srish Chandra Nandi (1) has set the whole controversy at rest and if it is once established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law the party is entitled to recover the same and the party receiving the same is bound to repay or return it.
No distinction can, therefore, be made in respect of a tax liability and any other liability on a plain reading of the terms of section 72 of the , even though such a distinction has been made in America vide the passage from Willoughby on the Constitution of the United States, Vol. 1, p. 12 opcit.
To hold that tax paid by mistake of law cannot be recoverd under section 72 will be not to interpret the law but to make a law by adding some such words as " otherwise than by way of taxes " after the word " paid ".
If this is the true position the fact that both the parties, viz., the respondent and the appellants were labouring under a mistake of law and the respondent made the payments voluntarily would not disentitle it from receiving the said amounts.
The amounts paid by the respondent under the U. P. Sales Tax Act in respect of the forward transactions in silver, had already been deposited by the respondent in advance in accordance with the U. P. Sales Tax Rules and were appropriated by the State of U. P. towards the discharge of the liability for the sales tax on the res pective assessment orders having been passed.
Both the parties were then labouring under a mistake of law, the legal position as established later on by the decision of the Allahabad High Court in Messrs. Budh Prakash Jai Prakash vs Sales Tax Officer, Kanpur (2) subsequently confirmed by this Court in Sales Tax Officer, Pilibhit vs Budh Prakash Jai Prakash (3) not having been known to the parties at the relevant (1) (1949) L. R. 76 1.
A. 244.
(2) (3) [1955] I S.C.R. 243.
173 1364 dates.
This mistake of law became apparent only on May 3, 1954, when this Court confirmed the said decition of the Allababad High Court and on that position being established the respondent became entitled to recover back the said amounts which had been paid by mistake of law.
The state of mind of the respondent would be the only thing relevant to consider in this context and once the respondent established that the payments were made by it under a mistake of law, (and it may be noted here that the whole matter proceeded before the High Court on the basis that the respondent had committed a mistake of law in making the said payments), it was entitled to recover back the said amounts and the State of U. P. was bound to repay or return the same to the respondent irrespective of any other consideration.
There was nothing in the circumstances of the case to raise any estoppel against the respondent nor would the fact that the payments were made in discharge of a tax liability come within the dictum of the Privy Council above referred to.
Voluntary payment of such tax liability was not by itself enough to preclude the respondent from recovering the said amounts, once it was established that the payments were made under a mistake of law.
On a true interpretation of section 72 of the the only two circumstances there indicated as entitling the party to recover the money back are that the monies must have been paid by mistake or under coercion.
If mistake either of law or of fact is established, he is entitled to recover the monies and the party receiving the same is bound to repay or return them irrespective of any consideration whether the monies had been paid voluntarily, subject however to questions of estoppel, waiver, limitation or the like.
If once that circumstance is established the party is entitled to the relief claimed.
If, on the other hand, neither mistake of law nor of fact is established.
, the party may rely upon the fact of the monies having been paid under coercion in order to entitle him to the relief claimed and it is in that position that it becomes relevant to consider whether the payment has been a voluntary payment or a payment under coercion.
The 1365 latter position has been elaborated in English law in the manner following in Twyford vs Manchester Corporation (1) where Romer J. observed: " Even so, however, I respectfully agree with the rest of Walton J. 's judgment, particularly with his statement that a general rule applies, namely, the rule that, if money is paid voluntarily, without compulsion, extortion, or undue influence, without fraud by the person to whom it is paid and with full knowledge of all the facts, it cannot be recovered, although paid without consideration, or in discharge of a claim which was not due or which might have been successfully resisted.
" The principle of estoppel which has been adverted to by the Privy Council in Shiba Prasad Singh vs Srish Chandra Nandi (2) as disentitling the plaintiff to recover the monies paid under mistake can best be illustrated by the decision of the Appeal Court in England reported in Holt vs Markham (3) " here it was held that as the defendant had been led by the plaintiffs ' conduct to believe that he might treat the money as his own, and in that belief had altered his position by spending it, the plaintiffs were estopped from alleging that it was paid under a mistake; and this brings us to a consideration of point No. 2 above stated.
Re: (ii): Whether the principle of estoppel applies or there are circumstances attendant upon the transaction which disentitle the respondent to recover back the monies, depends upon the facts and circumstances of each case.
No question of estoppel can ever arise where both the parties, as in the present case, are labouring under the mistake of law and one party is not more to blame than the other.
Estoppel arises only when the plaintiff by his acts or conduct makes a representation to the defendant of a certain state of facts which is acted upon by the defendant to his detriment; it is only then that the plaintiff is estopped from setting up a different state of facts.
Even if this position can be availed of where the representation is in regard to a position in law, no (1) , 241.
(2) [1949] L. R. 76 I. A. 244.
(3) 1366 such occasion arises when the mistake of law is common to both the parties.
The other circumstances would be such as would entitle a court of equity to refuse the relief claimed by the plaintiff because on the facts and circumstances of the case it would be inequitable for the court to award the relief to the plaintiff.
These are, however, equitable considerations and could scarcely be imported when there is a clear and unambiguous provision of law which entitles the plaintiff to the relief claimed by him.
Such equitable considerations were imported by the Nagpur High Court in Nagorao vs G. G. in Council where Kaushalendra Rao J. observed: " The circumstances in a particular case, disentitle the pltf.
to recover what was paid under mistake." " If the reason for the rule that a person paying money under mistake is entitled to recover it is that it is against conscience for the receiver to retain it, then when the receiver has no longer the money with him or cannot be considered as still having it as in a case when he has spent it on his own purposes which is not the case here different considerations must necessarily arise.
" We do not agree with these observations of the Nagpur High Court.
No such equitable considerations can be imported when the terms of section 72 of the are clear and unambiguous.
We may, in this context, refer to the observations of their Lordships of the Privy Council in Mohori Bibee vs Dhurmodas Ghose (2) at p. 125.
In dealing with the argument which was urged there in regard to the minor 's contracts which were declared void, viz., that one who seeks equity must do equity and that the minor against whom the contract was declared void must refund the advantage which he had got out of the same, their Lordships observed that this argument did not require further notice except by referring to a recent decision of the Court of Appeal in Thurstan vs Nottingham Permanent Benefit Building Society (3) (1) A.I.R. 1951 Nag.
372,374.
(2) [19O2] L. R. 30 I. A. 114.
(3) [I9O2] 1 Ch.
1. 1367 since affirmed by the House of Lords and they quoted with approval the following passage from the judgment of Romer L. J., at p. 13 of the earlier report: " The short answer is that a Court of Equity cannot say that it is equitable to compel a person to pay moneys in respect of a transaction which as against that person the Legislature has declared to be void.
" That ratio was applied by their Lordships to the facts of the case, before them and the contention was negatived.
Merely because the State of U. P. had not retained the monies paid by the respondent but had spent them away in the ordinary course of the business of the State would not make any difference to the position and under the plain terms of section 72 of the the respondent would be entitled to recover back the monies paid by it to the State of U.P. under mistake of law.
The result, therefore, is that none of the contentions urged before us on behalf of the appellants in regard to the non applicability of section 72 of the to the facts of the present case avail them and the appeal is accordingly dismissed with costs.
Appeal dismissed.
| IN-Abs | Under section 72 of the : " A person to whom money has been paid . by mistake or under coercion must repay or return it ".
The respondent, a registered firm, paid sales tax in respect of its forward transactions in pursuance of the assessment orders passed by the sales tax officer for the years 1949 51, but in 1952, the Allahabad High Court having held in Messrs. Budh Prakash jai Prakash vs Sales Tax Officer, Kanpuy, , that the levy of sales tax on forward transactions was ultra vires, the respondent applied for a refund of the amounts paid, by a writ petition under article 226 of the Constitution.
It was contended for the sales tax authorities that the respondent was not entitled to a refund because (1) the amounts in dispute were paid by the respondent under a mistake of law and were therefore irrecoverable, (2) the payments were in discharge of the liability under the Sales Tax Act and were voluntary payments without protest, and (3) inasmuch as the monies which had been received by the Government had not been retaine but had been spent away by it, the respondent was disentitled to recover the said amounts.
Held, that the term " mistake " in section 72 Of the Indian Con tract Act comprises within its scope a mistake of law as well as a mistake of fact and that, under that section a party is entitled to recover money paid by mistake or under coercion, and if it is established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law, the party receiving the money is bound to repay or return it though it might have been paid voluntarily, subject, however, to questions of estoppel, waiver, limitation or the like.
Shib Prasad Singh vs Maharaja Srish Chandra Nandi, (1949) L.R. 76 I.A. 244, relied on.
Where there is a clear and unambiguous provision of law which entitles a party to the relief claimed by him, equitable considerations cannot be imported and, in the instant case, the fact that the Government had not retained the monies paid by the respondent but had spent them away in the ordinary course 1351 of business of the State would not make any difference, and under the plain terms of section 72 Of the Act the respondent was entitled to recover the amounts.
Observations in Nagorao vs Governor General in Council, A. 1.
R. , 374, to the effect that where a party receiving money paid under a mistake has no longer the money with him, equitable considerations might arise, disapproved.
|
CTION: Civil Appeal No. 398890 of 1988.
From Order No. 590 592/1988 dated 18.8.1988 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal Nos.
E 375/84 D, S.A. No. 991/88 D & 992/88 D with C.O. No. 283/ 84 D. V. Lakshmikumaran, Madhava Rao and V. Balachandran for the Appellant.
A.K. Ganguli and P. Parmeshwaran for the Respondent.
Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal under section 35L of the Central Excises & Salt Act, 1944 (hereinafter referred to as 'the Act ') against the judgment and order dated 18th August, 1988 passed by the Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi (hereinafter re ferred to as 'the tribunal ').
The appellant was at all relevant times engaged in the manufacture, inter alia, of polyester fibre (man made) failing under tariff item 18 of the erstwhile Central Excise Tariff.
In the manufacture of the aforesaid, the appellant was using, amongst other inputs, ethylene glycol and DMT (Dimethyl Tetraphthalate) duty paid ethylene glycol falling under tariff item No. 68 of the erstwhile Central Excise Tariff received by the appellant and used in the manufac ture.
The notification No. 201/79 dated 4.6.79, mentioned hereinafter, exempted, according to the appellant, all excisable goods on which duty of excise was leviable and in the manufacture of which any goods falling under tariff item 68 had been used, from so much of the duty of excise as was equivalent to the duty of excise paid on the inputs.
The appellants claimed set off of duty on ethylene glycol used in the manufacture of polyester fibre under notification No. 201/79 dt.
23.6.1979.
In response to the appellant 's seeking set off the duty paid on ethylene glycol, they received a letter from the Assistant Collector of Central Excise, Ghaziabad, dated 6th August, 1980 by which the Asstt.
Col lector held that no proforma credit was allowable in respect of ethylene glycol for the following: (a) Methanol which is not excisable and is cleared without pay 266 ment of duty; (b) Glycol residual waste which was being destroyed by the appellants by throwing in the field; and (c) Polyester fibre waste which was used in the recovery of DMT and exempt from payment of duty under Central Excise Notification dt.
19th May, 1976.
The appellants were further directed to furnish the exact percentage of ethylene glycol content used/consumed in the methanol, the ethylene glycol residual waste and polyes ter fibre waste; and that not to utilise the proforma credit or set off credit till the data was furnished and the same was authenticated by the Chemical Engineer.
The classifica tion list submitted by the appellants was modified in terms of the said letter.
Thereafter, classification list was filed claiming set off of duty on ethylene glycol falling under tariff item 68 under exemption notification No. 201/79 as amended by noti fication No. 102/81 dt.
13th May, 1981.
By this amended notification, a second proviso was added which provided that the credit of the duty allowed in respect of inputs could not be denied or varied on the ground that part of thee input was contained in any waste, refuge or by product arising during the manufacture, irrespective of the fact that such waste, refuse or byproduce was exempt from the whole of duty of excise leviable thereon or was chargeable to nil rate of duty.
Hence, it is the case of the appellants that from 11th April, 1981 even though some part of the input may be con tained in any waste, refuge or by product which is charge able to nil rate of duty, the credit of the duty paid on the inputs could not be denied.
By this order the set off of duty in respect of duty paid ethylene glycol was allowed from 11th April, 1981 onwards except in the case of ethylene glycol used/ consumed in polyester waste used for recovery of DMT on the ground that this polyester waste was charge able to nil rate of duty.
Similarly, duty paid on ethylene glycol which was used for recovery of DMT was held not to be allowable while paying duty on polyester fibre.
Aggrieved thereby, an appeal against the said order to the Collector of Central Excise, Ghaziabad was filed.
The main contentions of the appellants were that the ethylene glycon received in the factory after payment of duty was consumed in the manufacture of polyester fibre only.
During the course of manufacture of polyester fibre, two basic raw materials DMT and Glycol interact and thereby certain waste comes into existence.
This 267 waste is recycled with glycol for the recovery of DMT in DMT recovery plant, within the factory.
Hence, the entire set off of duty was to be allowed since no part of DMT produced was diverted for any other use other than production of polyester fibre nor was it taken outside the factory.
The appellants contended that in case of proforma credit proce dure under rule 56 A of the Central Excise Rules, clarifica tion had been issued by the Collector of Central Excise, under trade notice No. 72 CE/80 dt.
1980 to the effect that proforma credit is permissible even where at an in termediate state of manufacture, a final product which is fully exempt from duty comes into being, provided that the fully exempted product is consumed in the production or manufacture of the finished product.
This trade notice categorically states that this clarification would also be applicable to exemption notification No. 201/79.
By an order dated 17th November, 1981 the Asstt.
Collec tor held that the appellants were entitled to credit of duty paid on the ethylene glycol only to the extent of the per centage content as determined by the Chief Chemical Engi neer, CRCL, New Delhi.
The order covered the period from 17.7.1979 to 10.4.
As mentioned before, the notification was amended from 11th April, 1981 whereby the credit of the duty on any inputs was not to be denied to any waste, refuse or by product arising during the manufacture of the output irre spective of whether the waste, refuse or by product was chargeable to nil rate of duty or not.
By a letter dated 27th November, 1981 the appellants were informed that set off for Rs. 15,41,673.60 was inadmis sible.
By a subsequent letter of the Superintendent of Central Excise, Ghaziabad, dated 17th December, 1981 it was stated to the appellant that they had received Rs. 15,42,740.16 as set off which was inadmissible.
The period mentioned was 17.7.1979 to 10.4.1981.
The appellants case was that this related only to ethylene glycol content in methanol.
There was a second appeal preferred to the Collector of Central Excise, Delhi, against the order dated 17.11.1981 of the Asstt.
Collector disallowing the set off of duty credit paid on ethylene glycol content in methanol and ethylene glycol waste and polyester fibre waste.
A third appeal was filed before the Collector (Appeals) against the duty demand of Rs. 15.42,740.16.
Thereafter, the appellants received a letter dated 23rd April, 268 1983 from the Superintendent of Central Excise which stated that the stand of the appellants that the ethylene glycol contribute only H positive and not OH negative, has been accepted by the Chief Chemical Engineer, CERL, New Delhi.
Consequently, since the ethylene glycol content in the methanoi, wherein the ethylene glycol contribute only H positive and not OH negative ions, the amount of inadmissi ble set off would stand reduced to Rs.90,749,76.
The aforesaid three appeals were decided by the 'Collec tor of Central Excise (Appeals), by passing a single order dated 15th December, 1983, wherein he observed that the procedure under notification No. 20 1/79 was materially the same as the procedure under rule 56A and in the circum stances allowed all the appeals and set aside the Asstt.
Collector 's order and the demands.
Aggrieved thereby, the revenue went up in appeal before the tribunal.
The tribunal after examining the aforesaid contentions noted the contention of the parties.
It was the case of the revenue that prior to 1 Ith April, 1981 there was no provision in notification No. 201/79 entitling the manufacturer to obtain credit of the duty of excise already paid on the inputs resulting in waste or by product or refuge which arose in the manufacture of excisable products which used the inputs.
Hence, it was argued that the duty element in the quantity of glycol which was contained in the glycol residual waster, polyester fibre waste and methanoi (by product) which was non excisable, did not qualify for credit which could be subsequently used for discharging duty liability on dutiable finished product.
The provision con tained in notification No. 102/81 was not available prior to 11th April, 1981 it was submitted on behalf of revenue.
It was further submitted that the trade notice issued by Pune Collectorate pertained to rule 56 A only and not to the notificaion.
It was further submitted that the rule and notifications are different enactments and the provisions of one cannot be read into another even after 11th April, 1981 and the exemption was only in respect of duty on inputs in the manufacture of excisable goods and their waste, by product or refuge.
It was submitted that since methanol was not excisable, it was not eligible for set off of duty on the glycol content in its manufature.
On behalf of the appellants, however, it was contended that glycol is used totally in the production of polyester fibre.
methanol results out of the reaction of DMT and glycol; and that the Government always maintained parity between rule 56 A and notification No. 201/79, hence, the appellants were eligible to full set off.
On behalf of the appellants reliance was placed on the decision of the High Court of Bombay in Indian Aluminium Co. 269 Ltd. & Anr.
vs A.K. Bandyopadhyay & Ors., The question that the tribunal had to decide was whether the set off of duty paid on inputs was admissible only if the finished excisable goods manufactured therefrom, was not exempted from duty.
The process of manufacture and the out come of ethynol are not in dispute.
The tribunal was of the view that the judgment of the Bombay High Court had held that dross skimmings thrown off in the process of manufac ture and aluminium sheets were not end products or finished or by products merely because such refuge might fetch some price in the market.
The High Court had further held that proviso to sub rule 56 A will have no application and the skimmings cannot be said to be finished excisable goods.
These were not exempted from the whole of duty of excise or chargeable to nil rate of duty whereas the sub rule pre scribed that the credit is admissible if the material is used in the manufacture of finished goods which are exempt from duty or are chargeable to nil rate of duty.
The Tribu nal was of the opinion that the factual background 'of the case before the Bombay High court was different and there fore, it was of the opinion that the said decision was not applicable in the instant case.
The Tribunal was of the opinion that the revenue was right that rule 56A and notification No. 201/79 were differ ent enactments and the amendment to one could not be read into the other.
In that view of the matter, the Tribunal was of the view that the Collector 's observation that the proce dure under notification No.201/79 was materially the same as the procedure under rule 56A and consequently the amending notification deemed to have retrospective effect was not, in the absence of any such indication, acceptable.
In the premises, the Tribunal allowed the appeals and rejected the cross objection.
The question involved in these appeals, is whether the Tribunal was right.
On behalf of the appellants, Shri V. Lakshmikumaran contended that the Tribunal failed to appre ciate that the provisions of rule 56A and notification No. 201/79 were para materia.
It appears to us that the provi sions of rule 56A and the notification No. 201/79 are iden tical.
The relevant provisions of Rule 56A are as follows: "56A(1) . . 56A(2) The Collector may, on application made in this behalf and subject to the conditions mentioned in sub rule (3) and such other conditions as may, from time to time, be prescribed by the Central Government, permit a manu 270 facturer of any excisable goods specified under sub rule (1) to receive material or component parts of finished product (like Asbestos Cement), on which the duty of excise or the additional duty under section 3 of the (51 of 1975) (herein after referred to as the countervailing duty), has been paid in his factory for the manufac ture of these goods or the more convenient distribution of finished product and allow a credit of the duty already paid on such mate rial or component parts or finished product, as the case may be: Provided that no credit of duty shall be allowed in respect of any material or compo nent parts used in the manufacture of finished excisable goods (i) if such finished excisable goods produced by the manufacturer are exempt from the whole of the duty of excise leviable thereon or are chargeable to 'nil ' rate of duty, and (ii) . . Explanation.
Credit of the duty allowed in respect of any material or component parts shall not be denied or varied on the ground that part of such material or component parts is contained in any waste, refuse or by product arising during the process of manufac ture of the finished excisable goods irrespec tive of the fact that such waste, refuse or by product is exempt from the whole of the duty of excise leviable thereon or is charge able to nil rate of duty or is not notified under sub rule ( 1): Provided . .
The notification No. 20 1/79 prior to 1 Ith April, 1981 in so far as relevant for the present purpose was as follows: "Set off of duty on all exciseable goods on use of duty paid goods falling under Item 68 (Tariff Items I to 68): In exercise of the powers conferred by sub rule (1) of rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Gov ernment of India in the Ministry of Finance (Department of Revenue) No. 178/77 Central Excise, dated the 18th June, 1977, the Central Government 271 hereby exempts all excisable goods (hereinaf ter referred as "the said goods"), on which the duty of excise is leviable and in the manufacture of which any goods falling under Item No. 68 of the first Schedule to the (1 of 1944) (hereinafter referred as "the inputs") have been used, from so much of the duty of excise leviable thereon as is equivalent to the duty of excise already paid on the inputs: Provided that the procedure set out in the Appendix to this notification is followed: Provided further that nothing contained in this notification shall apply to the said goods which were exempted from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty." The amending notification No. 102/81 dated 11th April, 1981 is as follows: "Provided also that credit of the duty allowed in respect of the inputs shall not be denied or varied on the ground that part of such inputs is contained in any waste, refuse or by product arising during the process of manufacture of the said goods, irrespective of the fact that such waste, refuse or by product is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty or is not mentioned in the declaration referred to in the Appendix to this notifica tion." Central Board of Excise & Customs issued Circular No. 6/81CX.
6, dated 31st January, 1981, which reads as follows: "Central Excise Rule 56A Proforma Credit of duty paid on material/component parts con tained in waste, refuse or by product arising during the process of manufacture regarding.
A doubt has been raised whether proforma credit of duty paid on material/component parts used in manufacture of the finished excisable goods notified under rule 56A of the Central Excise Rules, 1944, is to be denied to the extent such material or component parts are contained in any 272 waste, refuse or by product arising during the process of manufacture of the notified fin ished excisable goods on the grounds that such waste, refuse or by product is either fully exempt from duty or not notified under sub rule (1) of rule 56A. 2.
Since the Government 's intention has been not to deny the benefit of proforma credit in such situation, an Explanation has been added to sub rule (2) of rule 56A, so as to remove the ambiguity in the rule.
Notification No. 8/8 I CE dated 31.1.
1981 amending rule 56 A is enclosed.
It may, however, be noticed that such credit cannot be utilised for payment of duty leviable on such waste, refuse or by product.
" On an analysis and comparison of aforesaid, it is clear that the clarification in the form of trade notice issued by the Pune Collectorate in respect of rule 56A was as much applicable to that rule as to notification No. 20 1/79.
In the premises, it is clear that the Tribunal should have held that even though a part of the ethylene glycol was contained in the by product methanoi, yet the credit of duty could not be reduced to the extent of the ethylene gIycol contained in the mathanoi as ineligible.
It is true that when in a fiscal provision, if benefit of exemption is to be considered, this should be strictly considered.
But the strictness of the construction of exemption notification does not mean that the full effect to the exemption notification should not be given by any circuitous process of interpretation.
After all, exemption notifications are meant to be implemented and trade notices in these matters clarify the stand of the Government for the trade.
It is clear, therefore, that the Tribunal failed to interpret the words of the exemption notification No. 201/79 properly and fully.
The said notifi cation exempted all excisable goods on which the duty of excise was leviable and in the manufacture of which any goods falling under Tariff Item 68 (i.e. inputs) had been used from so much of the duty of excise leviable thereon as was equivalent to the duty of excise already paid on the inputs.
It is clear, however, that ethylene glycol was used in the manufacture of polyester fibre.
It appears that methanoi arises as a part and parcel of the chemical reac tion during the process of manufacture when ethylene glycol interacts with DMT to produce polyester fibre.
It is not possible to use a lesser quantum of the ethylene glycol to prevent methanoi from arising for producing a certain quan tity of polyester fibre.
Thus, the quantity of ethylene glycol required to produce a certain quantum of polyester fibre is determined 273 by the chemical reaction.
It may be mentioned herein that it is not as if the appellants have used excess ethylene glycol wantonly to produce the methanol.
It is clear that the appellants are not engaged in the production of methanol but in the production of polyester fibre.
That position is undisputed.
Therefore, it appears that the Tribunal erred when it held that the appellants were not entitled to a part of the credit of duty since ethylene glycol when it inter acts with DMT also gives rise to methanoi.
This construction would frustrate the object of exemption if something which evidently arises out of the interaction is denied Credit.
Even prior to amendment to notification No. 201/79 with effect from 1 Ith April, 1987, the only situation where the credit of the duty paid on the inputs could be denied was only where the final products were wholely exempt from the duty of excise or chargeable to nil rate of duty.
In the present case, the excisable goods, namely, polyester fibre were not wholely exempt from duty nor chargeable to nil rate of duty.
It cannot be read in the notification that the notification would not be available in case non excisable goods arise during the course of manufacture.
In fact, the Tribunal seems to have erred in not bearing in mind that exemption notification was pressed in service in respect of polyester fibre which is excisable goods and not in respect of methanoi which arises as a by product as a part and parcel of chemical reaction.
It appears further on a com parison of the rule 56A and the notification No. 20 1/79 that these deal with the identical situation.
In this connection, reference may be made to the deci sion of the Bombay High Court in Indian Alurninium Co. and Anr. 's case (supra).
In that case, the High Court came to the conclusion that dross and skimmings were merely the refuge, scum or rubbish thrown out in the process of manu facture of aluminium sheets and could not be said to be the result of treatment, labour or manipulation whereby a new and different article emerged with a distinctive name, character or use which can ordinarily come to the market to be bought and sold.
The High Court further held in that case that merely because such refuse or scum may fetch some price in the market does not justify it being called a by product, much less an end product or a finished product.
In the light of that fact, the High Court was of the view that in that case the end product was aluminium sheets manufactured from aluminium ingots and dross or skimmings.
Therefore, the High Court was of the view that these were neither 'goods ' nor 'end products ' nor 'finished products ' liable to duty under item 27 of Central Excise Tariff.
The High Court was of the view that under proviso to section 56 A (2) proforma credit was not admissible if the material is used in the manufac ture of finished excisable goods which are exempt from duty 274 or chargeable to nil rate of duty.
Since dross and skimmings are mere 'ashes ', these could not be said to be finished excisable goods, nor they were exempt from the whole of duty of excise or chargeable to 'nil ' rate of duty.
Therefore, proviso to sub rule (2) of rule 56A would not have any application.
The High Court was of the view that refuse or skum thrown off during the process of manufacture could not by any stretch of imagination be considered as a by product and merely because such refuse or scum may fetch some price in the market they could not be said to be 'finished excisa ble goods '.
Under rule 56A, the High Court was of the view, if the material is used in the manufacture of any finished excisable goods, and during the course of manufacture any non excisable by product emerged, then it could not be said that the raw material was not used in the manufacture of the finished excisable goods.
In our opinion, the same analogy and reasoning would apply when the methanoi arises as a result of chemical reaction and not as a result of any by product.
In the instant case, the methanoi was nonexcisable.
Just because methanoi arises as a part and parcel of the chemical reac tion during the process of manufacture, it cannot be said that methanoi was not used in the manufacture of polyester fibre.
The intention of the Government is evident further more, from the trade notice of Pune Collectorate No. 31/81.
The Tribunal, therefore, should have taken into considera tion the trade notice for interpretation of exemption noti fication No. 201/79, which was para materia with rule 56A.
In the aforesaid view of the matter, we are of the opinion that the Tribunal was in error in coming to the conclusion it did.
The appeals are, therefore, allowed and the order and the judgment of the Tribunal are set aside and the combined orders of the Collector (Appeals) Nos.
284 286/CE/MT/83 dated 15th December, 1983 are restored.
In the facts and the circumstances of the case, there will be no order as to costs.
R.S.S. Appeals allowed.
| IN-Abs | The appellant was engaged in the manufacture of polyes ter fibre (man made) falling under tariff item 18 of the erstwhile Central Excise Tariff.
In its manufacture, the appellant was using, among other things, ethylene glycol and DMT (Dimethyle Tetraphthalate) duty paid ethylene glycol falling under tariff item No. 68.
During the course of manufacture of polyester fibre, two basic raw materials DMT and Glycol interact and thereby certain waste comes into existence.
This interaction also gave rise to methanol, a by product.
Notification No. 201/79 dated 4.6.1979 exempted all excisable goods on which duty of excise was leviable and in the manufacture of which any goods failing under tariff item 68 had been used, from so much of the duty of excise as was equivalent to the duty of excise paid on the imputs.
Exemption notification No. 201/79 was amended by notifi cation No. 102/81 with effect from 11th April, 1981.
By this amended notification, a second proviso was added which provided that the credit of the duty allowed in respect of inputs could not be denied or varied on the ground that part of the inputs was contained in any waste, refuse or by product arising during the manufacture, irrespective of the fact that such waste, refuse or by product was exempt from the whole of duty of excise leviable thereon or was charge able to nil rate of duty.
Earlier, in the case of proforma credit procedure under rule 56 A of the Central Excise Rules, clarification had been issued by the Collector of Central Excise, under trade notice dated 19.7.1980 to the effect that proforma credit was permissible even where at an intermediate state of manufacture, a final product which was fully exempt from duty came into being, provided that the fully exempted product was consumed in 263 the production or manufacture of the finished product.
This trade notice categorically stated that the clarification would also be applicable to exemption notification No. 201/79.
The appellant claimed set off of duty paid on ethylene glycol used in the manufacture of polyester fibre under notification No. 201/79.
The Assistant Collector of Central Excise held on 6.8.1980 that no proforma credit was allowa ble in respect of ethylene glycol used/consumed in the methanol, the ethylene glycol residual waste and polyester fibre waste.
The Collector of Central Excise (Appeals), however, allowed the appeals filed by the appellant and set aside the Assistant Collector 's order and the demands.
The Collector observed that the procedure under notification No. 201/79 was materially the same as the procedure under rule 56A of the Central Excise Rule.
The revenue went up in appeal before the Customs, Excise was contended on behalf of the revenue that prior to 11th April, 1981 there was no provision in notification No. 201/79 entitling the manufacturer to obtain credit of the duty of excise already paid on the inputs resulting in waste or by products or refuse which arose in the manufacture of excisable products which used the inputs; that the trade notice issued pertained to rule 56 A and not to the notifi cation; that the rule and notifications were different enactments and the provisions of one could not be read into another even after 11th April, 1981; that the exemption was only in respect of duty on inputs in the manufacture of excisable goods and their waste, by product or refuse; and that since methanol was not excisable, it was not eligible for set off of duty on the glycol content in its manufac ture.
On behalf of the appellant, however, it was contended that glycol was used totally in the production of polyester fibre; that methanol resulted out of the reaction of DMT and glycol; and that the Government always maintained parity between rule 56 A and notification No. 201/79.
The Tribunal was of the opinion that the Collector 's observation that the procedure under notification No. 201/79 was materially the same as the procedure under rule 56 A and consequently the amending notification deemed to have retro spective effect was not, in the absence of any such indica tion, acceptable.
In the premises, the Tribunal allowed the appeals, of the Revenue.
264 Allowing the appeals, this Court, HELD: (1) On an analysis and comparison of the notifi cations No. 201/79, No. 102/81 and the circulars, it is clear that the clarification in the form of trade notice issued in respect of rule 56 A was as much applicable to that rule as to notification No. 201/79.
[272D] (2) It is true that when in a fiscal provision, is benefit of exemption is to be considered, this ' should be strictly considered.
But the strictness of the construction of exemption notification does not mean that the full effect to the exemption notification should not be given by any circuitous process of interpretation.
After all, exemption notifications are meant to be implemented and trade notices in these matters clarify the stand of the Government for the trade.
[272E F] (3) The quantity of ethylene glycol required to produce a certain quantum of polyester fibre is determined by the chemical reaction.
It is not possible to use a lesser quan tum of the ethylene glycol to prevent methanol from arising for producing a certain quantity of polyester fibre.
It is not as if the appellants have used excess ethylene glycol wantedly to produce the methanol.
It is also clear that the appellants are not engaged in the production of methanol but in the production of polyester fibre.
[272H; 273A] (4) The Tribunal, in the instant case, failed to inter pret the words of the exemption notification No. 201/79 properly and fully.
The said notification exempted all excisable goods on which the duty of excise was leviable and in the manufacture of which any goods falling under Tariff Item No. 68 (i.e. inputs) had been used from so much of the duty of excise already paid on the inputs.
The excisable goods, namely, polyester fibre, were not wholly exempt from duty nor chargeable to nil rate of duty.
It cannot be read in the notification that the notification would not be available in case non excisable goods arise during he course of manufacture.
In fact, the Tribunal seems to have erred in not bearing in mind that exemption notification was pressed in service in respect of polyester fibre which is excisable goods and not in respect of methanol which arises as a by product as a part and parcel of chemical reaction.
It ap pears further on a comparison of the rule 56 a and the notification No. 201/79 that these deal with identical situations.
[272F; 273C D] Indian Aluminium Co. Ltd. & Anr.
A.K. Bandyopadhyay & Ors., , referred to.
|
ivil Appeal No. 469 of 1975.
From the Order dated 31.5.1974 of the Government of India, Ministry of Finance, Department of Revenue and Insur ance, New Delhi, in Order No. 615 of 1974 on Central Excise Revision Application.
Dr. Y.S. Chitale, Ms. M. Ray and H.K. Dutt for the Appel lant.
V.C. Mahajan, (N.P.), P. Parmeshwaran and R.P. Srivasta va for the Respondents.
K .R. Nambiar for the Intervener.
372 The Order of the Court was delivered by RANGANATHAN J.
The appellant assessee manufactures goods known in the market as cushion repair compound, tread repair compound and cover.
compound.
These materials, ac cording to the assessee, are used to mend injured and defec tive sections of tyres and are not meant to be used either in the resoling or in retreading of tyres.
Under the Cen tral Excise & Salt Act, 1944, ( 'the Act '), the above goods were normally dutiable under tariff item No. 15A (2).
Howev er, the assessee claimed exemption from duty under notifica tion No. 71 of 1968 dated 1.4.1968.
By this notification under section 8 of the Act, the Central Government exempted "all rubber products, in the form of plates, sheets and strips unhardened, whether vulcanised or not, and whether combined with any textile material or otherwise (other than the products which are made either wholly or partly of rubber and which are used for the resoling or retreading of tyres, including the products commonly known as tread rub ber, camel back, cushion compound, cushion gum, tread gum and tread packing strips) falling under sub item (2) of this item, from the whole of the duty of excise leviable thereon".
The Superintendant of Central Excise having re jected the claim for exemption and charged the goods in question to duty at 20% (basic) under the tariff item above mentioned, the assessee preferred an appeal to the Collector of Central Excise, West Bengal.
The Collector also rejected the claim observing that there was no evidence that the goods in question could not be used for the resoling or retreading of tyres.
The assessee thereupon preferred a revision to the Central Government under section 36 of the Act as it then stood.
In the revision petition, it was pointed out that tread repair compound and cushion repair compound were primarily meant for and also used as repair material only with reference to the treads and cushions of tyres and that since they were designed to serve the limited purpose of mending small sections of tyres it would be grossly erroneous to hold that these repair materials could be used in place of tread rubber or camel back which only have the necessary physical dimensions and technical proper ties to serve as retreading and resoling material.
Similarly cover compound, it was said, was material which was used only for repairing conveyor belting and was also marketed by the assessee solely for the purpose of repairing damaged sections of the conveyor belting.
It was not meant for use in retreading and resoling of tyres since their sole intend ed use was to repair conveyor belts.
The Central Government, however, dismissed the revision petition by its order dated 21.5.1974.
The Government referred to the fact that the 373 notification of exemption specifically excluded cushion compound, cushion gum and tread gum and observed that, in view of this, cushion repair compound and tread repair compound would also be assessable to duty under item No. 16A. So far as cover compound was concerned, it was observed that its composition was such that its use for repair of conveyor belts was indistinguishable from the other use of resoling of tyres.
The present appeal has been preferred from the order of the Central Government.
On behalf of the appellant it is pointed out that the whole purpose of the exemption notification was to exclude products which were used for the resoling and retreading of tyres.
The Government has overlooked that while tread rub ber, cushion compound and tread gum are all items used for resoling or retreading of tyres, that was not the use to which the articles manufactured by the assessee were put.
The statement of the assessee that the goods manufactured by it were employed only for repairing tyres and conveyor belts has not been disbelieved.
It is therefore submitted that the Government erred in holding that the goods produced by the assessee are not eligible for the exemption in question.
In support of his contention, learned counsel for the appellant relied on two important circumstances.
One is that by a notification No. 27 of 1973 dated 1.3.1973, notifica tion No. 71 of 1968 was amended and the words "used for resoling, retreading or repairing of tyres" was substituted for the words "used for the resoling or retread~ ing of tyres".
This amendment was not effective for the period with which we are concerned and it is therefore argued that the compounds used for repairing as against resoling or retread ing will not be covered by the exclusion in the exemption notification.
The second circumstances relied upon by the learned counsel for the appellant is this.
Earlier, there was a notification No. 31 of 1964 under which the duty leviable in respect of latex foam sponge as well as products commonly known as tread rubber or camel back including cushion compound, cushion gum, tread gum, and tread packing strips were subjected to a concessional rate of duty while other rubber products falling under item 16A were granted an exemption from the levy of duty.
In the context of that notification, a question arose as to whether rubber products which are capable of being used for retreading or resoling of tyres but are only used for repairs would attract duty or not.
The position was clarified by the Central Board of Excise and Customs in its circular No. Rubber 1/66 dated 7.2.1966.
The relevant part of the circular reads as fol lows: 374 "2.
Those rubber products which are not 'latex foam sponge ' may be excisable under the said tariff item No. 16A but would not attract Central Excise duty unless commonly known as per description given in Column 2 against section No. 2 of the table to the above cited notifi cation.
While the scope of the levy on the rubber products thus gets very much restrict ed, it may so happen that different brand names are given by different manufactures to the same or similar product giving rise to the question whether or not a particular product can be deemed to be commonly known as 'tread rubber ', 'camel back ', 'cushion compound ', 'cushion gum ' etc., so as to attract duty.
Doubts of the above nature should not in fact arise in view of para 6 to the 1962 Budget instructions.
It was made quite explic it therein that 'item is . fairly comprehen sive as to wording but the intention . is to subject only 'latex foam sponge ' and the rubber products popularly known as 'tread rubber ' or camel back ' used for the resoling or retreading of tyres to duty.
That being the intention a rubber product which is neither 'latex foam sponge ' nor used for the resoling or retreading of tyres is classifiable as 'all other products ' and therefore exempt from whole of the duty leviable thereon under section No. 3 of the Table to the above cited notifi cation.
It is possible that some of the rubber products are capable of being used for re treading or resoling of tyres.
Mere capacity does not, however, attract duty in the absence of normal usage in that manner being estab lished it would not be appropriate to hold that the products are dutiable.
Rubber products used for repair of tubes or tyres also, in view of what has been stated above, does not attract duty.
Pending cases regarding assessment of rubber products may be finalised accordingly".
Learned counsel submits that the above interpretation is equally applicable in the context of notification No. 71 of 1968.
375 We are of opinion that the appellant 's contention is well founded.
The notification of 1978 only reproduces with some modifications the notification of 1964; however, the broad purport of both the notifications is to exempt rubber products other than those which are commonly sold under certain descriptions and are used for the resoling or re treading of tyres.
The circular of 1966, which can be con sidered as a contemporaneous exposition of the understanding of the Government while issuing the exemption notification of 1964, makes it clear that, at that time, it was not intended to deny exemption to rubber products used merely for repair purposes.
The notification of 1973 was one in which various amendments were carried out to a series of notifications relating to various items and does not contain anything to suggest that it was only a clarification that was intended to be given and not a prospspective amendment of the previous notification.
As already mentioned, the fact that the appellant is using or marketing the products for use, only for repairing tyres and conveyor belts is not controverted.
In these circumstances, we are of opinion that the appellant assessee was entitled to exemption under the notification.
In one sense, any rubber compound has a compo sition which theoretically permits it to be used either for repair purposes or for resoling or retreading of tyres.
But the assessee 's contention is that the product marketed by it ' has not the physical dimensions or technical properties to be capable of use for retreading or resoling.
Also, the notification talks of products "used for" resoling and retreading of tyres and that is not the case here.
The notification thus imports a limitation on the exclusion from the exemption specified in the paranthetical clause of the notification.
That exclusion is only in respect of compound used for resoling or retreading.
For the reasons mentioned above we allow this appeal and set aside the order of the Central Government under section 36 of the Central Excise Act as well as the orders of the subordinate authorities and hold that the assessee is enti tled to the exemption prayed for.
The concerned assessment will be modified accordingly.
We however make no order as to costs.
G.N. Appeal allowed.
| IN-Abs | The appellant assessee has been manufacturing cushion repair compoud, tread repair compound and cover compound.
According to the assessee, these were not meant either for resoling or retreading of tyres, but for mending injured and defective sections of tyres.
Though normally these goods are dutiable under tariff item No. 16A(2), the assessee claimed exemption from duty under Notification No. 71 of 1968 dated 1.4.68.
The Superintendent rejected the claim.
On appeal by the assessee, the Collector observed that there was no evidence that the goods in question should not be used for the resoling or retreading of tyres and rejected the claim.
The assessee preferred a revision to the Central Govt.
The Central Govt.
while rejecting the Revision Peti tion, referred to the fact that the notification specifical ly excluded cushion compound, cushion gum and tread gum.
As regards cover cushion compound, it observed that the compo sition was such that its use for repair of conveyor belts was indistinguishable from the other use of resoling of tyres.
This appeal has been filed against the order of the Central Govt.
The appellant contended that the Government had overlooked the fact that while tread repair, cushion compound and tread gum are items used for resoling or re treading of tyres, that was not the use to which the arti cles manufactured by the assessee were put.
Since the fact that the goods manufactured by it were employed only for repairing tyres and conveyor belts was not disbelieved, it was argued, the assessee was eligible for the exemption claimed by it.
Allowing the appeal, this court, HELD: 1.
The notification of 1978 only reproduces with some 371 modifications the notification of 1964.
The broad purport of both the notifications is to exempt rubber products other than those which are commonly sold under certain descrip tions and are used for the resoling or retreading of tyres.
The circular of 1966, which can be considered as a contempo raneous exposition of the understanding of the Government while issuing the exemption notification of 1964, makes it clear that at that time, it was not intended to deny exemp tion to rubber products used merely for repair purposes.
The notification of 1973 was one in which various amendments were carried out to a series of notifications relating to various items and does not contain anything to suggest that it was only a clarification that was intended to be given and not a prospective amendment of the previous notifica tion.
[375A C] 2.1 The fact that the appellant is using or marketing the products for use, only for repearing tyres and conveyor belts is not controverted.
Hence the appellant assessee was entitled to exemption under the notification.
In one sense, any rubber compound has a composition which theoretically permits it to be used either for repair purposes or for resoling or retreading of tyres.
But the assessee 's claim is that the product marketed by it has not the physical dimen sions or technical properties to be capable of use for retreading or resoling.
Also, the notification talks of products "used for" resoling and retreading of tyres; and it is not so in the instant case.
[375C E] 2.2 The notification imports a limitation on the exclu sion from the exemption specified in the paranthetical clause of the notification.
That exclusion is only in re spect of compounds used for resoling or retreading.
[375E]
|
vil Appeal No. 2 15 152 (NM) of 1986 etc.
From the Order dated 8.5.1984 of the Customs Excise and Gold Control/Appellate Tribunal, New Delhi in Appeal No. 2530/83 D & Cross objections 27/84, Order No. 258/84 D and Misc.
Order No. 67 84 D. A.K. Ganguli, P. Parmeswaran and Hemant Sharma for the Appellant.
Gobinda Mukhoty and P.N. Gupta for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is an appeal under section 35L(b) of the Central Excises & Salt Act, 1944 (hereinafter referred to as 'the Act ') against the judgment and order of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (hereinafter referred to as 'the Tribunal ') dated 8th May, 1984.
The appeal is by the revenue.
The respondent, Decent Dyeing Co., was dyeing acrylic yarn on job charges.
The acrylic yarn was being received by the respondent from traders in the market or from the manufacturers of hosiery goods and were returning the same to them after completing the required process.
The respondent was paying duty at the rate of Rs. 10 per kg.
in terms of notification No. 125/75 CE dated 12th May, 1975 on the presumption that base yarn had discharged duty liability before it was received for dyeing.
A show cause notice requiring the respondent to show cause to the Assistant Collector of Central Excise as to why central excise duty amounting to Rs.4,300 at Rs.24 per Kg.
leviable on 180 kgs.
(as applicable to base yarn under tariff item 18(i) of the Central Excise Tariff) should not be demanded under rule 9(2) of the Central Excise Rules, 1944, was issued to the respondent.
The Assistant Collector of Central Excise directed the respondent to deposit an amount of Rs.4,300 on the basis 432 of the demand of duty at Rs.24 per kg.
on 180.00 kgs.
and directed the respondent to deposit the said amount under the proper head.
On appeal, the Appellate Collector of Central Excise confirmed the said demand.
There was an appeal and the Appellate Tribunal upheld the contention of the respondent.
The Appellate Tribunal found that the case related to a demand for payment of differential duty for the period May, 1976 to July, 1976 with reference to texturing of base acrylic yarn received by the respondent from the manufacturers of such base yarn.
The respondent, the Tribunal held, had cleared such textured yarn on payment of duty at Rs. 10 per kg.
claiming the benefit of notification No. 125/75.
The differential duty payment was Rs.24 per kg.
leviable on the base yarn.
,The respondent denied theft liability but it was upheld as mentioned 'hereinbefore.
It was contended on behalf of the appellant before the Tribunal.that duty on base yarn was payable by the manufacturers of the base yarn only and the burden of showing that the said duty had not been paid by the manufacturers was on the revenue.
The authorities had, however, held that the appellant was liable to.
pay the differential duty since the appellant had failed to prove the payment of duty on the base yarn and, therefore, the said orders were bad.
On the other hand, on behalf of the revenue, it was contended that it was for the respondent to prove that the duty had been paid on the base yarn and if the appellant was paying the duty of Rs. 10 per kg.
Only under notification relied upon and in the absence of proof of payment of duty, the base yarn, the orders of the lower authorities making the respondent liable to pay the duty were correctly passed.
The Tribunal found that the respond ent was not the manufacturer of base acrylic yarn.
The work done by the respondent on the base yarn was by way of textu rising the same.
In respect of the, same, the duty payable on the textured yarn produced out of base yarn is the duty for the time being leviable on the base yarn, if not al ready, paid plus Rs.20 per kg.
Under notification No. 125/75, the duty was reduced to the duty for the time being leviable on the base yarn, if not already paid, plus Rs. 10 per kg.
In this connection, it is relevant to refer to notifi cation No. 125/ 75.
The notification, which was issued under sub rule (1) of rule 8 of the Central Excise Rules, 1944, stated that the Government exempted the texturised yarn of the description specified in column (3) of the Table annexed thereto and falling under sub items of item No. 18 of the First Schedule to the Act as are specified in the corre sponding entries in column (2) of the said Table, from so much of the duty of 433 excise leviable thereon as is in excess of the duty speci fied in the corresponding entries in column (4) of the said Table.
The relevant portion of the Table annexed to the said notification reads as follows: section No. Sub Item No. Description Rate of duty 1.
(ii) Textured Yarn produced The duty for the out of base yarn time being leviable on the base yarn,if not already paid plus ten Rupees per kilogram.
Admittedly, the respondent had paid duty at Rs. 10 per kg.
and had been allowed to clear the goods.
The demand for differential duty by way of duty payable on the base yarn was not in dispute.
On the base yarn, the Tribunal held, the manufacturer was liable to pay duty only since purchasers of the base yarn from the market could naturally assume that duty on the base yarn would have been paid by the manufac turer before removal and that it was for the department to verify the fact of such payment and take action against the manufacturer if base duty had not been paid.
Under the relevant tariff item, the duty, as mentioned before, was fixed as the duty for the time being leviable on the base yarn, if not already paid, plus Rs.20 per kg.
(reduced to Rs. 10 per kg.
under the notification).
The notification does not change the basic position so far as base duty is concerned from the aforesaid stand.
The Tribunal held that the revenue was entitled to claim duty inclusive of the duty paid on base yarn only on proof that the duty on the base yarn had not been already paid, unless otherwise, in the normal course, the presumption inevitable, in view of the nature of the business, be that the duty on base yarn had been paid.
If that is so, that cannot be the responsibility or the burden of the respondent to prove that the duty on base yarn had already been paid.
It further appears that when the appeal was filed before the Collector, the respond ent had disclosed the names of the persons from whom they had received the yarn as also the names of the manufacturers enclosing the copies of the relevant record.
But even then the revenue had not chosen to verify these facts and the Collector (Appeals) had passed his order on the basis that it was for the respondent to prove the actual payment of base duty.
This approach is not proper approach.
It is not correct to state that the respondent alone should have special knowledge of the fact of payment of base duty and it was therefore for the respondent to prove the said fact.
In that view of the matter, the 434 Tribunal held in favour of the respondent.
We are of the opinion that the Tribunal was right.
Excise is a duty on manufacture.
The liability of pay ment of this duty is on the manufacturer.
The language of the notification referred to hereinbefore indicates that only the duty for the time being leviable on the base yarn, if not already paid plus ten rupees per kg.
was the liabili ty.
The description of manufacture was textured yarn pro duced out of base yarn.
We are clearly of the opinion that in view of the facts and the circumstances of the case, the Tribunal was right in the view it took.
In this connection, it is instructive to refer to rule 49 of the Central Excise Rules, 1944, which deals with duty chargeable only on the removal of the goods from the factory premises or from an approved place of storage.
Reference was also made before the Tribunal and our attention was also drawn to the deci sion of the Delhi High Court in Sulekh Ram & Sons vs Union of India & Ors., [1978] ELT J 525, where under rule 9 of the Central Excise Rules, it was held by the Delhi High Court that under excise system, no goods can be removed from the place of manufacturer without first paying the excise duty, therefore, a purchaser can presume that goods are duty paid.
It would be intolerable if the purchasers were required to ascertain whether excise duty had already been paid as they have no means of knowing it.
It has to be borne in mind that duty of excise is primarily a duty levied on a manufacturer or a producer in respect of the commodity manufactured or produced.
See the observations of Lord Simonds in Governor General in Council vs Province of Madras, 72 Indian Appeals 91.
In a situation of this nature, the Delhi High Court held that the processor was in the similar position as a purchas er of the goods.
In that view of the matter, we are of the opinion that the Tribunal was right in the view it took.
We have heard learned counsel for the appellant and considered the matter.
We find no merit in the appeal for the reasons mentioned above.
In that view of the matter, this appeal must fail and is accordingly dismissed without any order as to costs.
Appeals dismissed.
435 CIVIL APPEAL NOS.
214 1 42 (NM) OF 1986.
Collector of Central Excise, Chandigarh Versus 1.
M/s Navrang Dyeing Co. & Ors.
M/s Capital Dyeing Co This is an appeal under section 35L(b) of the Act from the judgment and order of the Tribunal dated 17th April, 1984.
For the reasons in civil Appeals Nos. 2151 52, these appeals must also fail and are accordingly dismissed without any order as to costs.
| IN-Abs | The Respondent Company was in the business of dyeing acrylic yarn received from traders and manufacturers of hosiery goods on job basis.
It was paying duty at the rate of Rs. 10 per K.G. in terms of Notification No. 125/75 CE dated 12.5.1975 on the presumption that base yarn had dis charged duty liability before it was received for dyeing.
A show cause notice under section 9(2) of the Central Excise Rules, 1944 was issued by the Assistant Collector of Central Excise demanding an amount of Rs.4,300 as central excise duty (C) Rs.24 per K.G. on 180 Kgs.
for the period May 1976 to July 1976.
The demand was resisted by the Respondent Company contending that duty on base yarn was payable by the Manufacturers and the burden of showing that this had not been paid by the Manufacturers was on the Revenue which was not accepted and on appeal by the Assessee the Appellate Collector of Central Excise confirmed the demand.
On further appeal, however, the Appellate Tribunal upheld the conten tion of the Respondent holding that the Manufacturer was liable to pay duty on the base yarn since purchasers could naturally assume that the duty on base yarn would have already been paid by the Manufacturer and that it was for the Department to verify the fact of such payment and take action against the manufacturer, if duty had not been paid particularly when in this case the Assessee had disclosed the names of persons/manufacturers from whom it had received the yarn for dyeing while the matter was pending before the Collector.
Dismissing the appeals preferred by the Revenue, this Court, HELD: Excise is a duty on manufacture.
The liability of payment of this duty is on the manufacturer.
The language of the Notification No. 125/75 dated 12th May 1975 indicates that only the duty for the time being leviable on the base yarn, if not already paid, plus ten rupees per kg.
was the liability.
The description of manufacture was textured yarn produced out of base yarn.
[434B] 431 It would be intolerable if the purchasers were required to ascertain whether excise duty had already been paid as they have no means of knowing it.
It has to be borne in mind that duty of excise is primarily a duty levied on a manufac turer or a producer in respect of the commodity manufactured or produced.
A processor is in the similar position as purchaser of the goods.
[434D E] Sulekh Ram & Sons vs Union of India & Ors., [1978] ELT J 525 and Governor General in Council vs Province of Madras, 72 Indian Appeals 91, referred to.
|
Civil Appeal Nos.
463 and464 of 1986.
From the Judgment and Order dated 6.11.
1984 of the Patna High Court in Civil Writ Jurisdiction Case No. 3489 of 1981 & 601 of 1982.
M. Qamaruddin and Mrs. M. Qamaruddin for the Appellant.
S.N. Misra, M.K. Jha and P.C. Kapur for the Respondent.
The Judgment of the Court was delivered by 401 SINGH, J.
These two appeals are directed against the judgment and order of High Court of Patna dated November 6, 1989, quashing the order of the Bihar State Madarasa Educa tion Board dissolving the Managing Committee of the respond ent 's institution.
The State Legislature of Bihar enacted the Bihar State Madarasa Education Board Act (Act 32 of 1982) providing for the constitution of an autonomous Board for development and supervision of Madarasa education in the State of Bihar.
"Madarasa" as defined by Section 2 means an educational institution providing instructions in Islamic, Arabic and Persian studies and recognised as such by the Board.
The 'Board ' means the Board established under Sec. 3 of the Act.
Section 3 provides for the constitution of State Madarasa Education Board which is a body corporate with perpetual succession and a common seal.
The Board consists of a Chair man appointed by the State Government, Director of Education (Incharge of Oriental Education), Director, Institution of Post graduate Studies and Research in Arabic and Persian, Patna, the Principal, Madarasa Islamia, Shamsul Hoda, Patna, Chairman, Bihar Sunni Wakf Board, Patna, Chairman, Bihar Shia Wakf Board, Patna, two members of the State Legislature nominated by the Government having interest in Madarasa Education or Islamic studies, two senior teachers of recog nised Madarasa nominated by the State Government, and three other members nominated by the State Government who have interest in Madarasa education or Islamic studies.
The Board is invested with powers and functions to provide for in struction and research in Arabic, Persian and Islamic stud ies and to advise the State Government on all matters relat ing to Madarasa education.
The Act empowers the Board to direct, supervise and control Madarasa education, to grant recognition to Madarasas in accordance with the regulations framed by it, to conduct different Madarasa examination, to publish results, to make regulations prescribing conditions of employees of the Board, to provide for the constitution of the Managing Committee, to constitute academic committee, recognition committee, examination committee, and for carry ing on its powers and functions in regulating the education in Madarasa institutions.
The Board is headed by a Chairman nominated by the State Government under Sec.
10(2) of the Act, it lays down that no person shall be eligible for appointment as Chairman unless he holds adequate administra tive experience under the Central or State Government and he has teaching or research experience for not less than 10 years in post graduate educational institutions or he is regarded scholar in Arabic, Persian, Islamic studies and he is interested in Madarasa education.
The Board as constitut ed by the 402 Act is an autonomous body entrusted with the duty to grant recognition, aid, supervise and control the academic effi ciency in the Madarasa institutions, aided and recognised by it.
The members of the Board consist of those persons who are connected with or interested in the teaching and re search of Arabic, Persian and Islamic studies, and interest ed in the Madarasa education.
The Legislature has enacted the Act with the primary purpose of providing an autonomous educational authority for regulating the efficiency of Madarasa institutions where studies are carried on in Ara bic, Persian and Islamic studies.
The Hanfia Arabic College Jamalia and Madarasa Shamsul Uloom the respondent 's institutions are Madarasa institu tions aided and recognised by the Board under the provisions of the Act, as such the respondent 's institutions are sub ject to the provisions of the Act and the regulations framed by the Board in matters relating to their management and administration.
The Committees of Management of the two respondent institutions failed to comply with the directions issued by the Board with regard to payment of salary to teachers, whereupon the Board in exercise of its power under Section 7(2)(n) of the Act dissolved the Managing Committee of the respondent 's institution and appointed ad hoc Commit tee to manage the institutions.
The outgoing Managing Com mittee of the respondent 's institutions and some of the affected members of the Committee filed writ petitions before the High Court of Patna under Article 226 of the Constitution challenging the Order of the Board, dissolving the Committee of Management and appointing ad hoc Committee.
Before the High Court, the respondents submitted that Sec.
7(2)(n) of the Act which confers power on the Board to dissolve Managing Committee of a Madarasa is violative of Article 30(1) of the Constitution as it interfered with their right of management of institutions.
The High Court upheld the respondent 's plea and declared Sec.
7(2)(n) unconstitutional as it confers power on the Board to dis solve Committee of Management of a Madarasa.
The Board has preferred this appeal by leave against the aforesaid judg ment of the High Court.
Section 7(2)(n) reads thus: "7.
Power and functions of the Board: (1) It shall be the duty of the Board to provide for instruction and research in Arabic, Persian and Islamic studies and such other branches of knowledge including vocational courses and training which the Board thinks fit and to advise the State Government on all other matters relating to Madarasa Education.
403 (2) Subject to the provisions of this Act and the Rules and Regulations made thereunder the Board shall have the power to direct, super vise and control Madarasa Education and in particular have the powers (n) To get the Managing Committee of Madarasas constituted in a manner such as to include the Head Maulvi, two guardians ' representatives and one member nominated by the Board and two other persons interested in Madarasa Education or Islamic studies to be composed by the above seven members.
The power to dissolve the Managing Committee shall vest in the Board.
" The above provision confers power on the Board to pro vide for constitution and dissolution of Managing Committee of a Madarasa.
There is no dispute that the respondent Madarasas are educational institutions established by the Muslim minority community.
Article 30(1) of the Constitution protects the right of minorities to establish and administer educational institutions of their choice.
The Article in terms grants all minorities two rights (i) the right to establish and (ii) the right to administer educational institution of their choice.
The rights so granted are, however, not absolute, a minority institution obtaining financial aid and recognition is subject to reasonable restrictions to ensure excellence in the institution.
While minorities have a constitutional right to establish and to administer educational institutions of their choice, they have no absolute right to maladminister, the State has right to impose regulations made in the interest of efficiency of institution 's discipline, health, sanitation and public order even though such regulations may indirectly impinge on the exclusive right of administration and management of the institution.
A minority institution seeking aid and recogni tion must be subject to regulatory provisions which are reasonable and consistent with Article 30(1) of the Consti tution.
A minority institution which does not seek aid or recognition from the State or the Education Board need not be subject to regulatory provisions.
These principles have been settled by this Court in re Kerala Education Bill 1957, [1959] SCR 995, Sidharajbhai vs State of Gujarat, ; , , , and ; The question which arises for consideration is whether Section 7(2)(n) which confers power on the Board to dissolve the managing 404 committee of an aided and recognised Madarasa institution violates the minorities constitutional right to administer its educational institution according to their choice.
This Court has all along held that though the minorities have right to establish and administer educational institution of their own choice but they have no right to maladminister and the State has power to regulate management and administra tion of such institutions in the interest of educational need and discipline of the institution.
Such regulation may have indirect effect on the absolute right of minorities but that would not violate article 30(1) of the Constitution as it is the duty of the State to ensure efficiency in educational institutions.
The State has, however, no power to completely take over the management of a minority institution.
Under the guise of the regulating the educational standards to secure efficiency in institution, the State is not entitled to frame rules or regulations compelling the management to surrender right of administration.
In State of Kerala vs Very Rev. Mother Provincial etc.
, [1971] I SCR 734, Section 03(1) of the Kerala University Act, 1969 which conferred power on the Government to take over the management of a minority institution on its default in carrying out the directions of the State Government was declared ultra vires on the ground that the provisions interfered with the con stitutional right of a minority to administer its institu tion.
Minority institutions cannot be allowed to fall below the standard of excellence on the pretext of their exclusive right of management but at the same time their constitution al right to administer their institutions cannot be com pletely taken away by superseding or dissolving managing committee or by appointing ad hoc committees in place there of.
In the instant case Section 7(2)(n) is clearly violative of constitutional fight of minorities under Article 30(1) of the Constitution in so far as it provides for dissolution of managing committee of a Madarasa.
We agree with the view taken by the High Court.
We have upheld the view taken by the High Court with regard to the validity of Section 7(2)(n) of the Act but we do not agree with the observations made by the High Court in paragraphs 9 and 10 of its judgment with regard to the constitution of the Board and appointment of its Chairman.
The High Court has observed that the majority of the members of the Board and its Chairman may not belong to minority community, therefore the Board 's constitution will not be in consonance with the minorities constitutional right under Article 30 of the Constitution.
In our opinion, the view taken by the High Court is not correct.
Article 30(1) does not contemplate that an autonomous Educational Board en trusted with the duty of regulating the aided and 405 recognised minorities institution, should be constituted only by persons belonging to minority community.
Article 30(1) protects the minorities right to manage and administer institutions established by them according to their choice, but while seeking aid and recognition for their institutions there is no constitutional obligation that the Board grant ing aid or recognition or regulating efficiency in minority institution should consist of members exclusively belonging to minority communities.
In the instant case the constitu tion of the Board under Section 3 of the Act ensures that its members are only those who are interested in teaching and research of Persian, Arabic and Islamic studies.
This provision fully safeguards the interest of Madarasa of the Muslim community.
We therefore hold that observations made by the High Court in paragraphs 8 and 9 of its judgment are contrary to the scope of Article 30(1) of the Constitution.
With these observations we agree with the view taken by the High Court in quashing the order of the Board dissolving the managing committee of the respondent 's institutions and appointing ad hoc committee.
The appeals fail and are ac cordingly dismissed.
There will be no order as to costs.
P.S.S. Appeals dismissed.
| IN-Abs | Section 7(2)(n) of the Bihar State Madarasa Education Board Act, 1982 confers power on the State Madarasa Educa tion Board to dissolve the managing committee of an aided and recognised Madarasa institution.
The committees of management of the respondent institutions established by the Muslim minority community failed to comply with the direc tions issued by the Board with regard to payment of salary to teachers, whereupon the Board in exercise of its power under section 7(2)(n) of the Act dissolved the said committees.
The respondents filed writ petitions under Article 226 of the Constitution assailing section 7(2)(n) of the Act as violative of Article 30(1) on the ground that it interfered with their right of management of institutions.
The High Court declared section 7(2)(n) unconstitutional It, however, observed that the majority of members of the Madarasa Educa tion Board and its Chairman may not belong to minority community, therefore, the Board 's constitution will not be in consonance with the minorities constitutional right under Article 30 of the Constitution.
Dismissing the appeals by the Board, the Court, HELD: 1. Article 30(1) of the Constitution protects the right of minorities to establish and administer educational institutions of their choice.
The rights so granted are, however, not absolute.
Minorities have no right to malamin ister.
The State has power to impose regula 400 tions made in the interest of efficiency of institution 's discipline, health, sanitation and public order even though such regulations may indirectly impinge on the exclusive right of administration and management of the institution.
The State has, however, no power to completely take over the management of a minority institution under the guise of regulating the educational standards by superseding or dissolving managing committee or by appointing ad hoc com mittees in place thereof.
[403D F; 404C E] In the instant case, section 7(2)(n) of the Bihar State Madarasa Education Board Act, 1982 in so far as it provides for dissolution of the managing committee of a Madarasa is, clearly violative of constitutional right of minorities under Article 30(1) of the Constitution.
[404E F] In re Kerala Education Bill 1957, [1959] SCR 995; Sidha rajbhai vs State of Gujarat; , ; State of Kerala vs Very Rev. Mother Provincial etc.
; , ; Ahmedabad St. Xaviers College Society vs State of Gujarat, ; ; Lilly Kurian vs Lawina, ; and All Bihar Christian Schools Assn.
vs State of Bihar, ; , referred to.
Article 30(1) of the Constitution does not contem plate that an autonomous Educational Board entrusted with the duty of regulating efficiency in the aided and recog nised minority institutions, should be constituted exclu sively by persons belonging to the minority community.
In the instant case, the constitution of the Board under section 3 of the Act ensures that its members are only those who are interested in teaching and research in Persian, Arabic and Islamic studies.
This provision fully safeguards the inter est of Madarasa of the Muslim community.
The observations made by the High Court are contrary to the scope of Article 30(1) of the Constitution.
[404H; 405A, B C]
|
vil Appeal No. 135 I(N) of 1973.
From the Judgment and Decree dated 14.3.1973 of the Rajasthan High Court in S.B. Civil Second Appeal No. 201 of 1966.
K.K Jain, Pramod Dayal and A.D. Sanget for the Appellant.
U.N. Bachavat, Sushil Kumar Jain, Sudhanshu Atreya and L.C. Agarwala for the Respondents.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
This appeal by special leave is from the judgment of the Rajasthan High Court dated March 14, 1973 in S.B. (Civil) 2nd Appeal No. 201of 1966.
The case has a long history.
It is concerned with a garden (baghichi) with temples of Sri Satyanarayanji, Sri Mahadeoji and other buildings at Motidungri Road in Jaipur.
The local Darjees (Tailors) claim that it is their community property.
According to them 359 it is known as 'Baghichi Darjian ' since it belongs to Darji community.
The property however, was the subject matter of several litigations.
It was claimed by different persons at different intervals on different grounds.
One Narayan was admittedly 'Pujari ' of the Temples.
There was allegation that Narayan purported to have sold the Baghichi in favour of one Khawas Bala Bux.
The Panchas of Darjian community filed a suit for cancellation of the sale deed and posses sion of the baghichi.
The suit was also for declaration of the right to administer the trust of the temples and the other properties.
Narayan was the first defendant in that suit.
He did not contest the suit.
He was, however, summoned and his statement was recorded on July 8, 1925, wherein he admitted that he was only the Pujari of the temples.
The other defendants in the suit set up rival title to the property relying upon the sale deed of Samvat 1932 in the name of Raghunath.
The trail court dismissed the suit but on appeal the District Judge decreed it.
That decree was af firmed by the former Chief Court, Jaipur by judgment exhibit A8 dated September 15, 1928.
Thereafter, for about 23 years there was no problem and there was no rival claimant to the property.
But the dispute started after the death of Narayan.
His eldest son Bhonrilal respondent 3 herein, made attempts to get his name mutated in the revenue records as owner of the baghichi.
It appears that Bhonrilal after the death of his father was acting as Pujari of the temples.
The Darjian community authorised Kalyan Singh, the appellant herein, as well as one khawas Suraj Narayan to bring an action for ejectment of Bhonrilal.
In 1951 they instituted a suit for his ejectment.
In that suit Bhonrilal admitted the Panchayat 's right to the baghichi but raised a number of other pleas including his title by adverse possession.
In 1966 the Munsif Court (West Jaipur) decreed the suit in favour of the Darji community.
In 1958 the appeal against that decree was dismissed by the senior civil Judge, Jaipur City.
Bhonrilal preferred Second Apeal No. 8C of 1958 in the High Court of Rajasthan and obtained stay of delivery of possession on depositing mesne profits at Rs.25 per month.
On September 15, 1960, the High Court dismissed the second appeal.
Thus the title of the Darjee community in respect of the baghichi was again recog nised.
Even before disposal of the aforesaid second appeal, Ganga Ram the younger brother of Bhonrilal started another round of litigation.
On December 12, 1959, he brought a declaratory suit claiming that he is owner of the property consisting of baghichi and temples.
In this appeal we are concerned with the fight claimed by him.
The suit was pri marily against the present appellant Kalyan Singh and Suraj 360 Narayan, since deceased.
Bhonrilal was also impleaded as the third defendant.
Ganga Ram based his title to the property under a sale deed dated Baishakh Sudi 12th Samvat 1932 (about 1875 A.D.) and also on a will dated Asaj Sudi 12th Samvat 1973 (about 1916 A.D.).
It was further alleged that the bagichi belonged to Bhagala and Girdhari and they sold the same to Raghunath Brahmin.
Raghunath constructed the temple of Sri Satyanarainji and other buildings.
Raghunath had only one son called Gaurilal and he was issueless.
Garuilal executed a will giving all his properties to Ganga Ram.
It was alleged that the earlier suit against Bhonrilal was collusive between the parties.
With these allegations, Ganga Ram prayed for the following reliefs: "(a) the plaint of the plaintiff be decreed and the plaintiff be declared as the owner of the aforesaid property.
The plaintiff is the owner of the property mentioned in Para No. 1.
The decree which the defendant Nos. 1 and 2 had obtained on 20.8.
1956 against the Defend ant No. 3 and was upheld by the Senior Civil Judge on 6.2.
1958, is null and void against the claim of the plaintiff.
" The appellant the first defendant in the suit denied plaintiff 's title to the baghichi.
He also denied the title of Bhagala and Girdhari.
It was maintained that the baghichi was community property of Darjees and Narayan was only a 'Pujari ' of the temples.
Narayan continued as Pujari till his death in 1950 and thereafter his eldest son Bhonrilal was acting as Pujari.
Reference was made to the judgment of the Chief Court of Jaipur in the first suit against Narayan and judgments in the second suit against Bhonrilal.
In view of those litigations and judgments rendered therein, it was claimed that the present suit was barred by principle of res ]udicata.
It was also specifically stated that the suit against Bhonrilal was not collusive but brought on behalf of the Darjee community in a representative capacity.
The trial Judge on considering the evidence produced by the parties decreed the suit declaring the plaintiff as owner of the suit property.
It was also declared that the plaintiff is not bound by the judgment and decree dated September 15, 1928 of the Chief Court of the erstwhile State of Jaipur.
But no reference was made to the judgment and decree obtained in the suit against Bhonrilal.
No declara tion was given that it was not binding on the plaintiff though that relief was specifically sought for.
Perhaps the plaintiff did not press that point.
Kalyan Singh and Suraj Narayan appealed to the District Court.
The 361 learned District Judge dismissed the appeal.
He also did not refer to the judgment in the suit against Bhonrilal.
He only examined the validity of the said Sale deed and Will and held that they were proved to have been executed.
The de fendants approached the High Court in Second Appeal No. 201/41 Before the High Court, they sought to produce addi tional evidence.
They moved an application under Order 41 Rule 27 C.P.C. to accept a certified copy of the judgment dated September 15, 1928 of the Chief Court of the erstwhile Jaipur State and a copy of the statement of Narayan recorded in that suit.
The High Court accepted the judgment of the Chief Court of Jaipur State, but rejected the Statement of Narayan.
During the pendency of the appeal in the High Court Suraj Narain died and his name was deleted from the appeal memo.
Ganga Ram also died and his wife and son were brought on record as his legal representatives.
The principal question argued before the High Court related to the validity of sale deed (exhibit 3) and will (exhibit 4) which formed the foundation of Gangaram 's title to the suit property.
The High Court rejected both the documents.
The sale deed exhibit 3 was rejected as inadmissible in evi dence.
The will exhibit 4 was disregarded in view of the suspi cious circumstances surrounding its execution.
These conclu sions would have been sufficient for allowing the appeal and dismissing the suit.
But the High Court did not do that and instead rounded off the discussion as follows: "The plaintiff is undoubtedly in possesion of the Baghichi and it cannot be gainsaid that he was not a party to the previous litigation and he is not claiming the property though his father Narayan or his brother Bhonrilal.
Apart from everything, the suit does not seem to have been filed against Kalyan Singh and another in a representative capacity in ac cordance with Order 1 Rule 3 Civil Procedure Code.
There was no application for permission to sue them in their representative capacity.
Therefore, in spite of my having reached the conclusion regarding the document exhibit 3 and 4 against the plaintiff respondents I am not inclined to interfere with the decree of the court below though I do feel that the litiga tion against Kalyan Singh and another in their individual capacity was a fruitless exercise. ' ' 362 Kalyan Singh the defendant has now appealed challenging the decree of the High Court.
Counsel for the appellant has a two fold contention.
In the first place, it was argued that the Darjee community in their representative suit against Bhonrilal has obtained a decree declaring their title to the property and that decree could not be nullified by the present suit against individu als.
The High Court instead of holding that the plaintiffs suit was a fruitless exercise, ought to have dismissed the suit.
Secondly, it was urged that the High Court after discarding the sale deed exhibit 3 and will exhibit 4 ought to have non suited the plaintiff since there is no other material whatever to support his title to the property.
Normally, these contentions would have been accepted without much discussion, but we have to consider the submis sions of counsel for the respondents.
He challenged the correctness of the findings on all material points.
It is, therefore, necessary to examine the judgment in greater detail.
We will first consider whether the previous suit against Bhonrilal was a representative suit on behalf of the Darjee community.
It was argued for the respondents that it was only a suit on behalf of the 'Panchayat Darjian ' and not a representative suit on behalf of the Darjee community.
Our attention was drawn to the trail court order dated November 16.
1962 in the present suit.
Thereunder the trial court has rejected an application for amendment of written statement.
It was observed that the defendants in the affidavit have not denied allegations of the plaintiff that the suit against Bhonrilal was not in a representative capacity.
But the Court made that observation only on perusing the affida vits of parties for a limited purpose of considering the amendment application and not on an issue arising out of pleadings in the suit.
In fact, the court has not framed any issue on that controversy although the defendant in the written statement has asserted that it was a representative suit on behalf of the Darjee community.
The view expressed in the order dated November 1962 is therefore, unacceptable.
Counsel for the appellant however, relied upon state ments from judgments in the previous suit in support of his contention that it was representative suit on behalf of the Darjee community.
exhibit A 2 is the judgment of the trial court.
It begins with a sentence: "This is a representative suit by the plaintiffs Kalyan Singh and Suraj Narayan on behalf of the Panchayat Darjian for recovery of possession of the 363 baghichi.
" But this statement may not help counsel for the appellant, since the suit was said to be on behalf of the 'Panchayat Darjian ' and not Darjee community.
exhibit A 4 is the High court judgment in the second appeal arising out of that suit.
There the High court has stated: "That the suit was brought by Kalyan Singh and another against Bhonrilal by the representatives of Darjee community.
" Here again we do not find much support to the appellant.
The suit might have been instituted by representatives of the Darjee community, but that by itself was not sufficient to constitute the suit as a representative suit.
For a representative suit, the court 's permission under Order 1 Rule 8 of the Code of Civil Procedure is mandatory.
One does not know whether any such permission was obtained.
The pleading in that suit or the order obtained under Order 1 Rule 8 has not been produced.
There is no other evidence to support the contention of either of the parties.
In the absence of necessery material the conclusion one way or the other as to the nature of the previous suit will not be justified.
But that does not mean that the plaintiff could succeed ignoring the judgment and decree in the suit against Bhonri lal.
It must be stated that any member of a community may successfully bring a suit to assert his right in the commu nity property or for protecting such property by seeking removal of encroachments thereform.
Such a suit need not comply with the requirements of Order 1 Rule 8.
The suit against Bhonrilal even if it was not a representative suit on behalf of the Darjee community would be a suit of this category.
Kalyan Singh and another claimed that the baghichi was their community property and Bhonrilal was a trespasser.
They brought the suit to recover possession from Bhonrilal.
The suit was decreed.
The rival title claimed by Bhonrilal by adverse possession was negatived.
So long as that decree operates it would be futile to decree the present suit.
The observation of the High Court that the present suit is a fruitless exercise could therefore, be sustained on this ground if not for the reasons stated.
The validity of the will may now be considered.
On this question, the High Court said: "Having read the evidence of these witnesses I am satisfied that according to the ordinary standard of proving a document the document exhibit 4 can be said to have been proved.
Howev er, there are two disturbing elements sur rounding the execution of the will.
The first striking feature of this will is that even though the wife of Gaurilal was living at 364 the time as she had survived him, no provision whatsoever had been made regarding her by Gaurilal in the alleged will exhibit 4.
Then the second striking feature is that even though litigation had been going on almost for years this will had not been referred to by anyone.
In the first suit Narain was a defendant he had not contested the suit and the proceedings remained ex parte against him.
However, he was called by the Court and his statement was recorded.
The judgment of the Jaipur Chief Court shows that he had laid no claim to the property and took the position that he was a Pujari at the baghichi.
Then subsequently when suit was filed by the Darzi community against Bhonrilal, no reference came to be made to this will exhibit 4 Learned counsel for the re spondents, as I have already observed, sug gested that Narain or Bhonrilal could not be expected to make any reference to the will as that would be detrimental to the stand taken by them.
The argument, no doubt, looks attrac tive, but if it is examined in the light of none other than the statement of Ganga Ram himself it cannot stand the scrutiny.
Gangaram had referred to the earlier litigation in the plait, but when he entered the witnesses box he had taken a somersault.
He was asked wheth er he was aware of the previous litigation and he said, he did not know of it.
He was then questioned with reference to para 5 of the plaint as to how the facts had been mentioned by him therein and he kept mum and had no answer.
He also admitted that it was Narain who had given him the document, exhibit 4 some 5 or 7 years after the death of Gaurilal i.e. some 30 or 35 years back.
In that situation there was no mention of the alleged will in any of the two previous suits.
It is also remarkable that even upto the High Court Bhonrilal had asserted his own possession over the property and had also obtained a stay order on payment of mesne profits vide exhibit A 7.
XXXXX XXXXXX XXXXXXX The will is, therefore, not free from suspi cion and it has not been dispelled.
My con science in this regard is not satisfied and therefore, I am unable to hold that exhibit 4 was the last will of Gaurilal in favour of Ganga Ram".
Counsel for the respondents however, urged that the plain tiff has 365 proved its execution by producing one of the attestors and the scribe and their evidence has not been disbelieved by the High Court.
We were referred, in particular, to the evidence of plaintiff PW 3, Ramdeo PW 4 and Sham Sunder PW 7.
We have perused their testimony and we are of the opinion that it is far from satisfactory.
The plaintiff has deposed that Gaurilal was issueless and hence executed the will bequeathing the property to him.
Ramdeo claims to be the attesting witness to the will.
He has stated that the plain tiff was 10 11 years old when the will was executed.
But the plaintiff himself has deposed that he was then a boy of 2 3 years.
Ramdeo has given his age as 55 years when he deposed in the court on January 5, 1962.
If we go by that age Ramdeo must have been a boy of 9 years when he attested the will in 19 16 Sham Sundar claims to be the scribe of the will.
He has deposed that after he wrote the will attestation was made by witnesses but he has not named any one of them.
He has not even referred to Ramdeo as an attesting witness.
It was said that the plaintiff was adopted son of Gauri lal, and was thus the object of his affection for the exclu sive bequest.
But there is no reference in the will that he was the adopted son.
The plaint also makes no reference to his adoption by Gaurilal.
Nor there is any other material to lend credence to such relationship.
On the contrary, the Temple register shows that he was the son of Narayana.
Even if we proceed on the plea that the plaintiff was adopted son of Gaurilal, there seems to be little reason to justify the bequest exclusively m his favour.
It is now not in dispute that Gaurilal 's wife was living at the time of execution of the will, but no provision was made for her maintenance.
In the normal course, the wife would be the first to be thought of by the husband executing a will.
She should have been the first beneficiary of her husband 's bounty unless there was odium or embittered feelings between them.
But there is no such evidence and it was not even the plaintiff 's case that their relationship was strained.
Why then she should be excluded altogether? It is indeed baf fling since it runs counter to our societal values.
Yet there is another circumstance which tells against the genuineness of the will.
The will purports to have been executed in 1916 and Gangaram instituted the suit in 1959.
The will had not seen the light of the day till the institu tion of the suit.
It is not as if Gangaram or his brother or father had no opportunity to produce the will to assert rights over the property in question.
The plaintiff has stated in his evidence that his father Narayan handed over the will to 366 him.
Narayan was therefore, aware of the execution of the will.
Yet he did not disclose it to the court in the suit against him.
His statement was recorded on July 8, 1925 wherein he had admitted that he was only the Pujari of the temple and the wife of Baldeo sold the property.
He did not say that his son Gangaram became owner of the property under the will executed by Gaurilal.
In ,he second suit, Bhonrilal set up independent title to the property by adverse posses sion.
That claim was totally destructive of Gangaram 's title.
It cannot be said that Gangaram was ignorant of that litigation till he filed the suit.
His evidence does not lead to that inference.
In fact the plaint averments and his statements in the court lead to the contrary.
Gangaram, however, made no attempt to produce the will in that suit.
In the long period of 43 years, none made any attempt to rely upon the will against the claim of the Darji community when the community representatives have successfully brought two suits.
This would not have been the natural conduct of person if the will had been really in existence.
It has been said almost too frequently to require repe tition that a will is one of the most solemn documents known to law.
The executant of the will cannot be called to deny the execution or to explain the circumstances in which it was executed.
It is, therefore, essential that trustworthy and unimpeachable evidence should be produced before the court to establish genuineness and authenticity of the will.
It must be stated that the factum of execution and validity of the will cannot be determined merely by considering the evidence produced by the propounder.
In order to judge the credibility of witnesses and disengage the truth from false hood the court is not confined only to their testimony and demeanour.
It would be open to the court to consider circum stances brought out in the evidence or which appear from the nature and contents of the documents itself.
It would be also open to the court to look into surrounding circum stances as well as inherent improbabilities of the case to reach a proper conclusion on the nature of the evidence adduced by the party.
In H. Venkatachala lyengar vs B.N. Thimmajamma & Ors., [1959] Supp. 1 SCR 426 Gajendragarkar, J., as he then was, has observed that although the mode of proving a will did not ordinarily differ from that of proving any other docu ment, nonetheless it requires an element of solemnity in the decision on the question as to whether the document pro pounded is proved as the last will and testament of departed testator.
Where there are suspicious circumstances, the onus would be on the propounder to explain them to the satisfac tion of the court before the will could be accepted as genuine.
Where there are 367 suspicious circumstances, the Court would naturally expect that all legitimate suspicions should be completely removed before the document is accepted as the last will of the testator.
These principles have been reiterated in the subsequent decisions of this Court in Rani Purnima Devi & Anr.
vs V. Kumar Khagendra Narayan Dev & Anr., and Smt.
Indu Bala Bose & Ors.
vs Manindra Chandra Bose & Anr., ; The Privy Council in Mr. Biro vs Atma Ram & Ors., AIR 1937 PC 10 1 had an occasion to consider an analogous case where the wife was practically disinherited and there was unexplained delay in producing the will in public.
There the alleged will by a testator gave only a life estate to his daughter who was the only child and who was to get some property at her marriage.
The bulk of the estate was vested in the widow of the testator and three other women, namely, his mother, his step mother and his paternal aunt.
These women though entitled under the Hindu Law only to mainte nance, were made joint owners equally with the widow of the testator.
None of the devisees could get the estate parti tioned or alienate it for necessity.
It was however, provid ed that the lady, who survived the other three devisees, would become the absolute owner of the estate.
The widow of the testator would not get her husband 's estate, if she predeceased any of her co devisees.
The will was not pro duced until 22 years after its execution though there were occasions to produce it, had it been in existence.
Consider ing these circumstances, the Privy Council observed (at 104): "It is most unlikely that a person having a wife and a minor unmarried daughter, who should be the objects of his affection, would make a will which would practically disinherit them.
That the testament is unnatural and runs counter to the ordinary sentiments of persons, having a status in society similar to that of Harbans Lal, cannot be seriously disputed.
But this is not the only circum stances which tells against its genuineness.
The will purports to have been executed on 24th August 1900, and the testator died within a month of that date.
But it is strange that it was not produced until 1922, after the com mencement of the present litigation.
During this long period of 22 years, which inter vened, there were occasions when the widow or her advisers could have produced the document, if it had been in existence; but they did not do so . " 368 ,The will in the present case, constituting the plaintiff as a sole legatee with no right whatever to the testator 's wife seems to be unnatural.
It casts a serious doubt on genuine ness of the will.
The will has not been produced for very many years before the court or public authorities even though there were occasions to produce it for asserting plaintiff 's title to the property.
The plaintiff was re quired to remove these suspicious circumstances by placing satisfactory material on record.
He has failed to discharge his duty.
We therefore, concur with the conclusion of the High Court and reject the will as not genuine.
This takes us to the validity of the sale deed exhibit 3.
The High Court rejected the document with the following observations: "exhibit 3 is neither a certified copy given under any of the provisions of the Evidence Act nor is it a copy made from the original by any mechanical process.
It also does not appear to have been made or compared from the original as there is no verification or endorsement of the kind and it does not come under clauses 1 or 5 of section 63 ei ther.
No one has given the oral account of the contents of the original document.
If in place of primary evidence secondary evidence is admitted without any objection at the proper time then the parties are precluded from raising the question that the document has not been proved by primary evidence but by second ary evidence.
But where there is no secondary evidence as contemplated by Section 66 of the Evidence Act then the document cannot be said to have been proved either by primary evidence or by secondary evidence.
" The basis of the plaintiff 's title relates back to the sale deed dated Baisakh Sudi 12 Samvat 1932 (1875 A.D.).
It was said to be a registered sale deed by which Bhagala Girdhari purported to have sold the baghichi to Raghunath Brahmin.
The plaintiff has not produced the original sale deed.
Nor a certified copy of it has been produced.
All that we find from the record is an ordinary copy of a sale deed exhibit 3 produced by Gopal Prasad PW 1.
Gopal Prasad has stated that exhibit 3 was a copy submitted by the parties along with the original sale deed for registration.
The original sale deed was said to have been returned to the party after its registration and a copy was kept in the file.
But Gopal Prasad has no personal knowledge about the registration of the sale deed, nor he has produced the register to indicate that that sale deed was registered and a copy was kept in the record.
exhibit 3 produced 369 by him does not bear any endorsement to the effect that it was a true copy of the original.
The High Court said, and in our opinion very rightly, that exhibit 3 could not be regarded as secondary evidence.
Section 63 of the Evidence Act mentions five kinds of sec ondary evidences.
Clause (1), (2) and (3) refer to copies of documents; clause (4) refers to counterparts of documents and clause (5) refers to oral accounts of the contents of documents.
Correctness of certified copies referred to in clause (1) is presumed under Section 79; but that of other copies must be proved by proper evidence.
A certified copy of a registered sale deed may be produced as secondary evidence in the absence of the original.
But in the present case exhibit 3 is not a certified copy.
It is just an ordinary copy.
There is also no evidence regarding contents of the original sale deed.
exhibit 3 cannot, therefore, be considered as secondary evidence.
The appellate Court has a right and duty to exclude such evidence.
In the result, the appeal is allowed, modifying the judgment and decree of the High Court.
The judgment and decree of the trial court as affirmed by the District Court are set aside and the plaintiff 's suit is dismissed.
Since the original plaintiff died leaving behind his widow during pendency of the appeal before the High Court, we make no order as to costs.
R.N.J. Appeal allowed.
| IN-Abs | This case is concerned with a garden with temples and other buildings at Jaipur claimed to be the property of Darjee (Tailors) community popularly known as 'Bagichi Darjian '.
It was claimed by different persons at different intervals on different grounds.
One Narayan, Pujari on the temples was said to have sold the Bagichi in favour of one Khawas Bala Bux.
Darjee community filed a suit for cancella tion of that sale and declaration of its right to administer the property.
The Trial Court dismissed the suit but on appeal District Judge decreed it and this decree was af firmed by the Chief Court of Jaipur.
But after 23 years on the death of Narayan his eldest son Bhonrilal respondent No. 3 herein who became the Pujari attempted to get his name mutated in revenue records as owner of the Bagichi.
On behalf of the Darjee community the appellant herein together with one Khawas Suraj Narayan filed a suit in 1951 for his ejectment.
This suit was decreed in favour of the Darjee community.
Appeal against that decree by Bhonrilal was dismissed by the Senior Civil Judge, Jaipur.
Second appeal in the High Court too failed.
However, even before the disposal of the aforesaid Second appeal, Gangaram the younger brother of Bhonrilal started another round of litigation.
He filed a declaratory suit claiming the ownership of the Bagichi and temples on the basis of sale deed dated Baishakh Sudi 12th Samvat 1932 (about 1875 A.D.) and a Will purported to be executed in 1916 A.D. in his favour.
357 The Trial Judge decreed the suit in his favour.
The defendants ' appeal was dismissed by the District Judge upholding the validity of the said Sale Deed and the Will.
On further appeal, the High Court rejected the validity of the Sale Deed as well as that of the Will which formed the foundation of Ganga Ram 's title.
But instead of allowing the appeal and dismissing the suit the High Court declined to interfere with the decree of the Court below though holding that the plaintiff 's suit was a fruitless exercise.
Kalyan Singh the defendant challenged the decree of the High Court in this Court on two counts.
Firstly that the suit against Bhonrilal was of a representatives character which could not be nullified by the present suit against individuals.
Secondly the High Court after discarding the Sale Deed and the Will ought to have non suited the plain tiff since there was no other material whatever to support the title.
While allowing the appeal and modifying the judgment and decree of the High Court, this Court, HELD: In the absence of permission under Order I Rule 8 CPC to file a representative suit which is mandatory any member of the community may successfully bring a suit to assert his right in the community property or for protecting such property.
Such a suit need not comply with the require ments of Order I Rule 8 C.P.C. and the suit against Bhonri lal even if it was not a representatives suit on behalf of the Darjee Community would be a suit of this category.
[363D E] It is essential that trust worthy and unimpeachable evidence should be produced before the Court to establish genuineness and authenticity of the Will.
It must be stated that the factum of execution and validity of the Will cannot be determined merely by considering the evidence produced by the propounder.
In order to judge the credibility of wit nesses and disengage the truth from falsehood the Court is not confined only to their testimony and demeanour.
It would be open to the court to consider circumstances brought out in the evidence or which appear from the nature and contents of the documents itself.
It would be also open to the Court to look into surrounding circumstances as well as inherent improbabilities of the case of reach a proper conclusion on the nature of the evidence adduced by the party.
[366E F] The Will in the instant case, constituting the plaintiff as a sole legatee with no right whatever to the testator 's wife seems to be unnatural.
It casts a serious doubt on the genuineness of the Will.
The Will has not been produced for very many years before the Court or 358 public authorities even though there were occasions to produce it for asserting plaintiff 's title to the property.
The plaintiff was required to remove these suspicious cir cumstances by placing satisfactory material on record.
He has failed to discharge his duty.
This Court concurs with the conclusion of the High Court and rejects the Will as not genuine.
[368A B] Section 63 of the Evidence Act mentions five kinds of secondary evidence.
Clauses (1), (2) and (3) refer to copies of documents; clause (4) refers to counter parts of docu ments and clause (5) refers to oral accounts of the contents of documents.
Correctness of certified copies referred to in clause (1) is presumed under section 79 but that of other copies must be proved by proper evidence.
A certified copy of a registered sale deed may be produced as secondary evidence in the absence of the original.
[369B C] H. Venkatachala lyengar vs B.N. Thimmajamma & Ors., [1959] Supp.
I SCR 426; Rani Purnima Devi & Anr.
vs V. Kumar Khagendra Narayan Dev & Anr., ; Smt.
Indu Bala Bose & Ors.
vs Manindra Chandra Bose & Anr., ; and Mst.
Biro vs Atma Ram & Ors., AIR 1937 PC 101.
|
ivil Appeal No. 1810 of 1982.
From the Judgment and Order dated 30.3.1982 of the Delhi High Court in S.A.O. No. 204 of 1980.
Ram Panjwani and Vijay Panjwani for the Appellant.
Avadh Behari Rohtagi and P.N. Gupta for the Respondent.
The Judgment of the Court was delivered by V. RAMASWAMI, J.
The tenant is the appellant.
The re spondent landlord filed a petition under section 14(1)(b) of the Delhi Rent Control Act, 1958 (hereinafter referred to as 'the Act ') for an order of eviction of the appellant tenant for a shop bearing No. 361 (Old No. 467 25 A) Azadpur, G.T. Road, Delhi, on the ground that the tenant Duli Chand has sub:let or parted with the possession of the said shop after 9th day of June, 1952 to M/s Hira Lal Sri Bhagwan illegally and without the written consent of the landlord.
The main contention of the tenant was that there was no sub letting or parting with the possession of the shop, that Hira Lal was a relative of the tenant who died some time prior to 1958, that Sri Bhagwan is the son of the tenant, and that the name of the business was given as M/s Hira Lal Sri Bhagwan in memory of the deceased relative Hira Lal.
He further pleaded that the possession of the shop is with the tenant.
Some other defences like the Respondent petitioner was not a landlord, that he had no locus standi to file the petition for eviction, and that the notice of termination of tenancy was not valid, were taken in the written statement and they were overruled and do not survive for consideration in this appeal.
On the main contention, the tenant has taken up the defence that Sri Bhagwan is the son of the respondent and the name of the business M/s Hira Lal Sri Bhagwan is given only in memory of the deceased relative Hira Lal.
A reply statement was filed by the land lord to the effect that though Sri Bhagwan was the natural son of the tenant Duli Chand, he had been given in adoption to Hira Lal, that on such adoption Sri Bhagwan had gone out of the family of the respondent and that it was a clear case of sub letting or parting with the possession of the shop.
On the facts and circumstances of the case, the question of subletting did not arise but the case was considered on the dispute whether the tenant had parted with possession of the shop.
The tenant never pleaded that he had obtained any written consent from the landlord for parting with posses sion.
The only question, therefore, for consideration in this case is as to whether the tenant had parted with pos session of the whole or part of the tenanted premises.
The learned Rent Controller held that the landlord had not proved parting with possession of the tenanted shop by the tenant.
On appeal by the landlord the Rent Control Tribunal held that the tenant had parted with the legal possession of the tenanted premises and in that view ordered the eviction of the tenant under section 14(1)(b) of the Act.
The second appeal filed by the tenant to the High Court was dismissed confirming the finding of the Rent Control Tribunal that the tenant had parted with possession of the tenanted shop.
Section 14(1)(b) of the Act provides that the Rent Controller may on an application made to him in the pre scribed manner make an order for recovery of possession of the premises on the ground 468 "(b) that the tenant has, on or after the 9th day of June, 1952, sub let, assigned or other wise parted with the possession of the whole or any part of the premises without obtaining the consent in writing of the landlord.
" The parametric content and the meaning of the words "parted with possession of the whole or any part of the premises" had come up for consideration in a quite number of cases including some of the decisions of this Court.
It is enough if we refer to the latest judgment of this Court on this point.
In Jagan Nath (deceased) through L.Rs.
vs Chander Bhan and Others, ; , Mukharji, J. speaking for the Court held that: "parting with possession meant giving posses sion to persons other than those to whom possession had been given by the lease and the parting with possession must have been by the tenant; user by other person is not parting with possession so long as the tenant retains the legal possession himself, or in other words there must be vesting of possession by the tenant in another person by divesting himself not only of physical possession but also of the fight to possession.
So long as the tenant retains the fight to possession there is no parting with possession in terms of clause (b) of section 14(1) of the Act.
" The facts in this case as found by the Rent Control Tribunal which was accepted by the High Court are that the concern M/s Hira Lal Sri Bhagwan is the sole proprietary concern of Sri Bhagwan, that Sri Bhagwan has been carrying on that business in the premises in dispute, that Duli Chand tenant had no interest in the business, that Sri Bhagwan is in exclusive possession of the property, that tenant Duli Chand works at another Shop, M/s Aggarwal Hard ware and Mills Stores with his younger son, that there was no plea of concurrent user of the premises by the tenant nor there is any plea that Sri Bhagwan is a licensee, that occasionally the tenant Duli Chand was seen sitting in the shop and that the tenant had not retained any control over the same.
These facts clearly support the finding of Appel late Tribunal and High Court that the tenant had parted with legal possession of the shop to the said Sri Bhagwan.
The learned counsel for the appellant, however, contend ed that Sri Bhagwan was not the adopted son of Hira Lal and that by permitting the son to carry on business it could not be stated that he had 469 parted with the legal possession of the premises.
In this connection, he drew our attention to the decision of this Court in Lakshman Singh Kothari vs Smt.
Rup Kanwar, ; wherein this Court had held that in order that an adoption may be valid under Hindu Law there must be a formal ceremony of giving and taking by the natural parent and the adopted parent after exercising their volition to give and take the boy in adoption and that such an evidence of a valid adoption is not available in this case.
The Appellate Tribunal and the High Court have dealt with the evidence available in this case in detail and came to the conclusion that Sri Bhagwan was adopted by Hira Lal.
It is not neces sary for us to rely on the evidence available or the find ings as proof of a valid adoption under Hindu Law but the evidence and the findings are enough to show that though Duli Chand and Sri Bhagwan are father and natural son, it is not possible to invoke any presumption that they constituted a Joint Hindu Family.
It may also be mentioned that in the written statement the tenant had not pleaded specifically that he and Sri Bhagwan, constituted a Hindu Joint Family, that they are in joint possession, that either the business is joint family business or Sri Bhagwan was permitted to use the premises for carrying on any business as licensee re maining in joint possession.
The evidence on adoption is thus to be treated only relevant for the purpose of consid ering the question whether the tenant has not retained any control over the premises and that he has parted with the possession, and we do not think that the Courts below erred in relying on the same for this purpose.
At this stage we may dispose of another point raised by the learned counsel in connection with the admissibility of certain evidence in this case.
In support of the case of the landlord that Sri Bhagwan was adopted by Hira Lal he exam ined three witnesses, AW 2, AW 3, and AW 4.
The first wit ness was an Inspector of House Tax According to this witness in the House Tax assessment register Sri Bhagwan was shown as the son of Hira Lal and residing at 26 Sarai Peepal Thalla, which was the residence of Hira Lal and not that of tenant Duli Chand.
The next witness was an Upper Division Clerk of the Excise Department.
His evidence was to the effect that in the licence issued under the Central Excise Act the father 's name of Sri Bhagwan was shown as Hira Lal.
The other witness was Upper Division Clerk in the Sales Tax Department and his evidence was that Sri Bhagwan was an assessee of the Department and as per the records in his office the father 's name of Sri Bhagwan was Hira Lal.
The learned counsel contended that these evidences were inadmis sible under Section 91 of the Evidence Act.
Section 91 of the Evidence Act provides 470 that when the terms of a contract, or of a grant, or of any other disposition of property, have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such con tract, grant or other disposition of property except the document itself or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions of Evidence Act.
This Court has considered the scope of section 91 in Bai Hira Devi and Others vs The Official Assignee of Bombay, ; it was held therein: "The normal rule is that the contents of a document must be proved by primary evidence which is the document itself in original.
Section 91 is based on which is sometimes de scribed as the "best evidence rule".
The best evidence about the contents of a document is the document itself and it is the production of the document that is required by section 91 in proof of its contents.
In a sense, the rule enunciated by section 91 can be said to be an exclusive rule inasmuch as it excludes the admission of oral evidence for proving the contents of the document except in cases where secondary evidence is allowed to be led under the relevant provisions of the Evidence Act.
" The evidence in this case is not with reference to the terms of contract or grant or any other disposition of property which has been reduced to the form of a document or a case in which the matter is required by law to be reduced in the form of a document but the evidence is to the effect that Sri Bhagwan has given his father 's name as Hira Lal while claiming ownership to the House No. 26, Sarai Peepal Thalla to the Municipality and similarly the evidence of the other witnesses were that while applying for a licence he had given his name as son of Hira Lal.
The evidence may be worth nothing without production of the extracts from the property register or the other books maintained by the departments.
However, that does not make the evidence itself inadmissible.
The learned counsel for the appellant then contended that Sri Bhagwan had been carrying on business right from 1958 to the knowledge of the landlord and that therefore, the landlord shall be deemed to have waived his right to get order of eviction on the ground of parting with the posses sion under section 14(1)(b) of the Act.
In this connection, the learned counsel for the appellant relied on the 471 evidence of the landlord and some of his witnesses.
The landlord in his evidence as AW 1 has stated that Sri Bhag wan has been to his knowledge sitting at the shop since the year 1968 that he has seen the board of M/s Hira Lal Sri Bhagwan since 1972, and that he was residing in the same building behind the shop in dispute.
AW 5 who is the Uncle of the landlord who came to depose on behalf of the landlord in his evidence had stated that the firm M/s Hira Lal Sri Bhagwan is doing the business in premises since 1960 61.
The tenant in his evidence has stated that the firm M/s Hira Lal Sri Bhagwan is functioning in the disputed premises for the last 18 years.
The Rent Controller found that Shri Bhagwan was doing business in the said premises since 1962, i.e., after the death of Hira Lal.
On the basis of this evidence the learned counsel contended that the landlord was aware that Shri Bhagwan was carrying on business for at least 16 years prior to the filing of the petition for eviction and in the circumstance he shall be deemed to have waived his claim for eviction under section 14(1)(b).
The learned counsel for the landlord, however, contended that the land lord had not received the rent after he came to know of the parting with the possession by the tenant that he was col lecting rent till about 1972 only from the tenant Duli Chand, that the tenant defaulted in payment of the rent subsequent to 1972, and the petition for eviction was filed thereafter in 1976 and in such circumstances there could be no question of waiving of his right with knowledge of part ing with possession by tenant could arise in this case.
He also contended legally no such waiver could be pleaded on the language used in section 14(1)(b) of the Act.
In Associated Hotels of India Ltd. Delhi vs S.B. Sardar Ranjit Singh, ; this Court held that, a waiver is an intentional relinquishment of a known right.
There can be no waiver unless the person against whom the waiver is claimed had full knowledge of his right and of facts enabling him to take effectual action for the enforce ment of such right.
In the present case, though there is some evidence to show that the sign board M/s Hira Lal Sri Bhagwan was seen in the premises since 1972 and the landlord had seen Sri Bhagwan sitting in the shop since the year 1968, there is no positive evidence to show when the landlord had came to know of Sri Bhagwan getting the exclusive possession and doing business in the premises.
In fact, since the question of waiver has not been raised in this form in the courts below there is no definite finding as to when the landlord came to know of such parting with possession and Sri Bhagwan doing business in the pre 472 mises as the sole proprietor of M/s Hira Lal Sri Bhagwan and whether he had received rent after such knowledge.
We can not, therefore, permit this point to be raised for the first time in this Court nor can we go into this question of fact.
That apart section 14(1)(b) requires a "consent in writing" of the landlord in order to avoid an eviction on the ground of sub letting, assigning or otherwise parting with the possession of the whole or any part of the premises.
This Court considering the need for obtaining a consent in writ ing under the provision, in M/s. Shalimar Tar Products Ltd. vs
H.C. Sharma and Others, ; quoted with ap proval the following passage from the judgment of the High Court in Delhi Vanaspati Syndicate vs M/s. Bhagwan Dass, Faquir Chand: "Section 16 of the Act of 1958 holds the key to the interpretation of provisions of clause (b) of sub section (1) of section 14 of this Act as well as of clause (b) of sub section (1) of section 13 of the Act of 1952.
It deals with restrictions on sub letting.
Sub section (1) of section 16 makes sub letting lawful though it was without the consent of the landlord provided that the sub letting has taken place before June 9, 1952 and the sub tenant is in occupation of the premises at the time when the Act of 1958 came into force.
Sub section (2) of section 16 reiterates the provisions of clause (b) of sub section (1) of section 13 of the Act of 1952 and lays down that the sub letting after June 9, 1952 with out obtaining the consent in writing of the landlord shall not be deemed to be lawful.
It does not say that the requisite consent should be obtained before sub letting the premises and the consent obtained after sub letting will not enure for the benefit of the tenant.
However, sub section (3) of Section 16 prohib its subletting of the premises after commence ment of Act of 1958 without the 'previous ' consent in writing of the landlord.
The use of the word 'previous ' in this sub section shows that where it was the intention of the legis lature that the consent in writing should be obtained before sub letting it said so specif ically.
The absence of the word 'previous ' in sub section (2) shows that it was not the intention of the legislature that the consent in writing could be obtained before sub letting.
Before the Act of 1952 a tenant could successfully show acquiescence of the landlord in subletting of escape forfeiture of tenancy.
Since the absence of 473 consent in writing by a landlord for sub letting gave rise to Unnecessary litigation between a landlord and a tenant, the Act of 1952 required the consent of the landlord in writing after its commencement.
The purpose seemed to be that the consent of the landlord evidenced by a writing would cut out litiga tion on this ground.
After all a landlord could always agree to sub letting either before or after sub letting of the premises.
For that reason no condition was laid down that such consent should be obtained before sub letting the premises.
" In the aforesaid view it was held that it was necessary for the tenant to obtain the consent in writing to sub letting the premises.
The mere permission or acquiescence will not do.
The consent shall also be to the specific sub letting or parting with possession.
This Court further observed that the requirement of consent to be in writing was to serve a public purpose, i.e., to avoid dispute as to whether there was consent or not and that, therefore, mere permission or acquiescence will not do.
While noting that everyone has a right to waive and to agree to waive the advantage of a law made solely for the benefit and protec tion of the individual in his individual capacity, in the context of the statutory provision of the Delhi Rent Control Act, this Court further held that the requirement as to the consent being in writing was in the public interest and that, therefore, there cannot be any question of waiver of a right, dealing with the rights of the tenants or landlord.
The words used in the section are "without obtaining the consent in writing of the landlord.
" If the words were "without consent of the landlord" it might mean without consent, express or implied and in that sense question of waiver may arise.
The question of implied consent will not arise, if the consent is to be in writing.
The learned counsel for the appellant referred to a number of decisions of the English Courts in support of his contention.
We do not think it necessary to refer to them in view of the direct decision of this Court on this point.
In the circumstances, there are no grounds to interfere with the decisions of the courts below.
This appeal is accordingly dismissed with costs.
Y. Lal Appeal dis missed.
| IN-Abs | The Respondent landlord filed a petition under section 14(1)(b) of the Delhi Rent Control Act 1958 for an order of eviction of the appellant tenant from a shop situate at G.T. Road, Delhi on the ground that the tenant Duli Chand had sub let or parted with the possession of the said shop after the 9th of June 1952 to M/s Hira Lal Sri Bhagwan illegally and without the written consent of respondent landlord.
The contention of the appellant tenant was that he had not sub let or parted with the possession of the shop in ques tion.
According to him Hiralal was his relative who died sometime prior to 1958 and that Sri Bhagwan was his son and the name of the business as M/s Hiralal Sri Bhagwan & Compa ny was given in memory of the deceased Hira Lal.
In reply, the Landlord respondent had contended that it was true that Sri Bhagwan was the natural son of Duli Chand but since he had given him in adoption to Hiralal, he had gone out of the family of the appellant and as such it was a clear case of sub letting and parting with the possession of the rented premises.
The Rent Controller, held that the land lord had failed to prove parting with possession of the tenanted shop.
On appeal by the landlord, the Rent Control Tribunal held that the tenant had parted with the legal possession of the premises and in that view ordered the eviction of the appel lant tenant under section 14( 1 )(b) of the Act.
Thereupon the appellant tenant preferred second appeal before the High Court.
The High Court having affirmed the finding of the Tribunal that the appellant tenant had parted with the possession of the premises in dispute, dismissed the appeal.
Hence this appeal by the tenant.
Dismissing the appeal, this Court, HELD: Section 14(1)(b) requires a "Consent in Writing" of the landlord in order to avoid an eviction on the ground of sub letting, 466 assigning or otherwise parting with the possession of the whole or any part of the premises.
[472B] Mere permission or acquiescence will not do.
The consent shah also be to the specific sub letting or parting with possession.
The requirement of consent to be in writing was to serve a public purpose i.e., to avoid dispute as to whether there was consent or not.
[473C] If the words were "without consent of the landlord" it might mean without consent, express or implied and in that sense question of waiver may arise.
The question of implied consent will not arise, if the consent is to be in writing.
[473E] In the instant case, though there is some evidence to show that the sign board M/s Hira Lal Sri Bhagwan was seen in the premises since 1972 and the landlord had seen Shri Bhagwan sitting in the shop since the year 1968, there is no positive evidence to show when the landlord had come to know of Sri Bhagwan getting the exclusive possession and doing business in the premises.
[471G] Jagan Nath (deceased) through L. Rs. vs Chander Bhan & Ors., ; ; Lakshman Singh Kothari vs Smt.
Rup Kanwar, ; ; Bai Hira Devi & Ors.
vs The Official Assign ee of Bombay; , ; Associated Hotels of India Ltd., Delhi vs S.B. Sardar Ranjit Singh, ; and M/s Shalimar Tar Products L,d.
vs H.C. Sharma & Ors.
, ; , referred to.
|
Appeal No. 1552 of 1981.
From the Judgment and Order dated 1.2.1980 of the Jodh pur High Court in D.B. Civil Appeal No. 9 & 31 of 1977.
Soli J. Sorabji, Tapas Ray, L.C. Agarwal, Mrs. Pratibha Jain, Pradeep Aggarwal, Sushil Kumar Jain, Sudhansu Atreya and S.D. Sharma for the Appellant.
Dalveer Bhandari, Badridas Sharma, B.Y. Kulkarni, S.K. Mehta, D. Mehta, S.M. Satin, Aman Vathher, Atul Nanda, Mrs. P.S. Shroff, 54 R. Sasiprabhu, S.S. Shroff, S.A. Shroff, R.Jagannath Goulay and D. Goburdhan for the Respondents.
The Judgments of the Court were delivered by SABYASACHI MUKHARJI, J.
This appeal by special leave is directed against the judgment and order of the High Court of Rajasthan at Jodhpur in D.B.
Civil Special Appeals Nos. 9 and 31 of 1977 and which raised common questions of law and fact, and were disposed of together.
Writ Petition No. 17 of 1976 was filed by M/s Parekh Automobiles, respondent No. 1 in C.A. No. 1552/81.
The said appeal may be taken up and disposal of the same would lead to the disposal of other appeals.
In the said writ petition, the petitioner prayed for a direction or an order restrain ing the respondents therein from realising any tax on die sel, etc.
which are supplied to the respondent herein at Dangiawas by the Indian Oil Corporation.
being the respond ent No. 2 herein.
It was further prayed that the respondents therein be ordered to refund the octroi tax as mentioned in the Schedule to the said petition which, it was alleged, had been illegally realised from the petitioner.
It was further prayed that the respondent No. 1 be directed to provide transport passes to the Indian Oil Corporation under rule 13 of the Rajasthan Municipal Octroi Rules, 1962 read with section 133 of Rajasthan Municipalities Act.
It was the case of the petitioner in the High Court, respondent No. 1 here in, that the Municipal Council had no jurisdiction to levy octroi tax on the goods brought within the municipal limits but not sold, consumed or used therein and subsequently exported outside the said limits.
The case of the respondent No. 2 was that H.S.D. (diesel) which was brought by the Indian Oil Corporation within the local limits of Jodhpur Municipality was ultimately exported and sold to respondent No. 1 at Dangiawas for use, consumption or sale outside the Municipal limits and as such the Municipal Council had no jurisdiction to levy octroi tax on the same.
In reply to the said writ petition, it was stated by the Municipal Council, being the appellant herein, that the sale of H.S.D. (diesel) by the respondent No. 2 to respondent No. 1 took place at Jodhpur, and only the delivery was effected at Dangiawas as respondent No. 1 did not have its own tankers but for this the respondent No. 2 was charging mileage for transmission of goods from its depot to Dangiawas.
It was stated that the appellant was charging octroi from the respondent No. 2 and not from respondent No. 1.
It was stated that the question whether the contract of sale between the respondent No. 2 and respondent No. 1 took place at Jodhpur or at Dangiawas was a disputed question of fact to be decided by reference to the original agreement qua each transaction.
It was further stated that the disputed question of fact could not be adjudicated under Article 226 of the Constitution.
In reply to para 6, it was stated that the current account facility was still provided and had not been stopped, that respondent No. 2 did not make the declaration as required by rule 9 and rule 13(4) of the Rajasthan Municipal Octroi Rules, 1962 and that the goods exported were to be 55 lessened only if such goods had not been sold within the Municipal limits and were exported out within a period of six months ' from the date of entry.
The relevant provisions of section 104 of the Rajasthan Municipalities Act, 1959 (herein after referred to as 'the Act ') are as follows: "Sec. 104: Obligatory Taxes Every board shall levy, at such rate and from such date as the State Government may in each case direct by notification in the official gazette and in such manner as is laid down in this Act and as may be provided in the rules made by the State Government in this behalf, the following taxes, namely: (1) . (2) an octroi on goods and animals brought within the limits of the municipality for consumption, use or sale therein; and (3) .
Section 133 of the Act provides as follows: "133.
POWER TO KEEP ACCOUNT CURRENT WITH FIRM OR PUBLIC BODY IN LIEU OF LEVYING OCTROI ON INTRODUCTION OF GOODS: The Board if it thinks fit instead of requiting payment of octroi due from any mercantile firm or public body to be made at the time when the articles in respect of which it is leviable are introduced within the octroi limits of the municipality, at any time direct that an account current shall be kept on behalf of the board of the octroi so due from any such firm or body as the board specifies in this behalf.
(2) Every such account shall be settled at intervals not exceeding one month and such firm or public body shall make such deposit or furnish such security as the board or any committee or officer authorised by it in this behalf shall consider sufficient to cover the amount which may at any time be due from such firm or body in respect of such dues.
Every amount so due at the expiry of any such interval shall, for the purposes of Chapter VIII be deemed to be and shall be recoverable in the same manner as amount claimed on account of any tax recoverable under the same Chapter.
" The Rules, being Rajasthan Municipal Octroi Rules, 1962, framed thereunder are relevant and rule 13 of the said Rules provided as follows: "13.
FACILITIES FOR CURRENT ACCOUNTS: (1)The Board shall maintain a list, in Form 6, of all persons whether firms Or individuals allowed special facilities under section 133 of the Act for the payment of octroi.
The list shall be kept corrected 56 upto date and a copy of the list signed by the Executive Officer shall be kept at each octroi out post.
(2) The person to whom such facilities are given, printed books of entry passes in dupli cate shall be supplied in Form No. 7 on pay ment of such price as may be fixed by the Board.
When such a person wishes to bring his goods into the Municipality, he shall fill up the entry pass, the goods shall be dealt with under the ordinary rules.
On receipt of the entry pass, the Incharge of the octroi out post shall see that the person who has signed it is named on his list, and if so, he shall, after satisfying himself that the goods agree with the details entered in the entry pass, fill up the certificate the at foot thereof as well as the coupon.
He shall then tear off the coupon, deliver it to the person who presents the entry pass, and admit the goods named in the pass.
He shall send the entry passes to the Octroi Superintendent, where they shall be examined that the certificate covers the details of the entry pass and the amount of octroi due shall be debited to the account of the person concerned.
(3) The persons to whom special facilities have been given, a printed book of transport passes shall be supplied in Form No. 5 on payment of such a price as may be fixed by the Board.
When such a person wishes to transport h*is goods from the Municipality, he shall fill up a transport pass and send it with his good to the octroi gut post of exit.
On re ceipt of the Transport pass, the Incharge of octroi out post shall see that the person who has signed it is named on the list; and if so, he shall after satisfying himself that the goods to be transported agree with the details entered in the Transport pass, fill up the certificate at the foot thereof as well as the coupon.
He shall then tear off the coupon and deliver it to the person who presents the Transport pass.
He shall send the transport passes to the Octroi Superintendent, where they shall be examined to see that the certif icate covers the details of the transport pass and shall be filed separately under the name of each such person.
(4) In cases provided for in sub rule (3) amount of octroi duty payable shall be based on the total amount of the octroi as shown by the entry passes less the total amount of goods transported outside the Municipal limits as shown by the transport passes: Provided that in computing the octroi duty payable under sub rule (4), the goods transported outside the Municipal Limits shall be lessened only if such goods have not been sold within the Municipal limits and if they have been exported out of such limits within a period of (six months) from the date of their import in such limits.
57 (5) Payments by such person shall be made strictly in advance, and at the expiry of his period for which facilities have been given, the name of the person shall immediately be struck off.
" Rule 6 deals with the payment of octroi duty and provide as follows: "6. PAYMENT OF OCTROI DUTY: No goods liable to payment of octroi shall, except as otherwise provided in these rules, be brought within the Municipal limits until the octroi duty levi able in respect of such goods has been paid at the octroi out post situated on the route of entry as notified by the Board from time to time for the purpose.
" Rule 9 deals with the declaration of goods brought into the Municipal limits and provides as follows: "9. DECLARATION OF GOODS BROUGHT INTO THE MUNICIPAL LIMITS: (1) Every person bringing within the Municipal limits goods liable to payment of octroi shall produce such goods at the octroi oUt post and shall declare whether goods are intended: (i) for consumption, use or sale within the municipality; or (ii) for immediate transportation outside the Municipality; or (iii) for temporary detention within Municipal limits and eventual transportation outside Municipal limits.
(2) Declaration under clause (i) of sub rule (1) may be oral, declaration under clauses (ii) and (iii) shall be, in writing in Form No. 1 and shall be tendered to the incharge of the octroi outpost at the time of bringing the goods shall be treated as having been brought within the Municipal limits for consumption, use or sale therein.
" It was urged by the appellant that the respondent No. 2 had not made the declaration as required by rule 9 and that under rule 13(4) of the rules, the goods exported were only.
to be lessened only if such goods had not bee sold within the municipal limits and were exported out within a period of six months ' from the date of entry.
The Municipal Council also raised the plea that there was no privity of contract between respondent No. 1 and the Municipal Council as the demand of octroi tax was not made from respondent No. 1.
The Writ petition of the respondent No. 1 along with another writ petition being No. 82 of 1976 filed by one Shri Sukh Sampat Raj was heard by the learned Single Judge of High Court of Rajasthan.
The learned Single Judge by his judgment dated 28th January, 1977 allowed the writ petition and restrained the appellant from charging or realising octroi on the goods brought within the municipal limits by the Indian Oil Corporation but re exported outside the said municipal limits to its retail outlets for the use 58 and consumption of the ultimate consumers outside the limits of the Municipal Counsel.
The prayer for refund of the octroi tax was, however, refused.
Appeals were filed there from against the judgment and order of the learned Single Judge.
The appellant herein filed the appeal No. 9 arising out of the Writ Petition No. 17 of 1976 and also Special Appeal No. 13 arising out of Writ Petition No. 82 of 1976.
M/s Parekh Automobiles also filed a Special Appeal being Special Appeal No. 31 of 1977.
Thus, three appeals were filed.
All the three appeals were heard by the Division Bench of the High Court and by its judgment and order dated 1st February, 1980, the Division Bench dismissed the Special Appeal Nos. 9 and 13 filed by the appellant herein.
The special appeal filed by M/s Parekh Automobiles was partly allowed.
It was directed that the Municipal Council would have to refund to the Indian Oil Corporation the amount of octroi duty paid on the petroleum products re exported by it to Dangiawas outlet for supply to the writ petitioner who would recover the same from the Indian Oil Corporation.
It is not necessary for the purpose of this appeal to deal with the facts agitated and found by the High Court.
We will, however, refer to the same in brief.
Respondent No. 1 had been allotted retail outlet allotted by the respondent No. 2, Indian Oil Corporation, for sale of petroleum products such as diesel oil, mobile, iii, etc.
at Dangiawas, which was outside the limits of Jodhpur Municipal Council, appellant herein.
The respondent No. 2 had its depot ear Raikabag Station at Jodhpur where it stored petroleum products.
The respondent No. 2 from its depot at Jodhpur supplied the petroleum products to various pump stations situated within the limits of appellant as well as situated outside the limits of appellant in several districts such as Districts of Jodhpur, Pali, Barmet, Jalore, Nagaur, etc.
including the retail outlet of the appellant at Dangiawas.
The respondent No. 2, being a public sector undertaking, was provided current account facilities under section 133 of the Act, and so the respondent No. 2 had not to pay octroi tax on such consignment at the time of entry of goods within the limits of appellant.
It was alleged by respondent No. 1 that under rule 13 of the said Rules, respondent No. 2 was sup plied printed books for entry passes in duplicate in Form No. 7 appended to the said Rules.
Rule 13 provides, as noted before, that if the goods which are imported within the Municipal limits are not used, consumed or sold within the Municipal limits and are exported out of Municipal limits for supply at various other retail outlets no octroi duty is charged on those goods for the reason that under rule 13(4) octroi tax payable shall be based on the total amount of octroi tax as shown by the entry passes less the octroi tax on the total amount of goods transported outside the Munici pal limits.
It was contended that the appellant had been following the aforesaid procedure till 24th July, 1975, but a11 of a sudden on 25th July, 1975, it was alleged, the appellant had suspended the transport facilities to the respondent No. 2 and took the stand that octroi would be charged from respondent No. 2 on the goods brought within the municipal 59 limits even though these were exported by it outside the municipal limits, if these were sold within the limits of appellant although such goods were meant for use and con sumption of the consumers outside the Municipal limits.
The appellant, it is alleged, cancelled the transport passes supplied to the respondent No. 2 from 25th July, 1975.
As a consequence of this action of the appellant, the respondent No. 1 was charged octroi duty on supplies made to the re spondent No. 1 at Dangiawas by the respondent No. 2 since 25the July, 1975 by adding the amount of octroi tax in the bills for the supplies made to the respondent No. 1 's retail outlet at Dangiawas.
The respondent No. 2 challenged the right of the appellant to charge the octroi on such goods and approached the State Government.
Upon that, the State Govt.
by its letter wrote to the appellant that it having granted current account facilities under section 133 of the Act to the respondent No. 2 should charge octroi on the basis of petroleum products imported by respondent No. 2 minus the goods exported by it to its other distributing centres in Rajasthan.
The respondent No. 1 also made representation to the appellant challenging its right to realise octroi on the petroleum products which were received at the depot of the respondent No. 2 at Jodhpur but were transported by it to its retail outlets but of no avail.
The case of the respond ent No. 1 was that the goods were not sold at Jodhpur but actually the sale took place at Dangiawas, the retail outlet of the respondent No. 1 Secondly, even if the sale was held to have taken place at Jodhpur merely on that account octroi could not be levied unless the goods so sold Were meant for the use or consumption of the consumers within the octroi limits.
Respondent No. 2, Indian Oil Corporation, supported the case of respondent No. l. Respondent No. 2 is a public sector undertaking and has got vast network of retail out lets, i.e., distribution centres for distribution of petro leum products throughout Indian including Rajasthan.
For the purpose of distribution, it had got its depots at various important places where it stored its petroleum products for supply to its various retail outlets, i.e., distributing centres.
Likewise the respondent No. 2 had got its depot situated near Raikabag Station, Jodhpur where it stored its petroleum products for sale and supply of its petroleum products to its numerous retail outlets situated within the districts of Jodhpur, Pali, Barmet, Jalore, Jaisalmer, Nagaur, Sirohi, etc.
It was further alleged by respondent No. 2 that it stored petroleum products in its depot at Jodhpur for purposes which might be classified into differ ent classes, namely.
(1) for sale by respondent No. 2 to its consumers such as Railways, Police, etc.
and to its dealers of retail outlets situated within Municipal limits of Jodhpur city who distributed or sold the petroleum products within the area covered by municipal limits of Jodhpur city, (2) for re export by itself for supply to its dealers in charge of various retail outlets situated outside the municipal limits of Jodhpur city within the various districts specified above.
Such retail outlets distrib uted or sold the petroleum products to ulti mate consumers 60 outside the limits of Jodhpur Municipal Council.
According to the respondent No. 2, it had allotted the retail outlets to various dealers under dealers agreement.
Under the terms of the said agreement, the respondent No. 2 was obliged to transport petroleum products out of its depots and supplied petroleum products to its dealers at the destination in its own truck tankers or the tankers of its contractors and obtained the signatures of the dealers of the retail outlet in token of the delivery of the goods and till the supplies were made at the destination the goods were at the risk of the respondent No. 2.
It was further alleged by respondent No. 2 that the pump tank and other outfits which were fitted at the retail outlets belonged to it and these were its property.
It was, therefore, alleged that the goods supplied at retail outlets situated outside the limits of Municipal Council, Jodhpur were sold at the retail outlets where the deliveries were made and not at Jodhpur although the dealers were required to deposit the price of the petroleum products in the respondent No. 2 's account in the bank unless they were allowed credit facili ties but the sale took place only when the respondent No. 2 delivered its products at the dealers ' retail outlets out side the municipal limits as per the terms of the dealers ' agreement.
The appellant, Municipal Council, had, however, disputed the aforesaid position.
It contended that whenever the sale was made at the Jodhpur depot at Jodhpur, Octroi was chargeable irrespective of the fact where it was con sumed or used.
It was further contended that whether a contract of sale had taken place at Jodhpur or retail outlet is a question of fact and unless the contracts (agreements) were placed on the record by the respondent No. 1, the Court should not decide whether the sale by the respondent No. 2 had taken place at Jodhpur or at Dangiawas.
Rule 13(4) of the said Rules would be operative only in those cases where the goods had not been sold within the Municipal limits or if they had been exported out of such limits within a period of six months from the date of its import.
The Municipal Council 's further case was that the respondent No. 2 sold the goods at Jodhpur.
The respondent No. 2 never submitted its declaration as required by rule 9 of the said Rules and, therefore, the goods brought within the limits of Municipal Council were, according to the appellant, liable to octroi.
It was contended on behalf of the respondent No. 1 that the appellant was not entitled to levy the octroi on the petro leum products which were re exported by the respondent No. 2 to the retail outlet of the respondent No. 1 at Dangiawas as the goods were neither brought for consumption or use in the limits of the Municipal Council of Jodhpur, nor sold in the Municipal area.
It was further contended that even if it was assumed that the petroleum products which had been exported to the respondent No. 1 's outlet at Dangiawas have been sold at Jodhpur then to the appellant had no jurisdiction to levy the octroi and realise the same as good so sold were not meant for the use of ultimate consumer in the municipal area.
The taxable event for the purpose of levy of octroi duty takes place, according to respondent No. 1, only if the entry of the goods in the limits of appellant was 61 meant for the use of ultimate consumer or user.
It was contended that the petroleum products which had been export ed to the respondent No. 1 's retail outlet at Dangiawas were meant for the use of ultimate consumer for use outside the limits of the Municipal Council so these were not chargeable to octroi.
It is not necessary in view of the findings of the High Court to deal with the preliminary objections of the appellant, namely, respondent No. 1 was a firm and not competent to bring the writ petition, that the respondent No. 1 had no locus standi to file the writ petition, or that there was an alternative remedy under rule 40 of the said rules and as such writ petition would not be maintainable.
The learned Single Judge of the High Court rejected these contentions of the appellant.
Two main contentions involved before the High Court and us were and are, namely, where the taxable even took place and whether respondent No. 1, in the facts and the circumstances of this case, was liable to pay octroi duty and secondly, whether in view of the maintenance of the current account facilities, as mentioned hereinbe fore, the Municipal Council was entitled to charge the octroi duty in the manner it has purported to do from the 25th July, 1975 and whether that the appellant was liable to refund the said duty.
Section 104 of the Act by sub section (2) provides that an octroi on goods and animals brought within the limits of the municipality for consumption, use or sale therein, is liable to be charged by the State Government.
It was con tended on behalf of the respondent No. 1 that the taxable event in respect of the goods supplied at its real outlet at Dangiawas had not taken place within the limits of the appellant.
It was submitted that the goods brought by the respondent No. 2 and exported to the respondent No. 1 's retail outlet at Dangiawas were in the first place not sold at all within the Municipal limits; secondly, even if the sale of the goods so exported was held to have taken place within the Municipal limits than too the taxable event had not taken place as such goods were not meant for sale or use or consumption of the ultimate consumer residing within the local limits of the appellant but were meant for the con sumption of the ultimate consumer residing outside the local limits of the appellant.
It was contended that the word 'sale ' occurring under section 104 of the Act cannot be read without reference to use or consumption.
Sale simplicitor by itself did not attract the levy of octroi, it was submitted, unless the goods were meant for use or consumption of the ultimate consumer in the area of the appellant.
Reference was made before the High CoUrt as before us to the decision of this Court in Burmah Shell Oil Storage & Distributing Co. India Ltd. vs The Belgaum Borough Municipality, 216 as well as the decision of this Court in Hiralal Thakorlal Dalai vs Broach Municipality & Ors., [1976] Supp.
SCR 82.
In Burmah Shell 's case (supra), the company was a dealer in petrol and petroleum products which it manufac tured in its refinery situated outside the octroi limits of Belgaum Municipality.
It brought those products inside that area either for use or consumption by itself or for sale generally to its dealers and the licensees who in their turn 62 sold these to others.
According to the Company, the goods brought by it within the octroi limits could be divided into four separate categories, namely: (i) goods consumed by the company within the octroi limits, (ii) goods sold by the company through its dealers or by itself and consumed within the octroi limits by persons other than the company, (iii) goods sold by the company through its dealers or by itself inside the octroi limits to other persons to be consumed by them outside the octroi limits.
(iv) goods sent by the company from its depot inside the octroi limits to extra munic ipal points where these were brought and consumed by persons other than the company.
In that case, the company had objected to the levy of octroi on the goods which were sent by it out of the octroi limits for the outside ultimate consumers and claimed refund of the amount so charged as octroi.
Clause (4) of sub sec tion (1) of section 73 of the Bombay Municipal Boroughs Act, 1925 which was under consideration in that case was analo gous to subsection (2) of section 104 of the present Act in question.
The words 'use or sale ' were substituted for the words 'for use ' by the Bombay Act of 35 of 1954.
This Court examined the scheme of the taxation under the Bombay Bor oughs Act and the Rules and bye laws made by the Municipali ty for the levy of octroi.
After examining the history of octroi, this Court in that decision held octrois were tax on goods brought into the local area for consumption, use or sale and that they were leviable in respect of goods put to some use or other in the area but only if they were meant for such user. ' This Court specifically clarified that the word 'sale ' was included only in 1954 in order to bring the description of the octroi in the Act in line with the Con stitution of India.
While doing so this Court further ob served that the expression 'consumption ' and 'use ' together 'connote ' the bringing in of the goods and animals not with a view to taking them out again but with a view to their retention either for use without using them up or for con sumption in manner which destroys, wastes or uses them up.
This Court further observed in that case that octroi and terminal tax resemble each other in the sense that they are both leviable in respect of goods brought into a local area.
Otherwise, these are quite different from each other.
While terminal taxes are leviable on goods 'imported or exported ' from municipal limits denoting thereby that they are con nected with the traffic of goods, octrois are leviable in respect of the goods brought into a municipal area for consumption or use or sale.
The history of these two taxes showed that while terminal taxes were a kind of octroi which were concerned only with the entry of goods in a local area irrespective of whether they would be used there or not, octrois were taxes on goods brought into the area for con sumption, use or sale.
These 63 Were leviable in respect of the goods put to some use or the other in the area but only if these were meant for such user.
Another difference between the two is that there is no system of refund under terminal tax but that is so for octroi.
This Court held that the sale by it directly to consumer or dealers was merely the means for putting the goods in the way of use or consumption and that the word therein does not mean that all the acts of consumption must take place in the area of the municipality.
Hidayatullah, J. (as the learned Chief Justice then was) speaking for this Court observed at p. 233 of the report as follows: "In other words, a sale of the goods brought inside, even though not expressly mentioned in the description of octroi as it stood former ly, was implicit, provided the goods were not re exported out of the area but were bought inside for use or consumption by buyers inside the area.
In this sense the amplification of the description both in the Government of India Act 1935 and the Constitution did not make any addition to the true concept of 'octroi ' as explained above.
That concept included the bringing in of goods in a local area so that the goods come to a repose there.
When the Government of India Act, 1935 was enacted, the word 'octroi ' was deliberately avoided and a description added to forestall any dispute of the nature which has been raised in this case.
In other words, even without the description the tax was on goods brought for 'consumption, use or sale '.
The word 'octroi ' was also avoided because termi nal taxes are also a kind of octroi and the two were to be allocated to different legisla tures.
In our opinion, even without the word 'sale ' in the Boroughs Act the position was the same provided the goods were sold in the local area to a consumer who bought them for the purpose of use or consumption or even for resale to others for the purpose of use or consumption by them in the area.
It was only when the goods were re exported out of the area that the tax could not legitimately be levied and in this case the municipality has agreed to refund the amount of tax on goods re exported without being used or consumed in the municipal area.
In this view of the mat ter, it was not necessary for the municipality to follow the procedure for imposing taxes when the section was amended.
The tax still remained the same.
Its nature.
incidence or rate were not altered.
" The aforesaid observations were approved by this Court in Hiralal Thakorlal Dalal vs Broach Municipality & Ors., (supra).
On the basis of the aforesaid decisions of this Court, the Division Bench of the High Court in the instant case in appeal filed from the aforesaid judgment of the learned Single Judge held that sale simplicitor would not attract the levy of the 64 octroi.
The word 'sale ', in this context, has to be read in reference to the use or consumption, according to the Divi sion Bench and 'sue, consumption and sale ' have to be read in disjunctive manner.
Reference, in this connection, was made to rule 6 of the said Rules, which provides that no goods liable to payment of octroi shall except as otherwise provided in these Rules be brought within the Municipal limits 'until the octroi duty leviable in respect of such goods have been paid at the octroi outpost situated on the route of the entry as notified by the Board from time to time.
Rule 9 of the said Rules further provides that every person bringing within the Municipal limits goods liable to payment of octroi shall produce such goods at the octroi.
outpost and shall declare whether the goods are intended (i) for consumption, use or sale within the Municipality, or (ii) for immediate transport outside the Municipality or (iii) for temporary detention within Municipal limits and eventual transportation outside the Municipal limits.
It further provides that if no such declaration is made the goods shall be treated as having been brought within the Municipal limits for consumption, use or sale therein.
On the basis of these rules, it was contended before the Divi sion Bench that as soon as the goods enter within the octroi limits it gives rise to taxable event unless a declaration as contemplated rule 9 has been made by the person bringing such goods.
It was submitted that no such declaration had been made in this case, and therefore, a conclusive presump tion arose that the goods should be treated as having been brought within the Municipal limits for consumption, use or sale therein.
The division bench was unable to accept this submission.
The division bench was of the view that this argument ignored the import of rule 13.
Rule 13 dispensed with the requirements of rules 6 and 9 and it was a special rule applicable to the persons, firms and individuals under section 133 of the Act.
Section 133 of the Act provides that the Board if it thinks fit instead of requiting payment of octroi due from any mercantile firm or public body it may at the time when the articles in respect of which it is levi able are introduced within the octroi limits of the munici pality, direct that an account current shall be kept on behalf of the Board of the octroi so due from any such firm or body as the Board specifies in this behalf.
It further provides that every such account shall be settled at the intervals not exceeding one month and such firm of public body shall make such deposit or furnish such security as the Board of any committee or officer authorised by it in this behalf shall consider it sufficient to cover the amount which may at any time be due to such firm or body in respect of such dues.
Rule 13, therefore, dispenses with the re quirement of rule 6.
It further dispenses with the require ments of rule 9 in regard to declaration.
The division bench of the High Court also referred to sub rule (3) of rule 13, which has been set out before.
The High Court held that rule 13 is a special provision in regard to the persons who had been granted current account facilities and this rule is not subject to either rule 6 or rule 9 but is a over riding rule independent of rules 6 and 9.
The High Court found that respondent No. 2 had been granted current account 65 facilities and, therefore, the octroi duty shall be charged from it under sub rule (4) of rule 13 on the goods brought by it in the Municipal area minus the goods transported by it outside the Municipal limits.
Therefore, the contention of the appellant herein on rules 6 and 9 was rejected.
It is, therefore, necessary for these appeals to consider the validity or otherwise of the said findings of the High Court in these appeals.
The High Court dealt with the contentions based on sub rule (4) of rule 13 and considered if the sale of the goods had taken place within the Municipal limits to see if the octroi shall be leviable or not.
The High Court felt that the rule had to be construed in consonance with section 104 of the Act As mentioned hereinbefore, section 104 of the Act was anologous to section 73 of the Bombay Boroughs Act which had been interpreted by this Court in the aforesaid two deci sions, wherein it was held that the sale in order to attract levy of octroi should be for the purpose o fuse or consump tion of the ultimate consumer in the area.
(Emphasis sup plied).
The High Court further observed that the meaning of the word 'sale ', therefore, has to be given as per this Court 's view and any other meaning to 'sale ' contained in the rules shall not be justified as it will be repugnant to section 104 of the Act.
The High Court found that the goods were re exported by the Indian Oil Corporation from its depot to its retail outlet for the use or consumption of the ultimate consumer outside the municipal limits.
(Emphasis supplied).
The Municipal Council was not entitled to levy octroi on goods so exported by respondent No. 2 to its retail outlet for use and consumption by the ultimate consumer outside the local limits of the Municipal Council.
Therefore, it was held that the Municipal Council had no jurisdiction to levy octroi on the goods re exported by the respondent No. 2, the Indian Oil Corporation to the retail outlets of its dealers located outside the Municipal limits for the use of the ultimate consumers outside the Municipal limits.
Though the aforesaid finding of the High Court has been assailed before us in this appeal, in view of the decision of this Court referred to hereinbefore and in view of the principles laid down therein and the language of section 104 of the Act and the facts, we are unable to accept the challenge on behalf of the appellant herein.
It was, however, contended by the respondent No. 1 before the High Court that the taxable even had taken place at Dangiawas and not at the octroi limits of Jodhpur as the sale had not taken place in the octroi limits but had taken place at Dangiawas.
It was contended by the respondent No. 1 that goods were supplied by the respondent No. 2 in its tankers at Dangiawas and till the goods were supplied at the respondent No. 1 's outlet at Dangiawas, the risk in respect of the goods was with the respondent No. 2, the Indian Oil Corporation.
This fact, it was stated, had been admitted by the Corporation in its return wherein it had been clearly admitted that till the goods are supplied to the respondent No. 1 's outlet stations the goods were at the risk of respondent No. 2.
It was, therefore, contended that till the goods were delivered at Dangiawas, there was no contract for sale.
The contract for sale, it was contend ed, had taken place at Dangiawas where the 66 goods were delivered at the respondent No. 1 's outlet and receipt was obtained from the respondent No. 1 's outlet acknowledging the delivery of the goods at that place.
In this connection, reference was made to para 25 of the model agreement exhibit B. 1.
According to para 25, the quantity of petroleum and other allied products shall be delivered by the Corporation as measured by the Corporation 's measuring device and a receipt signed by or on behalf of the dealer at the time of delivery by the Corporation would be conclusive evidence that the petroleum products mentioned therein were in fact delivered to the dealer.
It was submitted that the delivery was made by the respondent No. 2 's tankers at Dangiawas and the receipt obtained there.
On the other hand before the High Court.
as mentioned hereinbefore, it was contended on behalf of the appellant that this question involved disputed questions of facts.
which was beyond the pale of jurisdiction under Article 226 of the Constitution.
It was submitted that neither indents in regard to the transactions of sale had been produced nor there was any evidence as to the quantities for which the sale had taken place and in the absence of material documents it was not possible to determine the question as to where the sale had taken place.
It further appeared that the respondent No. 1 used to deposit the amount in advance against the supplies to be made to its retail outlet at Jodhpur.
According to the appellant, as the material and relevant evidence had not been produced on the record, it would be hazardous to reach a definite conclusion as to where the contract of sale had taken place.
The High Court held that it was difficult and inappropriate to go into under Article 226 of the Constitu tion.
The High Court referred to certain decisions.
The High Court.
however.
rested on the view that even if the sale took place within the octroi limits of Jodhpur Municipal Council for the use or consumption of the ultimate consumer outside the octroi limits of Jodhpur then the taxable event did not take place in the octroi limits of Jodhpur.
In those circumstances.
the High Court held that the Municipal Coun cil had no jurisdiction to levy octroi on the goods so exported.
We have considered the submissions of the appel lant on this point.
We are, however, in view of the facts and circumstances of the case, of the opinion that the High Court was right.
The High Court issued an order of re straint.
It directed that the Municipal Council be re strained by way of Mandamus not to levy octroi on the goods exported by the respondent No. 2 for the use of the ultimate user outside the octroi limits of Municipal Council even if the sale took place within the octroi limits of Municipal Council, Jodhpur.
The next aspect of the matter, is, whether the respond ent No. 1 was entitled to refund of the octroi realised from respondent No. 2.
It had been contended by the respondent No.1 that although the octroi had been realised directly from the respondent No. 2 but in fact and in reality it was the respondent No. 1 who had been made to pay the octroi as the same had been realised by the respondent No. 2 by adding the octroi realised by the Municipal Council in its bills for the supply of the goods made to respondent No. 1.
It was contended on behalf of the appellant that there was no privity 67 of obligation between respondent No. 1 and the appellant and therefore, respondent No. 1 had no right to ask for a refund of the octroi.
Secondly, it was urged that the respondent No.1 had realised the amount of octroi while selling the petroleum products to the retail consumers by adding the same in the retail price charged from the consumers.
So far as the first contention is concerned, the division bench found that there was no privity of obligation between re spondent No. 1 and the appellant.
The same had not been realised from the respondent No. 1.
It was, therefore, held that there being no privity of obligation between respondent No. 1 and the appellant, the respondent No. 1 could not ask for a refund of the money which it has not paid to the appellant.
There was no provision for refund in the Act or in the Rules which enabled the respondent No. 1 to claim refund from the appellant even though it had been paid by the respondent No. 1 indirectly.
There was, however, an undertaking given to the High Court by the appellant on 3rd February, 1976 in the High Court.
On that date, the appel lant had given an undertaking that the appellant would refund the octroi charged from the respondent No. 1 on the diesel re exported outside the Municipal limits of Jodhpur in case the writ petitions were allowed.
The undertaking is however, confined to the refund of the amount charged from the respondent No. 1 by the appellant and not from respond ent No. 2.
The basis for refund of the amount undertaking from respondent No. 2 has not been established.
To that extent, the writ petition was bound to fail, the High Court held.
If that was the position, there cannot be any basis for refund of the same on the basis of the undertaking.
The Division Bench of the High Court held that as the challenge in this case was that the words 'use or sale ' could not make any difference so far as the event of taxability was con cerned, as according to this Court, 'sale ' simplicitor would not attract the levy of the octroi.
The sine qua non for levy of octroi is consumption, according to this Court.
Therefore, no octroi could be levied in respect of goods which were re exported for consumption or use outside the Municipal limits, the Division Bench held.
In that view of the matter, the Division Bench of the High Court held that in view of the decisions of this Court, no octroi was levi able on petroleum prod acts re exported to the retail out lets situated outside the municipal limits for consumption and use outside the limits.
In our opinion, the division bench is right insofar as it held as aforesaid.
It was, however, submitted that the ratio of the deci sions of this Court had no application because of rules 6 and 9 of the said Rules.
We have referred to the said rules.
The contention of the appellant on the basis of the afore said rule was that since the goods were brought within the octroi limits, these became liable to octroi unless a decla ration as contemplated by rule 9 had been made by the person bringing such goods.
It was submitted by the appellant that no such declaration had been made in the present case.
According to the High Court rule 13 contemplates, as we have noticed, special facilities for current account under which in case of a person to whom such facilities are given, amount of octroi duty payable is determined by 68 deducting the total amount of goods transported outside the municipal limits as shown by the transport passes from the total amount of octroi as shown by the entry passes.
The High Court noted that section 133 of the Act confers power on the Board to direct that current accounts may be kept on behalf of the Board with the firm or public body in lieu of octroi on introduction of goods.
The Division Bench was of the opinion that section 133 of the Act along with rule 13 of the said Rules left no doubt that no conclusive presumption of the goods having been brought within the municipal limits for consumption, use or sale therein, could be drawn in cases where special current account facilities were given to a person.
In the instant case, special facilities for cur rent accounts had been given to the respondent No. 2.
There fore, rule 9 had no application according to the Division Bench.
Learned counsel for the respondent No. 1 had contend ed before the Division Bench that at the time of entry of petrol or diesel, it was not possible for the Indian Oil Corporation to give a declaration as to how much would be re exported to retail outlets situated outside the Municipal limits.
The Division Bench found that the argument on behalf of the Municipal Council regarding necessity of giving a declaration was vital.
The appeal filed by the Municipal Council was, therefore, dismissed.
Coming to the appeal for refund, it was urged before the Division Bench that Munici pal Council had given an undertaking that it would refund the octroi charged from the respondent No. 1 on the petrole um products re exported outside the Municipal limits of Jodhpur.
The Division Bench noted that the learned Single Judge had disallowed this firstly on the ground that the octroi had been charged from the respondent No. 2 and not from the respondent No. 1 and, secondly, the respondent No. 1 had not succeeded in establishing his claim for refund against the respondent No. 2.
The Division Bench held that the refund was not possible.
In this connection, reliance was placed on the decisions of this Court in M/s Motilal Padarnpat Sugar Mills Co. Ltd. vs State of Uttar Pradesh & Ors., ; and State of Madhya Pradesh & Anr.
vs Bhailal Bhai etc.
; , The Division Bench of the High Court, therefore, held that the claim for refund is not sustainable but the High Court found that the octroi had been paid by the Indian Oil Corporation and not by the respondent No. 1 and therefore, directed that the Municipal Council would have to refund to the Indian Oil Corporation the amount of octroi paid on the petroleum products re exported by it to Dangiawas outlet for supply to the re spondent No. 1 and the respondent No. 1 may recover the same from the Indian Oil Corporation.
The appeals were allowed to the extent indicated above.
Otherwise, the decision of the learned Single Judge was confirmed.
As mentioned hereinbe fore, being aggrieved, the appellant came up for appeal by special leave to this Court.
On behalf of the appellant, Shri Soli Sorabjee and Shri Tapash Ray made their submissions.
On the main point as held by the division bench of the High Court there was not much substantial challenge.
We agree with the High Court.
It was, however, contended that during the period in respect of 69 which the claim had been made by the respondent, there was no continuation of the current account facilities in favour of the respondent No. 2, Indian Oil Corporation as provided under section 133 of the Act read with rule 13 of the said Rules, and the question was whether the goods brought within the Municipal limit by the Indian Oil Corporation were liable to payment of octroi because of non compliance with the proce dure in rules 6 and 9 of the said Rules.
The other question which required consideration is that assuming that current account facilities in favour of respondent No. 2 existed, whether by reason of such, respondent No. 2 was exempted from complying with the rules 6 and 9 of the said Rules.
Council submitted that it was strange that the respondent No. 1 was purporting to make out a case that the current account facility to the respondent No. 2 by the appellant was not withdrawn and the same was still continuing.
An affidavit in support of this contention was filed by one Shri R.C. Parekh after the conclusion of the hearing in this case on the 30th September, 1988.
The case was reargued again in Feb. 1989.
It was contended that the Writ Petition in M/s Parekh Automobiles ' case showed beyond doubt that the writ petition was made on a positive case that all of a sudden on 25th July, 1975, the appellant had suspended the current account facilities in respect of also the goods which were exported out of Jodhpur Municipal limit by the respondent No. 2 and supplied to respondent No. 1 at Dangia was.
It was further the case of M/s Parekh Automobiles that upon suspending such current account facility the municipal ity was charging octroi on all petroleum products brought by respondent No. 2 within the Municipal limits without making a distinction amongst goods which were exported outside the Municipal limits.
In this connection, reference was made to paragraph 9 of the writ petition.
On behalf of the appel lant, it was contended that the term 'export facilities ' used in that paragraph was to mean 'current account facili ty ' as it appeared from the pleadings of the respondent No. 1 in paragraph 16 of the said writ petition.
Reference was also made to other paragraphs of the writ petition, namely, paragraph 10, paragraph 11 and paragraph 12 which proceeded on the basis that current account facilities had been with drawn and a complaint was made on that basis.
Reference was also made to the paragraph 17 at p. 107 of the appeal paper book.
The Municipal Council, Jodhpur filed a reply to the writ petition where also statements were made.
It was sub mitted that reading of the said pleadings make it clear that the respondent No. 2 was not making any declaration under rule 9 of the said Rules.
A declaration under rule 9 of the said Rules was to be made in Form 1, a specimen copy of which was enclosed to the written argument.
it was further stated that in the affidavit of the Indian Oil Corporation, nowhere it was stated that the said current account facility had not been suspended and was still continuing.
It was the case of the appellant that current account facilities were not provided to the respondent No. 2 as contemplated under section 133 of the Act.
It was the case of the municipality that even now the facilities are provided to a public sector undertaking provided they act in compliance with the provi sions of section 104 of the Act read with rules 6 and 9 of the said Rules.
But so far as the facts of this 70 case are concerned, it was submitted that during the period in dispute as also today there is no facility to the re spondent No. 2 under rule 13 of the said Rules and as admit tedly, the respondent No. 2 was not complying with the requirements of rules 6 and 9 of the said Rules and was not filing any declaration, the Municipality had the right to treat the goods, brought within the Municipal limits, as those brought for consumption, use or sale under sub rule (2) of rule 9 of the said Rules and thereby attracting octroi.
The Division Bench of the High Court, it was con tended by the appellant, failed to appreciate the implica tion of the aforesaid provisions of law and the fact that in respect of the period in question, admittedly, the current account facility was not available with the Indian Oil Corporation and as admittedly, the Indian Oil Corporation did not file any declaration under rule 9 of the said Rules, the petroleum products brought within the Municipal limits by the Indian Oil Corporation were to be presumed to be for consumption, use or sale and as such liable to octroi duty.
The High Court, according to Shri Ray for the appellant, should have appreciated that the questions raised, gone into but the questions decided by the High Court were not germane to the issue and as such were not required to be gone into the decided.
On this aspect, it was submitted that the appeals should be allowed so far as refund was concerned, and the impugned decisions of the High Court should be set aside.
It was further submitted that an analysis of law while dealing with this point would indicate that a declara tion under section 133 of the Act read with rule 13 of the said Rules cannot be interpreted as one dispensing with the requirement of the declaration under rule 9 of the Rules and if that be so then the presumption of non declaration would be available to the Municipality.
It would, therefore, be a case of deemed use or consumption.
It was submitted that the aspect whether sale alone would be sufficient to levy octroi or along with sale there should be consumption or use within the municipal limits, would require consideration.
It was submitted that conceivably goods can be brought within the municipal limits of a municipality for the purposes of (i) use, consumption or sale; or (ii) for immediate transporta tion outside the Municipality; or (iii) for temporary deten tion within the Municipal limits and eventual transportation outside the Municipal limits; or (iv) goods brought by a travelling agent for sale or exhibiting them for the pur poses of securing orders for sale thereafter.
Octroi, it was submitted, can only be levied on goods which are brought within the municipal limits for the purpose of consumption, use or sale therein.
No octroi can be charged on any goods which are brought within the municipal limits either for immediate transportation outside the municipality or for temporary detention within the municipal limits or for sale or exhibition by a travelling agent, it was submitted.
The provisions of the Act and the Rules have been made for the different categories in different ways.
it was submitted.
section 104 of the Act is the charging section and authorises munic ipality to impose octroi on goods and animals brought within the limits of the municipality for consumption.
use or sale.
The said section, it was submitted, is to be read with rule 6 providing for payment of octroi duty on goods liable to 71 payment of octroi.
Rule 6 of the said Rules, would indicate that octroi is to be paid only on goods liable to payment of octroi and not other goods.
Rule 7 indicates that import of the goods should be through prescribed routes.
This has been made for preventing clandestine importation of goods.
Rule 8 provides that the importers are to furnish documents and information in respect of the dutiable goods to be brought.
Rule 9 enjoins that the person bringing within the municipal limits good liable to payment of octroi, shall produce such goods at the octroi outpost and shall declare whether the goods are intended for consumption, use or sale within the municipality or for immediate transportation outside the municipality or for temporary detention within the municipal limits.
Referring to the scheme of the Act and the rules, it was submitted on behalf of the appellant that an analysis of section 133 and the current account facility therein indicate that only on the goods for use consumption or sale octroi is leviable.
Grant of current account facility does not mean providing facility to bring within Municipal limits which are liable to payment of octroi without complying with the other rules specifically applicable in respect of Such goods.
It was submitted that respondent No. 1 knew well that current account is in respect of those goods which are brought within the Municipal limits for use, consumption and sale.
In this connection, reference was made to certain paragraphs in the pleadings.
There was no current account facility, according to the appellant.
It was submitted that when the writ petition was moved at the particular point of time the current account facility stood suspended.
Xerox copy of the Order Sheet of the Trial Court was relied upon.
It would appear from that the trial court did not grant any stay because there was nothing to be stayed as by the time the writ petition was moved the current account facility stood suspended, it was submitted.
If the Court desired, a mandatory order reviving the current account facility was required to be made.
That was not done.
Therefore, the court of first instance heard the writ petition and disposed of the same.
The Court of first instance did not grant any relief to the writ petitioner and as such the writ petition er filed the appeal before the Division Bench.
In the appeal the appellate Court refused to stay the operation of the writ issued by the learned Single Judge.
Therefore.
by reason of that order also, there was no revival of the current account facility to the respondent No. 2, according to the appellant.
The Division Bench, as appears from the said order dated 1st April, 1977, restrained the payment of the octroi duty by the respondent No. 2 to the Municipality pending the said appeal and directed the Indian Oil Corpora tion to maintain a separate account in respect of the same and to keep the same in a separate bank account with the State Bank of India, Jodhpur.
The said order speaks of deposit of the octroi tax payable in respect of such des patches.
As the Division Bench partly allowed the writ petition, the Municipality moved this Court and this Court stayed the operation of that order.
Therefore, when the petitioner moved this Court, the Current Account facility stood suspended, according to the appellant, and at no stage thereafter till now the same stood revived by any order or otherwise.
72 But it may be noted, as mentioned hereinbefore, that an affidavit was filed by one Shri R.C. Parekh.
It was stated that current account facility as mentioned in section 133 of the Act was provided to the respondent No. 2, but the said facility was never discontinued even after 25th July, 1975 and is still being provided till the date of the hearing of the matter before this Court.
The current account facility under section 133 of the Act is not to recover octroi tax on goods at the time of entry but to keep current account and recover it periodically.
Reference was made to paragraph 6 of the writ petition and in reply, the Municipal Council admitted para No. 6 of the writ petition and stated that the facilities are still provided and has not been stopped.
Therefore, it is clear, according to the deponent, and according to the respondent, that according to the Municipal Council, Jodhpur itself current facilities as provided under section 133 of the Act were never withdrawn and therefore, any submissions made by the Municipal Council to the contrary are totally unfounded.
It could not have been withdrawn unilaterally without notice to the Indian Oil Corporation.
According to the deponent, the petitioner never stated that the current account facility provided to the Indian Oil Corporation had been withdrawn by the Municipal Council.
It only stated in paragraph 9 of the writ petition that sudden ly on 25th July, 1975, the Municipal Council, Jodhpur sus pended the export facilities provided to the respondent No. 2 and informed the respondent No. 2 that henceforth octroi tax would be charged from the respondent even on those goods which were exported outside the Municipal limits and which were not used or consumed within the municipal limits.
The export facility, i.e., facility on the issue of transport passes under rule 13 of the said Rules was only with the object to ascertain that quantity of petroleum products that have been exported out of Jodhpur Municipal limits and it did not amount to withdrawal of current account facilities.
The object of current account facilities is not to realise octroi tax on each consignment of goods at the time of its entry in Municipal limits of Jodhpur, but to keep current account and realise octroi tax after specified time periodi cally.
It is the case of the respondent No. 1 that the current account facility was never discontinued and it is still continuing.
In fact it is the duty of the Municipal Council to provide passes under rule 13 to person who have been provided current account facility.
In reply to para 9 of the writ petition, it was stated by the Municipal Council that it never suspended the export facilities of Indian Oil Corporation.
It was further stated that it was decided between the officers of the Indian Oil Corporation and Administrator that export facility shall remain in force only for goods exported to such distribution centres in respect of goods of which no sale is done at Jodhpur.
There fore, the affidavit stated that there was no suspension.
Reference was made to the order of the High Court dated 9th February, 1976 and other orders.
Shri Soli Sorabjee referred to the scheme of the Act and submitted that the two decisions of this Court referred to by the High Court were not applicable.
Neither of these cases, it was submitted, was concerned with the 73 situation where the goods were sold within the octroi limits and thereafter exported for consumption outside the said limits.
In the Burmah Shell 's case (supra), there was no sales by the company to its dealers.
The company sold goods through its dealers to the customers both within and outside the local area.
He submitted that the observations of this Court to the effect that octroi is chargeable on goods brought into the area for sale to consumers must be under stood in that context.
It was submitted that there was nothing in the said judgments of this Court to the effect that if goods are brought into a local area for sale to a dealer who then transports the goods outside the local area for sale to consumers, no octroi would be chargeable.
It was submitted that as the goods were brought into the local area for sale within that area, octroi would be chargeable.
It is significant to note, it was submitted, that the Burmah Shell 's case (supra) makes it clear that to attract liabili ty to pay octroi duty it is not necessary that the goods should be consumed within the octroi limits.
We are, however, unable to accept these contentions.
If the goods were brought within the municipal limits for the purpose of sale (sale means passing of the title to the purchaser), then different considerations might have ap plied.
But in view of the facts of this case, the title passed to the goods outside the municipal limits even in respect of the petroleum products which were sold within the municipal limits.
It was contended by Shri Sorabjee that rule 13 had no application.
Shri Sorabjee drew our attention to certain paragraphs of the writ petition, in particular to paragraph 18(b) where it was stated that it is obligatory for the respondent No. 1 to grant respondent No. 2 transport passes and it had no jurisdiction to withdraw that facility.
It was submitted with reference to that and other paragraphs that it was the case of the respondent No. 1 that facility was withdrawn and suspended and prayer was made for restoration of that facility.
It was, therefore, submitted on behalf of the appellant that in the absence of facilities being grant ed under rule 13, it was incumbent on the parties to make a declaration under rule 9 of the said Rules.
As no such declarations had admittedly been made, rule 9(2) of the said Rules was attracted.
Accordingly, the goods in the present case were to be treated as having been brought within the municipal limits for consumption use or sale therein and as such liable for octroi duty, according to the appellant.
Therefore, Shri Sorabjee submitted that this appeal should only be confined to the applicability of rule 9(2) of the said Rules.
On the other hand, it was disputed by Shri Dalveer Bhandari and others that it is incorrect to say that the facility was suspended or withdrawn.
Reading of the plead ings, according to Shri Bhandari, would make it clear that these were not suspended or withdrawn.
Reference was made to paragraphs 6 and 7 of the reply to the writ petition at p. 116 of the paper book to the effect that it was the case of the appellant that facilities provided to the Indian Oil Corporation were never stopped and this submission has been 74 repeated several times.
It was further submitted that when current account facility has been provided, there is no question of payment of octroi at the time of entry of petro leum products.
On the other hand, the octroi tax is paid at the time of settlement of periodical account, say after every month.
question of complying with rule 6 or rule 9 of the said Rules does not arise as they apply when octroi tax is paid at the time of entry of goods.
In fact.
the account of petroleum products imported and exported is kept by delivery of entry passes and transport passes by Indian Oil Corporation at Octroi outpose, which passes are given by Municipal Council.
In fact, it is obligatory duty, according to counsel, of Municipal Council to provide entry passes and transport passes to Indian Oil Corporation which have been provided current account facilities.
The delivery of entry passes and transport passes is only to facilitate settlement of octroi account on goods which have been retained in Municipal area for use and consumption.
If municipality does not provide transport passes, it cannot take advantage of its own default, according to Shri Bhandari.
It is obligato ry duty of Municipality, it was urged, to provide transport and entry passes to Companies and persons who have been provided current account facilities.
In any way, even it transport passes are not given by the Municipal Council, the quantity exported can be ascertain by other means also.
In the present case, there is no dispute regarding diesel exported to Dangiawas from Jodhpur Municipality.
The Municipal Council has not refuted in its reply in para 11 at p. 117 of the paper book, the quantity of petroleum products exported to Dangiawas as mentioned in Schedule 'A ' (p. 104 of paper book) from 25th July, 1975 to date of writ peti tion.
The Municipal Council gave an undertaking to refund the octroi tax charged from the petitioner on the diesel exported to Dangiawas outside the limits of Municipal Coun cil, Jodhpur as will be clear from the order of the learned Single Judge dated 7th February, 1976.
It was also stated that the Division Bench vide its order dated 1st April, 1977 has already ordered that respondent No. 2 would deposit the octroi tax on diesel exported to Dangiawas.
Thus, the octroi tax which became due on diesel exported to Dangiawas from 1st April, 1977 upto date is being deposited in the Bank account and there is no dispute regarding quantity of diesel exported to Dangiawas.
Thus, it appears to us that the controversy raised by Municipal Council referring to cancel lation of transport passes is unfounded.
The object of the transport passes was to ascertain the quantity of diesel exported to Dangiawas.
There appears to be no dispute re garding quantity of diesel exported to Dangiawas from 25th July, 1975.
The Depot Superintendent of Indian Oil Corpora tion, Jodhpur had deposed that current account facilities to Indian Oil Corporation is being continued till today.
It was stated that the octroi is paid periodically on settlement of account between Municipal Council and Indian Oil Corporation and not at the time of entry of petroleum products.
It appears that the contention that cancellation of transport passes is equivalent to cancellation of current account facilities, 75 made on behalf of the appellant, is incorrect.
A perusal ot section 133 would show that current account facility is provided by substantive section, whereas rule 13 of the said Rules is procedure provided with the object of providing facility of settlement account of payment of octroi tax.
In other words, according to rule 13(4), octroi tax is charged on quantity mentioned in entry passes minus the quantity mentioned in transport passes, i.e., on quantity of petroleum products used or consumed within the Municipal limits of Jodhpur Municipality.
It is also unsustainable, according to Shri Bhandari to contend that M/s Parekh Automobiles has recov ered octroi tax from consumers.
It has been asserted in the writ petition on oath as well as before this Court on filing affidavit that no octroi was recovered by M/s Parekh Automo biles from consumers.
On the other hand, it is the case of M/s Parekh Automobiles that it had to pay octroi tax out of commission which it received from Indian Oil Corporation on sale of diesel.
This fact, according to Shri Bhandari was never refuted by the Municipal Council or the Indian Oil Corporation.
Thus there is no question of unjust enrichment, and as such M/s Parekh Automobiles is entitled to octroi tax which was recovered from it and which is lying deposited in separate Bank Account by the Indian Oil Corporation as per order of Division Bench dated 1st April, 1977 upto date.
For period before 1st April, 1977, the Municipal Council has already given an undertaking to refund octroi tax.
Pleadings in this case and the averments are rather confusing.
On the consideration of all the facts and the circumstances of the case, we are of the opinion that the principles of the aforesaid two decisions of this Court have been correctly applied by the High Court in the facts and the circumstances of the case.
The octroi duty is, there fore, not chargeable on the transactions mentioned herein.
We are further of the opinion that in view of the confused state of the pleadings and averments, it is not possible to hold that current account facilities were withdrawn or cancelled.
If that is the position, then there is no ques tion that the High Court was right in the order it passed and the direction it gave.
In view of the aforesaid, appeals must fail and are accordingly dismissed.
In the facts and the circumstances of the case, however, we make no orders as to costs.
RANGANATHAN.
J. I have gone through the judgment pro posed to be delivered in the above cases by my learned brother Sabyasachi Mukharji, J. I agree but I would like to add a few words on one of the questions raised.
The controversy before us I shall refer only to the facts in CA.
1552/1981 for purposes of the discussion relates to the claim of the Municipal Council, Jodhpur (appellant) to octroi on the petroleum products sent from the depot of the Indian Oil Corporation (IOC) at Jodhpur, to retail outlets at Dangiawas where they are sold by Parekh 76 Automobiles Co. (hereinafter referred to as 'the dealer ') for sale at Dangiawas.
Dangiawas is admittedly situated outside the limits of Jodhpur Municipal Council.
The case of IOC and the dealer is that the goods in question are not sold at Jodhpur.
According to them, the actual sale took place only at Dangiawas and, since neither the sale nor the consumption nor the use of the petroleum products in ques tion took place within the limits of the municipality of Jodhpur, the appellant council was not entitled to levy any octroi thereon.
Alternatively, it was contended that, even if the sale is held to have taken place at Jodhpur, still, octroi cannot be levied as the goods so sold were meant for use or consumption outside the municipal limits, in view of the decision of this Court in Burmah Shell Oil Storage & Distributing Co. India Ltd. vs The Belgaum Borough Munici pality, [1963] Supp.
(2) SCR 216 as followed in Hiralal Thakorlal Dalal vs Broach Municipality & Ors., [1976] Supp.
SCR 82.
The learned Single Judge in the High Court did not permit the petitioners to raise the question that the sale took place only outside the municipal limits of Jodhpur since that involved an investigation into facts which could not be undertaken in a writ petition and proceeded on the footing that the sale of the products in question took place within the limits of Jodhpur.
He, however, accepted the contention of IOC and the dealer that even if the sale is taken to have been effected within Jodhpur, no octroi was leviable as admittedly the goods had been sold in Jodhpur only for their onward transmission for use and consumption in Dangiawas outside the Municipal limits.
The Division Bench of the High Court has also approved of this conclusion and, in our opinion, rightly.
As pointed out by my learned brother in his detailed discussion on this aspect, this issue is covered by the two decisions of the Supreme Court which have already been referred to.
I have nothing to add, so far as this part of the case is concerned.
It was urged before the High Court.
on behalf of the Municipal Council, that the levy of octroi could be justi fied on the terms of rule 9 of the Rajasthan Municipalities (Octroi) Rules, 1962, (hereinafter referred to as 'the rules ').
It is unnecessary to set out again the terms of this rule which have already been extracted in the judgment of my learned brother.
Under sub rule (1) of this rule, every person bringing his goods within the municipal limits should make a declaration in terms thereof.
In the present case, it is common ground that no such declaration had been made.
It is, therefore, urged that by virtue of the closing words of rule 9(2), the goods in question should be treated "as having been brought within the Municipal limits for consumption, use or sale therein" and thus attract the charge of tax under clause 2 of sub section (1) of section 104 of the Rajasthan Municipalities Act, 1959 (hereinafter referred to as 'the Act ').
The respondents have 77 attempted to counter this argument by urging that this provision regarding declaration does not apply in their case.
Their argument is that their case is covered by sec tion 133 of the Act read with rule 13 of the rules.
The argument is that rule 13 is a special provision applicable to a class of persons which has been allowed current account facilities under section 133 of the Act and that the proce dure under rule 13 overrides the requirements of rule 9.
This argument has been accepted by the High Court.
The question is whether the High Court 's conclusion on this issue is correct.
I think that the High Court rightly ac cepted this argument and I should like to elaborate a little my reasons for this conclusion.
Chapter II of rules provide for the manner of assessment and collection of octroi duty.
Rules 3 to 5 provide for the establishment of octroi outposts with powers to the inspect ing staff to stop the vehicles at the outposts.
Rule 6 lays down that no goods liable to payment of octroi shall, except as otherwise provided in these rules, be brought within the Municipal limits until the octroi duty leviable in respect of such goods has been paid at the octroi outposts.
Where goods arrive at an octroi outpost they may be coming in either for consumption, use or sale within the Municipal Limits or for transportation outside those limits, whether immediately or after a period of time.
If they have come in merely for the purpose of transportation, they are not liable to pay octroi duty.
It, therefore, became necessary to make a detailed provision as to the manner of assessment and collection of duty having regard to this consideration.
That is why rule 9 requires every person bringing goods within the municipal limits to make a declaration as to what the goods are intended for.
If any of the goods are intended for consumption, use or sale within the Municipality, a declaration could be made orally to this effect; thereupon the octroi would be collected then and there in respect of those goods.
If, however, the goods are intended for immedi ate or eventual transportation outside the Municipality, a written declaration should be filed by the importer.
In respect of goods declared intended for immediate transporta tion, the officer in charge of the octroi outpost receives by way of deposit such amount as may be equivalent to the duty payable thereon and issues a transit pass to the im porter.
The importer should transport the goods outside the Municipal limits within a period not exceeding eight hours (which can be extended to 24 hours at the most).
On such transportation being effected, the amount of octroi deposit ed in respect of the goods so transported is returned to.the importer and the transit pass taken back.
This is the proce dure envisaged in rule 11.
(Certain refinements in procedure in the case of travelling agents is provided for in rules 11A & 11B, with which we are not concerned).
Where, however, the goods are not immediately to be transported outside the Municipal limits but are to be temporarily detained within 78 the Municipal limits and eventually transported outside the Municipal limits, rule 12 is attracted.
In the case of such goods they have to be sent to a bonded warehouse.
The goods may be withdrawn from time to time either on payment of octroi in the event of their being consumed, used or sold within the Municipal limits or without any payment of octroi duty in case of their being transported outside the Munici pal limits.
This procedure is outlined in rules 12 and 16 to 22.
But one important condition is that the maximum period for which the goods can be placed in the bonded warehouse is 6 months.
If the goods are not removed within the said time limit, they are liable to be sold by public auction and the warehouse charges and octroi recovered from the sale pro ceeds.
This is the normal procedure for the assessment and collection of octroi duty.
It is in respect of this proce dure that the declaration in rule 9 becomes important.
The terms of the declaration determine the incidents of the duty.
Regarding the first category of goods mentioned in rule 9(1), the collection of duty is immediate; regarding the second category, a deposit is demanded which can be refunded on transportation within a few hours; and in re spect of the third, duty has to be paid unless the goods are transported outside the municipal limits within 6 months.
Rule 13, however, contemplates a totally different scheme for the assessment and collection of octroi for the special type of cases envisaged therein.
From the terms of section 133.
it would appear to be intended to cover mercantile firms or bodies which may be bringing goods into, or taking goods out of, the municipal limits frequently and, perhaps, also firms or bodies about whose capacity to pay the duty in due course the Municipal Board has confidence.
These persons are given the facility of having a current account with the Municipality and the amount of duty payable by such a person is determined and collected from time to time.
Such an account is opened on the firm or body making such deposit or furnishing such security as the Municipality may require, for the due discharge of its liabilities under the Act and the Rules.
When this facility is provided, the procedure to be followed is set out in rule 13.
Here what is done is that the firm or body is given a book of entry passes and a book of transport passes from time to time.
As and when the firm or body brings goods into the Municipality, it is required to fill in one of the entry passes setting out the details of the goods which are being brought in under any particular consignment and present the same at the octroi outpost of entry.
After verifying that the details of the goods brought in tally with the details of the goods entered in the entry pass, the details are passed on to the octroi Superintendent who debits the account of the person concerned with the amount of octroi payable in respect of the goods 79 listed in the pass.
As and when the firm or body wishes to transport the goods out of the MUnicipality, it fills up a transport pass containing the details of the goods proposed to be transported outside and presents it to the octroi outpost of exit.
The officer at the outpost verifies that the goods mentioned in the pass and the goods sought to be transported tally with each other.
Then the transport pass duly certified by him is passed on to the octroi Superin tendent.
The octroi Superintendent, after verification, files the certificates of export separately in respect of each such body or firm.
The amount of octroi payable in these cases is based on the total amount of octroi on the goods shown by the entry passes less the goods transported out under the transport passes.
In other words, in the case of persons who have the current account facilities, the duty is calculated on the basis of the total amount of goods that have.
come in as reduced by the total amount of the goods that have gone out, the balance being presumed to have been consumed, used or sold within the Municipal limits.
In order to ensure that there is a correspondence between the goods that have come in and those that have gone out, the proviso to sub rule (4) of rule 13 provides that, in computing the octroi duty payable, the goods transported outside the Municipal limits shall be lessened only if (a) such goods have not been sold within the Municipal limits and (b) they have been transported out of such limits within a period of 6 months from the date of their import.
A comparison of the above two sets of provisions will make it clear that they are two independent and mutually exclusive modes of assessment and collection of duty.
Under the cash system of payment, a declaration under rule 9 is absolutely essential because the officials at the outpost will have to determine the mode of dealing with the goods on the basis of such declaration.
The octroi duty has to be collected then and there in respect of the goods which are to be consumed, used or sold within the Municipal limits; a deposit has to be taken in respect of those goods which are intended to be immediately transported outside; and the rest of the goods on which the transportation is to be effected on a future time, have to be directed to a bonded warehouse.
The mode of collection of duty in respect of a person having current account facilities, however, does not depend upon any such declaration or upon the mode of utilisation of the goods as indicated in such declaration, because, in the case of the current account holders, the duty payable in respect of the entirety of the goods brought in is straightaway debited to his account on the basis of entry passes.
The duty payable in respect of the goods transported outside is later on credited to his account on the basis of the trans port passes.
The difference is the amount of the duty pay able by him and this is recovered 80 from the person concerned from time to time either by ad justment out of the deposits earlier obtained from him or by other processes of recovery.
The procedure as to issue of transit passes or storage in a warehouse are also irrelevant for the purposes of dealing with the goods under rule 13.
It, therefore, appears to me that High Court was fully justified in holding that the terms of rules 6 and 9 have no relevance to the payment of duty in cases covered by the current account facility envisaged under rule 13.
The High Court was, therefore, right in holding that the present case cannot be brought within the terms of proviso to rule 9(2) on the basis of a deemed consumption, use or sale within the Municipal limits.
It is true that the proviso to sub rue 4 of rule 13 also envisaged the exclusion from levy of octroi duty only where the goods are not sold within the Municipal limits.
It may be contended that, in the present case, as the IOC has sold the goods within the Municipal limits, and the subsequent transport to Dangiawas, though effected by the IOC, was really on behalf of the dealer the goods so transported and entered in the transport passes of the IOC should be exclud ed from deduction under sub rule (4) of rule 13.
But this construction, in my view, cannot be accepted.
The expres sions used in the proviso to sub rule (4) cannot be inter preted differently from the words used in section 104, on the basis of which chargeability to duty arises.
If, as we have held, there can be no octroi duty at all levied by the Jodhpur Municipality in respect of the goods solo by the IOC within, but clearly intended to be transported for use or consumption outside, the Municipal limits, then this statu tory limitation cannot be defeated by interpreting the proviso in such a way as to make all goods sold within the Municipality liable to duty even if the sale is in pursuance of a clear intention that the goods are to be despatched outside.
The terms of the proviso and the main section have to be read harmoniously.
The result of the above discussion is that the present case is governed by the terms of rule 13 and the IOC is entitled to go on paying octroi duty on the basis of the goods brought by it within the Municipality less the goods transported outside the Municipality even where the trans port outside the Municipality may be in pursuance of a sale within the Municipality so long as such sale is in pursuance of an intention that the goods should be consumed or used outside the Municipal limits.
As we have already said, in cases where rule 13 applies, rule 9 is excluded and, there fore, the High Court rightly held that the octroi charged on the IOC in respect of the impugned sales was not justified.
81 Before concluding I wish to refer to three aspects.
The first is as to whether even assuming that rule 9 was ap plicable to a case where the current account facility has been provided, the terms of that rule can be read in such a manner as to militate against the very concept of octroi duty as explained in the Burmah Shell case.
A question may arise whether the terms of rule 9(2) so interpreted would be intra vires the rule making power of the legislature.
I express no opinion on this issue as I have already expressed my view that rule 9 has no application to the present case.
The second aspect, which I wish to touch upon, is a point sought to be raised on behalf of the appellant in the course of,the present hearing that the current account facility granted to the IOC had been revoked.
My learned brother has referred to the pleadings in this regard at great length and, as pointed out by him, the factual position is by no means clear.
I do not think that the appellant should be permitted to raise at this stage a new plea when all along, in the earlier proceedings in the High Court, the case has proceeded on the footing that the IOC had been having and continues to have current account facilities.
The third aspect to which I would like to make a reference is that we have principally based out decision only on the facts in regard to the sales to Parekh Automobiles Ltd.
We are told that there are a number of suits, other than those before us today, which are pending at various stages in which various pleas have been raised, I would only like to make it clear that we express no opinion regarding the factual position in those cases and those cases will have to be disposed off in the light of the legal position set out in our judgment.
Except for the above clarifications I have nothing to add to what my learned brother Mukharji, J. has said and I respect fully agree with his conclusion that the appeals must fail and are dismissed.
R.S.S. Appeals dismissed.
| IN-Abs | M/s. Parekh Automobiles Ltd., respondent No. 1, had been allotted retain outlet by Indian Oil Corporation, respondent No. 2, for sale of its petroleum products at Dangiawas, which was outside the limits of the appellant.
Respondent No. 2 had its depot near Raikabag Station at Jodhpur where it stored petroleum products for supply to various pump stations situated within the limits of the appellant as well as situated outside its limits.
Respondent No. 2, being a public sector undertaking, was provided current account facilities under section 133 of the Rajasthan Municipalities Act, 1959, and so respondent No. 2 had not to pay octroi tax on such consignments at the time of entry of goods within the limits of the appellant.
For this purpose, respondent No. 2 was provided with the export facilities and supplied with entry passes under Rule 13 of the Rajasthan Municipal Octroi Rules 1962.
Under rule 13(4), the amount of duty payable, in the case or persons who had the current account facilities, was determined and collected on the basis of the total amount of goods that had come in as reduced by the total amount of goods that had gone out, the balance being presumed to have been consumed, used or sold within the municipal limits.
It was alleged that the appellant suspended the current account facility under section 133 of the Act and took the stand that octroi would be charged from Respondent No. 2 on the goods brought within the municipal limits if these were sold within the limits of the appellant although such goods were mean for use and consumption of the consumers outside the municipal limits.
As a consequence of this action of the appellant, respondent No. 2 charged octroi duty on supplies made to respondent No. I at Dangiawas by adding the amount of octroi tax in the bills.
Respondent No. 1 filed a writ petition in the High Court praying inter alia for a direction or an order restraining the Municipal Council from realising any tax on diesel, etc.
which were supplied to respondent No.1 at Dangiawas by respondent No. 2, and for refund of octroi tax already paid.
It was contended on behalf of respondent No. 1, in the High Court, that the Municipal Council had no jurisdiction to levy octroi on the goods brought within the municipal limits but not sold, consumed or used therein and subsequently exported outside the said limits; that actual sale took place only at Dangiawas and since neither the sale nor the consumption nor the use of the petroleum products in ques tion took place within the limits of the municipa 50 lity of Jodhpur, and Municipal Council was not entitled to levy any octroi thereon; alternatively, even if the sale was held to have taken place at Jodhpur, still, octroi could not be levied as the goods so sold were meant for use of con sumption outside the municipal limits; and that the word 'sale ' occuring under section 104 of the Municipalities Act could not be read without reference to use or consumption, as sale simplicitor by itself did not attract the levy of octroi, unless the goods were meant for use or consumption of the ultimate consumer in the area of the Municipal Council.
The defence of the Municipal Council was that because the sale took place at Jodhpur, octroi was chargeable irre spective of the fact where it was consumed or used; that as soon as the goods entered the octroi limits, it gave rise to taxable event unless a declaration as contemplated under rule 9 had been made; that respondent No. 2 did not make the declaration as required by rule 9 and rule 13(4) of the Octroi Rules; and that under sub rule (4) of rule 13 the goods exported were to be lessened only if such goods had not been sold within the municipal limits and were exported out within a period of six months from the date of entry.
The claim of refund was contested on the ground that there was no privity of contract between respondent No. 1 and the Municipal Council as the demand of octroi was not made from respondent No. 1.
The case of the Indian Oil Corporation, respondent No. 2, was that under the terms of the agreement respondent No. 2 was obliged to transport petroleum products out of its depots and supply petroleum products to its dealers at the destination in its own truck tankers, and till the supplies were made at the destination, the goods were at the risk of respondents No. 2 and therefore the goods were sold at the retail outlet where the deliveries were made and not at Jodhpur.
The learned Single Judge did not permit the petitioners to raise the question that the sale took place only outside the municipal limits of Jodhpur since that involved an investigation into facts which could not be undertaken in a writ petition, and proceeded on the footing that the sale of the products in question took place within the limits of Jodhpur.
He, however. accepted the contention of IOC and the dealer that even if the sale was taken to have been effected within Jodhpur, no octroi was leviable as admittedly the goods had been sold in Jodhpur only for their onward trans mission for use and consumption in Dangiawas outside the municipal limits.
The prayer for refund of the octroi tax was, however, refused.
The Division Bench dismissed the appellant 's appeal and partly allowed the appeal filed by respondent No. 1.
On the basis of the judgments of this Court in Burmah Shell Oil Storage & Distribution Co. India Ltd. vs The Belgaum Borough Municipality, [1963] Supp. 2 SCR 216 and Hiralal Thakorlal Dalai vs Broach Municipality, [1976] Supp.
SCR 82 wherein it was held that the sine qua non for levy of octroi was con sumption, and that the sale in order to attract levy of octroi shall be for the purpose of use or consumption 51 of the ultimate consumer, the Division Bench held that sale simplicitor would ot attract the levy of the octroi, that the word 'sale ' in this context had to be read with refer ence to the use or consumption and 'use, consumption and sale ' had to read in a disjunctive manner.
The Division Bench further held that rule 13 was a special provision in regard to; the persons who had been granted current account facilities and this rule was not subject to either rule 6 or rule 9 but was an overriding rule independent of rules 6 and 9.
The Division Bench was of the opinion that section 133 of the Municipalities Act, alongwith rule 13 of the octroi Rules left no doubt that no conclusive presumption of the goods having been brought within the municipal limits for consumption, use or sale therein could be drawn in cases where special current account facilities had been given to a person.
The Division Bench also held that the claim of refund by respondent No. 1 was not maintainable.
The Bench however directed that the Municipal Council would have to refund to the Indian Oil Corporation, respondent No. 2, the amount of octroi duty paid on the petroleum products re exported by it to Dangiawas outlet for supply to respondent No. 1, who would recover the same from the Indian Oil Corporation.
M/s. Motilal Padampat Sugar Mills Co. Ltd. vs State of Uttar Pradesh & Ors., ; and State of Madhya Pradesh & Anr.
vs Bhailal Bhai, ; , relied upon.
Before this Court, the parties reiterated their conten tions raised before the High Court.
In addition, it was contended on behalf of the appellant that there was nothing in the two judgments of this Court to the effect that if goods were brought into a local area for sale to a dealer who then transported the goods outside the local area for sale to consumers, no octroi would be chargeable.
It was further contended that during the period in dispute, as also today, there was no current account facility to the respond ent No. 2 under rule 13 of the Octroi Rules and as admitted ly the respondent No. 2 was not complying with the require ments of rules 6 and 9 of the said Rules and not filing any declaration, the Municipal Council had the right to treat the goods brought within the Municipal limits, as those brought for consumption, use or sale under sub rule (2) of rule 9 of the said Rules and thereby attracting octroi.
On the other hand, it was contended on behalf of the respond ents that it was incorrect to say that the current account facility was suspended or withdrawn.
Dismissing the appeal, this Court, HELD: (Sabyasachi Mukharji and M.H. Kania, JJ.
Per Sabyasachi Mukharji, J).
(1) The High Court was right in holding that it was difficult and inappropriate under Article 226 to determine the question as to where the sale 52 took place, and that even if the sale took place within the octroi limits of Jodhpur Municipal Council for the use or consumption of the ultimate consumer outside the octroi limits of Jodhpur then the taxable even did not take place in the octroi limits of Jodhpur.
[66F G] (2) In view of the decisions of this Court and in view of the language of section 104 of the Municipalities Act and the facts, the High Court was right in holding that no octroi was leviable on petroleum products re exported out side the municipal limits for consumption and use outside the municipal limits.
[65F] Burmah Shell Oil Storage & Distributing Co. Ltd. vs The Belgaum Borough Municipality, [1963] Supp. 2 SCR 216 and Hiralal Thakorelal Dalai vs Broach Municipality & Ors., [1976] Sup.
SCR 82, followed.
(3) In view of the facts of this case, the title passed to the goods outside the municipal limits even in respect of the petroleum products which were sold within the municipal limits.
If the goods were brought within the municipal limis for the purpose of sale (sale means passing of the title to the purchaser), then different considerations might have applied.
[73D] (4) Analysis of Section 133 and the current account facility therein indicates that only on the goods for use, consumption or sale, octroi is leviable.
Under this provi sion, octroi tax is paid at the tune of settlement of peri odical account, say after every month.
Thus, question of complying with rule 6 or rule 9 does not arise as they apply when octroi tax is paid at the time of entry of goods.
The delivery of entry passes and transport passes is only to facilitate settlement of octroi account on goods which have been retained in Municipal area for use and consumption.
[73H; 74A] (5) A perusal of section 133 would show that current account facility is provided by substantive section, whereas rule 13 is procedure provided with ' the object of providing facility of settlement of account of payment of octroi tax.
In other words, according to rule 13(4), octroi tax is charged on quantity mentioned in entry passed minus the quantity mentioned in transport passes, i.e., on quantity of petroleum products used or consumed within the Municipal limits of Jodhpur Municipality.
[75A B] (6) In view of the confused state of pleadings and averments, it was not possible to hold that current account facilities were withdrawn or cancelled.
If that is the position, then there is no question that the High Court was right in the order it passed and the direction it gave.
[75E] Per Ranganathan, J. (1) When goods arrive at an octroi outpost, they may be coming in either for consumption, use or sale within the municipal limits or for transportation outside these limits.
Rule 9 requires every person bringing goods within the municipal limits to make a declaration as to what the goods are intended for.
[77E] 53 (2) Under the normal procedure for the assessment and collection of octroi duty, the declaration under Rule 9 becomes important and the terms of the declaration deter mines the incidence of the duty.
Rule 13, however, contem plates a totally different scheme for the assessment and collection of octroi for the special type of cases.
[78C D] (3) A comparison of the two sets of provisions will make it clear that they are two independent and mutually exclu sive modes of assessment and collection of duty.
Under the cash system of payment, a declaration under rule 9 is abso lutely essential.
The mode of collection of duty in respect of a person having current account facilities, however, does not depend upon any such declaration or upon the mode of utilisation of the goods as indicated in such declaration, because in the case of the current account holders, the duty payable in respect of the entirety of the goods brought in is straightaway debited to his account on the basis of entry passes.
The duty payable in respect of the goods transported outside is later on credited to his account on the basis of the transport passes.
[79E G] (4) The High Court was fully justified in holding that the terms of rules 6 and 9 have no relevance to the payment of duty in cases covered by the current account facility envisaged under rule 13, and that the present case cannot be brought within the terms of proviso to rule 9(2) on the basis of a deemed consumption, use or sale within the munic ipal limits.
In cases where rule 13 applies, rule 9 is excluded.
[80B] (5) The present case is governed by the terms of rule 13 and the Indian Oil Corporation is entitled to go on paying octroi duty on the basis of the goods brought by it within the Municipality less the goods transported outside the Municipality, may be in pursuance of a sale within the Municipality, so long as such sale is in pursuance of an intention that the goods should be consumed or used outside the Municipal limits.
[80G] (6) The appellant should not be permitted to raise at this stage a new plea that the current account facility granted to the Indian Oil Corporation had been revoked when all along, in the earlier proceedings in the High Court, the case had proceeded on the footing that the Indian Oil Corpo ration had been having and continued to have current account facilities.
|
ivil Appeal No. 1638 of 1987.
From the Judgment and Order dated 28.11.1986 of the Karnataka High Court in C.R.P. No. 365 of 1984.
S.B. Bhasme and A.S. Bhasme for the Appellant.
R.S. Hegde and S.N. Bhat for the Respondent.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal from a judgment and order of a learned Single Judge of the Karnataka High Court.
Only a few facts are necessary to appreciate the contro versy raised before us.
476 The appellant herein was the plaintiff in Original Suit No. 103 of 1981 in the Court of 2nd Additional Civil Judge, Belgaum.
It was the case of the appellant in the plaint that on July 16, 1976 the respondentdefendant entered into an agreement in his favour for sale of the suit property com prising a shop and a bhatti room situated at Kirloskar Road, Belgaum City for a sum of Rs.20,000.
The appellant paid to the respondent as part consideration a sum of Rs.5,000 and pursuant to the agreement for sale the appellant was put in possession of the suit property.
The sale agreement provided that the registered sale deed was to be executed by the respondent after securing a No Objection certificate or permission from the competent officer as required under the Karnataka Urban Land Ceiling Act and within one month of the grant of such permission.
The respondent received the No Objection or permission as aforesaid on March 31, 1981 but failed to execute the registered deed of sale as provided under the said agreement.
Hence, on 30th June, 1981, the appellant filed the present suit.
It may be observed here that in the plaint, there was no specific averment that the appellant was and had always been ready and willing to perform his part of the said agreement.
The respondent filed a written statement raising several contentions and inter alia raised the contention that the suit was not maintain able for non compliance with the provisions of section 16(c) of the .
The issue as to whether the suit was not maintainable on the aforesaid ground was directed to be tried as a preliminary issue.
At this stage, the appellant applied for leave to amend the plaint by incorporating an averment in the plaint that the appellant was and had always been ready and willing to perform his part of the said agreement.
The learned Additional Civil Judge before whom the said application was made, rejected the same.
A revision petition was preferred by the appellant against the judgment of the learned Additional Civil Judge to the High Court of Karnataka but the said revision peti tion was dismissed by a learned Single Judge of the said High Court as aforesaid.
The learned judge took the view that the application for amendment was filed beyond the period of limitation and the application could not be grant ed as a vested right of the respondent would be disturbed by allowing the said amendment.
It is the correctness of this decision which is challenged before us.
In the leading case of Pirgonda Hongonda Patii vs Kal gonda Shidgonda Patil and Others, ; a Bench comprising three learned Judges of this Court laid down the principles which should govern the question of granting or disallowing amendments.
It was held by this Court that all amendments ought to be allowed which 477 satisfy the two conditions: (a) not working injustice to the other side, and (b) of being necessary for the purpose of determining the real questions in controversy between the parties.
Amendments should be refused only where the other party cannot be placed in the same position as if the plead ing had been originally correct, but the amendment would cause him an injury which could not be compensated in costs.
It is merely a particular case of this general rule that where a plaintiff seeks to amend by setting up a fresh claim in respect of a cause of action which since the institution of the suit had become barred by limitation, the amendment must be refused; to allow it would be to cause the defendant an injury which could not be compensated in costs by depriv ing him of a good defence to the claim.
In L.J. Leach & Co. & Anr.
vs Messrs Jardine Skinner & Co., ; another Bench comprising three learned Judges of this Court held that it is no doubt true that courts would, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limita tion on the date of the application.
But that is a factor to be taken into account in exercise of the discretion as to whether amendment should be ordered, and does not affect the power of the Court to order it, if that is required in the interests of justice.
If these principles are to be followed, there is little doubt that the learned judge was in error in rejecting the application for amendment made by the appellant.
In the present case no fresh cause of action was sought to be introduced by the amendment applied for.
All that the appel lant sought to do was to complete the cause of action for specific performance for which relief he had already prayed.
It was only that one averment required in law to be made in a plaint in a suit for specific performance in view of the provisions of sub section (c) of section 16 of the was not made, probably on account of some over sight or mistake of the lawyer who drafted the plaint and that error was sought to be rectified by the amendment applied for.
There was no fresh cause of action sought to be introduced by the amendment and hence, no question of caus ing any injustice to the respondent on that account arose.
Learned counsel for the respondent placed strong reli ance on the decision of this Court in Ouseph Varghese vs Joseph Aley and Others, In that case, a suit for specific performance was filed by the plaintiff on the basis of an alleged agreement with the first defendant.
The defendant denied the agreement and went on to state that just before his death her husband had agreed to sell to the plaintiff 478 Item No. 1 of the suit property less one acre of paddy field for a sum of Rs. 11,000 but due to the illness of her hus band, the sale in question could not be effected.
After the written statement to this effect was filed, no application for amendment to the plaint was made.
The Trial Court de creed the suit.
In the appeal, the High Court did not accept the agreement pleaded by the plaintiff, but granted a decree on the basis of the agreement set out in the written state ment.
It was held by a Bench comprising two learned Judges of this Court that the agreement pleaded by the defendant was wholly different from that pleaded by the plaintiff.
The plaintiff did not plead either in the plaint or at any subsequent stage that he was ready and willing to perform the agreement pleaded in the written statement and hence, no decree on the basis of that agreement should have been passed in his favour as done by the High Court.
The Court held that it was well settled that in a suit for specific performance, the plaintiff should allege that he is ready and willing to perform his part of the contract and in the absence of such an allegation in the plaint, the suit is not maintainable.
In our opinion, this case does not lend any support to the argument of the learned counsel for the respondent, as in the present case there is no question of any decree being passed on the basis of any agreement other than the one pleaded by the appellant in the plaint.
In the result, the judgment and order passed by the learned Single Judge are set aside.
The appeal is allowed.
The amendment applied for by the appellant is allowed.
The amendment to be carried out by the appellant at his own expense within eight weeks of a certified copy of this order being received by the Trial Court.
The Trial Court shall thereafter give time to the respondent to file a supplemen tary written statement, if so advised, and dispose of the case on merits according to law.
There will be no order as to costs of the appeal.
G.N. Appeal allowed.
| IN-Abs | For selling an immovable property, respondent entered into an agreement with the appellant.
Appellant paid part of the consideration and he was put in possession of the property.
Since the respondent failed to execute the regis tered sale deed, the appellant filed a suit.
There was no specific averment in the suit that the appellant was and had always been ready and willing to perform his part of the agreement.
Respondent contended inter alia that the suit was not maintainable for non compliance with the provisions of Section 16(c) of the .
This issue was directed to be tried as a preliminary issue.
At that stage, the appellant applied for leave to amend the plaint by incorporating an averment that he was always and had been ready and willing to perform his part of the agreement.
The trial court rejected the application.
The revision petition filed in the High Court was dis missed.
The High Court took the view that the application for amendment was filed beyond the period of limitation and cannot be granted, as a vested interest of the respondent would be disturbed.
This appeal is against the judgment of the High Court.
Allowing the appeal, this Court, HELD: 1.1 Amendments should be refused only where the other party cannot be placed in the same position as if the pleading had been originally correct, but the amendment would cause him an injury which could not be compensated in costs.
It is merely a particular case of this general rule that.
where a plaintiff seeks to amend by setting up a fresh 475 claim in respect of a cause of action which, since the institution of the suit, had become barred by limitation, the amendment must be refused; to allow it would be to cause the defendant an injury which could not be compensated in costs by depriving him of a good defence to the claim.
Courts would as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limita tion on the date of the application.
But that is a factor to be taken into account in exercise of the discretion as to whether application for amendment should be granted and does not affect the power of the Court to order it, if that is required in the interest of justice.
[477A D] 1.2 In the present case, no fresh cause of action was sought to be introduced by the amendment applied for.
All that the appellant sought to do was to complete the cause of action for specific performance and add an averment which required to be added in view of the provisions of sub sec tion (c) of Section 16 of the .
There was no fresh cause of action sought to be introduced by the amendment and hence, no question of causing any injustice to the respondent on that account arose.
[477E F] Pirgonda Hongonda Patil vs Kalgonda Shidgonda Patil and Ors., ; and L.J. Leach & Co. and Anr.
vs Messrs Jardine Skinner & Co., ; , relied on.
Ouseph Varghese vs Joseph Aley & Ors., , distinguished.
|
Appeal No. 481 of 1957.
Appeal by special leave from the judgment and order dated December 12, 1955, of the Punjab High Court (Circuit Bench) Delhi, in Civil Writ Application No. 11 D of 1955.
Gurbachan Singh and R. section Narula, for the appellant.
C.K. Daphtary, Solicitor General of India, H. J. Umrigar and T. M. Sen, for respondents Nos. 1 to 4.
Dr. J. N. Banerjee and P. C. Agarwala, for respondent No. 5. 1958.
September 30.
The Judgment of the Court was delivered by DAS C. J.
The facts material for the purpose of disposing of this appeal by special leave are shortly as follows: The appellants, before us claim to have been dealers in foreign liquor since 1922 and to have, before the partition of the country, held licenses in forms L 1, L 2, L 10 and L 11 at Amritsar, Sialkot and Multan.
The appellants allege that in 1945 they had also secured a license in Form L 2 in respect of some premises in Chawri Bazar, Delhi, but that the operation of the said license had to be suspended on account of the unsuitability of the Chawri Bazar premises.
Then came the communal riots in the wake of the partition of the country and that license could not be renewed.
ln 1951 the appellants applied to the Chief Commissioner, Delhi, (exhibit 1) for licenses both in Forms L 1 and L 2 in respect of Karolbagh or at any place in Delhi.
On May 17, 1951, the Home Secretary to the Chief Commissioner by letter (exhibit 2) conveyed to the appellants the sanction of the Chief Commissioner to the grant to them of license in Form L 2 in respect of Karolbagh, Delhi.
This license has ever since then been renewed from year to 1427 year.
In 1954 a vacancy arose in respect of a license in Form L 2 on account of the closure of the business of Messrs. Army and Navy Stores of Regal Buildings, New Delhi, which held such a license.
Accordingly on January 21, 1954, the appellants submitted an application (exhibit 4) to the Deputy Commissioner for the grant of a foreign liquor license in Form L 2 in the aforesaid vacancy.
In that application the appellants stated, inter alia, that they were " prepared to operate it in such a part of Delhi as may be determined by the authorities ".
Not having received any reply for nearly 3 months and apprehending that interested persons were endeavouring to cause hindrance in the matter of the granting of the license to them on the plea that the appellants had no premises in Connaught Place, the appellants, on March 11, 1954, wrote a letter (exhibit 5) to the Chief Commissioner in which, after pointing out that Karolbagh where they had their L 1 license was in New Delhi, the appellants stated: " In any case, we have already made it clear in our application which we made to the Deputy Commissioner, Delhi on the 21st January, 1954, that we are prepared to operate this license in any locality which the authorities might deem proper ".
This letter was acknowledged by the Personal Assistant to the Chief Commissioner who, on March 15, 1954, stated (exhibit 6) that the " application No. Nil dated 18 3 1954 on the subject of grant of foreign liquor license in Form L 2 " had been forwarded to the Home Secretary, Delhi State, for disposal.
Exhibit 7 to the petition is an important document.
It is a letter dated May 21, 1954, addressed by the appellants to the Excise and Taxation Commissioner stating that " with a view to avoiding any possible objection as to locality etc., we have secured suitable premises also in the Connaught Place area, New Delhi, in which area has occurred a vacancy on account of the surrender of this license by Messrs. Army and Navy Stores ".
The letter concluded with the request that early orders be passed oil their application.
On July 30, 1954, the appellants wrote a long letter (exhibit 8) to the Chief Commissioner claiming justice in the matter of their 1428 application for the L 2 license.
In the second paragraph of that letter it was stated: ,It is now being acclaimed by the party concerned and their friends that they have succeeded in removing the only obstacle that stood in the way of their getting the said L 2 license by so arranging matters that our application has been kept back by the Excise Commissioner and that only five or six other applications of firms without much merit in them have been forwarded to you in order that they might have a smooth sailing as against those applicants ".
The appellants prayed that the Excise Commissioner might be directed to forward all records concerning the case to the Chief Commissioner so that the latter might be able to arrive at a just conclusion and they asked for a hearing to explain their claim fully.
A copy of this letter appears to have been endorsed to the Excise Commissioner on August 13, 1954, by the Under Secretary, Finance.
The Excise Commissioner then wrote a letter No. 295/C/54 dated August 31, 1954, to the Under Secretary, Finance, a copy of which was produced by the learned Solicitor General at the hearing before us.
In this letter the Excise Commissioner explained why the application of the appellants was not considered by him to be a good and proper one and stated that reasons why, according to him, the applications of two , other applicants, including Messrs Gainda Mall Hem Raj (respondent No. 5), should be given the preference.
In the penultimate paragraph of this letter of explanation it was stated: " In the end it may also be added that the applicant has no premises in New Delhi and as such he had no claim.
The license in Form L 2 is granted in respect of certain premises.
" The conclusion was that "under the circumstances there is no force in the application of Messrs. Ghaio Mall and Sons.
" It is apparent that the Excise Commissioner did not remember that the appellants had, by their letter (exhibit 7) of May 21, 1954, addressed to him, stated that they had secured suitable premises also in the Connaught Place area, New Delhi.
Be that as it may, on September 11, 1954, the appellants wrote another letter (exhibit 9) to the Chief 1429 Commissioner pressing their claim.
In this letter reference was made to their letter to the Excise Commissioner of May 21, 1954, (exhibit 7) in which it had been stated that the appellants had secured suitable premises in the Connaught Place area in New Delhi.
A copy of this letter was sent to the same Under Secretary, Finance, to whom the Excise Commissioner had written his letter of August 31, 1954, alleging that the appellants had no premises in New Delhi.
Exhibit 9A is the postal acknowledgment by the Under Secretary, Finance, of the letter containing the copy of the appellants ' letter but it does not appear from the record that the Under Secretary, Finance, thought it necessary to remind the Excise Commissioner that the appellants were maintaining that they had secured suitable premises in New Delhi.
This was followed by a letter (exhibit 10) from the appellants to the Excise Commissioner intimating that an application had been made to the Collector on September 11, 1954, for a change of their premises for L 1 license from Karolbagh, New Delhi to H. 32 Connaught Circus, New Delhi.
Although this letter had been written in connection with the change of L 1 license,, it certainly did specify that the appellants had secured the premises H 32 Connaught Circus.
The personal Assistant to the Excise Commissioner replied (exhibit 11) that the matter was under consideration.
There was a reminder (exhibit 12) sent to the Excise Commissioner on December 8, 1954, about the change of L 1 license from Karolbagh to Connaught Circus.
It appears from papers, for the first time produced before us at the hearing of this appeal, that on September 3, 1954, a note was put up by the Under Secretary, Finance, before the Finance Secretary, Shri section K. Mazumdar.
At the forefront of this note we find the following statement: " The applicants (Messrs. Ghaio Mall and Sons) have no premises in Connaught Circus.
For these reasons, if for no other, their claim has to be rejected.
" The note concluded with the recommendation that, in case it was decided that the vacancy should be filled, the recom mendation of the Excise Commissioner should be accepted, that is to say, the L 2 license should go to 1430 Messrs. Gainda Mall Hem Raj (Respondent No. 5).
On September 8, 1954, the Finance Secretary simply endorsed the file to the Chief Minister who, on September 14, 1954, recorded the following order on the file: " Commissioner 's recommendation may be accepted ".
There is nothing on the record produced before us to indicate that the matter was sent up to the Chief Commissioner or that his concurrence was obtained under section 36 of the Government of Part C States Act (No. 49 of 1951).
On December 14, 1954, the Under Secretary, Finance, wrote to the Excise Commissioner a letter which was for the first time produced at the hearing before the High Court and to which detailed reference will be made hereafter.
On January 15, 1955, the appellants were informed that the change applied for by them in respect of their L 1 license had been allowed.
The appellants were not told anything about the rejection of their application for L 2 license, but evidently they came to know that the L 2 license, for which a vacancy had arisen on account of the closure of Messrs. Army and Navy Stores, had been granted to Messrs. Gainda Mall Hem Raj (respondent No. 5).
On December 24, 1954, the appellants wrote severally to the Home Secretary (exhibit 14) Finance Secretary (exhibit 15) and the Under Secretary, Finance (exhibit 16) asking for a copy of the order or orders granting license to Messrs. Gainda Mall Hem Raj and/or rejecting their own application for L 2 foreign liquor license.
Three postal acknowledgments (Exs.
16A, 16B, 16C) relating to those three letters are on the record.
The appellants got no reply from any of them.
Not having received any reply the appellants on December 21, 1954, moved the Punjab High Court (Circuit Bench) under article 226 for appropriate writs or orders, but as it was not then quite clear whether the order granting the license to Messrs. Gainda Mall Hem Raj had actually been made, the Circuit Bench summarily dismissed that writ application as premature.
There were proceedings taken by the appellants to obtain leave to appeal first from this Court under article 136 which was adjourned sine die and then from the High Court under article 133, but it is not necessary 1431 to go into further details of those proceedings.
After the appellants had definitely ascertained that the L 2 license had been granted to Messrs. Gainda Mall Hem Rai, the appellants, instead of proceeding with their application for leave to appeal to this Court, filed a fresh writ petition in the High Court (Circuit Bench) out of which the present appeal has arisen.
In the present writ petition the appellants have impleaded 7 respondents, namely, (1) The State of Delhi, (2) The Chief Minister, Delhi, (3) The Excise and Taxation Commissioner, Delhi, (3 A) Secretary, Delhi State, (3 B) Under Secretary, Finance, (4) The Chief Commissioner, Delhi and (5) Messrs. Gainda Mall Hem Raj.
The principal ground , urged by the appellants in support of this petition are that the ap plications of the appellants and of the other applicants had never been placed before the Chief Commissioner who, under r. I of Ch.
5 of the Delhi Liquor License Rules, 1935, framed under section 59 of the Punjab Excise Act (Punjab I of 1914), as extended to Delhi, was the only competent authority empowered to grant L 2 license for wholesale and retail vend of foreign liquor to the public and that the Chief Commissioner had never applied his mind to the applications and did not in fact make any order and that respondents Nos. 2 and 3 had purported to exercise jurisdiction and power which were not vested in them by law and that their decision, if any, had not received the con currence of the Chief Commissioner, as requiried by the proviso to section 36 of the Government of Part C States Act.
The appellants pray for the issue of appropriate writs, orders or directions (a) quashing and setting aside the order of granting L 2 license to respondent No. 5, (b) directing the respondent No. 4 (the Chief Commissioner) to hold proper enquiry regarding suitability of premises etc., to hear both the parties and to decide the application of the petitioner before taking tip the application of the 5th respondent.
There is a prayer in the nature of a prayer for further and other reliefs and there is the usual prayer for costs.
182 1432 A Written statement verified by the affidavit of Shri.
section K. Majumdar, the Finance Secretary, has been filed on behalf of respondents I to 4.
In paragraph 5 of that written statement it has been averred that all the applications including the appellants ' application were in fact considered; but it is significant that it has not been stated by whom the applications had been considered.
Messrs. Gainda Mall Hem Raj have filed an affidavit only stating that they had been informed that the Chief Commissioner had sanctioned the grant of the license to them.
The appellants, with the leave of the High Court, filed a consolidated affidavit setting out facts including the fact that although they had written to the Home Secretary, the Finance Secretary and the Under Secretary, Finance, asking for a copy of the order granting the license to Messrs. Gainda Mall Hem Raj, no copy of the order or even a reply to the letters had been received.
In reply to the consolidated fresh affidavit an affidavit affirmed by the Finance Secretary (Shri section K. Majumdar) has been filed.
In paragraph 13 of this affidavit it has been stated that, since no appeal lies against the order of the Chief Commissioner, the question of supplying a copy of the order to the appellants does not arise.
Statements of this kind cannot but leave an impression in the mind of the Court that the respondents were not squarely dealing with the case made by the appellants, but were evading the production of the order of the Chief Commissioner which it was obviously insinuated not to have been made at all.
In order to compel the respondents to produce the original order, if any, the appellants made an application to the High Court supported by an affidavit.
Paragraph 2 of the petition which was quite precise reads thus: " 2.
That with reference to paragraphs 7 & 8 of the written statement and paragraphs 10 and 11 of the affidavit of the Finance Secretary it is submitted that the respondents have not filed any proper return to the rule issued by the Court inasmuch as the original order sought to be quashed with nothings etc., which led to those orders have been withheld by the 1433 respondents.
The respondents have not even stated that the Chief Commissioner, Delhi, who is admittedly the only competent authority for the grant of an L 2 license passed any orders himself.
The replies are evasive.
It is not stated who considered the application of the petitioner i.e. whether it was a clerk who was doing the noting or whether the Collector or the Finance Secretary or the Chief Minister who did it.
" On this application the High Court on April 11, 1955, made the following order: Let the order rejecting the petitioners ' application be brought to court by an officer or official of the department concerned.
" The Finance Secretary filed a reply paragraph 3 of which was in the term , following: " 3.
That I have carefully gone through the relevant papers.
The case of the petitioner was considered along with that of other applicants and it was finally decided to issue the license in favour of Messrs. Gainda Mall Hem Raj.
It was not considered necessary to send an intimation of rejection to all those who had not been granted the license in question.
There is therefore no specific order rejecting the petitioner 's application as ordered to be produced by the Hon 'ble Court.
" Although it was obvious what order of the Chief Commissioner the appellants were insisting on being produced, the respondents were prompt in taking advantage of the wording of the High Court 's order directing the production of the order rejecting the appellants ' application and stated that there was no specific order rejecting the appellants ' application.
This is nothing short of what may be called swearing by the card.
The deponent overlooks the fact that the order granting the license to Messrs. Gainda Mall Hem Raj was in effect tantamount to a rejection of the appellants ' application.
The appellants moved the High Court again on August 8, 1955.
After stating how the respondents were evading the real issue, the appellants in paragraph 5 of the petition categorically 1434 stated that their case was that the Chief Commissioner, Delhi, the competent authority, had not passed any order sanctioning the license in favour of Messrs. Gainda Mall Hem Raj and prayed that the respondents be directed to file the original record of the case including the actual sanction for the grant of the license to Messrs. Gainda Mall Hem Raj.
On August 19, 1955, the Court ordered the relevant records to be called for.
The only thing the respondents could, at long last, produce before the High Court was the letter of the Under Secretary, Finance, to the Excise Commissioner dated December 14, 1954, to which reference has already been made.
Learned Solicitor General appearing for respondents 1 to 4 pointed out that the order which is sought to be quashed was the grant of L 2 license for the year 1954/1955 which has long expired and suggested that the writ petition and consequently the appeal had become infructuous.
It appears that the usual practice in such matters is that once a license in Form L 2 is granted by the Chief Commissioner, it is almost automatically renewed by the Collector from year to year, unless, of course, the licensee is found guilty of breach of any excise rule and that in such cases of renewal there arises no question of vacancy entitling any outside competitor to apply for a license in Form L 2.
That being the position and this is not in dispute it is vitally important for the appellants that we should consider the validity of the grant of the L 2 licence for 1954/1955 to Messrs. Gainda Mall Hem Raj, for in case of our holding that the order granting the same was a nullity on account of its not having been made by the competent authority, the vacancy caused by the closure of business by Messrs. Army and Navy Stores will still remain to be filled up and the appellants will yet have a chance of having their application considered by the competent authority.
We accordingly proceeded to hear the appeal on merits.
The principal question urged before us, as before the High Court, is whether the Chief Commissioner of Delhi made any order under r. 1 of Ch.
5 of the Delhi 1435 Liquor License Rules, 1935.
It is significant that although the Chief Minister, the Excise Commissioner, the Secretary of Delhi State, the Under Secretary, Finance, and the Chief Commissioner have been impleaded in the present proceedings as respondents Nos. 2, 3, 3A, 3B and 4 respectively and although they or at least some of them could have deposed to the material facts of their own personal knowledge, none of them ventured to file an affidavit dealing with the categorical statement of the appellants that no order had at any time been made by the Chief Commissioner for granting the L 2 license to Messrs. Gainda Mall Hem Raj or rejecting the appellants ' application.
Instead of adopting the simple and straight forward way these respondents have taken recourse to putting up the Finance Secretary to give obviously evasive replies which are wholly unconvincing.
It is needless to say that the adoption of such dubious devices is not calculated to produce a favourable impression on the mind of the court as to the good faith of the authorities concerned in the matter.
We must also point out that when a superior court issues a rule on an application for certiorari it is incumbent OD the inferior court or the quasi judicial body, to whom the rule is addressed, to produce the entire records before the court along with its return.
The whole object of a writ of certiorari is to bring up the records of the inferior court or other quasi judicial body for examination by the superior court so that the latter may be satisfied that the inferior court or the quasi judicial body has not gone beyond its jurisdiction and has exercised its jurisdiction within the limits fixed by the law.
Non production of the records completely defeats the purpose for which such writs are issued, as it did in the present case before the High Court.
We strongly deprecate this attempt on the part of the official respondents to bye pass the court.
We are bound to observe that the facts appearing on the records before us disclose a state of affairs which does not reflect any credit on the administration of the erstwhile State of Delhi.
We must, however, say, in fairness to the learned Solicitor General, that he promptly produced 1436 the entire records before us during the hearing of this appeal.
As already stated the principal question, on which arguments have been addressed to us, is whether the Chief Commissioner had made any order for granting the L 2 license to Messrs. Gainda Mall Hem Raj.
The High Court answered the question in the affirmative on two grounds, namely, (1) that the Finance Secretary had made an affidavit stating that the decision regarding the grant of the license to Messrs. Gainda Mall Hem Raj had been taken by the Chief Commissioner, and (2) that the learned Solicitor General stated in specific terms that the matter had in fact been decided by the Chief Commissioner.
On the facts as they now emerge it appears to us that the High Court was under some misapprehension on both these points.
We have already summarised all the statements and affidavits affirmed by the Finance Secretary and it is quite clear that the only thing that he did not say was that the Chief Commissioner had considered the applications or made any order.
The learned Solicitor General, with his usual fairness, also informed us that except relying on the letter of December 14, 1954, lie did not say that the Chief Commissioner had taken any decision in the matter.
This being the position we are free to go into the matter and come to our own decision thereon.
The records, including the documents now produced before us, do not show that the applications had ever been placed before the Chief Commissioner.
There is nothing in the files showing any order or note on the subject made or signed or initialled by the Chief Commissioner.
What transpires is that the Excise Commissioner (respondent No. 3) had by his letter dated August 31, 1954, recorded the reasons why the appellants ' applications could not be entertained, one of the reasons being that they had no premises in the Connaught Place area in New Delhi, that a note was then put up by the Under Secretary, Finance, on September 3, 1954, suggesting that the appellants ' application should be rejected, if for nothing else, for their not having any premises in New Delhi (which 1437 according to the appellants was not a correct statement in view of their letters referred to above) and that the L 2 license should be granted to Messrs. Gainda Mall Hem Raj, that the Chief Minister on September 14, 1954, made an order on the file accordingly and finally that the Under Secretary, Finance, wrote the letter 'dated December 14, 1954, to the Excise Commissioner intimating that the Chief Commissioner had been pleased to approve the grant of the license to Messrs. Gainda Mall Hem Raj.
There is nothing on the record to show that the concurrence with the order of the Chief Minister was obtained from the Chief Commissioner.
The inexorable force of the aforesaid facts, now appearing on the record, inevitably led the learned Solicitor General to concede that, on the records as they are, it is not possible for him to say that the Chief Commissioner had actually made the order, but he contends that, in view of the letter of the Under Secretary, Finance, dated December 14, 1954, the fact that the Chief Commissioner had made the order could not be questioned in any court.
In other words the learned Solicitor General submits that that letter embodies the order of the Chief Commissioner and the court cannot be asked to go behind it and enquire whether the Chief Commissioner had in fact made the order.
In order to succeed in this contention the learned Solicitor General has to satisfy us that this letter is the embodiment of the Chief Commissioner 's order and that it has been duly authenticated.
On the second point he is clearly right, for under a rule 'Made on March 17, 1952, by the then Chief Commissioner, in exercise of powers conferred on him by section 38(3) of the Government of Part C States Act (49 of 1951), an Under Secretary is also a person competent to authen ticate an order or instrument of the Government of Delhi.
The only question that remains for us to consider is whether the letter in question is the order of the Chief Commissioner.
The letter on which the entire defence of the respondents rests is expressed in the following words: 1438 "DELHI STATE SECRETARIAT, DELHI STATE No. F. 10(139)/54 G A & R Dated the 14th December, 54.
From Shri M. L. Batra, M. A., P. C. section, Under Secretary Finance (Expenditure) to Government, Delhi State.
To Shri Dalip Singh, M. A., 1.
R. section, Commissioner of Excise, Delhi State, Delhi.
Subject: Grant of L 2 License.
Sir, With reference to your letter No. 295/C/54 dated the 31st August, 1954, on the above subject, I am directed to say that the Chief Commissioner is pleased to approve under Rule 5. 1. of Delhi Excise Manual Vol.
11 the grant of L 2 ' license to Messrs. Gainda Mall Hem Raj, New Delhi, in place of the L 2 License surrendered by Messrs. Army & Navy Stores, New Delhi.
Necessary License may kindly be issued to the party concerned under intimation to this Secre tariate.
Yours faithfully, (Sd.).
M. L. Batra, Under Secretary, Finance (Exp.) to Government, Delhi State." In the first place it is an inter departmental com munication.
In the second place it is written with reference to an earlier communication made by the Excise Commissioner, that is to say, ex facie, it purports to be a reply to the latter 's letter of August 31, 1954.
In the third place the writer quite candidly states that he had been " directed to say " something by whom, it is not stated.
This makes it quite clear that this document is not the order of the Chief Commissioner but only purports to be a communication at the direction of some unknown person of the order which 1439 the Chief Commissioner had made.
Indeed in paragraph 7 of the respondents ' statement filed in the High Court on February 2,1955, this letter has been stated to have " conveyed the sanction of the Chief Commissioner of the grant of license to the 5th respondent ".
A document which conveys the sanction can hardly be equated with the sanction itself Finally the document does not purport to have been authenti cated in the form in which authentication is usually made.
There is no statement at the end of the letter that it has been written " by order of the Chief Commissioner ".
For all these reasons it is impossible to read this document as the order of the Chief Commissioner.
Learned counsel for Messrs. Gainda Mall Hem Raj relied on our decision in Dattatreya Moreshwar Pangarkar vs The State of Bombay (1).
In that case there was ample evidence on the record to prove that a decision had in fact been taken by the appropriate authority and the infirmity in the form of the authentication did not vitiate the order but only meant that the presumption could not be availed of by the State.
That decision did not proceed on the correctness of the form of authentication but on the fact of an order having in fact been made by the appropriate authority and has thus no application to the present case where it is conceded that the Chief Commissioner had not in fact made or concurred in the making of an order granting the license to Messrs. Gainda Mall Hem Raj.
In the view we have taken it is not necessary for us to consider whether the action taken under the Excise Act and the rules thereunder was a judicial or an executive action, for even if it were of the latter category the letter of December 14, 1954, cannot be treated as an order properly authenticated to which the presumption raised by article 166 of the Constitution will attach.
For reasons stated above we hold that there was no valid order granting the L 2 license to Messrs. Gainda Mall Hem Raj and that in the eye of the law the vacancy arising on the closure of the (1) ; 183 1440 business by Messrs. Army and Navy Stores still remains unfilled.
The applications of the appellants and other applicants were for a grant of L 2 license for 1954/ 1955.
That year has gone past and accordingly in the changed circumstances we direct the Chief Commissioner to fill up the vacancy caused by the closure of the business by Messrs. Army and Navy Stores by inviting applications from intending licensees including the appellants and Messrs. Gainda Mall Hem Raj and granting the same to the most suitable party.
We, therefore, accept this appeal, reverse the order of the High Court and issue a mandamus to the effect aforesaid and also direct the respondents Nos.
1 to 4 to pay the appellants ' costs of this appeal and of the proceedings in the High Court out of which this appeal has arisen.
Messrs. Gainda Mall Hem Raj are to bear their own costs throughout.
Appeal allowed.
| IN-Abs | The appellant firm, an unsuccessful applicant for a license for vending foreign liquor in New Delhi for the year 954 1955, moved the High Court under article 226 of the Constitution for a writ of certiorari quashing the order granting the license to a rival applicant and impleaded the Chief Minister, the Excise Commissioner, the Secretary and the Under Secretary, Finance, of the State of Delhi, as it then was, as parties to the application.
Its case in substance was that the applications made for the grant of the licence were never placed before the Chief Commissioner who alone was the competent authority to grant it under Ch.
5, r. i of the Delhi Liquor License Rules, 1935, framed under section 59 Of the Punjab Excise Act (Punj. 1 of 1914), as extended to Delhi, and no order granting the license was ever made by him.
The said opposite parties respondents, although repeatedly called upon by the High Court to do so, did not produce the entire records and filed evasive affidavits and eventually produced a letter written by the Under Secretary, Finance, to the Excise Commissioner intimating that the Chief Commissioner had made the order for granting the license to the rival applicant and maintained that the order had in fact been made by the Chief Commissioner.
The High Court, under a misapprehension of fact and of the true nature and effect of that letter written by the Under Secretary, Finance, to the Excise Commissioner, held that the order had in fact been passed by the Chief Commissioner.
The production of the entire records in the 1425 Supreme Court made it clear, and the respondents also conceded, that the applications were never placed before the Chief Commissioner, nor any order granting the said license was ever made by him.
What had happened was that upon an order made by the Chief Minister on the file in accordance with a note put up by the Under Secretary, Finance, the latter wrote a letter to the Excise Commissioner in reply to a previous one of his, that the license might be granted to the said rival applicant.
That letter, on which the High Court had relied, was in the following terms, With reference to your letter No. 295/C/54 dated the 31st August, 1954, on the above subject, I am directed to say that the Chief Commissioner is pleased to approve under Rule 5. 1. of Delhi Excise Manual Vol.
11 the grant of L 2 license to Messrs. Gainda Mall Hem Raj, New Delhi, in place of the L 2 License surrendered by Messrs. Army & Navy Stores, New Delhi.
Necessary license may kindly be issued to the party concerned under intimation to this Secretariate ".
There was nothing on the record to show that the Chief Commissioner had ever concurred in the order made by the Chief Minister on the file.
Held, that the attempt of the official respondents to by pass the Court must be strongly deprecated, and the order of the High Court must be reversed.
When a superior Court issues a rule on an application for a writ of certiorari, it is incumbent upon the inferior Court or the quasi judicial body, to whom the rule is addressed, to produce the entire records along with the return so that the superior Court may satisfy itself that the inferior Court or the quasijudicial body has not exceeded its lawful jurisdiction.
Non production of such records, as in the instant case, must defeat the purpose which the writ has in view.
Held, further, that in view of the undisputed practice that such a license, once granted by the Chief Commissioner, was almost automatically renewed by the Collector year to year, it could not be said that the writ application and the appeal had become infructuous on the expiry of the period of the license in dispute and it was only proper that the appeal should be heard on merits.
In the facts and circumstances of the case it was impossible to hold that the letter of the Under Secretary embodied the order of the Chief Commissioner or that the Court could not be asked to go behind it.
The letter was clearly a communication of the sanction and could not be equated with the sanction itself.
Although an Under Secretary was competent to authenticate an order made by the Chief Commissioner, the letter in question did not purport to be made in the name of the Chief Commis sioner and therefore the letter could not be treated as a properly 1426 authenticated order to which the presumption raised by article 166 of the Constitution could properly attach.
Dattatreya Moreshwar Pangarkar vs The State of Bombay, , held inapplicable.
|
Civil Appeal No. 1216(N)of 1975.
WITH Civil Appeal Nos.
509 641(N) of 1977.
From the Judgment and Order dated 26.2.1975 of the Karnataka High Court in W.P. No. 371 of 1975.
A.S. Nambiar and M. Veerappa for the Appellant.
K.N. Bhat, Vineet Kumar and K.M.K. Khan, for the Re spondents.
The Judgment of the Court was delivered by M. FATHIMA BEEVI, J.
1.
These connected appeals by special leave arise from the common judgment of the High Court of Karnataka.
The Writ Petitions filed by the respond ents against the appellant, the Corporation of the City of Bangalore were allowed and the resolution dated the December 30, 1974 passed by the Corporation levying octroi on certain additional items under Section 98 of the City of Bangalore Corporation Act, 1949 (shortly stated as 'the act ') was declared as invalid.
Section 98 of the Act requires the Corporation before passing any resolution imposing a tax or duty for the first time to publish a notice in the Official Gazette and in the local newspapers of its intention and inviting objections.
The Corporation may, after considering the objections, if any, received within the period specified determine by resolution to levy the tax or duty.
On the recommendation of the Standing Committee to levy octroi on certain new items of goods the appellant published a notice as contemplated under Section 98(1) of the Act inviting objections from the public and the said notice was published in the Gazette dated 17 9 1974.
Several objections were received in pursuance of the said notifica tion.
The subject was included in the supplementary agenda at the meeting held on 30 12 1974.
It was taken up as Item No. 146 and the resolution was passed unanimously.
The Commissioner thereafter issued notification.
446 4.
The respondents challenged the validity of the reso lution on the ground inter alia that there had not been consideration of the objections before passing the resolu tion and, therefore, the mandatory provision under Section 98(1) was violated.
The High Court in allowing the Writ Petitions has taken the view that what is contemplated trader the statute is a real consideration of the objections and not a mere pretence and since the time was too short there was no opportunity for such consideration and on account of non consideration of the objections to the pur posed levy the condition precedent for the passing of the resolution was not satisfied and therefore, the resolution is invalid.
The learned counsel for the appellant submitted that the objections have been placed on the table after the Commissioner had prepared a note of the several objections analysing the nature of the objection, setting out the legal conditions regarding the levy and containing the answers to the objection, distributed cyclostyled copies of the note before the meeting, and the subject was taken up and passed unanimously.
The text of the resolution it is submitted indicated that there was proper application of mind by the council.
Relying on the decision of this Court in Municipal Board, Hapur vs Raghuvendra Kripal and Others, the learned counsel maintained that the High Court should not have ventured into the question of the manner in which consideration was given to the item in the agenda and the presumption that the statutory authority has followed the prescribed procedure should prevail.
It was also pointed out that the Mayor of the Corporation and one of the councillors have filed affidavits affirming that the objections along with the note were placed on the table and the objections were taken note of before reaching the deci sion.
The respondents ' learned counsel submitted that con sideration of the objections is a condition precent for imposition of the levy and the High Court having been satis fied of the non compliance with this mandatory requirement, has rightly invalidated the tax.
The admitted facts are that the resolution had been passed on 30 12 74 after placing the objections on the table and, distributing notes of the Commissioner, analysing the objections and containing answers to the same.
The subject was in the urgent agenda and the record of proceedings revealed that the resolution had been passed unanimously 7.
Taxation in order to be valid must not only be authorised by a statute, but also be levied or collected in strict conformity with the 447 statute which authorises it.
Where a condition precedent is laid down for statutory power being exercised it must be fulfilled before a sub ordinate authority can exercise delegated power.
When the statute requires that delegated power may be exercised on fulfilment of certain conditions precedent, the Court would presume the regularity of the order including the fulfilment of the condition precedent.
It is for the party who challenged the legality to show that the condition precedent was not in fact complied with by the authority.
The Municipal Administration is coordinated to secure the vital interest of the general public.
It is the function of the representative body to ascertain the local opinion and decide thereon before imposition of the tax.
It has, therefore, to be assumed that local representatives who had taken note of the objections received in pursuance of the notice published have consciously reached the decision.
Once it is clear that there had been consideration of the objec tion, it is not for the Court to examine the manner in which the legislative will had been indicated.
We shall only refer to the recent decision of this Court in Sundarjas Kanyalal Bhatija & Ors.
vs The Collector, Thane, Maharashtra & Ors., Judgments Today "It must be noted that the functions of the Government in establishing a Corporation under the Act is neither executive nor administra tive.
Counsel for the appellants was right in his submission that it is legislative process indeed.
No judicial duty is laid on the Gov ernment in discharge of the statutory duties.
The only question to be examined is whether the statutory provisions have been complied within they are complied with, then, the Court could say no more.
In the present case the Government did publish the proposal by a draft notification and also considered the represen tations received.
It was only thereafter, a decision was taken to exclude Ulhasnagar for the time being.
That decision became final when it was notified under Section 3(2).
The Court cannot sit in judgment over such deci sion.
It cannot lay down norms for the exer cise of that power.
It cannot substitute even "its juster will for theirs.
" The Court has no jurisdiction to examine the validity of the reasons that goes into the decision or the motive that induced the delegated authority to exercise its powers.
No judicial duty is laid on the authority in discharge of the statutory obligations and, therefore, 448 the only question to be examined is whether the statutory provisions have been complied with. 9.
In The Swadeshi Cotton Mills Co. Limited vs The State of U.P. and Others, ; this Court held that: "Where a condition precedent has to be satis fied before a subordinate authority can pass an order, (executive or in the nature of subordinate legislation), it is not necessary that the satisfaction of the condition should be recited in the order itself, unless the statute requires it, But it is desirable that it should be so mentioned for then the pre sumption that the condition was satisfied would immediately arise and the burden would be on the persons challenging the order to show that the recital is not correct.
Even when the recital is not made in the order, it will not become void ab initio and only a further burden is cast on the authority pass ing the order to satisfy the court by other means, e.g. by filing an affidavit, that the condition precedent was satisfied.
In Gopal Narain vs State of Uttar Pradesh & Another, ; , this Court held that: "There is a presumption, when a statutory authority makes an order for imposition of tax, that it has followed the prescribed procedure.
The said presumption is not in any way weakened by the long acquiescence in the imposition by the residents of the locality.
Nonetheless no tax shall be levied or collect ed except in accordance with law.
If it is not imposed in accordance with law, it would infringe the fundamental right guaranteed under article 19(1)(f) of the Constitution.
While the long period of time that lapses between the imposition of the tax and the attack on it may permit raising of certain presumptions where the evidence is lost by efflux of time, it cannot exonerate the statutory authority if it imposes a tax in derogation of the statuto ry provision.
The High Court was not justified in assuming from the time factor alone that there could not have been a consideration of the objections.
It is not the function of the Court to probe into the details of the discussions and the deliberations before legislative will is seen 449 expressed by passing the resolution.
The connotation of the word 'consideration ' occuring in sub section (1) of Section 98 comprehends 'taking note of ' or 'paying heed to ' depend ing upon the nature of the subject.
It may be open to the councillors to express their views even within the limited time available.
No standard can be prescribed in such mat ters.
When it is shown that the council had the opportunity to consider the objections received, it has to be deemed, that they had taken note of the same before reaching a decision.
We are, therefore, of the view that the High Court has committed an error in assuming on account of the shortage of time alone and that there had been non compliance with the requirements under the statute.
We set aside the judgment of the High Court and allow the appeals.
In the circumstances of the case we make no order as to costs.
T.N.A. Appeals allowed.
| IN-Abs | The City Corporation of Bangalore invited objections from the public to the proposed levy of octroi on certain items.
In a meeting of the Corporation after placing the objections on the Table and circulating the Notes of the Commissioner analysing the objections, a unanimous resolu tion was passed levying the octroi.
The respondents challenged the validity of the Resolu tion contending that it was passed in violation of Section 98(1) of the City of Bangalore Corporation Act, 1949.
The High Court declared the Resolution invalid holding that because of shortage of time, the condition precedent for passing the resolution i.e. real consideration of the objections was not satisfied.
Hence these appeals by the Corporation.
Setting aside the judgment of the High Court and allow ing the appeals, this Court, HELD: 1.
Taxation in order to be valid must not only be authorised by a statute, but also be levied or collected in strict conformity with the statute which authorises it.
Where a condition precedent is laid down for statutory power being exercised it must be fulfilled before a sub ordinate authority can exercise delegated power.
When the 444 statute requires that delegated power may be exercised on fulfilment of certain conditions precedent, the Court would presume the regularity of the order including the fulfilment of the condition precedent.
It is 1or the party who chal lenged the legality to show that the condition precedent was not in fact complied with by the authority.
[446H; 447B] 2.
The Municipal Administration is coordinated to secure the vital interest of the general public.
It is the function of the representative body to ascertain the local opinion and decide thereon before imposition of the tax.
It has, therefore, to be assumed that local representatives who had taken note of the objections received in pursuance of the notice published have consciously reached the decision.
Once it is clear that there had been consideration of the objec tion, it is not for the Court to examine the manner in which the legislative will had been indicated.
[447C D] 3.
The Court has no jurisdiction to examine the validity of the reasons that goes into the decision or the motive that induced the delegated authority to exercise its powers.
No judicial duty is laid on the authority in discharge of the statutory obligations, and, therefore, the only question to be examined is whether the statutory provisions have been complied with.
[447H; 448A] 4.
The High Court was not justified in assuming from the time factor alone that there could not have been a consider ation of the objections.
It is not the function of the Court to probe into the details of the discussions and the delib erations before legislative will is seen expressed by pass ing the resolution.
The connotation of the word 'considera tion ' occuring in sub section (1) of Section 98 comprehends 'taking note of ' or 'paying heed to ' depending upon the nature of the subject.
It may be open to the councillors to express their views even within the limited time available.
No standard can be prescribed in such matters.
When it is shown that the council had the opportunity to consider the objections received, it has to be deemed, that they had taken note of the same before reaching a decision.
[448H; 449A B] Municipal Board, Hapur vs Raghuvendra Kripal and Others, ; Sundarjas Kanyalal Bhatija & Ors.
vs The Collector, Thane, Maharashtra & Ors., [1989] 3 Judg ment Today 57; Swadeshi Cotton Mills Co. Limited vs The State of U.P. and Others, ; ; Gopal Narain vs State of Uttar Pradesh & Another, ; , followed.
|
ivil Appeal No. 1372 of 1987.
From the Judgment and Order dated 29.1.1986 of the Rajasthan High Court in Spl.
Appeal No. 336 of 1984.
J. Sorabjee, Roxena Swamy, Sushil Kr.
Jain and L.C. Agarwala for the Appellant.
Anil Dev Singh, Hemant Sharma, C.V.S. Rao, Mrs. Sushma Suri (N.P.) and Ms. A. Subhashini (N.P.) for the Respond ents.
The Judgment of the Court was delivered by VENKATARAMIAH, CJ.
The question for consideration in this appeal is whether an establishment which is manufactur ing carpets is subject to the (Act XIX of 1952) (here inafter referred to as 'the Act ').
The appellant is a part nership firm carrying on the business of 419 manufacturing and selling carpets in the State of Rajasthan at three factories belonging to it.
When steps were taken to direct the appellant to comply with the provisions of the Act by the Regional Provident Fund Commissioner the appel lant contested the applicability of the Act on the ground that the establishment owned by it was not manufacturing 'textiles ' included in Schedule I to the Act.
The Regional Provident Fund Commissioner after giving opportunity of being heard to the appellant passed an order on 27th July, 1979 holding that the business of manufacturing carpets carried on by it made the Act applicable to the appellant as carpets were textiles.
Aggrieved by the said order the appellant filed a petition under section 19A of the Act before the Central Government.
The Central Government passed an order on 4th May, 1981 holding that the appellant 's establishment was engaged in the manufacture of 'textiles ' and accordingly the order of the Regional Provident Commis sioner was upheld.
The appellant thereafter filed a petition under Article 226 of the Constitution before the Rajasthan High Court (Jaipur Bench).
The High Court by its order dated 15th October, 1984 dismissed the writ petition.
The appel lant then appealed to the Division Bench of the High Court and the Division Bench of the Rajasthan High Court dismissed the appeal on 29th January, 1986.
This appeal by special leave is filed against the order of the Division Bench of the High Court of Rajasthan.
The only point urged before us by the learned counsel for the appellant is that the products, namely, carpets which are being manufactured by the appellant did not come within the meaning of the expression 'textiles ' described in Schedule I to the Act and hence the Act was in applicable.
Clause (a) of sub section (3) of section 1 of the Act pro vides that subject to the provisions contained in section 16, the Act applies to every establishment which is a facto ry engaged in any industry specified in Schedule I and in which 20 or more persons are employed.
The relevant part of Schedule I to the Act reads thus: "Any industry engaged in the manufacture of any of the following, namely: Cement.
Cigarettes.
Electrical, mechanical or general engineering products.
Iron and Steel.
Paper.
Textiles (made wholly or in part of cotton or wool or jute or silk, whether natural or artificial . . 420 Clause (d) of the Explanation contained in Schedule I to the Act reads thus: "(d) the expression "textiles" includes the products of carding, spinning, weaving, fin ishing and dyeing yarn and fabrics, printing, knitting and embroidering.
" It is not disputed that was material with which the carpets are made is wool which is one of the materials mentioned in the Schedule, namely, textiles made wholly or in part of cotton or wool or jute or silk, whether natural or artificial.
The activity of manufacturing carpets is generally understood as the weaving of carpets and the man who is engaged in such activity is popularly known as a 'carpet weaver '.
Weaving means to form a fabric by interlac ing yarn on a loom.
It also means the method or pattern of weaving or the structure of a woven fabric.
The warp means yarn arranged length wise on a loom.
The fabric which is woven includes the weft which means yarn woven across the width of the fabric through the length wise yarn.
Thus the activity of the weaving involves passing of the weft through the warp.
While doing so even if there are any knots in the yarn still the activity is weaving.
The mere fact that there is knotting of the yarn, the fabric which is ultimately produced does not cease to be a textile fabric.
The fact that the Handicrafts Board has issued certificate under the Import Trade Control Policy Handbook of Rules that carpet is a product of handicrafts does not in any way improve the matter.
Even then the carpets do not cease to be textiles.
That certificate is not enough since we are very clear that the activity of making carpets though it involves knotting, in substance, amounts to weaving and the carpet is a fabric which is woven.
Thus it comes within the meaning of the expression "textiles:" as explained in clause (d) to the Explanation of Schedule I to the Act.
We are, therefore on the view that the establishment in question comes within Schedule I to the Act.
In Porritts & Spencer (Asia) Ltd. vs State of Haryana, ; this Court held that the concept of 'textiles ' is not a static concept.
It has, having regard to newly developing materials, methods techniques and process es, a continually expanding content and new kinds of fabric may be invented which may legitimately without doing any violence to the language be regarded as textiles.
The word 'textiles ' is derived from Latin 'texere ' which means 'to weave and it means woven fabric.
When yarn, whether cotton, silk, woollen, rayon, 421 nylon or of any other description made out of any other material is woven into a fabric what comes into being is a 'textile ' and is known as such.
Whatever be the mode of weaving employed, woven fabric would be 'textile '.
What is necessary is no more than the meaning of yarn and weaving would mean binding or putting yarn together by some process so as to form a fabric.
A textile need not be of any partic ular size or strength or weight.
The use to which it may be put is also immaterial and does not bear on its character as a textile.
The fact that the 'dryer felts ' are used only as absorbents of moisture in the process of manufacture in a paper manufacturing unit, cannot militate against 'dryer felts ' falling within the category of textiles, if otherwise they satisfy the description of textiles.
It is not necessary to refer to the other decisions cited before us in this case.
The non inclusion of knotting in the Explanation to Schedule defining 'textiles ' is, therefore, immaterial.
No other point was pressed before us in this case.
We, there fore, hold that the Regional Provident Fund Commissioner, the Government of India and the High Court were right in holding that the establishment of the appellant came within the scope of the Act and the appellant was liable to comply with the requirements of the Act in all respects.
The ap peal, therefore, fails and it is dismissed.
G.N. Appeal dismissed.
| IN-Abs | The appellant is a partnership firm carrying on business of manufacturing and selling carpets in the State of Rajas than.
It owns three factories.
When the Regional Provident Fund Commissioner took steps to direct the appellant firm to comply with the provisions of the , the appellant con tested the applicability of the Act on the ground that it was not manufacturing textiles included in Schedule I of the Act.
The Regional Provident Fund Commissioner held that the business of manufacturing carpets carried on by the appel lant included textiles and that the Act was applicable to the appellant.
Aggrieved by the said order, the appellant approached the Central Government under section 19A of the Act, which upheld the order of the Regional Provident Fund Commission er.
Thereafter the appellant moved the High COurt under Article 226 of the Constitution.
The writ petition was dismissed.
The appellant preferred an appeal to the Division Bench of the High Court and that appeal was also dismissed.
This appeal, by special leave, is against the order of the Division Bench.
Dismissing the appeal, this Court, HELD: 1.1 The activity of manufacturing carpets is generally understood as the weaving of carpets and the man who is engaged in such activity is popularly known as a 'carpet weaver '.
Weaving means to form a fabric by interlac ing yarn on a loom.
It also means the method or pattern of weaving or the structure of a woven fabric, [420B C] 418 1.2 Though there may be knotting of the yarn, the fabric which is ultimately produced does not cease to be a textile fabric.
The fact that the Handicrafts Board has issued certificate under the Import Trade Control Policy Handbook of Rules that carpet is a product of handicrafts does not in any way improve the matter.
Even then the carpets do not cease to be textiles.
That certificate is not enough since it is very clear that the activity of making carpet though it involves knotting, in substance, amounts to weaving and the carpet is a fabric which is woven.
Thus it comes within the meaning of the expression "textiles" as explained in clause (d) to the Explanation of Schedule I to the Act.
[420D F] 1.3 The non inclusion of knotting in the explanation to Schedule defining 'textiles ' is, therefore, immaterial.
[42ID] Porrits Spencer (Asia) Ltd. vs State of Haryana, ; , relied on.
The Regional Provident Fund Commissioner, the Govern ment of India and the High Court were right in holding that the establishment of the appellant came within the scope of the Act and the appellant was liable to comply with the requirements of the Act in all respects.
[421D]
|
ivil Appeal No. 4879 of 1989.
From the Judgment and Order dated 12.11.1986 of the Andhra Pradesh High Court in W.P. No. 16535 of 1986 P. Rama Reddy and A.V.V. Nair for the Appellants.
C. Sitaramaiah, Jagan Rao, D.R.K. Reddy and T.V.S.N. Chari for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Leave granted.
This is an appeal from the judgment and order of the High Court of Andhra Pradesh dated 12th November, 1986.
The appellants challenged the validity of an amendment to the Schedule to the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter called 'the Act ').
The appellants are dealers in tamarind in Parvathipuram in Srikakulam district, a border district in Andhra Pradesh.
They had purchased tama rind from the State of Orissa paying tax there and incurring expenditure in bringing the said goods to Andhra Pradesh for the purpose of sale.
Under the Act, tamarind was item 14 of Second Schedule and was subjected to sales tax at the point of first purchase in the State irrespective of whether it was purchased within the State or outside the State.
The subject matter of challenge in this application under article 226 of the Constitution before the Andhra Pradesh High Court, was the validity of an amendment to the Schedule to the Act modifying the point of taxability of tamarind in question.
Prior to the amendment tamarind was taxable as mentioned hereinbefore at the first purchase point, being item No. 14 in Schedule II to the Act.
The entry therein read as follows: "Description of Point of levy Rate of tax the goods 14.
Tamarind (2014) At the point of 4 paise in first purchase the rupee.
in the State.
" 425 By virtue of the amendment, the said entry was amended.
Tamarind which is purchased within the State, was retained in IInd Schedule while tamarind purchased outside the State was transferred to 1st Schedule.
After the amendment, item No. 14 in Schedule II and item 170 in Schedule I stood as follows: "SECOND SCHEDULE section No. Description of goods Point of levy Rate of tax 14.
Tamarind when put At the point of 4 paise in chased within the first purchase the rupee.
State.
in the State.
FIRST SCHEDULE section No. Description of Goods Point of levy Rate of tax 170 Tamarind when At the point 4 paise in obtained from out of first sale the rupee.
side the State.
in the State.
" It appears that the result of the said amendment was that tamarind purchased outside the State, was taxable at the point of first sale in the State.
It was contended before the High Court that the said amendment brought about a discrimination between tamarind purchased within the State i.e. one produced within the State, and the tamarind pur chased outside the State i.e. produced in other States; and that the incidence of tax was more on the tamarind purchased outside the State.
It was contended that it violated clause (a) of article 304 as also article 14 of the Constitution.
Clause (a) of article 304 states that notwithstanding anything contained in article 301 or article 303, the legislature of State may by law impose on goods imported from other States or the Union Territories any tax to which similar goods manufactured or produced in the State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced.
The question is whether as a result of the said amendment, there has been any infraction of clause (a) of article 304 of the Constitu tion.
We are unable to 426 accept the contention that there was any such discrimina tion.
The High Court in the judgment under appeal has so held.
We are of the opinion that the High Court was right.
Both the tamarind purchased within, and outside, the State is taxed uniformly.
On behalf of the appellants, reliance was placed on Firm A.T.B. Mehtao Majid and Co. vs The State of Madras, 14 STC 355, wherein on an analysis of the relevant provisions it was held that the provisions of rule 16(2) of the Madras General Sales Tax [Turnover and Assessment] Rules, 1939 (substituted in the place of the old rule w.e.f.
1st April, 1955) discriminate between hides and skins imported from outside the State and those manufactured or produced inside the State and as such contravened the provisions of article 304(a) of the Constitution, and therefore were invalid.
It was reiterated by this Court that taxing laws can be re strictions on trade, commerce and intercourse, if they hamper the flow of trade and if these are not compensatory taxes or regulatory measures.
It was further held that sales tax on hides and skins imposed under the Madras General Sales Tax Act, 1939 and the rules framed thereunder could not be said to be a measure regulating any trade or compen satory tax levied for the use of trading facilities.
The similarity contemplated by article 304(a) is in the nature of the quality and kind of the goods and not with respect to whether they were already the subject of tax or not.
There this Court was dealing with rule 16 of the relevant Madras rules.
Sub rule (a) of rule 16 provides that in case of untanned (raw) hides and/or skins, the tax u/s 3(1) of the Act was to be levied from the dealer who is the last pur chaser in the State.
Sub rule (2) which was in two parts, dealt with tanned hides and skins.
Clause (i) of sub rule (2) provided that in case of hides and skins tanned outside the State, tax shall be levied upon the dealer who in the State is the first dealer.
Clause (ii) provided that in case of tanned hides and skins which have been tanned within the State, the tax u/s 3(1) shall be levied upon a person who is the first dealer in such hides or skins.
The proviso, howev er, declared that if the dealer proved that he had already been taxed under sub rule (1) on the untanned hides and skins, he shall not be subjected to tax under sub rule (2).
It was held by this Court that this rule inevitably brought about a discrimination in the quantum of tax because while the tanned hides and skins which were imported from outside the State and were sold within the State, were taxed at a higher rate, the hides and skins tanned within the State and sold within the State, are taxed at a lower rate by virtue of the proviso.
It was, indeed, found that there was a substantial variation between the prices of tanned and untanned goods.
This Court pointed out that by virtue of the proviso, the tax on 427 the latter category was, in fact, on the purchase price of the untanned hides and skins though ostensibly the rate of tax under sub rule (2) was the same Hence, the mischief of discrimination was brought about by the proviso which said that if hides and skins are taxed within the State at raw (untanned) stage, they shall not be taxed again at the tanned stage.
But in view of the facts involved in the instant case, we are unable to accept that the principles of the said decision have any scope of application to the facts of instant case.
In the instant case the tamarind purchased within the State and outside the State, are taxed at the same rate.
But the point of taxability has necessarily to be different in both the cases.
In case of tamarind purchased within the State i.e. produced within the State, the tax is levied at the point of first purchase, and in case of im ported tamarind i.e. purchased outside the State, the tax is levied at the point of first sale in the State.
It was contended by Mr. P. Rama Reddy, learned advocate for the appellants, that tax in case of imported tamarind would be more because its price will include freight charge and other State taxes.
Hence, it was submitted that the sales tax will also be more.
That may be so but it cannot be said to be the effect of what law has amended.
Tamarind will be imported only when it can be sold in the market here at the same price as the tamarind produced within the State.
Only when after bearing the other ' State tax and freight charges, if it is able to compete with the locally produced tamarind, it will normally be imported from outside the State.
If there is any difference in prices because of market conditions and other factors, that cannot be said to be due to discrimination prohibited by clause (a) of article 304 of the Constitution.
In order to ensure this, it would be necessary that imported goods must always be taxed at a lower rate than the corresponding goods within the State because of freight and other charges.
That cannot be so.
The High Court observed that tamarind is an agricultural produce and that is why it was put in Second Schedule i.e. to say, purchase point, but where it was imported and sold within the State, there was no reason to tax it at the sale point.
We are of the opinion that the.
High Court was 'right.
It was contended on behalf of the appellants before the High Court that imported tamarind which had suffered tax at the first sale point, will again be taxed at the purchase point when purchased within the State, which would amount to double taxation.
Once the imported tamarind is taxed at the first sale point under the First Schedule, there is no occasion for taxing it over again at the sale point under the Second Schedule.
The idea of both the Schedules is to tax only at one point 428 though the point of taxability may be different under dif ferent Schedules.
Our attention was drawn on behalf of the appellants to a decision of this Court in Indian Cement Ltd. & Ors.
vs State of Andhra Pradesh & Ors., 69 STC 305.
There this Court was concerned with Andhra Pradesh General Sales Tax Act.
It appears that in exercise of its powers u/s 9(1) of the Act, the State Government had passed a notification on January 27, 1987 reducing the rate of sales tax on sale of cement from 13.75% to 4% in respect of cement manufactured by cement factories situated in the State and sold to manufac turing units situated within the State for the purpose of manufacture of cement products such as cement sheets, asbes tos sheets, cement flooring stones, cement concrete pipes, cement water and sanitary fittings, concrete poles etc.
On the same day the State Govt.
had passed another notification u/s 8(5) of the reducing the rate of tax on inter State sale of cement to 2% with or without Form C.
On February 28, 1987 the State of Karnataka passed a similar notification reducing the rate of tax on inter State sale of cement from 15% to 2%.
The petitioners, of whom some were manufacturers of cement having their manufacturing units in Tamil Nadu and others, were stockists having places of business in the States of Karnataka, Kerala and Tamil Nadu, filed writ petitions before this Court challenging the validity of these notifications on the ground that these created trade barriers and directly im pinged upon the freedom of trade, commerce and intercourse provided for in article 301 of the Constitution of India.
It was held that the variations in the rates of local and inter State sales tax affected free trade and commerce and created a local preference, which was contrary to the scheme of Part XIII of the Constitution of India; and as such the notification were bad.
This decision was rendered in the peculiar facts of that case.
While the principle enunciated by the Court in the said decision there can be no dispute that taxation was a deterrent in some cases, against free flow of trade, and as a result of favourable or unfavourable treatment by way of taxation, the course of flow of trade gets regulated either adversely or favourably, and that if the scheme of Part XIII guarantees has to be preserved in the national interest, it is imperative that the provisions of article 301 must be strictly complied with, we are of the opinion that the ratio of the said decision in the facts and circumstances of this case would not be relevant.
In our opinion, the provisions of the Constitution should be strictly complied with not only with the letter but also with their spirit.
Part XIII of the Constitution has to 429 be dealt with the other provisions of the Constitution.
Our attention was drawn to the observations of this Court in M/s Associated Tanners, Vizianagaram, A.P. vs C.T.O., Vizianaga ram.
A.P. & Ors., ; It was reiterated there that the effect of an imposition of tax may work differently upon different dealers, namely, those who import goods and those who purchase the goods locally.
That effect cannot be said to arise directly or as an immediate effect of the imposition of tax.
It cannot be said that there was any violation of clause (a) of article 304 of the Constitution.
We are of the opinion that in the instant case the difference, in rates, if any, between the imported tamarind and locally produced tamarind is not as an immediate or direct result of the imposition of tax.
The decision of this Court in Weston Electronics & Anr.
vs State of Gujarat & Anr.
, ; dealt, in our opinion, with an en tirely different situation and for the purpose of the in stant controversy, cannot be of any assistance.
Mr. C. Sitaramiah, appearing for the respondents, drew our attention to Rattan Lal & Co. & Anr.
vs The Assessing Authority & Anr., ; wherein this Court had reiterated that when a taxing State is not imposing rates of tax on imported goods different from rates of tax on goods manufactured or produced, article 304 has no application.
So long as the rate is the same article 304 is satisfied.
In the instant case the tax is at the same rate and, hence, tax cannot be said to be higher in the case of imported goods.
When the rate is applied the resulting tax may be somewhat higher but that does not contravene the equality contemplat ed by article 304 of the Constitution.
In the facts and the circumstances of the case, there is no ground to complain about the breach of article 14 of the Constitution.
In the aforesaid view of the matter, we are of the opinion that the High Court was right in the view it took and this appeal must fail.
The appeal is accordingly dis missed.
In the facts and the circumstances of the case, however, we make no order as to costs.
P.S.S. Appeal dismissed.
| IN-Abs | Under item 14 of Second Schedule to the Andhra Pradesh General Sales Tax Act, 1957 tamarind was subjected to sales tax at the point of first purchase in the State irrespective of whether it was purchased within the State or outside the State.
However, by virtue of an amendment to the Act by Act 19 of 1986 tamarind which is purchased within the State was retained in Second Schedule, while tamarind purchased out side the State was transferred to First Schedule as item 170, making it taxable at the same rate at the point of first sale in the State.
The appellants had purchased tamarind from the State of Orissa paying tax there and incurred expenditure in bringing it to Andhra Pradesh for sale.
They challenged the said amendment modifying the point of taxability as discriminato ry between tamarind produced and purchased within the State and the tamarind produced and purchased outside the State and as such, violative of Articles 304(a) and 14 of the Constitution.
The submission was that imported tamarind which had suffered tax at the first sale point will again be taxed at the purchase point when purchased within the State, which would amount to double taxation, and that tax in case of imported tamarind would be more because its price will include freight charges and other State taxes.
The High Court found that there was no discrimination.
Dismissing the appeal by special leave, the Court, 423 HELD: When a taxing State is not imposing rates of tax on imported goods different from rates of tax on goods manufactured or produced, Article 304 of the Constitution has no application.
In the instant case, both tamarind purchased within, and outside, the State was taxed uniform ly.
There was.
therefore, no infraction of clause (a) of Article 304 of the Constitution.
[429D E; 426A; 425G H] Rattan Lal & Co. & Anr.
vs The Assessing Authority & Anr.
, ; , applied.
Firm A.T.B. Mehtao Majid & Co. vs The State of Madras, 14 STC 355 and Indian Cement Ltd. & Ors.
vs State of Andhra Pradesh & Ors., 69 STC 305, distinguished.
It may be that when the rate is applied the resulting tax in respect of imported tamarind may be somewhat higher because its price will include freight charges and other State taxes.
But that cannot be said to be the effect of what law has amended.
Tamarind will be imported only when it can be sold in the market at the same price as the tamarind produced within the State.
Only when after bearing the other State taxes and freight charges, if it is able to compete with the locally produced tamarind it will normally be imported from outside the State.
If there is any difference in prices because of market conditions and other factors, that cannot be said to be due to discrimination prohibited by clause (a) of Article 304.
[429E; 427D E] M/s Associated Tanners, Vizianagaram, A.P. vs C.T.O., Vizianagaram, A.P. & Ors., ; , referred to.
Weston Electroniks & Anr.
vs State of Gujarat & Ant.
, ; , distinguished.
Once the imported tamarind is taxed at the first sale point under the First Schedule there is no occasion for taxing it over again at the sale point under the Second Schedule.
The idea of both the Schedules is to tax only at one point, though the point of taxability is different in both the cases.
In case of tamarind purchased within the State, i.e., produced within the State, the tax is levied at the point of first purchase under the Second Schedule, and in case of imported tamarind i.e., purchased outside the State, the tax is levied at the point of first sale in the State under the First Schedule.
It could not therefore, be said that taxing the imported tamarind at the point of first sale in the State would amount to double taxation.
[427H; 428A; 427B C; 427G] 424 In the facts and circumstances of the case, there was, therefore, no ground to complain about the breach of Article 14 of the Constitution [429E F]
|
ivil Appeal No. 4800 of 1989.
From the Judgment and Order dated 20.3.1987 of the Orissa High Court in Misc.
Appeal No. 453 of 1982.
Anil B. Divan and Vinoo Bhagat for the Appellant.
G.L. Sanghi and A.K. Panda for the Respondent.
The Judgment of the Court was delivered by V. RAMASWAMI, J.
Special leave granted.
In respect of a dispute relating to the work Lankagada Minor Irrigation Project (Balance Work) in Jagannathaprasad Block which 351 was entrusted to him, the appellant contractor, invoking clause 23 of the agreement and section 8 of the Arbitration Act requested the Chief Engineer, Rural Engineering Organi sation, Bhubaneswar, Orissa, to nominate an arbitrator.
It may be mentioned that before making this request for nomina tion of an arbitrator the appellant made a claim on 16.6.
1975 before the Executive Engineer, M.I. Division, Berham pur, Ganjam, claiming to be paid a sum of Rs.2,81,745.
He had also claimed interest on this at the rate of 18 per cent from the date of receiving of the claim book till payment.
The work entrusted to the appellant was to commence on 6.12.
1971 and to be completed within 18 months i.e. on or before 5.6.1973 and the total cost of the work was Rs.9.98,970.
One Shri D.C. Panda, Superintending Engineer, Central Range, was nominated as the sole arbitrator to decide the dispute and give the award.
This arbitrator having accepted the appoint ment entered on the reference and issued notices to both the parties directing them to file their claims.
The appellant filed a claim statement on 5.4.
1977 before the arbitrator.
In this claim statement he had made a detailed description of each of the items of the claim and the total of the 15 items claimed came to Rs. 3,87,796.
To this he added inter est at 18 per cent from the date which according to him each of the claims should have been settled making a total claim of interest to the tune of Rs.2,95,894.
He thus prayed for an award of Rs.6,83,690 and also prayed for further interest on Rs.3,87,796 from 6.4. 1977 till date of award and there after until payment at 18 per cent.
It may be mentioned that in this statement of claim made before the arbitrator some of the claims made before the Executive Engineer were omit ted, some were reduced whereas some new claims were intro duced and some other items of claim were enhanced.
The State of Orissa filed a written statement and the arbitration proceedings continued for some time but before the arbitra tor could make the award an application before the Subordi nate Judge, Bhubaneswar was filed under sections 8(2) and 12 of the Arbitration Act.
By an order dated 17.12.1979 the learned Subordinate Judge removed the arbitrator and ap pointed one Shri J. Pati, Chief Construction Engineer, Paradip Port as the sole arbitrator to decide the dispute between the parties.
However, since Shri J. Pati expressed his inability to arbitrate, by another order dated 16.4.1980 the court appointed Shri Banabasi Patnaik, Superintending Engineer, Sambalpur as the sole arbitrator in place of Shri J. Pati.
This arbitrator entered on the reference, got all the relevant records from the previous arbitrator continued the hearing on the 9th June and 9th July, 1980.
On the ground that the appellant has not included some of his claims "relating to this work" in the claim statement sub mitted to the previous arbitrator, he made a supplemental claim for a sum of 352 Rs.8,27,857 and prayed that in addition to the claim stated in the original claim statement a sum of Rs.8,27,857 be awarded in his favour with interest at 18 per cent per annum on Rs.8.27,857 from 14.10.
1973 till date of payment.
The State of Orissa not only disputed the claim made but also objected to the entertainment of an additional claim in their written statement dated August 13, 1981.
The arbitra tor, however, decided to entertain the supplemental claim and proceeded with the hearing of the dispute.
The supple ment claim consisted of 11 items.
As seen from the note papers, the arguments on supplemental claims 1 to 6 were heard on two different dates and the hearing was adjourned to 8.11.
On that day arguments in respect of rest of the supplemental claim items were heard and the hearing was closed.
On the same day the appellant contractor filed what he termed as one consolidated 'abstract ' of his two claim statements and the abstract showed a total claim of Rs.31,44,437 and he had further prayed in this that the total amount of Rs.31,44,437 may be allowed along with an interest at 18 per cent per annum on the said amount from 9.11.
198 1 till date of payment.
The arbitrator made an award on 7.12.
1981 allowing a lump sum of Rs.25,00,156 together with interest at 9 per cent after the expiry of 30 days from the date of making the award, till the date of payment or decree whichever is earlier.
The award was filed in court for making a decree and the Government filed an application to set aside the award on various grounds.
The trial court overruled the objections of the State and the award was made a decree of the court.
However, learned Judge disallowed the interest from the date of decree till reali sation.
On appeal by the State Government, the High Court came to the conclusion that award suffers from non applica tion of the mind amounting to legal misconduct.
In that view the award was set aside and the matter was remitted back to the Arbitration Tribunal constituted under section 41 A of the Arbitration Act as amended by Orissa Act 3 of 1983.
The contractor claimant has filed this appeal against this judgment of the High Court.
As is seen from the award though it refers to getting all the relevant record from the ex arbitrator there is no reference to the heating of the parties or consideration of the documents relating to the original claim made on 6.4. 1977.
In the order sheet it has been mentioned that both parties had agreed that they had nothing more to add except what had been already given in their respective claim and counter statement and what had been recorded in the deposi tions already made before the previous arbitrator.
The reference to depositions already made is incorrect as it is admitted by both the parties that no deposition was at all recorded before the previous arbitrator nor 353 there is any record of the previous arbitrator showing such oral evidence was recorded by him.
Neither of the parties adduced any oral evidence before the new arbitrator.
Though the arbitrator is not bound to disclose as to what interpre tation he has made and what inference he has derived from the documentary evidence, he is bound to refer in the award that he had considered all the documents placed before him no matter whether he relies on them or discards them from consideration.
The arbitrator in his award ex facie does not mention that he has referred to or considered the documents placed before him in respect of the original claim.
The order sheet mentions about the hearing on different dates relating to the supplemental claim statement which was filed before him.
It is this argument in respect of the supplemen tal claim that has been mentioned in the award.
The other point to be noted.
is that the original claim together with the supplemental claim do not make total claim of Rs.31,44,437.
It is seen from the records that the arbi trator directed the claimant to submit a consolidated claim abstract which was submitted by him on 8.11.
1981 the date on which the hearing by the arbitrator was concluded.
There is clearly some discrepancy while consolidating both the claims.
In addition to the total of both the claims some other amounts, may be by way of extra interest or otherwise, have been included but the arbitrator seem to have not applied his mind.
Then again in the award it is stated that the total amount claimed by the claimantappellant inclusive of "damages, compensation and interest" is Rs.31,44,437.
Even the 'abstract ' filed before the arbitrator does not show any claim of "damages" or "compensation".
As may be seen from the facts set out above, before the appellant demanded the appointment of an arbitrator he had made a claim before the Executive Engineer for a sum of Rs.2.81,745.
This is an iternised claim.
This claim was made in the claim book kept by the Executive Engineer.
It may be that this claim did not cover the entire amount due.
We may point out that in the letter demanding the appointment of an arbitrator he had stated that during the execution of the work he had executed many extra items of work as per direc tions of the Department and also incurred heavy expenditure which were not covered in the agreement and that he had submitted "most of my claims in the claim book on 16.6.1965 but these have not yet been decided".
It may also be men tioned that in this letter itself he has stated that he has completed the work in all respects on 14.9.1973 and that though the final bill which should have been prepared within one month of the completion of the work has not yet been paid to him.
The claim made before the arbitrator originally as already stated was Rs.6,83,690 of which a sum 354 of Rs.3,87,796 represented the value of the work not paid and the remaining represented interest claimed.
The total agreed value of the work entrusted to the appellant was Rs.9,98,970.
In the counter affidavit filed by the State of Orissa in the special leave petition it is stated that a total of Rs.23,11,887 had been paid to the appellantcontrac tor by 20.11.
1976 which was with reference to the original work entrusted and the extra work done by the appellant.
Arejoinder was filed by the appellant to this counter affi davit but the fact of payment of Rs.23, 11,887 is admitted.
The supplemental claim itself was filed on 10.7.1980 and that amounted to Rs.8,27,857 over and above Rs.6,83,690 which he had claimed originally before the arbitrator.
Then again the 'abstract ' filed by him on 8.11.1981 showed a figure of Rs.31,44,437 as the claim.
We have already pointed out that the total of the claim made on 5.4.
1976 and the supplemental claim made on 10.7.
1980 itself will not make anyway that figure of Rs.31,44,437 and, therefore, some more claims have been included.
The foregoing facts do show that the award suffers from non application of the mind by the arbitrator.
This Court in State of Orissa vs Dandasi Sahu, ; to which one of us (Sabyasachi Mukharji, J.) was a party while noting that the amount award is quite high or that a large amount has been awarded does not by itself vitiate the award as such, observed that one has to judge whether the amount of the award was so disproportionately high to make it per se bad on the facts and circumstances of a particular case.
In this connection we have to keep in mind that we are concerned with a situation where the arbi trator need not give any reason and that even if he commits a mistake either in law or in fact in determining the matter referred to him, where such mistake does not appear on the face of the award, the same could not be assailed.
The arbitrator, in the case of a reference to him in pursuance of an arbitration agreement between the parties, being a person chosen by parties is constituted as the sole and final judge of all the questions and the parties bind them selves as a rule to accept the award as final and conclu sive.
The award could be interfered with only in limited circumstances as provided under sections 16 and 30 of the Arbitration Act.
In this situation we have to test the award with circumspection.
Even with all this limitations on the power of Court and probably because of these limitations, we have to hold that if the amount awarded was disproportion ately high having regard to the original claim made and the totality of the circumstances it would certainly be a case where the arbitrator could be said to have not applied his mind amounting to legal misconduct.
It may be seen that in this case in the 355 original claim made before the arbitrator the value of the work not paid was stated as Rs.3,87,796, The supplemental claim made before the arbitrator amounted to Rs.8,27,857.
Thus the total value of the work not paid, according to the appellant, was Rs. 12, 15,653.
As against this claim the arbitrator has awarded a lump sum of Rs.25,00,156.
It is true that the appellant has asked for payment of interest and including interest his claim was Rs.31,44,437.
In a recent judgment of this Court in State of Orissa vs Niranjan Swain, [1989] 4 SCC 269 it has been held that where a refer ence to arbitration was made prior to the commencement of the (which Act came into force on August 19, 198l) the arbitrator is not empowered to grant interest for the period upto the date of submission of the claim or the period during which the dispute was pending before the arbitrator.
It was further held that where the award granted a lump sum amount it shall deem to have included the inter est also if interest had been claimed before the arbitrator and the inclusion of such interest rendered that part of award invalid.
If we exclude the interest portion then there could be no doubt that award of Rs.25,00,156 suffers from the vice of giving disproportionately high amount.
The learned counsel for the appellant, however, contend ed that the invalid part relating to the grant of interest may be set aside and the award may be accepted so far as the claim for the value of the work done applying the formula adopted in State of Orissa vs Niranjan Swain, (supra).
The learned Judges who decided the case after holding that inclusion of the interest rendered the award invalid, pro ceeded to separate the invalid part from the rest stating that the total amount awarded is principal plus interest, the rate of interest and the period for which the interest was claimed before known, the principal could be determined easily, and on that basis the principal amount and the interest out of the total amount awarded was divided and the award was sustained relating to the principal.
We are unable to apply this principle in this case as the State had dis puted major part of the claim in their counter statements before the arbitrator and we have held that the award suf fers not merely on the ground that it included interest but also on the ground of non application of the mind.
We are also of the view that there was nothing wrong in the approach of the High Court and that this is not a fit case for interference under Article 136 of the Constitution.
We accordingly dismiss the appeal with costs.
P.S.S Appeal dismissed.
| IN-Abs | The appellant contractor claimed a sum of Rs.3,87,796 before the sole arbitrator on April 5, 1977 for the value of 15 items of works not paid.
To this he added interest to the tune of Rs.2, 95,894 at 18 per cent from the date which according to him each of the claims should have been set tled, making a total of Rs.6,83,690.
He also prayed for further interest at 18 per cent from April 6, 1977 till date of award and thereafter until payment.
The respondent State filed its written statement and the arbitration proceedings continued for some time.
But before the arbitrator could make an award, an application under sections 8(2) and 12 of the Arbitration Act was filed before Subordinate Judge who by his order removed the arbitrator and appointed another person as the sole arbitrator.
The new arbitrator entered on the reference, got all the records from the previous arbi trator and continued the hearing.
The appellant made a supplemental claim for a sum of Rs.8,27,857 and also prayed for interest on that amount at 18 per cent from October 14, 1973 till date of payment.
The respondent State objected to the entertainment of additional claim.
The arbitrator, however, proceeded with the hearing.
On November 8, 1981, the day the hearing was closed, the appellant contractor filed one consolidated 'abstract ' of his two claim state ments showing a total claim of Rs.31.44.437 and also prayed for interest at 18 per cent per annum from November 9, 1981 till the date of payment.
The arbitrator made an award on December 7, 1981 allow ing a lump sum of Rs.25,00,156 together with interest at 9 per cent after the expiry of 30 days from the date of making the award, till the date of payment or decree whichever was earlier.
The award was made a decree of the court.
The court, however, disallowed interest from the date of decree till realisation.
349 On appeal by the respondent State the High Court came to the conclusion that the award was vitiated by non applica tion of mind amounting to legal misconduct.
In that view, it set aside the award and remitted the matter back to the Arbitration Tribunal constituted under section 41A of the Arbi tration Act, as amended by Orissa Act 3 of 1983.
Dismissing the appeal, the Court, HELD: 1.1 Though the arbitrator is not bound to disclose as to what interpretation he has made and what inference he has derived from the documentary evidence, he is bound to refer in the award that he had considered all the documents placed before him, no matter whether he relies on them or discards them from consideration.
[353A] 1.2 In the instant case, the arbitrator in his award ex facie did not mention that he had referred to or consid ered the documents placed before him in respect of the original claim.
The order sheet mentions about the nearing on different dates relating to tile supplemental claim statement which was filed before him.
It was this argument in respect of the supplemental claim that has been mentioned in the award.
[353B] 2.1 The arbitrator in case of a reference to him in pursuance of an arbitration agreement between the parties, being a person chosen by parties is constituted as the sole and final judge of all the questions and the parties bind themselves as a rule to accept the award as final and con clusive.
Even in a case where the arbitrator does not give any reason or he commits a mistake either in law or in fact in determining the matter referred to him and such a mistake does not appear on the face of the award, the same cannot be assailed.
It could be interfered with only in limited cir cumstances as provided under sections 16 and 30 of the Act.
The court has, therefore, to test the award with circumspection.
1354F, E, G] 2. 2 All the same, if the amount awarded is dispropor tionately high having regard to the original claim made and the totality of the circumstances, it would certainly be a case where the arbitrator could be said to have not applied his mind amounting to legal misconduct.
[354G H] State of Orissa vs Dandasi Sahu, ; , referred to.
In the instant case, in the original claim made before the arbitrator the value of the work not paid was stated as Rs.3,87,796.
The supplemental claim made before the arbitrator amounted to 350 Rs.8,27,857.
Thus, the total value of work not paid, accord ing to the appellant, was Rs.12,15,653.
As against this claim, the arbitrator had awarded a lump sum of Rs.25,00,156.
No doubt, the appellant had asked for payment of interest and including interest his claim was Rs.31,44,437.
[354H; 355A] 2.3 Where a reference to arbitration was made prior to the commencement of the which came into force on August 19, 1981 the arbitrator is not empowered to grant interest for the period upto the date of submission of the claim or the period during which the dispute was pending before the arbitrator, and where the award granted a lump sum amount it shall deem to have included the interest also if interest had been claimed before the arbitrator and the inclusion of such interest would render that part of award invalid.
[355B C] In the instant case, if the interest portion is exclud ed, then it becomes evident that award of Rs.25.00,156 suffers from the vice of giving disproportionately high amount.
[355C D] 2.4 Since the award suffers not merely on the ground that it included interest but also on the ground of non application of the mind the question of setting aside only the invalid part relating to the grant of interest does not arise.
[355F G] State of Orissa vs Niranjan Swain, [1989] 4 SCC 269, distinguished.
|
ivil Appeal No. 917 of 1989 etc.
From the Judgment and Order dated 15.12.1988 of the Allahabad High Court in C.M.W.P. No. 10059 of 1987.
Yogeshwar Prasad, Satish Chandra, Mrs. section Dixit and Mukul Mudgal for the Appellants.
453 A.K. Srivastava for the Respondents.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
This is the third time the matter is coming before this Court and we hope that this is the last of a series of litigations between the parties.
We have been helpfully provided with a chronology of the events leading up to this appeal.
It is important that the chronology is made clear.
It is as follows: At Allahabad, there is a private college called "Kulb haskar Ashram Agriculture Intermediate College".
It is run by the "Kayastha Pathshala" which is a society registered under the Societies Registration Act.
Rajendra Prasad, the common respondent in the appeals, was a Chemistry lecturer in that College.
He was appointed on 15 July 1962 in the scale of Rs. 175 10 2 15.
On 20 June 1963, the management wrote to him stating that his services would not be required after 15 July ' 1963.
It was indeed a termination letter.
The respondent moved the Civil Court with suit No. 422/1963 for permanent injunction restraining the management from inter fering with his teaching work.
The management resisted the suit inter alia, contending that the respondent was appoint ed only for one year.
He was removed after the period of probation since his work was found to be unsatisfactory.
It was also contended that no injunction could be granted for enforcement of the contract of personal service and the suit was not maintainable.
On 20 May 1964, the Trial Court dis missed the suit as not maintainable.
It was also held that the suit had become infructuous since the management had withdrawn the impugned communication.
It seems that the management had withdrawn its earlier communication only to make another order.
On 28 August 1964, the respondent was placed under suspension and he again approached the Civil Court for relief.
He instituted suit No. 198 of 1964 in the Munsif Court seeking a declaration that the order of suspension was illegal.
The trial court dismissed the suit, but the appeal therefrom, F.A. No. 583/1965, was allowed by the First Additional Civil Judge, Allahabad decreeing the suit as prayed for.
That decision was affirmed by the High Court in Second Appeal No. 1111 of 1966.
The High Court rendered the judgment on 9 April 1968.
Before the disposal of the appeal by the High Court, the manage 454 ment made a fresh order suspending the respondent pending enquiry on certain allegations That order was issued on 30 December 1965/7 January 1966.
This order was also the sub ject matter of a suit.
The respondent filed Civil Suit No. 48 of 1966 in the Munsif Court at Allahabad challenging the competency of the managing committee to take action against him.
He also contended that the prior approval of District Inspector of Schools (DIOS) was not taken for placing him under suspension The Munsif Court accepted the suit and declared that the suspension order was illegal and void.
But the management successfully took up the matter of Civil Appeal No. 117 of 1969 before the Additional Civil Judge.
The appeal was allowed reversing the trial court decree and upholding the respondent 's suspension.
The respondent pre ferred second appeal to the High Court and it was numbered as S.A. No. 2038 of 1970.
We may stop here for a moment and refer to some other events.
During the pendency of the said second appeal in the High Court, the U.P. Secondary Education Laws (Amendment) Act, 1976, was brought into force with effect from 18 August 1976.
The provisions thereunder required the management of the college to take prior approval of DIDS for taking any action against teaching staff.
The respondent took advantage of those provisions and made an application for amendment of his plaint to incorporate additional paragraphs 13 A and 14(g).
In the additional paragraphs, he challenged the validity of the suspension order since management did not take prior permission of the DIOS.
It was alleged that the suspension order became invalid and inoperative on the expiry of 60 days from the date of service.
The State of Uttar Pradesh was not a party to the original suit.
For the first time, on 31 October 1980 the respondent made an application for impleading the State of U.P. and DIOS as supplemental respondents to the appeal.
Their impleading was perhaps necessitated in view of the liability of the State Government to pay salaries to teach ers under the U.P. High School and Intermediate College (Payment of Salaries of Teachers and Other employees) Act, 1971.
Section 10(1) of the Act provides that the State Government shall be liable to payment of salaries of teach ers and employees of every institution due in respect of any period after March 31, 1971.
The High Court did not consider it necessary to allow the said amendment of the plaint.
But the respondent suc ceeded in this Court.
By order dated 20 April 1980 the Court allowed his appeal and 455 directed the High Court to allow the amendment.
The second appeal No. 2038 of 1970 thus fell for consideration in the light of fresh points raised in the amplified plaint.
Next, as to proximity, there is one other related liti gation between the same parties.
It is now necessary to refer to it.
The respondent filed a suit for recovery of arrears of salary past, pendente lite and future.
It was claimed for the period between 21 February 1964 and 20 February 1967.
That suit was filed in 1968 and registered as Civil suit No. 53 of 1968.
On 31 July 1969, the trial court decreed the suit for Rs.7812.92 being the arrears of salary for the period of three years.
The management of the college appealed to the District Court in Civil Appeal No. 268 of 1969.
The respondent filed a cross objection to the extent of the relief denied to him.
The second appeal No. 2038 of 1970 was then pending in the High Court.
It seems that the parties moved the High Court for withdrawal of C.A. No. 268 of 1969 from the District Court for being disposed of along with the second appeal No. 2038 of 1970.
That request was allowed and the said appeal was withdrawn.
It was renumbered by the High Court as First Appeal No. 450 of 1982.
The High Court disposed of both the said appeals by common judgment dated 22 October 1982.
The second appeal No. 2038 of 1970 was dismissed confirming the finding of the Additional Civil Judge as to the validity of the suspension order.
The first appeal No. 450 of 1982 was allowed revers ing the decree of the trial court and dismissing the re spondent 's suit for arrears of salary.
His claim for pen dente lite salary also vanished along with that.
The respondent stopped into this Court for the second time.
Being aggrieved by the decision of the High Court, he appealed to this Court in C.A. No. 5891 of 1983.
The appeal was allowed by a brief order dated 25 September 1986 which has since been reported in AIR 1987 SC 1644.
For immediate reference we may set out the same hereunder: "The High Court in the judgment recorded the following findings: "The result is, as noticed above, that al though it cannot be said that the order dated 30 December 1965/7 January 1966 suspending the plaintiff from service of the defendant col lege was illegal or null and void inoperative against the 456 plaintiff from its inception, it did cease to be operative with effect from 17 October 1975 on the expiry of 60 days from the commencement of the U.P. Secondary Education Laws (Amend ment) Act, 1975.
Having recorded this finding, the High Court refused to exercise its discretion to grant a declaration that the order of suspension ceased to be operative with effect from 17 October 1975.
We think that the High Court was wrong in refusing to grant the declaration.
We, therefore, declare that the order of suspension ceased to be operative with effect from 17 October 1975.
The appeal against the judgment of the High Court in second appeal No. 2038 of 1970 is disposed of accordingly.
In the appeal against the judgment of the High Court in First Appeal No. 450 of 1982 we do not see how the appellant can be denied his salary for the period between 20 February 1964 to 15 January 1966, the date on which the effective order of suspension was communicated to him.
Instead of sending the case back to the trial court for determining the amount, we think that a decree may straight away be passed for a sum of Rs. 10,000 which will include salary for the period, interest up to date and costs." With due apologies for this lengthy introduction, we then come to the proceeding out of which the present appeals arise.
On 18 May 1986 the respondent moved the High Court under Article 226 of the Constitution seeking a writ of Mandamus against the State of U.P. and management of the college for his reinstatement in service with payment of entire arrears of salary.
He rested his case on the afore said decision.
This High Court accepted the writ petition and gave him all the reliefs asked for.
As to the validity of suspension order, the High Court remarked: "The order of suspension being illegal was correctly set aside by the Supreme Court after the enforcement of U.P. Secondary Education Laws (Amendment) Act, 1975 as none of the conditions mentioned in sub section (5) of Section 16 G of the Act were fulfilled as no charges were framed against the petitioner, nor any charge sheet was served on him . . .
The petitioner, there fore, 457 could not have been suspended and the order of suspension, in our view, was void ab initio.
Under law there was no provision to keep the petitioner under suspension for more than 21 years without enquiry being held and without any charge sheet being submitted.
The peti tioner has a legal right to continue in serv ice and we direct him to be reinstated forth with.
" As regards the arrears of salary, the High Court observed: "Once the order of suspension ceased to be operative and was ab initio void from its very inception, the petitioner shall be deemed to be in continuous service.
That application of the petitioner was sent to State of U.P. through the Education Secretary and also the District Inspector of Schools.
The District Inspector of Schools has already sent a letter dated 7.1. 1987 (Annx. 28) to the Manager, Kulbhaskar Ashram Agriculture Intermediate College, Allahabad about the payment of ar rears of salary to the petitioner.
But the Manager and the State of U.P. do not seem to be interested in making payment of arrears of salary to the petitioner.
We are accordingly of the opinion that the petitioner has made out a case for issuance of a writ of mandamus directing the State of U.P. and the District Inspector of Schools, Allahabad to make pay ment of arrears of salary to the petitioner in view of Section 10 and prior to that date the arrears of pay and other emoluments would be payable by the institution.
In case the insti tution fails to make payment the procedure under Section 11 of the Payment of Salaries Act may be adopted.
" Finally, the High Court issued the following directions: "In view of the premises aforesaid, the present petition succeeds and is allowed Respondents Nos. 1 and 2 the State of Uttar Pradesh and the District Inspector of Schools, Allahabad are directed to make payment of salary to the petitioner since 16.1.1966 till date, forthwith including D.A. and other emoluments admissible under law, of course, after deducting the amount, if any, paid to him as subsistence allowance during the period of his suspension.
We further add that the petitioner shall be reinstated forthwith and shall be paid his salary regularly in accord ance 458 with the provisions of Section 3 of the Pay ment of Salaries Act, 1971.
" Challenging the judgment of the High Court, the management as well as State Government by obtaining leave have now appealed.
This how the matter is coming before the Court for the third time.
The first question for consideration is whether the High Court was justified in directing reinstatement of the re spondent? There is a long established rule of Courts that service contract cannot be specifically enforced.
There are, however, three exceptions which have been adverted to in very many cases.
In Vaish Degree College vs Lakshmi Narain, at 71 after examining a large vs number of authorities like: S.R. Tiwari vs District Board, Agra and Anr., ; , 59: The Executive Committee of U.P. Warehousing Corpora,on Ltd vs Chandra Kiran Tyagi, , 265: Bank of Baroda vs Jewan Lal Mehrotra, and Sirsi Municipality vs Kom Francis, ; the Court rounded off the conclusion: "On consideration of the authorities mentioned above, it is, therefore, clear that a contract of personal service cannot ordinarily be specifically enforced and a court normally would not give a declaration that the contract subsists and the employee, even after having been removed from service can be deemed to be in service against the will and consent of the employer.
This rule, however, is subject to three well recognised exceptions: (i) where a public servant is sought to be removed from service in contravention of the provisions of Article 311 of the Constitution of India; (ii) where a worker is sought to be reinstated on being dismissed under the Industrial Law; and (iii) where a statutory body acts in breach or violation of the mandatory provisions of the Statute.
This decision has been affirmed in Smt.
J. Tiwari vs Smt.
Jawala Devi Vidya Mandir and Ors., and reiterated in Deepak Kumar Biswas vs The Director of Public Instructions, and adverted to in Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvaran Jayanti Mahotsav Samarak Trust and Ors.
vs V.R. Rudani and Ors., ; at 697.
These authorities say that a college owned by a private body, though recognised by or affiliated to a Statu tory University will not become a statutory body 459 since not enacted by or under a statute.
And the dismissed employee of such institution cannot get specific performance of service contract: The submission for the respondent, however, was that the present case stands on a different footing since there was no repudiation of the respondent 's contract of service.
The contract of service, according to him is still subsisting and it was, therefore, not inappropriate for the High Court to put the respondent back into service.
But counsel for the appellants added that the respondent himself has abandoned his post after he was suspended and there was therefore no need to terminate his service.
The declaration made by the respondent when he enrolled himself as an advocate in 1968 stating that he was not employed nor engaged in any business or profession was relied upon to support the submission.
It is said that the law required that the respondent at the time enrolment must have given particulars of his employment or of his business or trade it he had one.
He must have also produced a character certificate from the employer and proved as to how the employment came to an end.
Since he did not furnish any such particulars counsel urged that it was a clear case of abandonment of service and no specific order of termination was necessary.
Much could be said on both the contentions, but we refrain from expressing any opinion since this is not a proper case for reinstatement.
Indeed, the reinstatement would be an unwise move from any point of view.
In educa tional institutions, the Court cannot focus only on the individual forgetting all else.
The Court must have regard to varying circumstances in the academic atmosphere and radically changed position of the individual sought to be reinstated.
The Court must have regard to interests of students as well as the institution.
It is not unimportant to note that the respondent was out of teaching for over 25 years.
He seems to have taught Chemistry for one or two years in 1962 and 1963.
Thereafter, he did not teach Chemis try at any time in any College.
In 1964 65 he diverted his attention and sought admission in LL.B. Degree Course.
In 1968, he enrolled himself as an advocate and since then concentrated only in law courts.
In this gap of twenty five years he must have clearly lost touch with Chemistry as well as art of teaching.
It must have been also deeply buried and disintegrated under the new acquisition of his legal knowl edge.
Reinstatement of such a person seems to be unjustified and uncalled for.
The next question for consideration is whether the respondent is entitled to damages or salary as ordered by the High Court and if so what should be the measure for determination? Counsel for the appel 460 lants urged that the respondent 's claim for salary was the subject matter of previous litigation which finally ended with a decree by this Court in C.A. No. 5891 of 1983 and it was a final settlement of all his claims.
It was also argued that in any event, the respondent is not entitled to damages or salary for more than three years.
Our attention was drawn to the decision in Tilok chand Motichand & Ors.
vs B. Munshi & Anr., In reply and in support of the High Court order, counsel for the respondent referred to us a number of decisions and in particular (i) Malmoona Khatun and Anr.
vs State of U.P. & Anr.
; , ; (ii) Managing Director, Uttar Pradesh Warehousing Corporation and Anr.
vs Vinay Narain Vajpayee, ; and (iii) Maharaja Sayajirao University of Baroda and Ors.
vs R.S. Thakur, AIR 1969 SC 2112.
We have read cases carefully, but it is not necessary to refer to them in detail when we have guidance from binding precedents in similar cases.
There is a triology of cases on the question, See: (i) The Vaish Degree College, (ii) Smt.
J. Tiwari and (iii) Deepak Kumar Biswas to which brief reference was made earlier.
in the first of the three cases, the institution concerned was a degree college managed by a registered co operative society.
The dismissed Principal of the College filed a suit for reinstatement, inter alia, contending that the management of the college though a society registered under the cooperative societies Act was a statutory body since affiliated to the Agra University (and subsequently to Meerut University).
It was contended that the Principal 's termination was in violation of statutory obligation of the society, and therefore, his reinstatement should be ordered.
But that contention was not accepted and the Court said (at 74 75): "That the plaintiff/respondent served the institution for a short period of two years only, i.e. from 1964 to 1966 and thereafter he was bereft of all his powers and did not work in the college for a single day.
(2) That if the declaration sought for or the injunction is granted to the plaintiff/re spondent the result would be that he would have to be paid his full salary with interest and provident fund for full nine years, i.e. from 1966 to 1975, even though he had not worked in the institution for a single day during this period.
461 (3) That consequent upon the declaration the appellant would have to pay a very huge amount running into a lakh of rupees or perhaps more as a result of which the appellant and the institution would perhaps be completely wiped out and this would undoubtedly work serious injustice to the appellant because it is likely to destroy its very existence.
(4) It is true that the plaintiff/re spondent is not at fault,but the stark reali ties, hard facts and extreme hardship of the case speak of themselves.
And said: "It appears but by virtue of the interlocutory orders passed by this Court, the appellant has already deposited Rs.9,000 before the High Court which was to be withdrawn by the re spondent after giving security, and a further sum of Rs.9,100 being the salary of 13 months has also been deposited by the appellant before the trial court under the orders of this Court.
It is also stated by Counsel for the appellant that the appellant has deposited Rs.3,000 more.
We feel that in the circum stances the respondent may be permitted to keep these amounts with him and he will not be required to refund the same to the appellant.
The amount of deposit in the High Court, if not withdrawn by the respondent may now be withdrawn by him without any security and if he has already withdrawn the amount he will be discharged from the security.
This will vindi cate the stand of the respondent and compen sate him for any hardship that may have been caused to him by the order terminating his services, and will also put a stamp of finali ty to any further litigation between the parties.
" The case of Smt.
J. Tiwari seems to be closer to the case before us.
There the appellant claimed arrears of salary for six years covered by the period of suspension from 1952 till 1958.
In January 1952 she filed a suit in the court of Munsif challenging her suspension which was later withdrawn by the High Court of Allahabad for trial by it self.
The High Court decreed the suit holding that the order of suspension was not made by a properly constituted Commit tee.
On 24 May 1958, her services were terminated by the management of the college with retrospective effect from the date of suspension.
On 28 August 1958, she filed a suit for a declaration that she continued in the service and 462 for setting aside the termination order.
She claimed a decree in a sum of Rs.37,657.40 by way of salary.
The trial court upheld her contention that the termination of service was bad and ineffective.
The trial Court, however, passed a decree in her favour in the sum of Rs. 15,250 as arrears of pay for a period of 3 years from August 1, 1955 to July 31, 1958.
Both the parties filed appeals before the High Court.
The Division Bench of the High Court partly allowed the appeal of the management and dismissed the appeal of Smt.
J. Tiwari.
The High Court took the view that though the dis missal was wrongful, she was entitled to a decree of damages only and not to a declaration that she still continued to be in the service of the management.
The High Court upheld the money decree passed by the trial court, but did so on the ground that the amount awarded by the trial court by way of arrears of salary could justifiably be granted to her by way of damages.
This Court while affirming the decree of the High Court has, however, said as follows (at p. 162): "The High Court has treated the claim for three years ' arrears of salary as being pay able to the appellant on account of damages.
But that is not a right approach to the prob lem.
The appellant is entitled to three years ' arrears of salary for the period of suspension ,since the order of suspension was without jurisdiction and until May 1958 no order of termination of her service was passed by the Society.
In addition to the arrears of three years ' salary, the appellant would be entitled to three months ' salary as provided for by clause 10 of the agreement.
We would like to add that even if the appel lant could be held to be entitled to a decla ration that she continued to be in the service of respondent 1, this is not a proper case in which such a declaration should be granted to her.
The appellant 's claim according to her counsel would amount to over Rs.2 lakhs.
The appellant has admitted in her evidence that she did not make any attempt to mitigate the damages by trying to obtain an alternative employment during the last 20 years.
The difficulty of obtaining employment is an argument which cannot be permitted to a person who, on her own showing, has made no effort to obtain any employment." Deepak Kumar Biswas case appears to be the closest to the present case.
There the appellant was a Lecturer in English in Lady Keane 463 Girls College, Shillong.
The college was governed by the statutes of the Meghalaya University and the Education Code framed by the State Government.
The college was also receiv ing financial aid from the Government.
His appointment was terminated for want of approval by the Director of Public Instruction.
The trial court decreed the suit for declara tion and permanent injunction.
The appellate Court set aside that decree and granted monetary compensation of one year salary as damages although his removal was found to be wrongful.
This Court sustained the removal but enhanced the compensation to three years ' salary following the pattern adopted in the aforesaid two cases.
What do we have here? In 1962 the respondent was ap pointed as a Chemistry lecturer in the scale of Rs. 175 10 215.
His performance was found to be unsatisfactory.
In August 1964, he was placed under suspension.
In January 1966, he was again suspended.
Thereafter, he brought suit after suit, appeal after appeal from the lowest court to the Apex Court.
He continued the litigation for about 25 years.
On 17 March 1976 the management had appointed Dr. Gopendra Kumar as Chemistry Lecturer and his appointment was approved by the DIOS.
On 28 October 1982 the management passed a resolution confirming his appointment w.e.f. 27 September 1975.
That was also approved by the DIOS.
Dr. Gopendra Kumar was not a party to any one of the earlier litigations nor to the present appeal.
The respondent knew very well that his service contract was with the private management.
In 1964 itself learned Munsif while dismissing the first suit No. 422/1963 has held that his contract of employment could not specifically be enforced.
He was then obliged to place his services on the market to mitigate the damages.
But he did nothing of the kind.
In 1968 he joined legal profession and he is still not out of it.
He has not disclosed his professional income.
In fairness he ought to have disclosed his income to the Court since it is in his personal knowledge.
Instead, he seems to have urged before the High Court that the professional income is not relevant for consideration.
The High Court while accepting the submission went a step further and observed: "that joining the legal fraternity can never be said to be employment and could not disentitle the respond ent to claim his arrears of salary.
" Legal profession may not be considered as an employment but the income from profession or avocation if not negligible, can not be ignored while determining damages or back wages for payment.
It must also be taken into consideration.
In S.M. Saiyad vs Baroda Municipal Corporation, Baroda, [1984] (Supp) SCC 378 the Court gave deduction of even a small income of Rs. 150 per month 464 earned by the worker turned advocate while awarding back wages upon reinstatement.
But we cannot accept the contention for the appellants that the sum of Rs. 10,000 decreed in favour of the respond ent in Civil Appeal No. 5891 of 1983 was a final settlement of all his claims.
There is no indication in the order of this Court to that effect.
In the light of all these facts and circumstances and the authorities to which we have called attention, it seems to us that it would be sufficient if the respondent is given salary for three years on account of damages.
In the result, the appeals are allowed and in reversal of the judgment of the High Court, we direct that the re spondent be paid three years salary.
The payment shall be treated as a final settlement of all his claims.
The payment shall be made by the management and not by Government.
In a case like this, the Government cannot be saddled with the liability to make payment.
There is no relationship of master and servant between Government and respondent and such relationship existed only between the management and respondent.
So far as statutory liability to pay salary to teachers is concerned, the Government has been paying salary to Dr. Gopendra who has since been appointed as Lecturer in the place of respondent.
Therefore, the Management alone should pay the amount ordered.
The payment shall be made within four weeks.
In the circumstances of the case, we make no order as to costs.
Y. Lal Appeals al lowed.
| IN-Abs | The respondent was appointed on 15.7.1962 as a Chemistry lecturer in Kulohaskar Ashram Agriculture Intermediate College run by the appellant society.
By a communication dated 20.6.1963, he was informed by the management that his services were no longer required after 15.7.1963.
He filed a civil suit for permanent injunction restraining the manage ment from proceeding with the proposed action.
But the management having withdrawn the letter, he withdrew the suit as having become infructuous.
However on 28.8.1964, the respondent was placed under suspension whereupon he again filed a civil suit for a declaration that the order of suspension was illegal.
The trial court dismissed the suit but the first appellate court allowed the appeal and decreed the suit as prayed for.
On appeal the High Court affirmed that decision, on 9.4.69.
During the pendency of the appeal before the High Court, the management appellant had passed a fresh order suspending the respondent pending enquiry on certain allegations.
The respondent again filed a civil suit to challenge the competency of the managing committee to take action against him.
In the said suit he also pleaded that the prior approval of the District Inspector of Schools having not been taken, the order placing him under suspen sion was bad.
The Munsiff Court accepted the suit and de clared the suspension order as illegal and void.
The first appellate court reversed that order and the respondent preferred second appeal to the High Court.
During the pendency of the respondent 's second appeal, U.P. Secondary Educational Laws (Amendment) Act, 1976 came into force from 18.8.76 which inter alia provided that prior approval of the District Inspector of School was necessary before any action could be taken against teaching staff of a college.
The respondent sought to amend the pleadings of second appeal in consonance with the Act but 451 the High Court declined but he succeeded on this question before this Court.
Contemporaneously with the litigation set out above, the respondent filed a suit for recovery of arrears of salary, past pendente lite and future.
It was claimed for the period between 21.2.1964 and 20.2.1967.
The trial court decreed the suit for Rs.7812/92 p. being the arrears of salary for the period of three years.
The management appealed to the Dis trict Court and the respondent filed cross objection.
As stated earlier, the second appeal preferred by the respond ent was pending in the High Court.
Hence the parties moved the High Court for withdrawing the appeal pending before the District Court for being disposed of alongwith the second appeal No. 2038/1970, which request was accepted and the said appeal came to be registered as First Appeal No. 460 of 1982.
The High Court disposed of both the appeals by a common judgment whereby the second appeal was dismissed and the finding as to the validity of the suspension order was confirmed.
However the First Appeal was allowed and the decree of the trial court was reversed and a suit for ar rears of salary filed by the respondent was dismissed.
The respondent appealed to this Court and his appeal was allowed and his claim to salary between 20.2.1964 to 15.1.1966 was settled at Rs. 10,000 and the court further held that the order of suspension ceased to be operative w.e.f. 17.10.1975.
Thereafter the respondent on May 18, 1986 moved the High Court under Article 227 of the Constitution for a writ of Mandamus against the State of U.P. and the management of the College for his reinstatement in service and for payment of entire arrears of salary.
The High Court accepted the writ petition and granted him the relief asked for.
Hence these appeals by the Management of the school and the State of U.P.
Allowing the appeals, this Court, HELD: Indeed, the reinstatement would be an unwise move from any point of view.
In educational institutions, the Court cannot focus only on the individual.
The Court must have regard to varying circumstances in the academic atmos phere and radically changed position of the individual sought to be reinstated.
The court must have regard to interests of students as well as the institution.
[459E] In the instant case, during the gap of twenty five years, the respondent must have clearly lost touch with Chemistry as well as the 452 art of teaching.
It must have been also deeply buried and disintegrated under the new acquisition of his legal knowl edge.
Reinstatement of such a person seems to be unjustified and uncalled for.
[459G] Legal profession may not be considered as an employment but the income from profession or avocation if not negligi ble, cannot be ignored while determining damages or back wages for payment.
[463G] In a case like this.
the Government cannot be saddled with the liability to make payment.
There is no relationship of master and servant between Government and respondent and such relationship existed only between the management and respondent.
So far as statutory liability to pay salary to teacher is concerned, the Government has been paying salary to Dr. Gopendra Kumar who has since been appointed as Lec turer in the place of the respondent.
Therefore, the manage ment alone should pay the amount ordered.
[464D E] Vaish Degree College vs Lakshmi Narain, ; G.R. Tiwari vs District Board, Agra and Anr., ; , 59; The Executive Committee of U.P. Warehousing Corpo ration Ltd. vs Chandra Kiran Tyagi, ; , 265; Bank of Baroda vs Jewan Lal Mehrotra, and Sirsi Municipality vs Kom Francis, ; ; Smt.
J. Tiwari vs Smt.
Jawala Devi Vidya Mandir & Ors., ; ; Deepak Kumar Biswas vs The Director of Public Instruc tions, ; Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvaran Jayanti Mahotsav Samarak Trust & Ors.
V.R. Rudani & Ors., ; at 697; TrilokChand Modichand & Ors.
vs H.B. Munshi & Anr., ; Maimoona Khatun & Anr.
vs State of U. P. & Anr.
, ; ; Managing Director U.P. Warehousing Corporation & Anr.
vs Vinay Narain Vajpayee, ; ; Maharaja Sayajirao University of Baroda & Ors.
vs R.S. Thakur, AIR 1968 SC 2112 and S.M. Saiyad vs Baroda Municipal Corpora tion, [1984] Supp.
SCC 378, referred to.
|
N: Review Petition (Criminal) Nos.
24 1 242 of 1989.
IN Criminal Appeal Nos.
544 545 of 1986.
Mahabir Singh for the Petitioner.
A.N. Mulla, S.B. Upadhyay for the Respondents.
The Order of the Court was delivered by RAY, J.It is very unfortunate that a controversy has arisen following the judgment sought to be reviewed in Criminal Appeal Nos.
544 45 of 1986 rendered by this Bench on 31st January 1989 whereby this Court while confirming the conviction of both the respondents/accused reduced the sentence of imprisonment in respect of each of the respond ents from 10 years to 5 years by invoking the proviso to Section 376(2) of the Indian Penal Code observing "the peculiar facts and 498 circumstances of this case coupled with the conduct of the victim girl, in our view, do not call for the minimum sen tence as prescribed under Section 376(2).
" The State of Haryana has filed the above petitions seeking review of the judgment and to "pass such other or further order(s) as may be necessary in the circumstances of the case.
" At the outset, we may examine the scope of review of a judgment in a criminal case already pronounced by this Court.
Article 137 of the Constitution of India gives the power to the Supreme Court to review its judgment but such special power is exercisable in accordance with, and subject to, the rules of this Court made under Article 145 of the Constitution of India.
Order XL, Rule 1 of the Supreme Court Rules provides: "The Court may review its judgment or order but no application for review will be enter tained in a civil proceeding except on the ground mentioned in Order XLVII, Rule 1 of the Code and in a criminal proceeding except on the ground of an error on the face of the record." This Court in a series of decisions has examined the scope of review in criminal cases after the judgment pro nounced or order made.
Though we are not citing all those decisions, we may refer to a In the case of P.N. Eswara Iyer and Ors vs Registrar, Supreme Court of India, ; the Constitution Bench of this Court while considering the rule observed thus: "The rule (Order XL, Rule 1), on its face affords a wider set of grounds for review for orders in civil proceedings, but limits the ground vis a vis criminal proceedings to 'errors apparent on the face of the record. '.
" See also Sow Chandra Kanta & Anr.
vs Sheik Habib, ; and Sheonandan Paswan vs State of Bihar and Or ders, In our considered view, when the present matter is examined in the light of the decisions referred to above, we find no error apparent on the face of the record necessitat ing review of the judgment and as such these review peti tions are liable to be dismissed.
499 We have heard the arguments of the learned senior coun sel, Mr. Rajinder Sachar who though initially started his arguments on behalf of the People 's Union for Civil Liber ties ultimately advanced his arguments on behalf of the State in these review petitions on the representation made by Mr. Mahabir Singh, the learned counsel for the State.
Mr. R.K.P. Shankar Dass who advanced his arguments on behalf of Mahila Sanyukt Morcha stated that his arguments may also be treated as supplemental to the arguments of Mr. Rajinder Sachar.
Mr. Mulla, the learned senior counsel appeared on behalf of the respondents.
Although we have found that the Review Petitions are liable to be dismissed on the ground that there is no error apparent on the face of the record, we, however, in view of the elaborate submissions made by the various learned coun sel appearing before us, would like to make the following observations.
The facts of the case are briefly stated in the Criminal Appeals and, therefore, it is not necessary to restate the same.
Suffice to say that during the course of the ' hearing on the appeals on behalf of the respondents/accused, it has been urged by the learned defence counsel that the victim Suman Rani was a woman of questionable character and easy virtue with lewd and lascivious behaviour and as such her version is not worthy of acceptance.
After considerable debate on the merits of the case, the argument was confined only with regard to the quantum of sentence.
after meticu lously examining the entire matter, this Court came to the conclusion that the proviso to Section 376(2) I.P.C. could be invoked having regard to the peculiar facts and circum stances of the case coupled with the conduct of the victim and the mandatory sentence provided under the penal provi sion is not called for.
At this juncture, we would like to point put that the very confirmation of the conviction accepting the sole testimony of the victim Suman Rani rejecting the arguments of the defence counsel is itself a clear indication that this Court was of the view that the character or reputation of the victim has no bearing or relevance either in the matter of adjudging the guilt of the accused or imposing punishment under Section 376 I.P.C. We would like to state with all emphasis that such factors are wholly alien to the very scope and object of Section 376 and can never serve either as mitigating or extenuating circumstances for impos ing the sub minimum sentence with the aid of the proviso to Section 376(2) of the I.P.C.
In fact, we have expressed our 500 views in the judgment itself ' stating "No doubt an offence of this nature has to be viewed very seriously and has to be dealt with condign punishment.
" We have neither characterised the victim, Suman Rani as a woman of questionable character and easy virtue nor made any reference to her character or reputation in any part of our judgment but used the expression "conduct" in the lexi graphical meaning for the limited purpose of showing as to how Suman Rani had behaved or conducted herself in not telling any one for about 5 days about the sexual assault perpetrated on her till she was examined on 28.3.1984 by the Sub Inspector of Police (PW 20) in connection with the complaint given by Ram Lal (PW 14) on 22.3.1984 against Ravi Shanker.
In this connection, we make it further clear that we have not used the word 'conduct ' with reference to the character or reputation of the victim Suman Rani.
Before parting with this matter, we would like to ex press that this Court is second to none in upholding the decency and dignity of woman hood and we have not expressed any view in our judgment that character, reputation or status of a raped victim is a relevant factor for considera tion by the Court while awarding the sentence to a rapist.
With the above observations, we dismiss the Review Peti tions.
G.N. Petitions dismissed.
| IN-Abs | This Court rendered a judgment in this case on 31.1.1989 confirming the conviction of both the respondents and reduc ing the sentence of imprisonment from 10 years to 5 years by invoking the proviso to Section 376(2) I.P.C.
The petitioner State has sought review of the said judgment.
Dismissing the review petitions, this Court, HELD: 1.
As per order XL Rule 1 of Supreme Court Rules, 1966, review in criminal proceedings is limited to errors apparent on the face of record.
In the instant case, there is no error apparent on the face of the record necessitating review of the judgment.
[498F] P.N. Eswara Iyer and Ors.
vs Registrar, Supreme Court of India, ; Sow Chandra Kanta and Anr.
vs Sheikh Habib; , ; Sheonandan Paswan vs State of Bihar and Ors., , relied on.
The very confirmation of the conviction accepting the sole testimony of the victim, rejecting the arguments of the defence counsel, is itself a clear indication that this court was of the view that the character or reputation of the victim has no bearing or relevance either in the matter of adjudging the guilt of the accused or imposing punishment 497 under Section 376 I.P.C.
Such factors are wholly alien to the very scope and object of Section 376 and can never serve either as mitigating or extenuating circumstances for impos ing the sub minimum sentence with the aid of the proviso to Section 376(2) of the I.P.C. [499G H] 3.
This Court neither characterised the victim, as a woman of questionable character and easy virtue nor made any reference to her character or reputation in any part of the judgment but used the expression "conduct" in the lexigraph ical meaning for the limited purpose of showing as to how she had behaved or conducted herself in not telling any one for about 5 days about the sexual assault perpetrated on her till she was examined on 28.3.1984 by the sub Inspector of Police.
The word "conduct" was not used with reference to the character or reputation of the victim.
[500B C] 4.
This Court is second to none in upholding the decency and dignity of womanhood and this Court has not expressed any view in the judgment that character, reputation or status of a raped victim is a relevant factor for considera tion by the Court while awarding the sentence to a rapist.
[500D]
|
Civil No. 1134 of 1986.
503 (Under Article 32 of the Constitution of India) Petitioner in person and Mohan Pandey for the Petitioners.
K. Madhava Reddy, P.P. Rao, R.N. Keshwani and H.S. Parihar for the Respondents.
The Judgment of the Court was delivered by SAWANT, J.
The petitioners who are employees of respond ent No. 1 National Bank for Agriculture and Rural Develop ment (hereinafter referred to as the Bank) request for a direction to the Bank to give them fitment benefits which were given to their counter parts who were in the Bank 's service prior to 1st February 1984.
The admitted facts are that on 1st February 1984, petitioner No. 1 was in the Bank 's service as a 'Grade B ' Officer land was promoted to 'Grade C ' Officer 's.cadre on March 7, 1984.
Petitioners 2 to 4 were not in the service of the Bank on 1st February 1984.
Petitioner No. 2 was appoint ed as a 'Grade C ' Officer and Petitioners 3 and 4 were appointed as 'Grade B ' Officers, on various dates in March 1984.
Petitioners 5 and 6 were in the Bank 's service in Clerical Grade prior to 1st February 1984 and were appointed as Officers 'Grade A ' after the said date.
The first respondent Bank came into existence on July 12, 1982 under an Act of Parliament, viz National Bank for Agriculture and Rural Development Act, 1981.
The initial staff of the Bank consisted of the employees of the Reserve Bank of India and of those recruited by the Reserve Bank of India exclusively to serve the erstwhile Agriculture Refi nance and Development Corporation which was taken over by the 1st respondent Bank.
On February 24, 1986, the Bank revised pay scales of all its Officers as a result of a settlement on the charter of demands submitted by the Bank 's Officers ' Association called NABARD Officers ' Association.
One of the demands of the Association was that the revision in the scales of their pay should be on the same basis as of the revision of the Officers in the Reserve Bank of India.
It appears that the NABARD Officers Association had submit ted its charter of demands on November 30, 1984 which was on the same lines as the charter of demands submitted by the Officers Association of the Reserve Bank of India to the Reserve Bank of India.
On October 9, 1985, the Reserve Bank of India revised the pay scales of its Officers w.e.f 1st February 1984.
As a result, the 1st respondent Bank 504 also revised the pay scales of its Officers, as stated earlier, on February 24, 1986, and to bring it on parity with the pay scales of the Reserve Bank of India, gave effect to them also from 1st February, 1984.
Hence the importance of the date February 1, 1984.
Incidentally it may be stated that the revision of pay scales of the Officers in the entire Banking Industry was brought into effect from that date.
The said date is thus not arbitrarily fixed by the respondent Bank for giving effect to the revision of pay scales.
Since the revision of pay scales was given effect to from February 1, 1984, it was necessary to fit the pay of the employees in service prior to February 1, 1984 in the revised pay scales.
Hence it was necessary to evolve some uniform formula for the fitments.
The Reserve Bank of India had already prepared a refixation chart for the purpose.
The respondent Bank also prepared its refixation chart for the purpose.
This chart was also approved of by the NABARD Officers Association.
The Association at the relevant time had 2284 members and except the present six petitioners nobody has made a grievance against the said chart.
By the present Petition what is in effect, challenged is the said refixation chart.
The refixation chart which is an Annexure to the Petition gives effect to the terms of settlement between the Bank and its Officers, which as stated above, is a part of the general settlement in the Banking Industry.
The said chart is made applicable to all the Officers who were in the service of the Bank holding either probationary, permanent or temporary appointments and its benefit is given from 1st February 1984.
The chart is no more than a device for fit ting the pay of the concerned Officers in the revised pay scales.
Since the revised pay scales were given retrospec tive effect from 1st February 1984 it was necessary, as a first step.
to fit the pay in the old scales into the new scales on and from 1st February 1984.
Such a fitment was necessary only in the case of those who were in service prior to February 1, 1984.
The entrants in service after that date would automatically be treated as being employed on the new scales from the date of their entry.
There was therefore, no need, as indeed there could not be, of making fitment adjustments in their case.
There is further no dispute that the employees like the petitioners who were appointed either for the first time, or promoted to the higher post, after February 1, 1984, were given all the benefits of the revised pay scales including the arrears in salary, treating them as if they were appointed initially in the new scales.
505 6.
The refixation chart under challenge, therefore, contained a table of fitment of salaries of those employees who were in service prior to 1st February 1984.
It is common knowledge that such fitment has to be made not by reducing the existing pay of the employees but fixing it into the nearest higher stage in the new scale.
The table incorporat ed in the chart therefore contained fitment increments for the employees in service prior to 1st February 1984 (herein after referred to as the old employees) to avoid reduction and anomalies which would otherwise result.
These increments were to merge in the new scales in course of time, when the concerned employees reached the appropriate stage in the new scale.
The increments given were not designed to grant higher emoluments to the old employees for all time to come.
As has been pointed out by the respondent Bank, there was a possibility of reduction in salary in some cases and of anomalies in other cases if a stage to stage adjustment was made in their salaries.
Hence the table was so prepared that the fitments avoid the said consequences.
The said fitment adjustments in the salaries of the old employees resulted in temporary increases in their pay packets, although, as stated earlier these fitment increments were to merge in future increments in the new scales.
The grievance of the petitioners in this petition is directed precisely against these fitment increments given to the old employees.
It is their case that these increments give undue benefit to the old employees as against them, and since they occupy the same posts they are also entitled to the same fitment bene fits.
That is the main relief which they have claimed in the petition by prayer (a).
The other reliefs are declaratory in nature and incidental to it.
In support of their claim they have invoked the theory of Equal Pay for Equal Work and Articles 14 and 16 of the Constitution by alleging discrimi nation between them and the old employees.
They have also pressed certain decisions in support of their case.
As will be obvious from what we have stated earlier, the whole basis of the petitioners ' case is misconceived.
It proceeds on wrong presumptions and unwarranted premises.
The present is not a case of discrimination between employees belonging to the same class or of granting different scales of pay to them.
The present is a case of adjusting and fitting the salaries of the old employees belonging to the same class into the new scales of pay which are made avail able to both the new and the old employees.
If in effecting such adjustments, it becomes necessary to give fitment increments to the old employees, it is to work out the equities and to do justice to them.
Their past service in fact merits it.
To deny them such adjustment is to treat them unequally by ignoring their past service and placing them on par with 506 the new entrants.
For this purpose, however limited it may be, the old employees in the present case stand in a differ ent class from that of the new.
The classification for the purpose is not only justified but necessary.
The revision of pay scales is always effected with a particular date pro spectively or retrospectively.
Whatever the date from which it is effected, it necessarily involves fitment of the salaries of the existing employees in the new scales.
A retrospective operation of the new scales therefore in volves, for the same purpose, a classification of employees into two categories, viz. those who were in service prior to the retrospective date and those who entered the service thereafter.
If the benefit of the revised pay scales is to be conferred equitably on the old and the new employees, the fitment of salaries is inevitable.
To avoid it is to deny the equal benefit of the revised scales to the employees in service prior to the date from which the new scales come into effect.
The service jurisprudence, therefore, makes it imperative to grant such fitments in the emoluments of the old employees.
The fitment/adjustment in the new scales further, as stated above, has to be done by revising the salaries upward.
This sometimes necessarily involves fitment in a higher stage in the pay scale than what the employee would be entitled to by a strict application of the stage to stage adjustment.
The provision is also, therefore, some times made to treat the additional benefit as a personal pay till it gets merged in the next higher increment.
This is a known practice of equitable adjustment of the old pay scales to the new pay scales.
There is no other way of effecting the just and required adjustment.
Thus, it is not a case of giving undue benefits to one section of the employees be longing to the same class, but is a case of conferring equitable benefits on the old employees and effecting a just adjustment between the salaries of the old and new employ ees, as necessitated by the new pay scales.
As stated above, there is no dispute in the present case that the petitioners were either appointed to the higher post or they came in the service of the Bank, for the first time after February. 1, 1984.
Those who were appointed to the higher post after February 1, 1984 and who were therefore necessarily in the lower post prior to that date, get the benefit of fitment into the new scales in theft earlier lower post according to the very same refixation chart and received arrears of salary on account of such refixation.
What they claim now is that notwithstanding the benefit of the refixation they got in theft lower post, they should also get the said benefit in the higher post, as if they were promoted to the higher post prior to February 1, 1984.
Similarly, those of the petitioners who entered the Bank 's service for the first time after February 1, 1984, want the benefit of refixation as if they 507 were in service prior to February 1, 1984.
The claim of the petitioners is thus on the face of it both unreasonable and unsustainable in law.
We may now examine the authorities cited before us.
K.N. Ananda & Ors.
vs The Karnataka State Financial Corpora tion, Bangalore & Anr., [1985] Labour & Industrial Cases Vol. was not a case of fitment of the salaries of the old employees into the revised scales of pay.
In that case, what the respondent Karnataka State Financial Corpora tion had, instead done was to prepare a conversion table and give the old employees salaries in the revised scale accord ing to the said table.
The pay given to,the old employees according to the table had apparently no relation to the stages in the revised pay scale at which the salaries of the old employees had to be fitted.
The Corporation also could not explain the basis on which the said table was worked out.
In fact, as is apparent from paragraph 16 of the judg ment, the learned counsel for the Corporation being unable to furnish the basis of the differentiation in the salaries, submitted before the court that in fact the Corporation wanted to protect the total emoluments and to allow the new employees, who were petitioners in that case, to earn incre ments over and above the pay, as enacted in the Corpora tion 's resolution of 30th March 1978 which was reproduced in the judgment.
But the State Government did not agree.
It is for this reason that the High Court there held that the conversion table insofar as it was made applicable to the old employees only, was discriminatory in nature and therefore invalid.
It will thus be seen that the facts in that case were different and hence the ratio of the said decision is not applicable to the present case.
P. Savita S/o.
Shri PL Savita vs Union of India, Minis try of Defence (Deptt. of Defence Production) New Delhi & Ors., ; was again not a case of fit ment of the salaries of the old employees into a new pay scale.
In fact, what was done in that case was to prescribe two separate pay scales for Senior Draftsmen by dividing them artificially into seniors and juniors, and awarding Senior Draftsmen new scales while keeping the Junior Drafts men on the old scale.
The Court, therefore, struck down the classification.
D.S. Nakara & Ors.
vs Union of India 's case ; was a case of dividing the same class of individu als, namely, the pensioners on the basis of an artificial date, and giving benefit of pension calculated on a new basis to those employees only who had retired after 31st March 1979.
while denying the benefit of the same 508 computation to those who had retired before that date.
The classification made of the pensioners into two categories on the basis of their retirement date had no nexus to the object which was sought to be achieved, namely to mitigate the hardship of the fixed income group, on account of the ever rising prices, and of the lowering of the value of the rupee.
In fact, it was pointed out by the Court in that case that by extending the benefit to those employees who had retired prior to March 1979 the Court was not making liber alisation of the pension retroactive.
It was only giving the benefit of the same basis of computation to all the pension ers whether they had retired before or after that date.
The Court also pointed out in that context that retroactiveness is implicit in the theory of wages.
When revised pay scales are introduced from a certain date, all existing employees are brought on to the revised scales adopting a theory of fitments and increments for the past service.
The benefit of the revised scales is not limited to those who enter service subsequent to the date fixed for introducing the revised scales but is extended also to those in service prior to that date.
These observations would also make it clear that it is a general practice recognized even by this Court that when new pay scales are introduced, the salaries of the old employees have to be adjusted and fitted into the new scales by adopting some formula of fitments and increments for past service.
In fact, if such fitment is not made, the old employees would get no benefit for the service rendered by them in the past, and they would be placed on par with those who enter the service after the date of the revision of scales.
That would be a case of unequals being treated equally.
It is, therefore, an absence of fitments and ad justments and not their application which results in dis crimination.
In State Government Pensioners ' Association & Ors.
vs State of Andhra Pradesh.
[1986] 3 SCC 501, the Government Order dated 26th March 1980 providing for higher gratuity to the employees who had retired after 1st April 1978 was challenged by the Pensioners ' Association on the ground that the benefit of the said higher gratuity was not made avail able to them.
The Court held that the provision of payment of gratuity on stepped up basis prospectively from a speci fied date of retirement, was not unconstitutional.
In Kanpur Suraksha Karamchari Union vs Union of India, the Government of India by its Order of 25th July 1981 accorded sanction to treat employees of canteens established in Defence Industrial Installation under Section 46 of the Factories Act as the Government employees with immediate effect.
By an amend 509 ment, the said Govt.
Order was given effect to from 22nd October 1980.
The question which was raised in the case was whether the employees who were recognised as Government employees w.e.f. 22nd October 1980, were entitled to calcu late the service rendered by them prior to 22nd October 1980 for the purpose of their pension, and the Court held that the period of service rendered by the employees prior to that date has to be counted for the said benefit.
This was thus in effect giving benefit to the old employees of their past service.
In Reserve Bank of India & Ors.
vs C.N. Sahasaranaman & Ors., 1, what was challenged was the com bined seniority and scheme of promotions for cadres of Officers and non Officers in the Reserve Bank of India.
In the past, there was a separate departmentwise and grade wise seniority, and the promotions to the cadres of Officers and non Officers were effected on the basis of such seniority.
In September 1962, a need was felt for the maintenance of a combined seniority list at each centre for the purposes of promotions as recommended by the National Industrial Tribu nal presided over by Justice Desai.
These recommendations for centre wise combined list were approved by this Court in 1966.
In 1970, the supervisory staff in Class1 was upgraded to staff officers in Class 1 pursuant to the settlement between the employees and the Bank on January 9, 1970 sub ject to certain conditions.
On 6th June 1970, a circular was issued for introduction of written examination for depart mental promotions of clerks grade I/Assistants etc.
to the post of Staff Officers Grade II in all the groups.
The circular was not, however, enforced.
On May 7, 1972 the Bank took several steps towards equalising promotional opportuni ties of employees by introducing what was known as Optee Scheme of 1965 and the Optee Scheme of 1966, and finally by entering into a settlement with the Association of the employees on May 7, 1972.
The Association by that settlement accepted the principle of maintenance of a combined seniori ty list at a centre.
On the same date, the Bank formulated a Scheme for promotions of staff officer Grade I1 after giving full opportunity to the Association to make its suggestions.
On that occasion, tile Bank and the Association further agreed by exchange of correspondence that the ratio of direct recruits to the promotees in the total strength of officers staff Grade II should be 17.5%: 82.5%.
On 13th May, 1972, the Bank introduced administrative circular No. 8 which was binding on all employees of the Bank.
On the same date, the Bank introduced another circular No. 9 on "Scheme of Combined Seniority List and switch over from clerical to non clerical" w.e.f. May 7, 1972 which was also binding on all employees.
The constitutional validity of this Scheme also was upheld by this Court.
510 On May 22, 1974 the Bank took a decision based on the recommendations of the Cadre Review Committee, and issued administrative circular No. 15 to prepare a common seniority list and to provide for another group mobility at the lowest level of officers in Grade A w.e.f. January 1, 1970.
On January 7, 1978 the Bank took further decision based on the recommendations of two Committees, and issued circular No. 8 to combine the seniority of all officers in Grade B and above, w.e.f. May 22, 1974, with a view to equalise the opportunity for promotion among officers.
Three employees who were Grade II clerks working at the Nagpur branch of the Bank ever since their employment, variously between 1962 to 1965, challenged clauses (II)(a)(i) of the Administrative Circular No. 8 of May 13, 1972 dealing with "the Scheme for promotion from staff officer Grade 1I" (later designated as Grade A) before the Nagpur Bench of the Bombay High Court.
This clause provided for the number of candidates who will be qualified to appear in the test at the written examina tion.
The clause stated that an estimate of the vacancies to occur in each office during the panel year, i.e. 1st Septem ber to 31st August, will be declared by the Bank in advance, and the number of candidates in that office will not exceed twice the number of such vacancies subject to other clauses in the Scheme.
The grievance of the petitioners was that the said clause was violative of their rights under Articles 14 and 16 of the Constitution since the chance to appear in the examination depended not on relative merits but merely on the fortuitous circumstance, namely, the number of vacancies occurring in the particular centre in a panel year which had no nexus with the purpose of promotion, namely, to secure a fresh cadre of staff officers, and therefore, the Scheme was bad in law.
The High Court found force in the submission and struck down the said clause.
In allowing the appeal filed by the Bank, this Court there held, among others, that: "In service jurisprudence there cannot be any service rule which would satisfy each and every employee and its constitution ality has to be judged by considering whether it is fair, reasonable and does justice to the majority of the employees and fortunes of some individuals is not the touch stone.
Further, whether there has been denial of equality of the view of promotion or any constitutional right infringed or not cannot be judged, where interest of large number of people are con cerned, in the abstract." 3.2 "The reference held pursuant to the orders of this Court dated 2nd May, 1984 undoubtedly indicates that 511 majority of the employees are in favour of acceptance of the modified settlement.
In matters of service conditions it is difficult to evolve as ideal set of norms governing various conditions of services and in grey area where service rules operated, if more than one view is possible without sacrificing either reasons or commonsense the ultimate choice has necessarily to be conditioned by several considerations ensuring justice to as many as possible and injustice to as few.
These principles, however, significant do not authorise the majority of the employees to trample upon the constitutional guarantees or rights of the individuals or minority employ ees.
Majority cannot thwart or barter away the constitutional rights of the minorities.
The constitutional guarantees are to protect this very danger.
But in judging the content of the constitutional rights, the entire perspective of the equality of opportunity here and denial of equal right in public employment have to be viewed in a fair, reasonable and just perspec tive.
Viewed in that light, it is true there may be individual instances exemplifying injustices by postponing or delaying the chances of promotions of the contesting re spondents yet that does not deny them their constitutional right in its proper measure, and the considerations that have weighed with the making of the modified scheme and in light of the other considerations it must be ob served that with whatever care and objectivity or foresight any rule is framed, some hard ship, inconvenience or injustice might to result but the paramount consideration is the reconciliation of the conflicting claims of two important constituents of service one which brings fresh clerical employees and the other mature experience.
There has been a happy merger of these two considerations in the scheme proposed and in that merger, no violation of the guaranteed rights of the opposing respondents have occurred.
" The observations have much bearing on the present case.
As has been pointed out hereinabove, in the present case also refixation chart of the salaries of the employees was worked out with the approval of the Association of the Bank Officers concerned.
The employees involved were further large in number.
Any chart evolved to fit the salaries of the old employees who had entered the service during the whole span of the period prior to 1st February 1984, was bound to result in some employees getting slightly more and others getting 512 slightly less.
It is not possible in such circumstances to satisfy all employees to the same degree.
Hence, as contend ed by the petitioners, if in some cases.
the employees have received some excessive benefit, the chart cannot be faulted on that account.
The chart as applied is a uniform one and is designed to adjust the old salaries in the new scale.
In a large organisation with a large number of employees in volved in the exercise, a few marginal cases of excessive benefits cannot be relied upon to invalidate the entire chart, for no adjustment chart in such cases can be free from some defects.
In Tarsem Lal Gautam & Anr.
vs State Bank of Patiala & Ors., AIR 1989 SC 30 and in C.R. Seshan & Anr.
vs State of Maharashtra & Ors., AIR 1989 SC 1287 this Court has, in fact, held that a higher category in the same class of employees on the basis of seniority cummerit can be carried out and a higher pay scale can be given to such higher category and that it is neither arbitrary nor unconstitu tional to do so.
The aforesaid review of the authorities shows that none of them supports the proposition advanced by the peti tioners, namely, that the salaries of the old employees cannot be brought on to the new or revised pay scales by giving them fitment increments as is done in the present case.
In fact, in such a case to refuse to fit the salaries of the old employees in the new scales of pay by denying them the necessary fitment or adjustment increments, is to deny them the equality of treatment.
That amounts to ignor ing their past service and to treating them on par with the new entrants which would be unjust in itself.
The adjustment increments granted to the old employees on such occasions automatically achieve the dual purpose of rewarding them for their past service and of adjusting their salaries in the new scale.
The adjustment fitment and increments are there fore not discriminatory but eminently just and valid.
In the circumstances, we find no merit in this petition and dismiss the same.
There will, however, be no order as to costs.
Y. Lal Petition dismissed.
| IN-Abs | In response to the charter of demands concerning the revision of pay scales, submitted by the officers of the Respondent Bank, called "NABARD Officers ' Association", the bank on 9.10.85 revised the pay scales of all its officers as per settlement with the Association and gave the said revision retrospective operation w.e.f.
1st February 1984, following the same date as was done in the Reserve Bank of India.
In order to fix the salaries of the employees, who were in employment of the Bank of 1 2 1984, the Respondent Bank prepared a refixation chart which was duly approved by the NABARD Officers ' Association.
The chart was made ap plicable to all the officers who were in service of the Bank on 1.2.1984.
The chart was a device to fit the salaries of the concerned officers in the new revised pay scales.
Thus it contained fitment increments for the employees in service prior to 1.2.84 to avoid reduction in emoluments and anamo lies which would otherwise have resulted.
These increments were to merge in the new scales in the course of time as they were not designed to grant higher emoluments to the old employees for all time to come but to avoid anamolies re sulting from refixation of salaries into new scales.
The Petitioners challenged the fitment increments granted to old employees.
It was their case that these increments gave undue benefit to the old employees as against them, and since they occupied the same posts they were also entitled to the same fitment increments.
They also invoked the theory the 'Equal pay for Equal work ' by alleging discrimination between them and the old employees.
It may be mentioned that the Association had 2284 members and except the present petitioners no body had made a grievance against the refixa tion chart.
Dismissing the Petition, this Court, 502 HELD: The revision of pay is always effected with a particular date prospectively or retrospectively.
Whatever the date from which it is effected, it necessarily involves fitment of the salaries of the existing employees in the new scales.
A retrospective operation of the new scales there fore involves, for the same purpose, a classification of employees into two categories viz., those who were in serv ice prior to the retrospective date, and those who entered the service thereafter.
If the benefit of the revised pay scales is to be conferred equitably on the old and the new employees, the fitment of salaries is in evitable.
To avoid it is to deny the equal benefit of the revised scales to the employees in service prior to the date from which the new sales came into effect.[506B C].
The fitment/adjustment in the new scales further, has to be done by revising the salaries upward.
This sometimes necessarily involves fitment in a higher stage in the pay scale than what the employee would be entitled to by a strict application of the stage to stage adjustment.
Some times the additional benefit is treated as personal pay till it gets merged in the next higher increment.
This is a known practice of equitable adjustment of the old pay scales to the new pay scales.
There is not other way of effecting the just and required adjustment.
[506D E] The adjustment increments granted to the old employees on such occasions automatically achieve the dual purpose of rewarding them for their past service and of adjusting their salaries in the new scale.
The adjustment, fitment incre ments are therefore not discriminatory but eminently just and valid.
[512F] K.N. Ananda & Ors.
vs The Karnataka State Financial Corporation, Bangalore & Anr., [1985] Labour & Industrial Cases Vol.
18 p. 1079; P. Savita S/o Shri P.L. Savita vs Union of India, Ministry of Defence (Deptt. of Defence Production) New Delhi & Ors., ; ; D.S. Nakara & Ors vs Union of India, ; ; State Government Pensioners Association & Ors.
vs State of Andhra Pradesh, [1986] 3 SCC 501; Kanpur Suraksha Karamchari Union vs Union of India, ; Reserve Bank of India & Ors.
vs C.N. Sahasaranaman & Ors., ; ; Tarsem Lal Gautam & Anr.
vs State Bank of Patiala & Ors., AIR 1989 SC 30; C.R. Seshan & Anr.
vs State of Maharashtra & Ors.
, AIR 1989 SC 1287, referred to.
|
ivil Appeal No. 3948 of 1987.
From the Judgment and Order dated 30.9.1987 of the Karnataka Administrative Tribunal in Application No. 1716 of 1987.
WITH Civil Writ Petition No. 163 1 of 1987.
(Under Article 32 of the Constitution of India).
388 B.R.L. Iyengar, R.B. Mehrotra, (N.P.) and E.C. Vidyasa gar for the Appellants.
P.R. Ramaseesh and A.K. Gupta for the Respondents.
Anil Dev Singh, R.B. Masodkar and K.L. Taneja for the Intervener.
The Judgment of the Court was delivered by SINGH, J.
This appeal is directed against the judgment and order of the Karnataka Administrative Tribunal, Banga lore dated September 30, 1987 quashing Karnataka Public Service Commission 's Notification dated 28.9.1983 inviting applications for recruitment of Motor Vehicle Inspectors and the select list prepared by it for appointment to the post of Motor Vehicle Inspectors and further directing the Public Service Commission to invite fresh applications in accord ance with the amended Rules.
Some of those candidates whose names were included in the select list prepared by the Public Service Commission for appointment to the post of Motor Vehicle Inspectors have filed a writ petition under Article 32 of the Constitution of India for the issuance of directions to the State Government of Karnataka for making appointments to the post of Motor Vehicle Inspectors from the select list prepared by the Commission.
Since the ques tions involved in the appeal by special leave filed against the order of the State .Tribunal and the writ petition are common, we consider it proper to dispose of the same by a common judgment.
The dispute involved in the present cases relates to the selection and appointment of Motor Vehicle Inspectors.
Recruitment to the said post is regulated by the Karnataka General Service (Motor Vehicles Branch) (Recruitment) Rules, 1962 (hereinafter referred to as 'the Rules ') framed under Article 309 of the Constitution.
These Rules provide for direct recruitment to the post of Motor Vehicle Inspectors and it further lays down the minimum qualification requiring a candidate to be holder of Diploma in Automobile Engineer ing or Mechanical Engineering.
In 1978 the Karnataka Public Service Commission held selections and about 200 posts of Motor Vehicle Inspectors were filled up from amongst the candidates holding Diploma in Mechanical Engineering and in Automobile Engineering.
On September 28, 1983 the Public Service Commission issued an advertisement (published in the Karnataka Gazette on October 6, 1983) inviting applications for 56 posts of Motor Vehicle Inspectors which was later on increased to 102 389 posts.
The advertisement specifically stated that the selec tion shall be made in accordance with the Recruitment Rules 1976 and it further stated that a candidate for selection must be holder of Diploma in Automobile Engineering or Mechanical Engineering.
The appellants/ petitioners (in writ petition) who were holding Diploma in Mechanical Engineering alongwith others applied for selection to the post of Motor Vehicle Inspectors.
The Commission after scrutiny of the application forms issued letters for interview to the suit able candidates and the Commission commenced the holding of interviews in August, 1984.
It appears that the Commission refused to interview some candidates who were competing for selection against the reserved seats for 'local candidates ' on the ground that they were not entitled to be treated as 'local candidates ' as they had not actually worked as 'local candidates ' in the post of Motor Vehicle Inspectors and further they had secured low percentage of marks, they were further not entitled to be interviewed against the seats earmarked for general pool as the marks secured by them were less than the percentage of marks obtained by the last candidate called for interview.
The candidates claiming reserved seats as 'local candidates ' filed a number of petitions under Article 226 of the Constitution before the High Court of Karnataka and obtained stay orders as a result of which the selection could not be completed.
Later interim orders were modified by the High Court and the Commission was permitted to proceed with the selection reserving seats for the petitioners.
The High Court further modified its order at a later stage permitting the Commission to make selection and appointment with a condition that the appoint ments so made will be subject to the decision of the writ petitions.
Thereafter the Commission resumed interviews again and it completed the same by 2nd June 1987 and de clared the result of the selection on 22.6. 1987 which was published in the Karnataka Gazette dated 23rd July, 1987.
The selected candidates were given intimation of their selection and the State Government took steps for imparting them three months ' training before appointing them as Motor Vehicle Inspectors.
Meanwhile, the State Government of Karnataka amended the Recruitment Rules by a Notification dated May 4, 1987 pub lished in the Gazette on 14.5.
1987 omitting the qualifica tion of Diploma in Mechamcal Engineering for the post of Motor Vehicle Inspectors.
Consequent to the amendment of Rules the holders of Diploma, of Automobile Engineering became exclusively eligible for appointment to the post of Motor Vehicle Inspectors and the holders of Diploma in Mechanical Engineering ceased to be eligible for selection and appointment to the said post.
Some of those candidates who were 390 unsuccessful at the selection held by the Commission pre ferred applications before the Karnataka Administrative Tribunal at Bangalore for quashing the select list prepared by the Commission and also for quashing the Notification dated 28.9.1983 inviting applications for appointment to the post of Motor Vehicle Inspectors on the ground that after the amendment of Rules in 1987, no person holding the Diplo ma in Mechanical Engineering was qualified for appointment, therefore fresh selection should be made in accordance with the amended Rules.
The State Government of Karnataka as well as the appellants both contested the applications and as serted that the 1987 amendment to the Recruitment Rules were not retrospective instead the amendments were prospective and the amended Rules did not affect the selections which were in the process of finalisation by the Commission.
The Tribunal held that after the amendment of the Recruitment Rules in May, 1987 the Commission could not make selection or determine the result on the basis of the Rules which existed prior to 14th May 1987 and as such the selection of candidates holding Diploma in Mechanical Engineering was illegal as holders of Diploma in Mechanical Engineering ceased to be eligible for appointment to the post of Motor Vehicle Inspectors with effect from the date of publication of the amending Rules.
On these findings the Tribunal al lowed the applications and quashed the advertisement issued under the Notification dated 28.9.1983 as well as the select list published by the Public Service Commission and it further issued directions to the Public Service Commission to invite fresh applications and to make selections in accordance with the amended Rules.
Aggrieved, the appellants who had been selected by the Commission for appointment to the posts of Motor Vehicle Inspectors have preferred appeal before this Court.
Some of the selected candidates have directly approached this Court by means of writ petition under Article 32 of the Constitution for issue of mandamus directing the State Government to appoint the selected candidates.
There is no dispute that under the Recruitment Rules as well as under the advertisement dated 6.10.1983 issued by the Public Service Commission, holders of Diploma in Mechan ical Engineering were eligible for appointment to the post of Motor Vehicle Inspectors alongwith holders of Diploma in Automobile Engineering.
On receipt of the applications from the candidates the Commission commenced the process of selection as it scrutinised the applications and issued letters for interview to the respective candidates.
In fact the Commission commenced the interviews in August 1984 and it had almost completed the process of selection but the selection could not be com 391 pieted on account of interim orders issued by the High Court at the instance of candidates seeking reservation for local candidates.
The Commission completed the interviews of all the candidates and it finalised the list of selected candi dates by 2nd June 1987 and the result was published in the State Gazette on 23rd July 1987.
In addition to that the selected candidates were intimated by the Commission by separate letters.
In view of these facts the sole question for consideration is as to whether the amendment made in the Rules on 14th May 1987 rendered the selection, illegal.
Admittedly the amending Rule does not contain any provision enforcing the amended Rule with retrospective effect.
In the absence of any express provision contained in the amending Rule it must be held to be prospective in nature.
The Rules which are prospective in nature cannot take away or impair the right of candidates holding Diploma in Mechanical Engi neering as on the date of making appointment as well as on the date of scrutiny by the Commission they were qualified for selection and appointment.
In fact the entire selection in the normal course would have been finalised much before the amendment of Rules, but for the interim orders of the High Court.
If there had been no interim orders, the select ed candidates would have been appointed much before the amendment of Rules.
Since the process of selection had commenced and it could not be completed on account of the interim orders of the High Court, the appellants ' right to selection and appointment could not be defeated by subse quent amendment of Rules.
It is well settled rule of construction that every statute or statutory Rule is prospective unless it is ex pressly or by necessary implication made to have retrospec tive effect.
Unless there are words in the statute or in the Rules showing the intention to affect existing rights the Rule must be held to be prospective.
If a Rule is expressed in language which is fairly capable of either interpretation it ought to be construed as prospective only.
In the absence of any express provision or necessary intendment the rule cannot be given retrospective effect except in matter of procedure.
The amending Rule of 1987 does not contain any express provision giving the amendment retrospective effect nor there is anything therein showing the necessary intend ment for enforcing the Rule with retrospective effect.
Since the amending Rule was not retrospective, it could not ad versely affect the right of those candidates who were quali fied for selection and appointment on the date they applied for the post, moreover as the process of selection had already commenced when the amending Rules came into force.
The amended Rule could not affect the existing rights of those candidates who were being considered for selection as they possessed the 392 requisite qualifications prescribed by the Rules before its amendment moreover construction of amending Rules should be made in a reasonable manner to avoid unnecessary hardship to those who have no control over the subject matter.
In A.A. Calton vs Directorof Education & Anr., this Court considered the validity of appointment of Principal by the Director of Education made under Section 16F of the U.P. Intermediate Education Act 1921.
The High Court quashed the selection of Principal on the ground that the appointment had been made by the Selection Committee and not by the Director of Education as required by Section 16F(4) of the Act.
The High Court directed the Director of Education to make selection and appointment.
Pursuant to the direction of the High Court, the Director made appointment to the post of Principal by his order dated March 8, 1977, but before that date, Section 16F(4) of the Act was amended on August 18, 1975 taking away the power of the Director to make appointment under Section 16F(4) of the Act.
In view of the amendment of Section 16F of the Act, validity of the order of the Director of Education dated March 8, 1977 making appointment to the post of Principal was again ques tioned.
The High Court dismissed the writ petition thereupon the unsuccessful party preferred appeal.
This Court held as under: "It is no doubt true that the Act was amended by U.P. Act 26 of 1975 which came into force on August 18, 1975 taking away the power of the Director to make an appointment under Section 16F(4) of the Act in the case of minority institutions.
The amending Act did not, however, provide expressly that the amendment in question would apply to pending proceedings under Section 16F of the Act.
Nor do we find any words in it which by necessary intendment would affect such pending proceed ings.
The process of selection under Section 16F of the Act commencing from the stage of calling for applications for a post up to the date on which the Director becomes entitled to make a selection under Section 16F(4) (as it stood then) is an integrated one.
At every stage in that process certain rights are treated in favour of one or the other of the candidates.
Section 16F of the Act cannot, therefore, be construed as merely a procedural provision.
It is true that the legislature may pass laws with retrospective effect subject to the recognised constitutional limitations.
But it is equally well settled that no retrospec tive effect should be given to any statutory provision so as to impair or take away an existing right, unless 393 the statute either expressly or by necessary implication directs that it should have such retrospective effect.
In the instant case admittedly the proceedings for the selection had commenced in the year 1973 and after the Deputy Director had disapproved the recommen dations made by the Selection Committee twice the Director acquired the jurisdiction to make an appointment from amongst the qualified candidates who had applied for the vacancy in question.
At the instance of the appellant himself in the earlier writ petition filed by him the High Court had directed the Director to exercise that power.
Although the Director in the present case exercised that power subsequent to August 18, 1975 on which date the amendment came into force, it cannot be said that the selection made by him was ille gal since the amending law had no retrospec tive effect.
It did not have any effect on the proceedings which had commenced prior to August 18, 1975.
Such proceedings had to be continued in accordance with the law as it stood at the commencement of the said proceed ings.
We do not, therefore, find any substance in the contention of the learned counsel for the appellant that the law as amended by the U.P. Act 26 of 1975 should have been followed in the present case.
" In view of the above the appellants ' selection and appointment could not be held as illegal as the process of selection had commenced in 1983 which had to be completed in accordance with law as it stood at the commencement of the selection.
The amended Rule could not be applied to invali date the selection made by the Commission.
Strangely the Tribunal did not follow the latest authority of this Court as laid down in Calton 's case, on the ground that the view taken in that case was contrary to the Constitution Bench decision of this Court in State of Andhra Pradesh vs
T. Ramakrishna Rao, We have carefully consid ered the decision but we do not find anything therein con trary to the view taken in Calton 's case.
In Ramakrishna Rao 's case the State Public Service Commission of Andhra Pradesh had invited applications in 1968 for the posts of District Munsifs.
Rule 5 of the Re cruitment Rules empowered the Commission to prepare a list of persons considered for the appointment to the post of District Munsifs after holding such examination as the Government would consider necessary.
On a challenge made by some of the candidates the High Court held that Rule 5 was void as it 394 empowerd the Government to determine whether an examination was necessary or not, and also the pattern of such an exami nation, in contravention of Article 234 of the Constitution.
The High Court further held that the Government orders, pursuant to the said Rule for holding of examination by the Commisssion was also void, having been issued under invalid Rules.
Pursuant to the judgment of the High Court the Gover nor amended Rule 5 after consultation with the High Court and the Commission as enjoined by Article 234 of the Consti tution.
The Commission thereafter issued advertisement inviting fresh applications to hold examination for the purpose of filling vacancies in the post of District Mun sifs, thereupon some of the candidates who had made applica tions in pursuance to the advertisement issued in 1968 challenged the validity of the holding of the fresh examina tion on the ground that since they had applied in response to the advertisement of 1968 they could not be subjected to written examination under the amended Rule as it was pro spective in nature.
They further asserted that the amended Rule prescribing 200 marks for written test and equal number of marks for oral test was contrary to the earlier Rules and since they had acquired right to be considered in accordance with Rule 5 before its amendment, they should not be sub jected to written examination and oral test as required by the amended Rules.
The High Court partly allowed the peti tion and directed the Commission to hold a separate examina tion for those who had applied in 1968 in accordance with the unamended Rules and further to hold a separate examina tion for the subsequent vacancies in accordance with the amended Rule 5.
On appeal by the State Government, a Consti tution Bench of this Court set aside the order of the High Court.
This Court held that since Rule 5 as it stood in 1968 had been declared void the advertisement issued by the Commission inviting applications and all proceedings taken by the Commission including the examination held thereunder was rendered void.
In this context this Court made observa tion that those candidates who had made applications in 1968 had not acquired any fight as their applications had been made under a Rule which had been declared invalid.
The Court further held that in the facts of that case the question whether amended Rule 5 was retrospective or prospective did not arise.
The Court observed as under: "Secondly the respondents had not acquired any right by merely applying for the posts either under that rule or otherwise, to be selected for the posts.
The Commission, therefore, was perfectly justified in treating the earlier applications of the respondents as invalid on the ground 395 that they had been invited under an illegal rule and calling for fresh applications and holding a fresh examination in respect of all the 200 vacancies.
There was thus no question of any breach of Article 16, nor of any viola tion of any right of the respondents as none was acquired by them.
Equally, there was no question of the amended Rule 5, being prospec tive or retrospective as the Commission had to act afresh under the amended Rule, the una mended rule having been struck down and there being therefore no basis on which the applica tions of the respondents made in 1968 could be treated as valid applications.
" The above observations as relied by the Tribunal do not apply to the facts of the instant case as the advertisement issued by the Commission on 28.9.1983 was in accordance with the Recruitment Rules of 1976, validity of those Rules was not in question.
The Rule prescribing qualification was amended after four years of the advertisement, therefore the law laid down in Ramakrishna Rao 's case does not apply.
The Tribunal committed error in ignoring the law laid down in Calton 's case by placing reliance on the observations of this Court in Ramakrishna Rao 's case.
In our view the prin ciples laid down in Calton 's case are fully applicable to the instant case.
In Y.Y. Rangaiah vs J. Sreenivasa Rao, the question was whether appointment could be made out of the list of approved candidates prepared by the appointing authority against the vacancies which had occurred prior to the amendment of the rules.
The Andhra Pradesh Registration and Subordinate Service Rules made provision for the prepa ration of a list of approved candidates for appointment and promotion in the month of September every year.
In 1976 the list of approved candidates was not prepared meanwhile in 1977 the original rules were amended providing for promotion or transfer to the category of LDCs for appointment as Sub Registrars Grade II from amongst UDCs employed in the Regis tration and Stamp Department.
A list of approved candidates for promotion was made in accordance with the amended Rules and appointments were made as a result of which some of the juniors in the category of LDCs were promoted as Sub Regis trars Grade II.
The Andhra Pradesh Tribunal set aside the appointments and directed the State Government to draw a fresh panel for the year 1976 77 in respect of vacancies arising during that year in accordance with the rules as they existed at that stage and to make appointments in the vacancies pertaining to that period on the basis of the panel so drawn.
On appeal this Court held 396 that the vacancies which occurred prior to the amended Rules would be governed by the old Rules and not by the amended Rules.
The decision does not lay down anything which may be contrary to the view taken in Calton 's case.
We would now consider the view taken by this Court in l.
J. Divakar vs Government of Andhra Pradesh, 1 as the Tribunal has placed strong reliance on the observations made in that decision in setting aside the selection made by the Public Service Commission.
It is necessary to ascertain the facts involved in Divakar 's case.
The Andhra Pradesh Public Service Commission invited appli cations for filling posts of Junior Engineers.
In response to the advertisement several candidates applied for the said post and appeared at the viva voce test.
While the Commis sion was in process of finalising the select list, the Government of Andhra Pradesh issued a Government Order under the proviso to Article 320(3) of the Constitution excluding the posts of Junior Engineers from the purview of the Public Service CommissiOn.
The Government regularised the services of all those who were appointed by direct recruitment to the post of ad hoc Junior Engineers and were continuing in service on August 9, 1979 without subjecting them to any test written or oral.
The candidates who had applied in response to the advertisement issued by the Commission challenged validity of the Government Order excluding the post of Junior Engineers from the purview of the Commission and also the validity of the decision by the Government to regularise the services of temporary employees.
Before this Court the Government 's power of framing regulations exclud ing any post from the purview of the Commission under the proviso to Article 320(3) was conceded.
It was, however, urged that since the advertisement had been issued by the Commission inviting applications for the posts of Junior Engineer and as the Commission was in process of selecting candidates the power under the proviso to Clause (3) of Article 320 of the Constitu tion could not be exercised.
This Court rejected the contention wit! the following obser vations: "The only contention urged was that at the time when the advertisement was issued the post of Junior Engineer was within the.
pur view of the Commission and even if at a later date the post was withdrawn from the purview of the Commission it could not have any retro spective effect.
There is no merit in this contention and we are broadly in agreement with the view of the Tribunal that inviting the applications for a post does not by itself create any right to 397 the post in the candidate who in response to the advertisement makes an application.
He only offers himself to be considered for the post.
His application only makes him eligible for being considered for the post.
It does not create any right in the candidate to the post.
" After making the aforesaid observations the Court further held that the relevant service Rules conferred power on the Government to fill emergently the vacancies to the post borne in the cadre of service otherwise than in accordance with the rules and therefore the Government had power to regularise temporary appointments made without the consulta tion of the Public Service Commission.
Even after upholding the Government order, the Court directed the Commission to consider the case of all those candidates who had applied for the post of Junior Engineers in response to the adver tisement issued by the Commission and to finalise the select list on the basis of viva voce test and to forward the same to the Government.
The Court further directed the Government to make appointments from the select list before any outsid er was appointed to the post of Junior Engineers.
Thus, the observations made by this Court as quoted earlier were made in the special facts and circumstances of the case, which do not apply to the facts of the instant case.
In Divakar 's case since the jurisdiction of the Public Service Commission had been denuded by the Government in exercise of its con stitutional power the Commission had no jurisdiction to conduct selection or prepare select list.
In this background the Court made observations that a candidate merely by making applications does not acquire any right to the post.
It is true that a candidate does not get any right to the post by merely making an application for the same, but a right is created in his favour for being considered for the post in accordance with the terms and conditions of the advertisement and the existing recruitment rules.
If a candidate applies for a post in response to advertisement issued by Public Service Commission in accordance with recruitment Rules he acquires right to be considered for selection in accordance with the then existing Rules.
This right cannot be affected by amendment of any Rule unless the amending Rule is retrospective in nature.
In the instant case the Commission had acted in accordance with the then existing rules and there is no dispute that the appellants were eligible for appointment, their selection was not in violation of the recruitment Rules.
The Tribunal in our opinion was in error in setting aside the select list pre pared by the Commission.
In view of the above discussions, we allow the appeal and set 398 aside the order of the Tribunal dated September 30, 1987.
We further direct the State Government to make appointments to the posts of Motor Vehicle Inspectors on the basis of the select list prepared and finalised by the Commission.
The writ petition is also disposed of accordingly.
There will be no order as to costs.
P.S.S. Appeal & Petition allowed.
| IN-Abs | The Karnataka General Service (Motor Vehicles Branch) Recruitment Rules, 1962 (as amended in 1976) laid down the minimum qualification of Diploma in Automobile Engineering or Mechanical Engineering for direct recruitment to the post of Motor Vehicle Inspectors.
The Karnataka Public Service Commission issued an advertisement on September 28, 1983 inviting applications for the said post stating specifically that the selection shall be made in accordance with the Recruitment Rules, 1976 and that the candidate must be holder of Diploma in Automobile Engineering or Mechanical Engineering.
After scrutiny of the applications the Commis sion issued letters for interview to the suitable candidates and commenced the holding of interviews in August, 1984.
The process of selection, however, could be completed only on June 2, 1987 on account of interim orders issued by the High Court at the instance of candidates seeking reservation for local candidates.
The result was declared on June 22, 1987 and published in the Karnataka Gazette dated 23rd July, 1987.
Thereafter, the selected candidates were given intima tion of their selection and the State Government took steps for imparting them three months training before appointing them as Motor Vehicle Inspectors.
In the meanwhile, the State Government amended the Recruitment Rules by a notification dated May 4, 1987 omit ting qualification of Diploma in Mechanical Engineering for the said post.
Thereupon some of the candidates who were unsuccessful at the selection preferred applications before the Karnataka Administrative Tribunal for quashing the select list and the notification dated September 28, 1983 inviting applications on the ground that after the amendment of Rules in 1987 no person holding Diploma in Mechanical Engineering was qualified for 386 appointment to the said post.
The State Government as well as the appellants both contested the applications and as serted that the 1987 amendment to the Recruitment Rules was not retrospective and that the amended rules did not affect the selections which were in the process of finalisation by the Commission.
Allowing the applications, the Tribunal held that after the amendment of the Recruitment Rules in May 1987 the Commission could not make selection or determine the result on the basis of the Rules which existed prior to May 14, 1987 and as such the selection of candidates holding Diploma in Mechanical Engineering was illegal as they had ceased to be eligible for appointment to the post of Motor Vehicle Inspectors with effect from the date of publication of the amending Rules.
Consequently it quashed the advertisement issued under the Notification dated September 28, 1983 as well as the select list published by the Commission and directed the Commission to invite fresh applications and to make selections in accordance with the amended Rules.
Allowing the appeal and the writ petition preferred by the selected candidates, the Court, HELD: 1.
The Tribunal was in error in setting aside the select list preferred by the Commission.
1397H] 2.1 If a candidate applies for a post in response to an advertisement issued by a Public Service Commission in accordance with the recruitment rules, he acquires a right to be considered for selection in accordance with the then existing rules.
This right cannot be affected by amendment of any rule unless the amending rule is retrospective in nature.
1397H] In the instant case, the advertisement issued by the Commission on September 28, 1983 was in accordance with the Recruitment Rules of 1976 under which the appellants were eligible for appointment.
The process of selection which had commenced on receipt of the applications, however could not be completed on account of the interim orders issued by the High Court.
The select list was finalised by June 2, 1987 and the result published in the Karnataka Gazette of July 23, 1987.
The selected candidates were also intimated by the Commission by separate letters.
If there had been no interim orders the appellants would have been appointed much before the amendment of Rules on May 4, 1987.
[395C; 390G; 391D] 387 2.2 Construction of amending Rules should be made in a reasonable manner to avoid unnecessary hardship to those who had no control over the subject matter.
Every statute or statutory Rule is prospective unless it is expressly or by necessary implication has retrospective effect.
Unless there are words in the statute or in the Rules showing the inten tion to affect existing rights the Rules must be held to be prospective.
If a Rule is expressed in language which is fairly capable of either interpretation it ought to be construed as prospective only.
In the absence of any express provision or necessary intendment the rule cannot be given retrospective effect except in matter of procedure.
[392A; 391E F] In the instant case, the amending Rule of 1987 does not contain any express provision giving the amendment retro spective effect nor there is anything therein showing the necessary intendment in enforcing the Rule with retrospec tive effect.
The amended Rule, therefore, could not he applied to invalidate the selection made by the Commission.
[391F G; 393E F] A.A. Calton vs Director of Education & Anr., , applied.
State of Andhra Pradesh vs T. Ramakrishna Rao, , referred to.
Y.Y. Rangaiah vs J. Sreenivasa Rao, and l.
J. Divakar vs Government of Andhra Pradesh, , distinguished.
The order of the Tribunal dated September 13, 1987 is set aside.
The State Government is directed to make appoint ment to the posts of Motor Vehicle Inspectors on the basis of the select list prepared and finalised by the Commission.
[398A]
|
vil Appeal No. 3 160 of 1983.
From the Judgment and Order dated 17.11.1981 of the Madras High Court in Second Appeals Nos. 650 and 874 of 1981.
V.M. Tarkunde, Ms. section Khanna, Jagmohan Khanna and A.S. Khan for the Appellants.
521 T.S. Krishnamurthy, K.R. Choudhary, S.M. Amiad Nainar and section Thananjayan for the Respondents.
The Judgment of the Court was delivered by KASLIWAL, J.
This Civil Appeal by the plaintiffs is directed against the Judgment of High Court of Judicature at Madras in Second Appeal Nos. 650 & 894 dated 17th November, 1981.
Mohd. Zainulabdeen and Yasin Bi filed a suit for decla ration that they were entitled to be in enjoyment and pos session of Saint Syed Moosa Shah Khadiri Dargah in Madras for a period of 27 days in all in the months of February, March, June, July, October & November and to restrain the defendants from interfering with the plaintiffs aforesaid right and management in the Dargah.
The case of the plain tiffs as set up in the plaint was that the Dargah in ques tion was being managed by the members of the family of one Sayed Mohideen Sahib.
Sayed Mohideen had two sons Sayed Ismail Sahib and Sayed Gulam Dastagir Sahib.
As per Judgment in C.S. 116 of 1909 the right of management was divided between the two sons each taking six months for himself.
According to this arrangement the branch of Sayed Ismail Sahib used to remain in management for the months of Janu ary, April, May, August, September and December and the branch of Gulam Dastagir Sahib for the other six months, namely, February, March, June, July October and November.
The present suit relates to the controversy between the decendants of the branch of Gulam Dastagir Sahib.
According to the plaintiffs after the death of Sayed Gulam Dastagir the right and management of the Dargah according to Muslim Law devolved on his two sons and one daughter, namely, Sayed Gaffar Sahib, Sayed Mohideen and Fathima Bee in proportion of 2:2:1 respectively.
The plaintiffs alleged that thus Fathima Bee had 1/5 share in 6 months i.e. 36 days.
Fathima Bee left surviving one son and two daughters.
The plaintiffs who are one son and one daughter of Fathima Bee as such are entitled to 3/4 share i.e. 27 days, as another daughter Zahurunnissa was not interested in claiming her right has been impleaded as defendant No. 2.
After the death of Fathi ma Bee, the plaintiffs being her son and daughter associated themselves in the management of the Dargah with their mater nal uncles and the sons of the maternal uncles and were getting share of the income of the Dargah.
According to the plaintiffs this arrangement was going on for several years eversince the death of Fathima Bee in 1957.
However on account of some dissensions, the first defendant Sayed Mohideen (since deceased) and another defendant being the son of another 522 deceased maternal uncle were preventing the plaintiffs from exercising their right and enjoying the income of the Dar gah.
The plaintiffs served a notice on 23.3.1972 calling upon the defendants to recognize the right of management of the plaintiffs in the Dargah.
The defendants sent a reply on 22.4.1972 stating that the plaintiffs claiming through female were not entitled to any right in the management or share in the offerings in the Dargah and even if they were entitled to any right or claim the same was barred by limi tation.
Sayed Mohideen (since deceased) defendant No. 1 in the suit filed a written statement and took the plea that his father Sayed Gulam Dastagir was a Mujawar and was receiving the offerings by right of inheritence.
Sayed Ismail being cousin brother of Sayed Gulam Dastagir as such he was also a Mujawar along with Sayed Gulam Dastagir Sahib.
Fathima Bee the daughter of Sayed Gulam Dastagir had no right of Mujawar as the right was given only to the male members and not to the females.
Fathima Bee as such was not entitled to claim any right of Mujawar.
The widows of Sayed Gulam Dastagir also could not claim any right of Mujawar thus neither Wazir Bee widow of Sayed Ismail nor Mohideen Bi the widow of Sayed Gulam Dastagir could take upon the management of the Dargah as they were female members.
According to the defendants no female members got the right of direct management of the Dargah and the Judgment in Suit No. 116 of 1909 also nega tived the right of any management by Wazir Bee and Mohideen Bi.
It was admitted that though Fathima Bee was alive but she was not a party to the aforesaid suit.
It was however pleaded that claim of Fathima Bee was not recognized in the above suit.
It was further alleged in the written statement that Fathima Bee never participated in the management of the Dargah.
According to Muslim Law females were excluded from performing the duties of the offices of Peshimam Khatib and Mujawar.
It was further alleged that Fathima Bee never enjoyed the right to the Hundial Collection of the Dargah and even if she had got any right, the same was lost as she did not claim any right till her death.
Fathima Bee never asserted any right during her life time nor received any share in the offerings.
Her right, if any, was extinguished within 12 years after the death of her father Sayed Gulam Dastagir.
It was further alleged that as Fathima Bee had no right or claim of share in the Mujawarship and was also ousted from the enjoyment of any share in the Hundial Col lections, the plaintiffs who were claiming through Fathima Bee were also not entitled to any relief.
Defendants Nos. 2 to 6 adopted the written statement filed by the first de fendant.
So far as the defendants Nos. 7, 8 & 10 were con cerned, they filed a written statement taking the plea that the 523 family members were recognized as sharers in the management of the Dargah and they were also sharing the income.
It was further alleged that even the answering defendants were paying such share to their sister Ahamadunnissa (lOth de fendant) in the Hundial collection of the Dargah.
The 7th defendant (Anser Bi) filed a suit No. 75 18 of 1971 in the Court of 4th Assistant City Civil Court and her right to manage was recognised for 9 days in a year.
Hence it was false to state that the females were not entitled to claim management.
It may be mentioned at this stage that defendant No. 1 Sayed Mohideen died during the pendency of the suit and defendants Nos.
12 to 19 were added as his legal repre sentatives.
The Trial Court decreed the suit and in the operative part held that the plaintiffs were entitled to manage the Dargah for 27 days in February (viz. from February 1 to February 27).
The defendants Nos. 3 to 6 and 12 to 19 filed appeals aggrieved against the Judgment of the Trial Court while 7th defendant in the suit filed cross objections in respect of a particular portion of the decree.
Learned City Civil Court, Madras affirmed the Judgment and decree of the Trial Court except some modifications in the relief as mentioned below. "The Plaintiffs are entitled to the reliefs of declaration that they are entitled to be in management of the Suit Dargah for a period of 27 days in a year during the months of Febru ary March, June July and October November each year and that the said 27 days shall be Febru ary 1 to 6, June 1 to 6 and October 1 to 6 for the first plaintiff and 9 days from July 1 to 9 for the second plaintiff and that the plain tiffs are entitled to the relief of possession of the said right to be in management of the Dargah and to be in enjoyment of the Hundial income during the said period.
The cross objections of the 7th defendant is dismissed.
" Different sets of defendants filed second appeals Nos. 650 & 894 of 1981, and both these second appeals were dis posed of by the High Court by order dated 17th November, 1981.
The High Court allowed the second appeals and while setting aside the Judgments and decrees of the Courts below dismissed the suit filed by the plaintiffs.
The High Court took the view that the Courts below proceeded upon an erro neous assumption as if it was the duty of the defendants to prove by what hostile assertions of title and possession ouster has been established.
524 In the view of the learned Judge by allowing inaction, more so when it was coupled with sharing of profits in not claim ing the profits at any point of time, there would arise a clear presumption of ouster.
The High court laid great emphasis on the circumstances that Fathima Bee till her death in 1957 did not care to make a demand of her right or share at any point of time.
It was further observed that after the decree in Civil Suit No. 116 of 1909, it was only male heirs who were exercising their rights.
The High Court in this regard further referred to the statement of P.W. 1 himself and drew the conclusion that after the death of his mother nobody was employed as an agent.
Only at the time when he consulted the Vakil he came to know that his mother had 36 days share in the Mujawarship.
Before that he did not do anything concerning the share of the Hundial collections.
The demand was from 1960 to 1972.
But nothing was paid.
He knew that he had rights even before.
The High Court on the basis of the above evidence of P.W. 1 observed that it was clear that the mother of P.W. 1 was aware of the filing of Civil Suit No. 116 of 1909.
Irrespective of that, in so far as there was absolutely no evidence whatsoever to show at any point of time till her death in 1957 that Fathima Bee ever made a demand or asked for a share of the Hundial collections as such it should be held that her rights had become barred.
The High Court in these circumstances held that if really the rights of Fathima Bee had become barred by her not exercising the rights, the plaintiffs themselves can have no independent right to claim.
It may be mentioned at the outset that there is no controversy now as regards the period of 27 days falling to the share of the plaintiffs and on the question that females are also entitled in the right and management of Dargah according to Muslim Law.
Thus the only controversy now left to be determined is whether the High Court was right in holding that the rights of Fathima Bee had become barred by limitation by ouster and as such the plaintiffs who were also claiming through Fathima Bee had lost their right by ouster? It would first be necessary to make it clear as to what is the impact of the decree dated 11.8.1910 passed in Civil Suit No. 116 of 1909, so far as the present litigation is concerned.
A perusal of the Judgment in the above case goes to show that Sayed Moosa Sahib and Wazir Bi filed a suit against Sayed Gaffar Sahib, Sayed Mohideen Sahib and Mohi deen Bi for a declaration that the plaintiffs and the de fendants were entitled to perform the duties of Mujawar of the Dargah in turns and they were entitled to collect and receive the offerings, gifts and other emoluments of the Dargah as well as the collec 525 tion of the hundi box in the Dargah and appropriate the same in two equal moities and to settle a scheme for managing the ' said Dargah so as to equalize the amount of income and emoluments to be collected and appropriated by both the parties during their respective turns.
In the said case a decree was passed that the 1st plaintiff and the 1st & 2nd Defendants were entitled to perform the duties of Mujawar of the Dargah in question in turns.
A scheme was also drawn for collecting and receiving the offerings, gifts and other emoluments of the said Dargah as well as the collections of the hundi box and apportion the same in two equal moities and that Sayed Moosa Sahib, the 1st plaintiff was entitled to one half and Sayed Gaffer Sahib and Sayed Mohideen, the 1st and 2nd defendants were entitled to the other half of the collections, offerings, gifts and other emoluments.
A great capital has been raised on the basis of the above decree by the learned counsel for the defendant respondents that no share was given to the female members in the above decree, namely, to Wazir Bi and Mohideen Bi and from this it was clear that the females were totally excluded from the right or claim of any share in the management or offerings in the Dargah.
We do not find much substance in the above contention.
In the above judgment the controversy whether females were entitled to any right or management of the offerings in the Dargah was neither raised for decided.
Fathima Bee though alive but was not a party in the aforesaid litigation and any judgment given in that suit cannot be held as res judi cata or binding on Fathima Bee or the present plaintiffs.
Mr. Krishnamurthy Aiyer, learned counsel for the defen dantrespondents contended that he was not arguing that the aforesaid judgment and decree were res judicata or binding on Fathima Bee, but his submission was that it should be taken as a circumstances in proving ouster of Fathima Bee from the fight or management of the Dargah or any claim in the offerings.
In our view as already mentioned such judg ment cannot be considered as an ouster of Fathima Bee cou pled with other circumstances which clearly show that there was no ouster in the facts of the present case.
It is an admitted case of the parties that Sayed Gulam Dastagir Sahib had a fight of management in the Dargah in question for six months (180 days) in the months of Febru ary March, June July and October November.
Gulam Dastagir had one daughter Fathima Bee and two sons and as such Fathi ma Bee got 1/5th share and which came to 36 days out of aforesaid 180 days.
Thus Fathima Bee was a co sharer in the right of management and possession of the Dargah as well as the 526 offerings and hundial collection.
Now, before considering the question of ouster of Fathima Bee, it would be important to consider the pleadings of the defendants in this regard.
Learned counsel for the defendant respondents in this regard have drawn our attention to paragraph 19 of the written statement filed by 1st defendant Sayed Mohideen.
Para 19 of the written statement reads as under: "Neither Fathima Bee till her death nor the plaintiffs from her death till now had posses sion or management of the Dargah, None of them had at any time received a share in the hundi al collection or offerings.
Further there has been expressed denial of Fathima Bee 's title at the time of the judgment of the High Court in 1909, if she did not have a title according to Muslim Personal Law that title was denied, and she was expressly ousted out from the enjoyment of any share in the hundial collec tions.
From her death till now the plaintiffs have not received any share in the hundial collections".
A perusal of the above pleading show that the defendants are claiming ouster on the basis of expressed denial of Fathima Bee 's title at the time of the judgment of the High Court in 1909 and another ground taken is that neither Fathima Bee nor the plaintiffs had at any time received a share in the hundial collection or offerings nor had posses sion or management of the Dargah.
The defendants are totally mistaken in taking the ground that there was any expressed denial of Fathima Bee 's title in that litigation.
At the risk of repetition it may be stated that neither Fathima Bee was a party in that suit nor any such question was raised or decided that females were not entitled to any share in the management or offerings of Dargah.
Thus there was no ques tion of any expressed denial of Fathima Bee 's title in that litigation.
It appears that the defendants were carrying a mistaken impression all along that females under the Muslim Law were not entitled to any right of management or posses sion in a Dargah and on that account they were pleading an ouster of Fathima Bee as well as the plaintiffs.
Such plead ing cannot be considered as an ouster in fact of a co sharer from a joint right.
It is well settled that where one co heir pleads adverse possession against another co heir then it is not enough to show that one out of them is in sole possession and enjoyment of the profits of the properties.
The possession of one co heir is considered in law, as possession of all the co heirs.
The co heir in possession cannot render his possession adverse to the other co heir not in possession merely by any secret hostile animus on his own part in derogation of 527 the other co heir 's title.
Thus it is a settled rule of law as between co heirs there must be evidence of open assertion of hostile title, coupled with exclusive possession and enjoyment by one of them to the knowledge of the other so as to construe ouster.
Thus in order to make out a case of ouster against Fathima Bee or the plaintiffs, it was neces sary for the defendants to plead that they had asserted hostile title coupled with exclusive possession and enjoy ment to the knowledge of Fathima Bee.
The written statement filed by the defendants in the present case is totally lacking in the above particulars and thus apart from the want of evidence, there is no proper pleading of ouster in the present case.
Thus it is clear that neither in the written statement nor in reply to the notice of the plain tiffs any stand was taken that the right of Fathima Bee or plaintiffs was specifically denied on any particular occa sion so as to put them on notice that from that date the possession of the defendants would be adverse to the inter est or rights of the plaintiffs of Fathima Bee.
We are supported in the above view by a decision of this Court in P. Lakshmi vs L. Lakskmi Reddy, ; It is further proved from the evidence led by the plain tiffs that Fathima Bee was being looked after by her broth ers and she was in fact being paid portions of the income from the Dargah and on that account she was satisfied in allowing the brothers to enjoy the office of Mujawar on her behalf also.
The 13th defendant who has been examined as D.W. 1 has admitted that Fathima Bee was living and was being looked after by Sayed Gaffar and who had arranged for and met the expenses of the marriage of the two plaintiffs.
This clearly goes to show that relations between Fathima Bee and her brothers were cordial and as such there was no question of any knowledge to Fathima Bee that she was being ousted from her right or share in the Dargah.
No evidence has been led by the defendants to show that such right was openly denied by the brothers which would be considered as an ouster.
The First Appellate Court had considered all these aspects in detail after discussing the entire evidence placed on record and had clearly recorded the finding that there was no proof of ouster in the present case.
The High Court in our view committed a serious error in reversing the above finding and in taking a wrong approach in holding ouster on the basis of judgment and decree given in Suit No. 116 of 1909 and on the ground that Fathima Bee had not made a demand or asked for her share of the hundial collections at any point of time till her death in 1957.
Mr. Krishnamurthy Aiyer, learned counsel for defendants Nos. 528 12 to 19 submitted that according to decree given by First Appellate Court the period of 27 days from February 1 6, June 1 6 and October 1 6 for First plaintiff and 9 days from July 1 9, for the second plaintiff acts onerous to his defendants 12 to 19 and it must be fixed in a manner which may be equitable to all the parties.
The appellants and their counsel Shri Tarkunde on the other hand submitted that their share of 27 days may be fixed jointly and so far as their own proportion of 18 and 9 days is concerned they will make their arrangement inter se.
After hearing learned coun sel for the parties and considering the entire facts and circumstances of the case, we uphold the decree passed by the First Appellate Court with the following modification in the arrangement of days in the management of the Dargah in question.
The plaintiffs would be entitled to such management from 17th.
to 30th June and 1st to 13th July and in the next year from 18th to 30th June and 1st to 14th July.
This arrange ment would continue by rotation of each year.
To be more precise the plaintiffs would be entitled to have the manage ment of the suit Dargah from 17th to 30th June and 1st to 13th July in the year 1990 and 18th to 30th June and 1st to 14th July in the year 1991 and they shall continue to follow such cycle by rotation every year.
For the reasons stated above, we set aside the judgment and decree of the High Court dated 17th Nov. 1987 and re store that of the Trial Court as affirmed by the First Appellate Court with modifications as stated earlier.
Parties to bear their own costs.
| IN-Abs | Mohd. Zainulabdeen and Yasin By filed a suit for decla ration that they were entitled to be in enjoyment and pos session of Saint Syeed Moosa Shah Khadiri Dargah in Madras for 27 days and to restrain the defendants from interfering with tile plaintiffs ' aforesaid right and management in the Dargah.
In reply the defendant No. 1 alleged that in the manage ment of the Dargah, female members had no right nor could they claim the right of Mujawar.
It was also alleged that Fathima Bee through whom the Plaintiffs were claiming never enjoyed the right to Hundial collection of the Dargah and share in the Mujawarship and even if she had any right the same was lost as she did not claim any right till her death and therefore the Plaintiffs were also not entitled to any relief.
Defendants 7, 8 and 10 however in their written statements admitted family members to be sharer in the income and management of the Dargah and they also admitted that they were paying such share to their sister Ahamadun nissa (10th defendant) in the Hundial collections and that the City Civil Court in suit No. 7518 of 1971 had also recognised the right of 7th defendant Anser Bi to management of the Dargah for 9 days in a year.
Thus it was false to contend that the females were not entitled to claim manage ment.
The trial court decreed the suit of the Plaintiffs and held that they were entitled to manage the Dargah 1or 27 days in a year.
Defendants 3 to 6 and 12 to 19 filed appeals against the judgment of the trial court.
The City Civil Judge, however, affirmed the judgment of the Trial Court with some modifications in the relief.
Different sets of defendant filed two second appeals before the High Court and both were disposed of by the High Court by its judgment and Order dated 17th November, 1981 whereby it reversed the 520 judgments and decrees of the courts below and dismissed the suit filed by the Plaintiffs.
This Court came to the conclusion that there is no controversy as regards the period of 27 days falling to the share of the Plaintiffs and the right of the females to the management of the Dargah according to Muslim law.
As regards the question of right of Fathima Bee having become barred by limitation by ouster and that as such the Plaintiffs too had lost that right, this Court, while setting aside the Judg ment and Decree of the High Court and restoring that of the Trial Court as modified by the First Appellate Court, HELD: It iS well settled that where one co heir pleads adverse possession against another co heir it is not enough to show that one out of them was in sole possession and enjoyment of the profits of the properties.
The possession of one co heir is considered in law as possession of all the co heirs.
The co heir in possession cannot render his pos session adverse to the other co heirs not in possession merely by any secret hostile animus on his own part in derogation of the other co heirs title.
[526G H; 527A] It is a settled rule of law as between co heirs that there must be evidence of open assertion of hostile title coupled with exclusive possession and enjoyment by one of them to the knowledge of the other so as to construe ouster.
[527A] The High Court in the instant case committed a serious error in reversing the finding of the lower Appellate Court and in taking a wrong approach in holding ouster on the basis of the judgment and decree given in Suit No. 116 of 1909 and on the ground that Fathima Bee had not made a demand or asked for her share of the hundial collections at any point of time till her death in 1957.
[527G] P. Lakshmi vs
L. Lakshmi Reddy; , , referred to.
|
(Crl.) No. 353 of 1989.
(Under Article 32 of the Constitution of India).
481 P.K. Chatterjee and R.P. Gupta for the Petitioner.
Prithvi Raj, Dalveer Bhandari and Prashant Choudhary for the Respondents.
The Judgment of the Court was delivered by V. RAMASWAMI, J.
This writ petition has been filed under Article 32 of the Constitution praying for the issue of a writ of certiorari to quash the order of detention dated 3.5.1989 passed by the District Magistrate, Farrukhabad, U.P. as confirmed by the Government of U.P. in their order dated 20.6.1989 detaining one Lakhmi Chand Gupta under the and to issue a writ of habeas corpus releasing the said detenu from such detention.
The order of detention was made under section 8 of the by the District Magistrate on the ground that with a view to prevent the detenu from indulging in unlawful activities which are prejudicial to the maintenance of essential services and supplies required for public life it was necessary to keep 'him under detention.
The detenu made his representation to the Advisory Board.
On receipt of the report of the Advisory Board to the effect that in its opinion there are sufficient grounds for detention, the Government after a consideration of the report confirmed the order of detention under section 12(1) of the Act and di rected that the said Lakhmi Chand Gupta be detained for a period of 12 months from 3.5.1989 the date of detention order.
This writ petition for habeas corpus has been filed by the brother in law of the detenu.
The learned counsel for the petitioner contended that there are absolutely no grounds or basis on which the de taining authority could have satisfied himself that the detenu had been engaged in criminal activities which are injurious to the maintenance of essential services and supplies required for public life or that the detenu is likely to indulge in any such activity in future.
Secondly, there is an unexplained delay from the date of the alleged incident or crime and the date of detention vitiating the satisfaction and the detention order itself.
The circum stances referred to in the order of detention does not lead to nor there was anything on which the District Magistrate can come to a conclusion that there is inherent criminal propensity in the detenu which could lead the District Magistrate to infer that there is every likelihood of the detenu repeating the alleged unlawful activity.
The facts relating to the incident which is referred to in the order 482 of detention as the ground for detention are as follows: On the 15th of February, 1989 the Junior Engineer, Tubewell Electrification Sub Division, Sarvodaya Nagar, Kanpur lodged a complaint with the Station House Officer, Police Station Chhibranau, Distt.
Farrukhabad that electric wires to a length of about 2900 mtrs.
in 11 K.V. Visya Bank Feeder had been cut and stolen away on 14.2.1989 by some unknown per sons and that the value of the loss to the Electricity Board amounted to Rs.21,500.
This F.I.R. was registered as Crime Case No. 51 of 1989 under section 379 IPC in the said Police Station and it was shown therein that three persons, namely, Jagdish, Santosh and Munshi Sharma were the accused.
Santosh is the brother of Jagdish.
On the 3rd of March, 1989 the house of Jagdish was raided and two bags filled with stolen aluminium electric wire recovered.
Jagdish gave an informa tion that a person at Vishnugarh Road claiming himself to be a resident of Delhi used to purchase stolen electric wire from the person cutting the electric wire stealthily.
On this information of Jagdish the factory of the detenu at Vishnugarh Road was raided.
One Munshi Sharma who is stated to be the servant of the detenu was found in possession of about 20 k.g. of melted electric wire and that was seized from him under a recovery memo.
The order of detention stated that Munshi Sharma had confessed that the stolen electric wire had been purchased by him from Jagdish and Santosh.
The detenu was arrested on the 2nd of May, 1989.
On the same date the bail application was moved on behalf of the accused.
After setting out this incident the grounds of detention stated: "This act on your part has disrupted the electric system resulting in non operation of tubewells, dearth of water for crops, non supply of drinking water for general public and cattle.
This unlawful act of yours and that of your accomplices is against the main tenance of essential services and supplies required for public order and life.
This act of yours have caused injury to the national economy and created terror in the general public and poses a serious threat to the public life.
" The order of detention further stated: "At present you are detained in the District Jail of Fatehgarh in connection with case No. 51/89 under section 379/411 of I.P.C. and in the P.S. Chhibranau in connection with case No. 56/89 under section 379 of I.P.C and your well wishers and sympathisers are trying to get you bailed 483 out in the aforesaid cases and a bail applica tion in this behalf has already been moved in the court and you are likely to be bailed out.
There is every likelihood that after coming out of jail you will again indulge in your criminal activities.
" It is on the basis of this the order stated that the detain ing authority was satisfied that the detenu had been engaged in criminal activities injurious to the maintenance of essential services and supplies required for public life and that with a view to prevent him from indulging in such unlawful activities it has become necessary to keep him under detention.
The learned counsel contended that the detenu had no past criminal record.
The present criminal case filed under section 411 of I.P.C. is the first crime which had been alleged against him.
The learned counsel further contended that there is absolutely no evidence of detenu 's complicity with the crime and making link of the detenu with the recov ery of 20 k.g. of melted wire recovered from Munshi Sharma at the behest of Jagdish.
In this connection he also con tended that the statement said to have been made bY Munshi Sharma had not been supplied to him and that would also vitiate the order of detention.
In the counter affidavit filed in this Court the respondent stated that there was no separate confessional statement recorded from Munshi Sharma and the confessional statement referred to in the detention order is the one that is found in the recovery memo a copy of which had already been supplied to the detenu.
The learned counsel for the petitioner drew our attention to the recovery memo and contended that if the statement of Munshi Sharma in the recovery memo is the only material available that cannot be a basis of satisfaction for an order of detention under the .
The statement of Munshi Sharma relied on by the detaining authority and found in the recovery memo reads as follows: "When the gauge of that melted wire was meas ured it was found that of the Government wire, therefore, the said melted wire weighing 20 k.g. was taken in the possession of police and thoroughly sealed in a sack.
But before seal ing the same a separate specimen of melted wire and the specimen of wire were taken and the specimens were sealed.
The accused Munshi Sharma on his being arrested stated that he had purchased that property from both Santosh i.e the brother of Jagdish and Jagdish, he further stated that 484 he melted and sold the same to Lakhmi i.e. the owner of the said factory.
The said property after being melted cannot be identified and it is used for making utensils thereafter." ' In this statement it may be seen that Munshi Sharma did not say that he purchased the stolen wire for the detenu or on the instructions of the detenu.
In fact he did not even say that he is the servant or agent of the detenu.
He had merely stated that 20 k.g. of melted wire recovered from him was purchased by him from Santosh and his brother Jagdish and that he had melted and sold the same to the detenu.
After it is melted in the melted form it could not be distinguished from any other melted wire of legal origin.
The statement also does not impute knowledge on the part of the detenu that the same was from stolen wires.
In any case it was not possible to say on the basis of this statement that the detenu was in league with other persons in the activity of stealing wire or purchasing of the same.
In fact it is not known how from the melted wire weighing 20 k.g.
the detain ing authority or the investigating officers came to the conclusion that the gauge of the melted wire was found to be that of Government wire.
Again only 20 k.g. was found in the factory and that too in the possession of Munshi Sharma though inside the factory.
The statement of Munshi Sharma in, the recovery memo and melted wire recovered from Sharma were the only material available before the detaining au thority.
In the light of the absence of past criminal histo ry on the part of the detenu we have no doubt that the statement found in the recovery memo could not form basis of satisfaction for the detention.
The learned counsel took strong exception to the view of the detaining authority that the detenu is likely to get bail and there is every likelihood that after coming out of jail the detenu will again indulge in criminal activities and that, therefore, it is necessary to detain him.
In this connection he relied on the decision of this Court in Ramesh Yadav vs District Magistrate, Etah, where it was held that merely on such apprehension a detention order under should not ordinari ly be passed.
This Court observed: "On a reading of the grounds particularly the paragraph which we have extracted above, it is clear that the order of detention was passed as the detaining authority was apprehensive that in case the detenu was released on bail he would again carry on his criminal activi ties in the area.
If 485 the apprehension of the detaining authority was true, the bail application had to be opposed and in case bail was granted challenge against that order in the higher forum had to be raised.
Merely on the ground that an ac cused in detention as an undertrial prisoner was likely to get bail an order of detention under the should not ordinarily be passed.
We are inclined to agree with counsel for the petitioner that the order of detention in the circumstances is not sustainable and is contrary to the well set tled principles indicated by this Court in series of cases relating to preventive deten tion.
The impugned order, therefore, has to be quashed.
" This Court had considered in a number of cases the validity of orders of detention made when a person is in jail custody but the detaining authority considered the likelihood of the detenu getting a bail and in that view proceeding to consider the necessity for detaining him under the preventive detention proceedings.
In Rameshwar Shaw vs District Magistrate, Burdwan & Anr., ; their Lordships observed: "On the other hand, if a person who is under going imprisonment, for a very short period, say for a month or two or so, and it is known that he would soon be released from jail, it may be possible for the authority to consider the antecedent history of the said person and decide whether the detention of the said person would be necessary after he is released from jail, and if the authority is bona fide satisfied that such detention is necessary, he can make a valid order of detention a few days before the person is likely to be released.
The antecedent history and the past conduct ' on which the order of detention would be based would, in such a case, be proximate in point of time and would have a rational connection with the conclusion drawn by the authority that the detention of the person after his release is necessary." In Kartic Chandra Guha vs The State of West Bengal and Ors., the order of detention stated that having regard to the activities of the detenu, as discussed in the grounds of detention, and having regard to the possi bility of his being enlarged on bail the detaining authority was satisfied that the detenu should be detained under the Act.
This order was upheld on the ground "the District 486 Magistrate on information received by him thought that the petitioner was likely to be released on bail in which case having regard to his past activities it was open to the District Magistrate to come to the reasonable conclusion that having regard to the desperate nature of the aCtivities of the petitioner his enlargement on bail would be no deter rent to his desperate activities." In Alijan Mian vs District Magistrate, Dhanbad and Others, [1983] 4 SCC 301 it was again held that a detention order would not become invalid merely because the detention order was passed on the detaining authority being apprehen sive of the likelihood of the detenu 's release on bail.
In Smt.
Shashi Aggarwal vs State of U.P. & Ors.
, ; this Court observed: "Every citizen in this country has the right to have recourse to law.
He has the right to move the court for bail when he is arrested under the ordinary law of the land.
If the State thinks that he does not deserve bail the State could oppose the grant of bail.
He cannot, however, be interdicted from moving the court for bail by clamping an order of detention.
The possibility of the court grant ing bail may not be sufficient.
Nor a bald statement that the person would repeat his criminal activities would be enough.
There must also be credible information or cogent reasons apparent on the record that the dete nu, if enlarged on bail, would act prejudi cially to the interest of public order.
That has been made clear in Binod Singh vs District Magistrate, Dhanbad, where it was observed: [1986] SCC (Crl.) 490 @ 495 (para7) A bald statement is merely an ipse dixit of the officer.
If there were cogent materials for thinking that the detenu might be released then these should have been made apparent.
Eternal vigilance on the part of the authori ty charged with both law and order and public order is the price which the democracy in this country extracts from the public officials in order to protect the fundamental free doms of our citizens.
" All these cases were again considered in a latest judg ment of this Court in N. Meera Rani vs Government of Tamil Nadu and Another, ; , and it was held that all those decisions of the Court on this aspect have to be read in the light of the Constitution Bench 487 decision in Rameshwar Shaw 's case (supra) and that the conclusion about the validity of the detention order in each case was reached having regard to the facts and circum stances in the particular case.
Thus the detaining authority though can take into ac count the possibility of the detenu being released on bail in the criminal proceedings,.
have to be satisfied, having regard to his past activities or by reason of the credible information or cogent reasons, that if he is enlarged on bail, he would indulge in such criminal activities.
In the present case except the bald statement that the detenu would repeat his criminal activities after coming out of the jail, there are no credible information or material or cogent reasons apparent on the record to warrant an inference that the detenu if enlarged on bail would indulge in such crimi nal activities which are prejudicial to the maintenance of essential services.
There must be something more than what is found in the record here to come to the conclusion that this is not a case of solitary incident but a case of the detenu indulging in business of receiving stolen electric wires.
On the other hand it appears to us that the detention order has been made in order to supplant the criminal prose cution which is not permitted.
The learned counsel also contended that there is an unexplained delay which makes the ground of detention not proximate vitiating the order of detention itself.
The theft of the wire was on 14.2.1989 and the F.I.R. was registered on 15.2.1989.
On that day itself as seep from the record Jagdish, Santosh and Munshi Sharma were shown as accused on the basis of some information.
The house of Jagdish was raided on 3.3.1989 and on the same day the factory of the detenu was raided and 20 k.g. of melted wire was recovered from Munshi Sharma but no action was taken till 2.5.1989 against the detenu.
On being arrested on 2.5.1989 the detenu moved a bail application and the detention order itself was made on 3.5.1989.
Though bail was granted, in view of the detention order he could not be released from jail.
In spite of the fact that the recovery statement itself was made as early as on 3.3.1989 no action was taken till 3.5.1989.
Nothing more is stated in the detention order.
The delay has also not been satisfactorily explained in the counter state ment of the respondents.
The ground instance, therefore, could not be a proximate cause for a sudden decision to take action under the and this also viti ates the order.
In the result we allow this writ petition, set aside the order of detention and direct that the detenu be released forthwith.
P.S.S. Petition allowed.
| IN-Abs | The detenu was arrested on May 2, 1989.
On the same date a bail application was moved on his behalf.
On May 3, 1989 he was detained under section 8 of the .
The detention order stated that the detenu was likely to be bailed out and there was every likelihood that after coming out of jail he would again indulge in criminal activ ities injurious to the maintenance of essential services and supplies required for public life.
The facts referred to in the grounds of detention were that on the basis of a com plaint of theft of electric wire lodged on February 15, 1989 an FIR was registered under section 379 IPC against three per sons, 'J ', 'S ' and 'M '.
Some of the stolen material was recovered from the house of 'J ' on March 3, 1989 and on the information provided by him about the purchase of such material the factory of the detenu was raided on the same day.
There 'M ', stated to be the servant of the detenu, was found in possession of about 20 kg.
of melted electric wire and that was seized under a recovery memo.
In the confes sional statement made by 'M ' and recorded in the recovery memo itself, he had stated that he had purchased the elec tric wire from 'J ' and 'S ' and that he had melted and sold the same to the detenu.
These facts led the detaining au thority to conclude that there was inherent criminal propen sity in the detenu.
Detenu 's representation was rejected by the Advisory Board.
The Order was confirmed by the Govern ment under section 12(1) of the Act.
In the writ petition seeking to quash the order of detention, it was contended that there was no evidence of detenu 's complicity with the crime linking him with the recovery of melted wire, that the criminal case filed under section 411 IPC was the first crime alleged against him, that he had no past criminal record from which it could be inferred that he was likely to indulge in such activity in future, and that there was an 480 unexplained delay from the date of the alleged crime and the date of detention vitiating the satisfaction and the deten tion order itself.
Allowing the writ petition, the Court, HELD: 1.
The detaining authority though can take into account the possibility of the detenu being released on bail in the criminal proceedings, have to be satisfied, having regard to his past activities or by reason of the credible information or cogent reasons, that if he is enlarged on bail, he would indulge in such criminal activities.
[487B] In the instant case, except the bald statement that the detenu would repeat his criminal activities after coming out of the jail, there were no credible information or material or cogent reasons apparent on the record to warrant an inference that the detenu if enlarged on bail would indulge in such criminal activities which were prejudicial to the maintenance of essential services.
There must be something more than what was found in the record to come to the con clusion that this was not a case of solitary incident but a case of the detenu indulging in business of receiving stolen electric wires.
Furthermore, the detention order seems to have been made in order to supplant the criminal prosecution which was not permitted.
[487B D] Ramesh Yadav vs District Magistrate, Etah, ; Rameshwar Shaw vs District Magistrate, Burdwan & Anr.
, ; ; Kartic Chandra Guha vs The State of West Bengal & Ors., ; Alian Mian vs District Magistrate, Dhanbad & Ors., [1983] 4 SCC 301; Smt.
ShashiAg garwal vs State of U. P. & Ors., ; and N. Meera Rani vs Government of Tamil Nadu & Anr., ; , referred to.
In spite of the fact that the recovery statement itself was made as early as on March 3, 1989 no action was taken against the detenu till May 3, 1989.
Nothing more was stated in the detention order.
The delay had also not been satisfactorily explained in the counter statement of the respondents.
The ground therefore, could not be a proximate cause for a sudden decision to take action under the Nation al Security Act and this also vitiates the order.
[487F G]
|
Appeal No.230 of 1954.
Petition No. 276 of 1953.
Appeal from the judgment and order dated June 7, 1954, of the former Pepsu High Court in Civil Misc.
No. 97 of 1953.
Petition under Article 32 of the Constitution of India for the enforcement of fundamental rights.
731 G.S. Pathak, Veda Vyasa, section K. Kapur and J. B. Dadachanji, for the appellants petitioners.
H. N. Sanyal, Additional Solicitor General of India,R.Ganapathi Iyer, Raj Gopal Sastri and R. H. Dhebar, for the respondents.
April 28.
The judgment of section R. Das C. J., Venkatarama Aiyar, section K. Das and Gajendragadkar JJ.
was delivered by Venkatarama Aiyar J. Bose J. delivered a separate judgment.
VENKATARAMA AIYAR J. Messrs.
Dalmia Dadri Cement Co. Ltd. which is the appellant in Civil Appeal No. 230 of 1954 and the petitioner in Petition No. 276 of 1953, is a public company engaged in the manufacture and sale of cement at a place called Dadri situate in what was once the independent State of Jind.
On April 1, 1938, one Shanti Prasad Jain, a promoter of the above company, obtained certain concessions from the Ruler of Jind under an agreement, exhibit A, and as it is this document that forms the basis of the present claim of the appellant, it is necessary to refer to the, material terms thereof.
Clause (1) of the agreement grants to the licensee, Shanti Prasad Jain, the sole and exclusive monopoly right of manufacturing cement in the Jind State and for that purpose he is authorised in Cl.
(2) to win and work all quarries, strata, seams and beds of kankar, rorey, limestone or other like materials ".
Under Cl.
(7), the licence is to last for a period of 25 years with option for successive renewals.
Clause (10) requires that a public limited company should be formed before July 21, 1936, to work the concessions, and that it should be registered in the Jind State.
Under Cl.
(11), the State is to be allotted 6 per cent.
cumulative preference shares fully paid up of the face value of rupees one lack and ordinary shares fully paid up of the total face value of Rs. 50,000 without any payment whatsoever.
Then there are provisions for the payment of royalty to the State and sale of cement at concession rates to local consumers.
Clause (23) is very material for the present dispute, and is as follows: 93 732 " The Company shall be assessed to income tax in accordance with the State procedure but the rate of income tax shall always be four per cent.
up to a limit of the income of rupees five lacs and five per cent.
on such income as is in excess of rupees five lacs. . .
Clause (24) grants exemption from export, import and other duties excepting consmers.
Clause (37) provides for settlement of all disputes between the parties by arbitration.
In accordance with the terms set out above, the appellant company was duly incorporated in the Jind State, and on May 27, 1938, Shanti Prasad Jain executed in its favour a deed agreeing to transfer all " his rights, privileges and obligations " under exhibit A.
The appellant claims that it has become in this wise entitled as assignee of the licensee to all the benefits granted under exhibit A.
The contention was raised by the respondent that the deed dated May 27, 1938, does not itself purport to assign the rights under the license, exhibit A but merely agrees to do so, and that in the absence of a further deed transferring those rights, the appellant could not claim the rights of assignee.
But Cl.
(35) expressly provides that " the licensee shall transfer his rights to the proposed Company on its formation ", and after the appellant was incorporated, the State had throughout recognised it as the person entitled to the rights and subject to the obligations under the license and realised royalty and levied income tax in accordance with the provisions of exhibit A.
This objection was taken for the first time only in the Writ Petition No. 276 of 1953 in this Court.
It is stated for the appellant and that is not controverted for the respondent that under the law of Jind State an assignment need not be in writing, and that being so, it is open to us to infer such assignment from the conduct of the parties.
We must accordingly decide these cases on the footing that the rights under the license, exhibit A, dated April 1, 1938, had become vested in the appellant by assignment.
On August 15, 1947, India became independent, and on the same date, the Ruler of Jind signed an Instrument of Accession ceding to the Government of India 733 power to legislate with respect to Defence, External Affairs and Communications.
On May 5, 1948, eight of the Rulers of States in East Punjab including Jind entered into a Covenant for the merger of their territories into one State, called the Patiala and East Punjab States Union.
For brevity, this State will hereafter be referred to as the Patiala Union.
Article VI of the Covenant on which the appellant relies in support of its claim is as follows: " The Ruler of each Covenanting State shall, as soon as may be practicable, and in any event not later than the 20th August, 1948, make over the administration of his State to the Raj Pramukh; and thereupon, (a)all rights, authority and jurisdiction belonging to the Ruler which appertain, or are incidental to the Government of the Covenanting State shall vest in the Union and shall hereafter be exercisable only as provided by this Covenant or by the Constitution to be framed thereunder; (b)all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the Union and shall be discharged by it; (c)all the assets and liabilities of the Covenanting State " shall be the assets and liabilities of the Union; and (d)the military forces, if any, of the Covenanting State shall become the military forces of the Union.
" Article X provides that a Constituent Assembly should be formed as early as practicable, and that it should frame a Constitution for the State, and that until the Constitution is so framed, the Rajpramukh is to have power to make and promulgate Ordinances for the peace and good government of the Union.
Under article XVI, the Union " guarantees either the continuance in service of the permanent members of the public services of each of the Covenanting States on conditions which will be not less advantageous than those on which they were serving on the 1st February, 1948, or the payment of reasonable compensation or retirement or proportionate pension." 734 In accordance with article VI of the Covenant, the Rajpramukh of the Patiala Union took over the administration of Jind on August 20, 1948, and immediately after assumption of office, he promulgated the Patiala and East Punjab States Union Administration Ordinance No. 1 of section 2005.
Section 3 of the Ordinance, which is material for the present discussion, is as follows: " As soon as the administration of any covenanting State has been taken over by the Raj Pramukh as aforesaid all Laws, Ordinances, Acts, Rules, Regulations, Notifications, Hidayate Firman i Shahi, having force of law in Patiala State on the date of commencement of this Ordinance shall apply mutatis mutandis to the territories of the said State and with effect from that date all laws in force in such Covenanting State immediately before that date shall be repealed: Provided that proceedings of any nature whatsoever pending on such date in the courts or offices of any such Covenanting State shall, notwithstanding anything contained in this Ordinance or any other Ordinance be disposed of in accordance with the laws governing such proceedings in force for the time being in any such Covenanting State." This Ordinance came into force on August 20, 1948.
On February 5, 1949, it was repealed and replaced by Ordinance No. XVI of section 2006, section 3(a) whereof being in the same terms as section 3 of Ordinance No. 1 of 8. 2005.
Article X(1) of the Covenant provided, as has been mentioned, for the framing of a Constitution for the Union in the manner provided therein.
That, however did not materialise, and on November 24, 1949, the Rajpramukh issued a proclamation accepting the Indian Constitution as that of the Patiala Union, and thus, the Union became a Part B State under the Constitution.
On April 13, 1950, the Patiala Union accepted the Federal Financial Integration Scheme, and became a taxable territory of the Union of India and the Indian Finance Act, 1950, became applicable to it from April 13, 1950.
The position, therefore, is that as regards liability to be assessed to income tax 735 which is what we are concerned with in these proceedings, the law applicable to the appellant for the period prior to August 20, 1948, was the income tax law of ' Jind, for the period August 20, 1948, to April 13, 1950, the Patiala Income tax Act, section 2001, which came into force under Ordinance No. 1 of section 2005 and after April 13, 1950, the Indian Income tax Act.
Civil Appeal No. 230 of 1954 arises out of proceedings for assessment of income tax for the year 1949 1950.
By its order dated November 11, 1952, the Appellate Tribunal has found that the taxable profits of the appellant for the year of account which is the calendar year 1948 was Rs. 1,94,265, and that finding is not now in dispute.
The substantial point now in controversy is as to the rate at which tax should be levied on that amount, whether it should be what is enacted in the Patiala Income tax Act as contended for the respondent, or what is provided in Cl.
(23) of the agreement, exhibit A, as claimed by the appellant.
On this question, the Appellate Tribunal held that the Patiala Union which was a new State that had come into existence as a result of the Covenant was not bound by the agreements entered into previously by the rulers of the Covenanting States, that the appellant could claim the benefit of that agreement only if the new State chose to recognise it, " that there had been, in fact, no such recognition, and that, in consequence, the tax was leviable as prescribed in the Patiala Income tax Act, section 2001.
On the application of the appellant, the Tribunal referred under section 66(1) of the Indian Income tax Act, the following question for the opinion of the High Court: " Whether the asseessee 's profits and gains earned in the calendar year 1948 were assessable for section 2006 (1949 50) at the rates in force according to the Patiala Income Tax Act of section 2001 read with section 3 of the Patiala & East Punjab States Union Administration Ordinance (No. 1 of section 2005), as repealed and re enacted in section 3 of the Patiala & East Punjab States Union General Provisions (Administration) Ordinance (No. XVI of 2006), or in accordance with clause (23) of the agreement of April, 1938 above referred to," 736 By their judgment dated June 7, 1954, the learned ,Judges of the High Court answered the question against the appellant, but granted a certificate under section 66(A)(2) of the Indian Income tax Act, and that is how Civil Appeal No. 230 of 1954 comes before us.
Meantime, proceedings were taken by the Income tax authorities for assessment of tax for years subsequent to 1949 1950, and the dispute again related to the question whether the amount of tax should be determined in accordance with Cl.
(23) of exhibit A or the provisions of the Indian Income tax Act, 1922.
The Income tax Officer, Rohtak, rejected the contention of the appellant that it was liable to pay tax only in accordance with.
exhibit A and passed orders determining the tax under the provisions of the Indian Incometax Act for the year 1950 1951 on April 28, 1952, for 1951 1952 on May 12, 1952, and for 1952 1953 on March 17, 1953.
Appeals against these orders have been preferred by the appellant, and they are stated to be pending before the Appellate Assistant Commissioner.
On the allegation that the tax as imposed in the orders aforesaid is unauthorised, and that it constitutes an unlawful interference with its rights to carry on business guaranteed under article 19(1)(g), the appellant has filed Petition No. 276 of 1953 for an appropriate writ directing the respondents to levy tax in accordance with the agreement, exhibit A, dated April 1, 1938.
In support of this petition, in addition to the contentions raised in Civil Appeal No. 230 of 1954 the petitioner also urges that even if the Union of India is entitled to repudiate the agreement dated April 1, 1938, it has not, in fact, done so, and that it has, on the other hand, recognised it as good and is therefore not entitled now to go back upon it, and that the levy of tax in accordance with the provisions of the Indian Income tax Act is accordingly illegal.
As the contentions raised in the appeal and in the petition are substantially identical, they were heard together.
Before us, the validity of the assessment of incometax for the year 1949 1950 was challenged by Mr. Pathak on the following grounds: 737 (1)Ordinance No. 1 of section 2005 under which the Patiala Income tax Act Act is sought to be applied to the appellant does not, on its true construction, annul ' the rights granted under exhibit A. (2)If the Ordinance in question is to be construed as having that effect, then it is in contravention of article VI of the Covenant, and is therefore unconstitutional and void.
(3)Even apart from the Covenant, the agreement, exhibit A, is binding on the Patiala Union and the impugned Ordinance is bad as infringing it; and (4)the Patiala Union had, in fact, recognised the rights granted under exhibit A and it is therefore binding on it, as if it were a contract entered into by itself.
(1)On the first question, the argument of Mr. Pathak is this: The Ruler of Jind was an absolute monarch, and his word was law.
The agreement, exhibit A, must therefore be held to be a special law conferring rights on the licensee.
Section 3 of Ordinance No. 1 of section 2005 is a general provision extending all laws of the State of Patiala to the territories of the Covenanting States.
The rule of construction is well established that general statutes should be interpreted so as not to interfere with rights created tinder special laws.
Section 3 of the Ordinance should therefore be construed as not intended to affect the rights conferred under exhibit A. Reliance is placed on the statement of the law in Maxwell 's Interpretation of Statutes, 10th Edn., pp. 176 and 180, and on the observations in Blackpool Corporation vs Starr Estate Co. (1).
Now the rule of construction expressed in the maxim generalia specialibus non derogant is well settled and we shall also assume in favour of the appellant that the agreement, exhibit A, is a special law in the nature of a private Act passed by the British Parliament, and that accordingly section 3 of the Ordinance should not be construed, unless the contrary appears expressly or by necessary implication, as repealing the provisions of exhibit A.
But ultimately, the question is what does the language of the enactment mean ? Section 3 is quite explicit, and (1)[1922] 1 A. C. 27, 34. 738 it provides that from the date of the commencement of the Ordinance " all laws in force in such Covenanting States immediately before that date shall be repealed ", and the proviso further enacts that pending proceedings are to be disposed of in accordance with laws in force for the time being, in the Covenanting States.
In the face of this language which is clear and unqualified, it is idle to contend that Ordinance No. 1 of section 2005 saves the rights of the appellant to the tax concessions under Cl.
(23) of exhibit A. (2)It is next contended by Mr. Pathak that if Ordinance No. 1 of section 2005 is to be construed as extinguishing the right to concessions conferred under exhibit A, then it must be held to be unconstitutional and void.
This contention is based on article VI (b) of the Covenant, which provides that the obligations of the rulers pertaining to or incidental to government of the Covenanting State shall devolve on the Union and be discharged by it.
It is argued that the Ruler of Jind had for good and valuable consideration undertaken certain obligations under Cl.
(23) of exhibit A with reference to taxation which is a governmental function, that he had himself scrupulously honoured them so long as he was a Ruler, and then passed them on under article VI (b) to the new State created under the Covenant, that the Rajpramukh who was a party to the Covenant and claimed under it was bound by that obligation, that his power to enact laws is subject under article VI (a) to the obligations mentioned in article VI (b), and that the impugned law is, if it is to be construed as having the effect of abrogating those obligations, ultra vires his powers under the Covenant and is, in consequence, void.
In answer to this, the respondent contends that the Covenant entered into by the rulers is an act of State and that any violation of its terms cannot form the subject of any action in the municipal courts, that the obligations mentioned in article VI (b) refer not to liabilities under agreements for which there was special provision in article VI (c) but to obligations of the character contemplated by the Instrument of Accession, and that, in any event, the rights granted to the licensee under exhibit A were 739 terminable by the Ruler of Jind at will, and that, in consequence, if the obligation under Cl.
(23) devolved on the Raj Pramukh under article VI (b) it did so subject ' to his rights under article VI (a) to terminate it if he so willed, and that, therefore, the impugned law did not violate article VI (b).
The question that arises for our decision is whether the Covenant was an act of State.
On that, there can be no two opinions.
It was a treaty entered into by rulers of independent States, by which they gave up their sovereignty over their respective territories, and vested it in the ruler of a new State.
The expression " act of State " is, it is scarcely necessary to say, not limited to hostile action between rulers resulting in the occupation of territories.
It includes all acquisitions of territory by a sovereign State for the first time, whether it be by conquest or cession.
Vide Vajesingji Joravar Singji and others vs Secretary of State (1) and Thakur Amar Singji vs State of Rajasthan (2).
And on principle, it makes no difference as to the nature of the act, whether it is acquisition of new territory by an existing State or as in the present case, formation of a new State out of territories belonging to quondam States.
In either case, there is establishment of new sovereignty over the territory in question, and that is an act of State.
Mr. Pathak did not contest the position that the Covenant in so far as it provided for the extinction of the sovereignty of the rulers of the Covenanting States and the establishment of a new State is an act of State.
But he contended that it was much more than that, that it was also in the nature of a Constitution for the new State in the sense that it is a law under which all the authorities of the new State including the Raj Pramukh had to act.
In support of this contention he referred to article X, which provided for the convening of a Constituent Assembly for the framing of the Constitution, and argued that the Articles of the Covenant which provided for the administration of the State by the Rajpramukh were in the nature of an interin (1)(1924) L. R. 51 I. A. 357, 360.
94 (2) ; , 335.
740 Constitution.
He also relied on article XVI, which guaranteed the rights of the permanent members of the public services in the Covenanting States to continuance in service, and contended that this could not be regarded as an act of State but only as a law relating to the administration of the new State.
In this view of the Covenant, he argued, article VI must be held to be a constitutional provision enacted for the protection of private rights, that it was, in conse quence, binding on the ruler of the new State, and that the municipal courts were competent to grant appropriate reliefs for the breach thereof.
This argument proceeds, in our view, on a misconception as to what is an act of state and what is a law of the State conferring rights on the subject, or, as the learned counsel for the appellant termed it, Constitution of the State.
When the sovereign of a Statemeaning by that expression, the authority in which the sovereignty of the State is vested, enacts a law which creates, declares or recognises rights in the subjects, any infraction of those rights would be action able in the courts of that State even when that infraction is by the State acting through its officers.
It would be no defence to that action that the act complained of is an act of state, because as between the sovereign and his subjects there is no such thing as an act of state, and it is incumbent on his officers to show that their action which is under challenge is within the authority conferred on them by law.
Altogether different considerations arise when the act of the sovereign has reference not to the rights of his subjects but to acquisition of territories belonging to another sovereign.
That is a matter between independent sovereigns,and any dispute arising therefrom must be settled byrecourse not to municipal law of either States but to diplomatic action, and that failing, to force.
That is an act of state pure and simple, and that is its character until the process of acquisition is completed by conquest or cession.
Now, the status of the residents of the territories which are thus acquired is that until acquisition is completed as aforesaid they are the subjects of the ex sovereign of those territories 741 and thereafter they become the subjects of the new sovereign.
It is also well established that in the new set up these residents do not carry with them the, rights which they possessed as subjects of the ex sovereign, and that as subjects of the new sovereign, they: have only such rights as are granted or recognised by him.
Vide Secretary of State for India vs Bai Rajbai (1), Vajesingji Joravar Singji and others vs Secretary of State (2), Secretary of State vs Sardar Rustam Khan (3) and Asrar Ahmed vs Durgah Committee, Ajmer (4).
In law, therefore, the process of acquisition of new territories is one continuous act of state terminating on the assumption of sovereign powers de jure over them by the new sovereign and it is only thereafter that rights accrue to the residents of those territories as subjects of that sovereign.
In other words, as regards the residents of territories which come under the dominion of a new sovereign, the right of citizenship commences when the act of state terminates and the two therefore cannot co exist.
It follows from this that no act done or declaration made by the new sovereign prior to his assumption of sovereign powers over acquired territories can quoad the residents of those territories be regarded as having the character of a law conferring on them rights such as could be agitated in his courts.
In accordance with this principle, it has been held over and over again that clauses in a treaty entered into by independent rulers providing for the recognition of the rights of the subjects of the ex sovereign are incapable of enforcement in the courts of the new sovereign.
In Cook vs Sprigg (5), the facts were that the ruler of Pondoland in Africa had granted certain concessions in favour of the appellants and subsequently ceded those territories to the British Government.
The latter having declined to recognise those concessions, the appellants sued for a declaration of their rights thereunder, and the question was whether they had a right of action in respect of what was an act of State.
One of the contentions (1) (1015) L.R. 42 I.A. 229.
(3) (1941) L.R. 68 I.A. 109.
(2) (1924) L. R. 51 T.A. 357, 360.
(4) A.I.R. 1947 P.C. 1.
(5) ,578.
742 urged on their behalf was that the ruler of Pondoland had at the time of cession of his territories expressed his desire to the British Government that the concessions in favour of the appellants should be recognised and that, in consequence, the appellants had the right to enforce them against the new Government.
In rejecting this contention, the Lord Chancellor observed: " The taking possession by Her Majesty, whether by cession or by any other means by which sovereignty can be acquired, was an act of state and treating Sigcau as an independent sovereign which the appellants are compelled to do in deriving title from him.
It is a well established principle of law that the transactions of independent States between each other are governed by other laws than those which municipal courts administer.
" "It is no answer to say that by the ordinary principles of international law private property is respected by the sovereign which accepts the cession and assumes the duties and legal obligations of the former sovereign with respect to such private property within the ceded territory.
All that can be properly meant by such a proposition is that according to the well understood rules of international law a change of sovereignty by cession ought not to affect private property, but no municipal tribunal has authority to enforce such an obligation.
And if there is either an express or a well understood bargain between the ceding potentate and the Government to which the cession is made that private property shall be respected, that is only a bargain which can be enforced by sovereign against the sovereign in the ordinary course of diplomatic pressure." In Vajesingji Joravar Singji and others vs Secretary Of State for India (1), the dispute related to the title of the appellants to certain lands situated in the Panch Mahals.
This area formed at one time part of the dominion of the Scindias of Gwalior, and it was ceded to the British Government by treaty on December 12, 1860.
Clauses (2) and (3) of the treaty provided for (1)(1924) L.R. 51 I.A. 357, 360.
743 the recognition by the new sovereign of rights of the residents under existing leases, jagirs and the like.
The complaint of the appellants was that in 1907 the British Government had proposed to lease the lands to them on terms which infringed their proprietary rights, and that this was in violation of the rights which had been guaranteed under Cls.
(2) and (3) of the treaty, and was, in consequence, bad.
The answer of the Government was that the treaty in question was an act of state and conferred no rights on the appellants.
In upholding this contention, Lord Dunedin observed: " When a territory is acquired by a sovereign state for the first time that is an act of state.
It matters not how the acquisition has been brought about.
It may be by conquest, it may be by cession following on treaty, it may be by occupation of territory hitherto unoccupied by a recognised ruler.
In all cases the result is the same.
Any inhabitant of the territory can make good in the municipal courts established by the new sovereign only such rights as that sovereign has, through his officers, recognized.
Such rights as he had under the rule of predecessors avail him nothing.
Nay more, even if in a treaty of cession it is ,stipulated that certain inhabitants should enjoy certain rights, that does not give a title to those inhabitants to enforce these stipulations in the municipal courts.
The right to enforce remains only with the high contracting parties.
" In Hoani Te Heuheu Tukino vs Aotea District Maori Land Board (1), the question arose with reference to the Treaty of Waitangi entered into by the British Government with the native chiefs of New Zealand in 1840.
Under cl.
(1) of the Treaty, there was a complete cession by the chiefs of all their rights and powers of sovereignty.
Clause (2) guaranteed to the chiefs, the tribes and the respective families and individuals certain rights in lands, forests and fisheries.
In 1935, the Legislature of New Zealand enacted a law, the provisions of which were impugned as ultra vires on the ground that they infrigned the rights (1) 744 protected by cl.
(2) of the Treaty of Waitangi.
In holding that the rights under the Treaty furnished no ground for action in the civil courts, Viscount Simon L. C. referred to the decision in Vajesingji Joravar Singji and others vs Secretary of State (1) and observed : " So far as the appellant invokes the assistance of the court, it is clear that he cannot rest his claim on the Treaty of Waitangi, and that he must refer the court to some statutory recognition of the right claimed by him." The result of the authorities then is that when a treaty is entered into by sovereigns of independent States whereunder sovereignty in territories passes from one to the other, clauses therein providing for the recognition by the new sovereign of the existing rights of the residents of those territories must be regarded as invested with the character of an act of state and no claim based thereon could be enforced in a court of law.
It must follow from this that the Covenant in question entered into by the rulers of the Covenanting States is in its entirety an act of state, and that article VI therein cannot operate to confer on the appellant any right as against the Patiala Union.
This conclusion becomes all the more impregnable when it is remembered that the Covenant was signed by the rulers on May 5, 1948, whereas the new state came into being only on August 20, 1948.
In the decisions cited above, the sovereign against whom the obligations created by the treaty were sought to be enforced was the very sovereign who entered into that treaty or his successor.
But here, the ruler of the Patiala Union against whom article VI is sought to be enforced was not a party to the Covenant at all, because that State had not come into existence on that date.
The person who signed the Covenant was the ruler of the State of Patiala which was one of the Covenanting States, but that State as well as the seven other States which entered into the Covenant stood all of them dissolved on August 20, 1948, when the new Patiala Union came into being.
The new State could not and did not enter into any covenant before August 20, 1948, and therefore, in strictness, it cannot be (1) (1924) L.R. 511.
A. 357, 360.
745 held to be bound by article VI, to which it was not a party.
Considerable emphasis was laid for the appellant on article XVI of the Covenant under which the Union guaranteed the continuance of the service of permanent members of public services, and this 'was relied on as showing that the rights of the subjects of the quondam States were intended to be protected.
This argument is sufficiently answered by what we have already observed, namely, that a clause in a treaty between high contracting parties does not confer any right on the subjects which could be made the subject matter of action in the courts, and that the Patiala Union is not bound by it, because it was not a party to the Covenant.
It should, however, be mentioned that after the formation of the new State oil August 20, 1948, the first legislative act of the sovereign was the promulgation of Ordinance No. 1 of section 2005, and section 4 thereof expressly recognises the rights of the permanent members of public services.
That undoubtedly is a law enacted by the sovereign conferring rights on his subjects and enforceable in a court of law, but at the same time the enactment of such a law serves to emphasise that the Articles have not in themselves the force of law and were not intended to create or recognise rights.
In this connection, reference should also be made to cl.
XVI of the Ordinance which enacts that " the provisions of articles XV and XVII of the Covenant relating to the bar of certain suits and proceedings shall have the force of law.
" In support of his contention that article VI of the Covenant is to be regarded as a Constitutional provision, counsel for the appellant relied on certain passages in the judgment of this Court in Thakur Amar Singji vs State of Rajasthan (1) at pp. 313 and 315 wherein a similar covenant entered into by the rulers of Rajasthan was described as a Constitution.
Apart from the use of the word " Constitution ", we find nothing in these passages which has any bearing on the point now under consideration.
There, the question was as regards the vires of a law enacted by (1)[1955] 2 S.C.R. 303.
746 the Rajpramukh of Rajasthan, and that depended on whether he was the authority in whom the legislative authority of the State was vested within article 385.
This Court held that under the Covenant it was the Rajpramukh who had the power to enact laws, and that the Ordinance issued by him was therefore valid, and it was in that context that the covenant was referred to as a Constitution.
We had not to consider there the question whether the Covenant was an act of state, or whether it was a law conferring on the citizens of the defunct States rights which were enforceable in a court of law.
No such question arose for decision, and therefore the description of the Covenant as a Constitution cannot be read as importing a decision that it is a law conferring rights and not an act of state.
In the result, we hold that the Covenant is in whole and in parts an act of state, that article VI therein does not operate to confer any rights on the subjects of the Covenanting States as against the sovereign of the new State constituted thereunder, and that Ordinance No. 1 of section 2005 is, in consequence, not open to attack as being a violation of article VI.
(3)We shall now consider the contention of the appellant that even apart from article VI of the Covenant, the impugned Ordinance No. 1 of section 2005 is bad in so far as it annuls rights granted by the Ruler of Jind under the agreement dated April 1, 1938.
It was argued that exhibit A was not a mere concession which could be withdrawn by the sovereign at his will and pleasure, but that it was an agreement entered into for valuable consideration and creating mutual rights and obligations, that the appellant had, acting on the agreement, allotted to the State shares of the value of Rs. 1,50,000 without payment and had incurred considerable expense in working the concessions, and that, therefore, it was not open to the Patiala Union to go back upon it.
The decisions in The Piqua Branch of the State Bank of Ohio vs Knoop (1) and Home of the Friendless vs Rouse (2) were relied on as authorities for the proposition that a State is not competent to revoke a grant made by it for consideration.
(1) ; , (2) (1869) 19 L. Ed 495.
747 In The Piqua Branch of the State Bank of Ohio vs Knoop (1), a law of the State of Ohio of the year 1845 had provided for the incorporation of Banks and it contained provisions as to the taxes payable by them to the State and the mode of payment.
In 1851 another Act was passed, the effect of which was to increase the tax payable and the validity of this Act was questioned by a Bank incorporated under the Act of 1845.
It was held by the majority of the Court that the Act of 1845 was a legislative contract, and that the State Legislature was not competent to impair the rights which had been acquired under that contract.
In Home of the Friendless V. Rouse (2), a Society called the Home of the Friendless was established under a charter granted by the State of Missouri.
The charter had provided that the properties of the Society shall be exempt from taxation.
Subsequently, the State proposed to withdraw the concession and impose tax.
It was held by the Supreme Court of the United States that the charter was a contract entered into between the State and the Society, and that there was no power in the State to go behind it.
Now, it should be observed that the decisions cited above were given on section 10 of article 1 of the American Constitution that " no State shall pass a law impairing the obligations of contracts ".
There is, in our Constitution, no similar provision protecting contractual rights, and it would therefore be unsafe to rely on American authorities in deciding on the validity of legislation which interferes with rights under contracts.
And moreover, we are dealing with a contract entered into by a sovereign, whose powers were not subject to any constitutional limitation, and whose word was, as contended for the appellant, law.
But apart from this, there is an obvious reason why the above decisions have no application to the present controversy.
The point for decision there was whether a State which had entered into a contract with its subjects conferring rights on them was entitled to enact a law abridging or abrogating those rights, (1) ; (2) ; 95 748 and the answer was in the negative.
But here, the ,impugned law is that of the Patiala Union and the contract which it affects is not a contract entered into by it but by the Ruler of Jind and unless it can be established that the obligations of the Ruler have devolved on the sovereign of the Patiala Union, the question whether he could repudiate obligations undertaken by him cannot arise.
That would have arisen for consideration if article VI had the effect of imposing obligations on him.
But on our finding that that is not its effect, there is no scope for the contention that the impugned Ordinance is bad as involving breach of contractual obligations, which were entered into by the Patiala Union, or which devolved on it.
(4)Lastly, we have to deal with the contention of Mr. Pathak that the Patiala Union had affirmed the agreement, exhibit A, that, in consequence, it was bound by it as if it had itself entered into it, and that the liability of the appellant to income tax should therefore be determined in accordance with Cl.
(23) thereof.
This contention would be irrefragable if the Patiala Union had, as a fact, affirmed the agreement.
But has that been established ? It has been already observed that the rights of the appellant under exhibit A would become enforceable only if the new State had accorded recognition to them, and what is requisite, therefore, is a declaration or conduct of the Patiala Union subsequent to its formation which could be regarded as amounting to affirmation of exhibit A. Of that, there is no evidence whatsoever.
On the other hand, the first act of the Rajpramukh after assumption of office by him was the promulgation of Ordinance No. 1 of section 2005, the effect of which was to sweep away the rights of the appellant under Cl.
(23) of exhibit A.
It was argued that article VI of the Covenant would at least be valuable evidence from which affirmance of those rights could be inferred.
That is so ; but that inference must relate to act or conduct of the new State, and that can only be after its formation on August 20, 1948.
If there were any acts of the new State which were equivocal in character, it would have been possible to hold in the light of article VI of the 749 Covenant that its intention was to affirm the concessions in Cl.
(23) of exhibit A.
But the act of the new.
sovereign immediately after he became in titulo was the application of the Patiala State laws including the Patiala Income tax Act to the territories of Jind involving negation of those rights.
It was said that the levy of income tax for 1948 1949 was made in accordance with exhibit A, but that relates to a period anterior to the formation of the new State and is within the saving enacted in the proviso to section 3 of the Ordinance.
The appellant has failed to substantiate his plea that there has been affirmance of Cl.
(23) of exhibit A by the Patiala State Union, and this point also must be found against it.
All the contentions urged in support of the appeal fail, and it must therefore be dismissed with costs.
Coming next to Petition No. 276 of 1953, in addition to the contentions already dealt with, the petitioner urged that whatever its rights under the law prior to the Constitution, when once it came into force it conferred on the citizens certain fundamental rights, that the tax concessions which the petitioner had under the agreement, exhibit A, were rights to property and they were protected by article 19(1)(f), and that it was entitled to seek redress under article 32 of the Constitution when those rights were violated.
The decision in Virendra Singh and others vs The State of Uttar Pradesh (1) is relied on in support of this position.
This argument assumes that there were in existence at the date when the Constitution came into force, some rights in the petitioner which are capable of being protected by article 19(1)(f).
But in the view which we have taken that the concessions under Cl.
(23) of exhibit A came to an end when Ordinance No. 1 of section 2005 was promulgated, the petitioner had no rights sub sisting on the date of the Constitution and therefore there was nothing on which the guarantees enacted in article 19(1)(f) could operate.
The petition must therefore be dismissed on this short ground.
In this view, it is unnecessary to express any opinion on the soundness of the contention based on article 295 which was (1) [1955] I S.C.R. 415.
750 urged in support of the petition, or on the scope of article 363.
The petitioner will pay the costs of the respondents.
BOSE J. I agree, but want to reserve my opinion on a point that does not arise here but which the ratio of my learned brother 's judgment will cover unless the reservation that I make is set out.
If I judge aright, international opinion is divided about the effect that a change of sovereignty has on rights to immoveable property.
The English authorities hold that all rights to property, including those in real estate, are lost when a new sovereign takes over except in so far as the new sovereign chooses to recognise them or confer new rights in them.
But that, I gather, is not the view of the International Court of Justice.
According to one of its opinions, which I have quoted at p. 426 of Virendra Singh vs State of Uttar Pradesh private rights acquired under existing law do not cease on a change of sovereignty." Certain American cases take the same view though they can be distinguished on the facts.
But this view, as I understand it, does not extend to personal rights, such as those based on contract, nor, in any event, does the new sovereign assume any obligations of the old State in the absence of express agreement.
I have referred to this at p. 427.
In any event, whether I am right in thinking that that is what I might call the international view, I would agree that for our ,country that is, and should be, the law so far as per sonal rights are concerned.
In the present case, in so far as the right is claimed on the basis of contract, it would fall to the ground on any view; and in so far as it is not founded on contract, it is an obligation that is sought to be fastened on the new State.
There is no contract between the new State and the appellant, so there also he is out of court; and even if there was some agreement or understanding between the high contracting parties, it cannot be enquired into, or enforced, by the municipal (1)[1955] 1 section C. R. 415.
751 courts of the new State.
So I agree that, so far as this case is concerned, the appellant must fail.
But my, learned brother 's judgment is grounded to ' a large extent on the views of the English courts which do not draw the distinction that I am drawing here.
I therefore want to make it clear that this decision must not be used as a precedent in a case in which rights to immoveable property are concerned.
Without in any way committing myself to one view or the other, as at present advised, I feel it may be a pity for us to disregard the trend of modern international thought and continue to follow a line of decisions based on the views of an older Imperialism, when we are not bound by them and are free to mould our own laws in the light of modern thought and conceptions about rights to and in immoveable property.
But in so far as the present case is concerned, I agree that the appeal and the petition under article 32 should both be dismissed.
Appeal and petition dismissed.
| IN-Abs | The appellant company which was incorporated in 1938 in the erstwhile State of Jind obtained certain concessions from the Ruler of the State under an agreement dated April 1, 1938, which, inter alia, provided that the State was to be allotted certain shares in the company without any payment and as regards income tax the company was to be assessed at concessional rates.
On May 5, 1948, the Ruler of jind along with the Rulers of seven other States entered into a Covenant for the merger of their territories into one State, Article VI of the Covenant provided, inter alia, that the Ruler of the Covenanting State shall make over the administration of his State to the Rajpramukh of the new State and that all duties and obligations of the Ruler of the Covenanting State shall devolve on the New State and shall be discharged by it.
In accordance with that Article the Rajpramukh took over the administration of jind on August 20, 1948, and immediately after assumption of office promulgated Ordinance No. , by section 3 of which all laws in force in the State of Patiala were made applicable mutatis mutandis to the territories of the New State and that all laws in force in the Covenanting States stood repealed.
On November 24, 1949, the Rajpramukh issued a proclamation accepting the Constitution of India and on April 13, 1950, the New State became a taxable territory of the Union of India.
730 The result of the constitutional changes was that the law relating to income tax applicable to the appellant, for the period prior to August 20, 1948, was that of Jind, for the period August 20, 1948, to April 13, 1950, that of the Patiala Income tax Act and after April 13, 1950, the Indian Income tax Act ; but the appellant contended that the income tax should be levied on him as provided in the agreement entered into with the Ruler of jind, dated April 1, 1938: Held, (1) that section 3 Of the Ordinance No. on its true construction extinguished the right to tax concessions conferred on the appellant under the agreement dated April 1, 1938, and that the appellant cannot rely on that agreement after August 20, 1948.
(2)The Covenant dated May 5, 1948, entered into by the Rulers of the States, is in whole and in parts an act of State and Article VI cannot be relied on by the appellant for the enforcement of the rights conferred on him under the agreement with the Ruler of jind as against the Rajpramukh of the new State, Per section R. Das C. J., Venkatarama Aiyar, section K. Das and Gajendragadkar JJ.
When a treaty is entered into by sovereigns of independent States whereunder sovereignty in territories passes from one to the other, clauses therein providing for the recognition by the new sovereign of the existing rights of the residents of those territories must be regarded as invested with the character of an act of State and no claim based thereon could be enforced in the municipal courts established by the new sovereign unless those rights have been recognised by him.
Secretary of State for India vs Bai Ralbai, (1915) L. R. 42 I. A. 229, Vajasingji Joravarsingji and others vs Secretary of State, (1924) L. R. 51 1.
A. 357, Sccretary of State vs Sardar Rustam Khan, (1941) L. R. 68 1.
A. 109, Cook vs Sprigg, and Hoani Te Heuheu Tukino vs Aotea District Maori Land Board , relied on.
Per Bose J. International opinion is divided about the effect that a change of sovereignty has on rights to immoveable property and this decision must not be used as a precedent in a case in which rights to immoveable property are concerned.
|
t Petition Nos. 100 and 1078 of 1988.
(Under Article 32 of Constitution of India).
R.D. Upadhyaya, H.N. Salve and Rajiv K. Garg for the petitioners.
R.K. Jain, Ashok Grover and S.C. Paul for the Respondent.
The Judgment of the Court was delivered by K. RAMASWAMY, J.
1.
The two writ petitions raise common questions of fact and law and accordingly they are disposed of by a common judgement.
The petitioners in both the writ petitions are daily rated workers working in the respondent Corporation and they are seeking relief under article 32 of the Constitution for a Writ of Mandamus or other directions to regularise their services in the respective units and to pay them equal wages with initial basic pay, D.A. and other admissible allowances at par with regularly appointed employees of the respondent performing the same or similar duties.
Admittedly, they have been appointed on daily wages between 1983 and 1986 and they have been working eversince.
It is contended by them that despite their continuous service respondent has resorted to unfair labour practice in creating artificial break in service to deprive them of the benefit of continuous serv ice.
As they are not being paid equal wages at par with regular employees, this offends their right to equality of pay under article 14 and such action is contrary to the provi sions of article 39.
The respondent had raised several disputed questions of fact which needed elaborate investigation.
This Court by its order dated January 27, 1989, after heating the counsel on either side, directed the Industrial Tribunal at Delhi to examine the contentions of the petitioners and the stand taken by the respondent, on all issues after providing full opportunity to the parties of hearing including leading of evidence, oral and documentary, and to make a report to the Registry of this Court within six months.
Pursuant to the above direction, the Industrial Tribunal afforded reasonable opportunity to both parties.
It would appear that both parties agreed that oral evidence need not be 516 adduced (though respondent is now disputing that fact), and both the parties filed documentary evidence.
The Tribunal held 12 sittings, heard the counsel, considered the record and submitted its report dated September 15, 1989.
The respondent has filed its objections to the report.
We have heard learned counsel for the petitioners and Shri R.K. Jain, learned counsel for the respondent.
The Tribunal found thus: "After taking into consideration all the facts and circumstances I come to the conclusion that all the petitioners/workmen are performing same or similar duties as are performed by the incumbents of group 'D ' posts of the DSMDC and consequently on the principle of 'equal pay for equal work ' enshrined in article 39(d) read with articles 14 and 16 of the Constitution, all these workmen petitioners are entitled to equal pay for equal work in relation to the regular employees.
" On the question of the nature of the work being discharged by the petitioners, it found that some of the workmen are shown to have been working with designa tions such as Wages Slip, Truck Loading Clerk, Attendance Keeper Clerk, Drill Man, Office Work, Stone Bricks Clerk Fitter Survey Section, Pipe Fitter, Operator, Pump Operator, Creched Check Post Clerk, Permit Clerk etc., which go to suggest that those workmen were performing skilled or semi skilled jobs or work of clerical nature.
1t, therefore, suggested that the workmen with these designations may also be equated with incumbents of group 'D ' posts However, it held that their scale of pay and the entitlement to the wages should be worked out in an inquiry under section 33 C(2) of the Industrial Disputes Act.
It also further found that since the petitioners have been appointed way back between 1983 and 1986, they are to be regularised; first 1/3rd of them immediately in the pay scale of Rs. 196232 or the corresponding revised scale with allowances; another onethird of the petitioners workmen to be regularised by April 1, 1990 and the remaining one third to be regularised by April 1, 1991.
The workmen are entitled to one increment for every two completed years of their service counted from the date of commencement of service under the Management and by ignoring the artificial breaks created by the respondent.
It also held that the dismissal of the workmen without following the rule of last come first go is an unfair labour practice, arbitrary and discriminatory.
It also held that the justification for not regularising the service of the petitioners, namely, unlikelihood of the extension of the mining lease after its expiry was believed by the subsequent advertisement calling applications for filling up the vacan cies.
Accordingly, it held that non regularisation due to uncertainly of the contract is only a pretence and is not valid in law.
It also held that 517 though some of the persons like S/Shri Chander Pal Pawar, Lok Nath Rai and Dinesh Kumar are eligible to hold the post of Assistant Gr.
III and their reversion for lack of requi site educational qualification is discriminatory, arbitrary and is an abuse of power by the Management.
Accordingly, it suggested the framing of a scheme for regularising the services of all the petitioners.
Shri R.K. Jain, learned counsel for the respondent, has vehemently assailed the tenability of all the recommen dations.
It is his further contention that the respondent did not agree to dispense with adducing oral evidence and despite the direction of this Court to submit a preliminary report the Tribunal is wrong in stating that the respondent agreed that the Tribunal would send the final report.
He disputed the findings on merits pointing out various conten tions raised by the respondent in its pleading, objections and the documents filed before the Tribunal.
It is now settled law that the statement of facts recorded by a Court or Quasi Judicial Tribunal in its proceedings as 'regards the matters which transpired during the hearing before it would not be permitted to be assailed as incorrect unless steps are taken before the same forum.
It may be open to a party to bring such statement to the notice of the Court/Tribunal and to have it deleted or amended.
It is not, therefore, open to the parties or the counsel to say that the proceedings recorded by the Tribunal are incorrect.
The further contention that the respondent did not agree to dispense with the adduction of oral evidence and that the report should be the preliminary report cannot be counte nanced.
Accordingly, we hold that it is no longer open to the respondent to say that it has not consented to dispense with adducing oral evidence and to the Tribunal submitting its final report instead of a preliminary one as directed by this Court.
During the pendency of these writ petitions, 16 workmen were retrenched.
Shri R.K. Jain, learned counsel appearing for the respondent, has agreed that if there.is work and any of these sixteen persons reports for duty, work shall be provided.
This Court further directed to pay the petitioners at the rate of Rs.25 per day.
The main controversy centres round the question whether some petitioners are possessed of the requisite qualifications to hold the posts so as to entitle them to be confirmed in the respective posts held by them.
The indis putable facts are that the petitioners were appointed be tween the period 1983 and 1986 and eversince, they have been working and have gained sufficient experience in the actual discharge of duties attached to the posts held by them.
Practical experience would always aid the person to effec tively discharge the 518 duties and is a sure guide to assess the suitability.
The initial minimum educational qualification prescribed for the different posts is undoubtedly a factor to be reckoned with, but it is so at the time of the initial entry into the service.
Once the appointments were made as daily rated workers and they were allowed to work for a considerable length of time, it would be hard and harsh to deny them the confirmation in the respective posts on the ground that they lack the prescribed educational qualifications.
In our view, three years ' experience, ignoring artificial break in serv ice for short period/periods created by the respondent, in the circumstances, would be sufficient for confirmation.
If there is a gap of more than three months between the period of termination and re appointment that period may be exclud ed in the computation of the three years period.
Since the petitioners before us satisfy the requirement of three years ' service as calculated above, we direct that 40 of the senior most workmen should be regularised with immediate effect and the remaining 118 petitioners should be regula rised in a phased manner, before April 1, 1991 and promoted to the next higher post according to the standing orders.
All the petitioners are entitled to equal pay at par with the persons appointed on regular basis to the similar post or discharge similar duties, and are entitled to the scale of pay and all allowances revised from time to time for the said posts.
We further direct that 16 of the petitioners who are ousted from the service pending the writ petition should be reinstated immediately.
Suitable promotional avenues should be created and the respondent should consider the eligible candidates for being promoted to such posts.
The respondent is directed to deposit a sum of Rs. 10,000 in the Registry of this Court within four weeks to meet the remu neration of the Industrial Tribunal.
The writ petitions are accordingly allowed, but without costs.
P.S.S. Petitions allowed.
| IN-Abs | The petitioners, daily rated workers of the respondent Corporation appointed between 1983 and 1986, sought a writ of mandamus to regularise their services in the respective units and payment of wages at par with regularly appointed employees of the respondent performing the same or similar duties.
The Industrial Tribunal, which was directed by the Court to examine the matter, found that all the petitioners/work men were performing same or similar duties as were performed by the incumbents of Group 'D ' posts of the respondent Corporation and concluded that on the principle of 'equal pay for equal work ' enshrined in Article 39(d) read with Articles 14 and 16 of the Constitution they were entitled to equal pay for equal work in relation to the regular employ ees.
It further held that non regularisation due to uncer tainty of the contract was only a pretence which was not valid in law, and that reversion of some of the petitioners for lack of requisite educational qualification was discrim inatory, arbitrary and an abuse of power by the management.
The respondent assailed the findings on merits pointing out various contentions raised in its pleading, objections and the documents filed before the Tribunal.
It also con tended that it had not consented to dispense with adducing oral evidence, and that despite the direction of the Court to submit a preliminary report the Tribunal was wrong in 514 stating that the respondent had agreed that the Tribunal would send the final report.
Allowing the writ petitions, the Court, Head l.
The petitioners are entitled to equal pay at par with the persons appointed on regular basis to the similar post or discharge similar duties in the respondent Corpora tion, and are entitled to the scale of pay and allowances revised from time to time for the said posts.
[518D] 2.
The statement of facts recorded by a Court or Quasi judicial Tribunal in its proceedings as regards the matters which transpired during the hearing before it would not be permitted to be assailed as incorrect unless steps are taken before the same forum.
It may be open to a party to bring such statement to the notice of the Court/Tribunal and to have it deleted or amended, It was not, therefore, open to the respondent in the instant case to say that the proceed ings recorded by the Tribunal were incorrect.
[517C D] 3.
Practical experience would always aid a person to effectively discharge the duties and is a sure guide to assess his suitability.
The initial minimum educational qualification prescribed for the different posts is undoubt edly a factor to be reckoned with, but it is so at the time of the initial entry into service.
[517H;518A] In the instant case, the petitioners were appointed between the period 1983 and 1986 and eversince, they have been working and had gained sufficient experience in the actual discharge of duties attached to the posts held by them.
Once the appointments were made and they were allowed to work for a considerable length of time as such, it would be hard and harsh to deny them confirmation in the respec tive posts on the ground that they lack the prescribed educational qualifications.
Three years ' experience ignoring artificial break in service for short period/periods created by the respondent in the circumstances, would be sufficient for confirmation.
Since the petitioners satisfy the require ment of three years ' service so calculated, 40 of the sen ior most of them should be regularised with immediate effect and the remaining 118 should be regularised in a phased manner before April 1, 1991 and promoted to the next higher post according to the standing orders, [517G:518B D] 4.
Those of the petitioners who were ousted from service pending 515 the writ petitions to be reinstated immediately.
[518D E]
|
vil Appeal No. 5 186 of 1989.
From the Judgment and Order dated 31.8.1989 of the Delhi High Court in Company Appeal No. 35 of 1988.
F.S. Nariman, Ashok K. Mahajan and Subhash Sharma for the Appellants.
Anil B. Devan and Vinoo Bhagat for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, CJ.
Leave granted.
This is an appeal from the judgment and order of the Division Bench of the High Court of Delhi, dated 31st Au gust, 1989.
The appellant No. 1 M/s World Wide Agencies (P) Ltd. is a private limited company incorporated under the provisions of the Indian (hereinafter referred to as 'the Act ') to which Table 'A ' of Schedule 1 to the Act applies, as stipulated under the Articles of Association of the company.
As per the memorandum of associ ation the appellant company was carrying on the business of travel agents at G 40, Connaught Circus, New Delhi.
The authorised Share capital of the company was to the tune of Rs.5 lakhs divided into 5000 equity shares of Rs. 100 each.
The paid up capital as per the last annual return filed by the company with the Registrar of Companies, was Rs.2,01,000.
The company had at all relevant times 7 share holders and the total number of shares subscribed and paid up was 2010 shares.
The appellant No. 2 Mrs. Amrit Kaur Singh, at all rele vant times, was a shareholder holding 545 fully paid up shares in the share capital of the company, and was also the whole time working Director of the company, holding the office from 1974 onwards.
Late Mr. S.K. Desor was a British national.
He held 600 shares in the said company, acquired by him from the Ex Managing Director Mr. Amrik Singh Saluja and his family.
The respondents Nos. 2 & 3 to this appeal are children of late Mr. S.K. Desor who died on 5th March, 1985.
As per the certified copy of the annual return made up to 15th February, 1984 548 the shareholders of appellant No. 1 (company) were as fol lows: Mr. S.K. Desor 600 shares Mrs. Amrit Kaur Singh 545 shares Mr. Yash Pal Malhotra 250 shares Mrs. Amrit Gupta 200 shares Mrs. Savitri Devi Kohli 5 shares Mr. A.S. Saluja 5 shares Mr. Balwant Singh 405 shares 2010 shares A petition under sections 397 & 398 of the Act and in the alternative for winding up of the company was filed by the respondents on 25th March, 1985, wherein it was alleged that on 12th March, 1985 respondent No. 1, being the widow of late Mr. S.K. Desor, applied as a legal heir of late S.K. Desor to the Board of Directors of the appellantcompany for transmission of 850 shares held by her late husband.
It is stated that the shares of Yash Pal Malhotra had been ac quired by late Mr. S.K. Desor; and that respondent No. 1 filed an affidavit of her daughter Ms. Kim Paul, relinquish ing her claim to the shares of her late father.
The Board of Directors resolved that they had no objection to transmis sion of the shares held by Mr. S.K. Desor but the actual transmission would take place on respondent No. 1 's obtain ing Reserve Bank of India 's permission and the succession certificate.
The respondent No. 1 's application for allot ment of 5 shares as per her letter of the same date was allowed by the Board of Directors, and it was resolved that in view of allotment of these shares, her interest in the shares of her late husband, she be appointed as a Director of the company, subject to Reserve Bank of India 's permis sion.
It is stated in the judgment under appeal that at the said meeting of the Board of Directors, they recorded their deep appreciation for the services rendered by late Mr. S.K. Desor as Managing Directorcum Chairman of the company, and.
mourned his passing away.
The quorum of the said meeting was two Mrs.
Amrit Gupta and Mrs. Savitri Devi Kohli.
It is recorded in the judgment under appeal that on 23rd March, 1985 the Board of Directors held another meeting.
The minutes of the meeting of 12th March, 1985 were confirmed by the two above mentioned Directors.
The third Director, Mrs. Amrit K. Singh, however, objected as she stated that she had not been informed of the last meeting.
Various averments had been made in the petition with 549 regard to oppression and removal of certain valuables of Mrs. Amrit K. Singh and illegal operation of the bank ac count etc.
It was also asserted that Mrs. Singh was holding 545 shares benami and these in fact belonged to Mr. S.K. Desor.
A preliminary objection was raised on behalf of Mrs. Amrit K. Singh regarding the maintainability of the petition on the ground that the appellants were not members of the company as their names had not been recorded in the register of members.
A further objection was taken that a composite petition under sections 397 & 398 of the Act with an alternative prayer for winding up of the company was not maintainable.
The learned single Judge of the High Court sitting as a Company Judge dealt with the application and held that the appellants who were the wife and children of late Mr. S.K. Desor and had obtained letters of administration.
u/s 290 of the Indian Succession Act read with section 273 of the Act, as also the permission of the Reserve Bank of India, should be treated as members for the purpose of maintaining a petition sections 397 & 398 of the Act.
The learned single Judge also held that a composite petition was maintainable.
The appellant Mrs. Amrit K. Singh filed an appeal for herself and, as she alleged, as "Working Director" from the judgment and order dated 21st September, 1988 of the learned single Judge.
It appears that the appellants, aggrieved thereby, had also moved this Court under article 136 of the Constitution.
This Court by its order dated 18th January, 1989 stayed the further proceedings before the learned single Judge and directed expeditious disposal of the appeal pending before the division bench or the High Court, from the said order of 21st September, 1988 which had been admit ted on 13th October, 1988, for consideration by the Division Bench of the High Court of the application for.
directions.
By a judgment and order delivered on 31st August 1989 the Division Bench dismissed the said appeal and held that the petition section 397 & 398 was maintainable by the respondents in the facts and circumstances of the case, and that a composite petition sections 397,398 & 433(f) of the Act was maintainable.
Aggrieved thereby, the appellants preferred this appeal to this Court.
We are concerned with two questions of law, namely, whether the legal heirs of a deceased shareholder can be treated as members of the company for the purpose of main taining a petition sections 397 & 398 of the Act, and whether a composite petition under sections 397, 398 & 550 433(f) of the Act is maintainable.
We had the advantage of hearing Mr. F.S. Nariman, counsel for the appellants and Mr. Anil Diwan for the respondents.
It may be mentioned that during the pendency of the appeal before the High Court, without prejudice to the rights and contentions of the parties, an emergent meeting of the Board of Directors was directed by the High Court to be held on 28th January, 1989 to consider the question of registration of 450 shares belonging to the deceased Mr. S.K. Desor in the name of Mrs. Margarat T. Desor and her son Sameer K. Desor, being re spondents Nos. 1 & 3 respectively.
It further appears that as per the directions of the Division Bench, dated 27th January, 1989 the court had appointed Chairman Mr. C.K. Mahajan and Mrs. Margarat T. Desor were not permitted to vote at the said meeting.
At a meeting held subsequent thereto, by a majority, it was resolved not to register the respondents Nos. 1 & 3 as members.
It must, however, be noted that the Division Bench vide its order dated 27th January, 1989 had directed that no effect would be given to the said Resolution.
The question, therefore, which is material to be consid ered, is, whether the legal heirs of a deceased shareholder whose names are not entered in the register of members, are entitled to maintain petition sections 397 & 398 of the Act.
It was contended on behalf of the appellants that sections 397 & 398 of the Act must be strictly construed.
Section 397 of the Act which is in chapter VI of the Act under the heading "Prevention of Oppression and Mismanage ment", provides as follows: "Application to Court for relief in cases of oppression.(1) Any member of a company who complains that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members including any one or more of themselves may apply to the Court for an order under this section, provided such members have a right so to apply in virtue of section 399.
(2) If, on any application under sub section (1), the Court is of the opinion (a) that the company 's affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members, and 551 (b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the fact would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up; the Court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit.
" On behalf of the appellants it was contended that the right which is a specific statutory right, is given only to a member of the company and until and unless one is a member of the company, there is no right to maintain application u/s 397 of the Act.
Mr. Nariman contended that there was no automatic transmission of shares in the case of death of a shareholder to his legal heir and representatives, and the Board has a discretion and can refuse to register the shares.
Hence, the legal representatives had no locus standi to maintain an application sections 387 & 398 of the Act.
Mr. Nariman submitted that the rights under sections 397 & 398 of the Act are statutory rights and must be strictly construed in the terms of the Statute.
The right, it was submitted, was given to "any member" of a company and it should not be enlarged to include "any one who may be entitled to become a member".
In order to decide the question involved, it would be necessary to examine certain provisions of the Act.
Section 2(27) of the Act states that "member" in relation to company does not include a bearer of a share warrant of the company issued in pursuance of section 114 of the Act.
Section 41 of the Act provides as follows: "(1) The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration, shall be entered as members in its register of members.
(2) Every other person who agreed in writing to become a member of a company and whose name is entered in its register of members, shall be a member of the company.
" Section 26 of the English Companies Act, 1948 in sub stantially the same.
Section 109 of the Act states as follows: "A transfer of the share or other interest in a company of a 552 deceased member thereof made by his legal representative shall, although the legal representative is not himself a member, be as valid as if he had been a member at the time of the execution of the instrument of trans fer.
" In this connection, it would be relevant to refer to Articles 25 to 28 of Table A of the Act, which deal with the transmission of shares and which are in the following terms: "25.(1) On the death of a member the survivor where the member was a joint ,holder, and his legal representatives where he was a sole holder, shall be the only persons recognised by the company as having any title to his interest in the shares.
(2) Nothing in clause (1) shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by him with other persons.
26.(1) Any person becoming entitled to a share in consequence of the death or insolvency of a member may, upon such evidence being produced as may from time to time properly be required by the Board and subject as hereinafter pro vided, elect, either (a) to be registered himself as holder of the share; or (b) to make such transfer of the share as the deceased or insolvent member could have made.
(2) The Board shall, in either case, have the same right to decline or suspend registration as it would have had, if the deceased or insolvent member had transferred the share before his death of insolvency.
(1) If the person so becoming entitled shall elect to be registered as holder of the share himself, he shall deliver or send to the company a notice in writing signed by him stating that he so elects.
(2) If the person aforesaid shall elect to transfer the share, he shall testify his election by executing a transfer of the share.
553 (3) All the limitations, restrictions and provisions of these regulations resulting to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or insolvency of the member had not occurred and the notice or transfer were a transfer signed by that member.
A person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled to the same dividends or other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, become being registered as a member in respect of the share, be entitled in respect of it to exer cise any right conferred by membership in relation to meetings of the company: Provided that the Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within ninety days, the Board may thereafter withhold payment of all divi dends, bonuses or other moneys payable in respect of the share, until the requirements of the notice have been complied with.
" Article 28 is more or less in para materia to articles 32 of Table A to the English Companies Act.
It may also be mentioned, as it ' has been mentioned by the High Court, that section 210 of the English Companies Act, before its amendment in 1990, was substantially the same as section 397 of the Act.
As mentioned hereinbefore, it is the admitted case of the parties that the regulation for management of the compa ny as contained in Table A to the Act apply to appellant No. 1 and the said relevant provision in the articles of associ ation of the company regarding transfer of shares is Article 17, which is as follows: "No share shall be transferred to any person other than a shareholder of the company so long as any member of the company is willing to purchase the same at fair value.
This clause shall not apply to the executor of administrator of a deceased shareholder, if there is will or to the heir or lineal decend ents where no letter of administration has been taken." 554 Mr. Nariman submits that in view of the specific provi sions of section 397 of the Act only a member is entitled to move a petition under sections 397 and 398 of the Act and that member is one whose name is in the register of members in view of section 41 of the Act, as mentioned hereinbefore.
In this connec tion, it is was emphasised that not only must the applicant be a member but in terms of section 399 of the Act, he has to fulfil the conditions laid down under clauses (a) and (b) of section 399 of the Act.
These should be construed so as to mean what the words say.
According to Mr. Nariman, a member is not, in view of the scheme of the Act, the representative of a deceased member.
It is true that it must be a member and section 41 of the Act provides that a member of a company is a person who has applied in writing and "whose name is entered in the regis ter of members" is entitled to move the petition.
It appears in this case that names of respondent Nos. 2 and 3 had not then been entered in the register of members at the relevant time when the application was made.
But the name of Late Shri S.K. Desor was still on the register of members and the requisite shareholding for moving a petition under sections 397 and 398 of the Act was held by him.
This question, though res integra so far as this country is concerned, has been considered in England, where Pennycuick, J. had occasion to consider this in Re Jermyn Street Turkish Baths Ltd., The Company there was incorporated in 1946 and represented a joint venture by L and section In 1952, S transferred his shareholding to Mrs. P who became a director of the company.
L died in 1953 and thereafter Mrs. P was mainly responsible for the company 's affairs.
The petition ers therein were appointed administrators in L 's estate in 1960, and in 1961, at their request, the names of the peti tioners therein were entered in the register of members of the company against the name of L as administrators of L.
On the questions whether the entry constituted merely a note of the grant of administration or the registration of the petitioners as members, and whether the petitioners were members of the company for the purposes of presenting a petition under section 210 of the English Companies Act at p. 65 of the report, Pennycuick, J. noted that it was contended before him that the petitioners therein were not members of the company and hence had no locus standi to present the petition bearing in mind that petition under section 210 of the English Companies Act could only be presented by a member of the company.
In the facts of that case, Pennycuick, J. held that the petitioners were duly registered as members of the company but he proceeded to hold that even if it were so, the personal representatives of a deceased member must be regarded as members of the company for the purposes of 555 section 210 Of the English Companies Act.
In this connection, reference was made to the decision of Buckley, J. in Re Bayswater Trading Co. Ltd., , where at p. 609 of the report, it was held that 'member ' would in clude representative of a deceased member for the purpose of section 353 of the English Companies Act.
This judgment of Penny cuick, J. went up in appeal to the Court of Appeal and it was reversed.
See Re Jermyn Street Turkish Baths Ltd., But on the point whether the repre sentative of a deceased member can maintain an action under section 210 of the English Companies Act, the views of Penny cuick, J. were not reversed or modified.
Mr. Nariman submit ted that the observations of Pennycuick, J. were obiter for the decision of the case.
We are unable to agree.
Indeed, this was a point specifically referred to by Pennycuick, J. as being raised and specifically decided.
But we need not detain ourselves with this controversy because the decision of the English Courts are not binding in the courts of India.
But the observations or the reasoning are of persua sive value.
We are clearly of the opinion that having regard to the scheme and the purpose of sections 397 and 398 of the Act, the reasoning on a para materia provision of the English Act would be a valuable guide.
The said construction, appears to us, to further the purpose intended to be fulfilled by petitions under sections 397 and 398 of the Act.
It facilitates solution of problems in case of oppression of the minorities when the member is dead and his heirs or legal representa tives are yet to be substituted.
This is an equitable and just construction.
This construction, as suggested by Penny cuick, J. does not militate against either equity or justice of the such situation.
We would, therefore, adhere to that construction.
In this connection, it may be mentioned that in the 1972 Edition of Gore Browne on Companies, it has been stated as follows: "It has recently been settled that the person al representatives of a deceased member, even though they are not registered as members, are entitled to present a petition under section 210.
In Re. Jermyn Street Turkish Baths Ltd., Pennycuick, J. held that on its true construc tion section 210 required that the word 'member ' should include the personal represen tatives of a deceased member, on whom title of his shares devolved by operation of law.
" In 1st Supplement January 1978 of Gore Browne on Compa nies, at para 16, it is stated that "while the shares remain in the name of the deceased holder, his estate is prima facie entitled to any subsequent benefits deriving from the shares".
At p. 491 of Buckley on Companies , the decision of Re Jermyn Street Turkish Baths Ltd. 's case (supra) has also been referred to and it was observed that for the purpose of the petition under section 210 of the English Companies Act, 'member ' includes the personal representatives of a deceased member.
Buckley also notes that this decision referred herein was reversed without affecting this point by the Court of Appeal.
In Halsbury 's Laws of England, 4th Edition, Vol. 7, para 1010, at p. 604, same view has been expressed.
The division bench of the Delhi High Court also noticed that the view expressed in Re Jermyn Street Turkish Baths (supra) also finds indirect support from various other decisions of the English Courts.
Reference was made to the decision in James vs Buena Venture Nitrate Grounds Syndicate Ltd., [1896] 1 Chancery Division 456; Re Dlewellyn vs Kasintoe Rubber Estate Ltd., and New Zealand Gold Extraction Company (Newbe ryyautin Proces) Ltd. vs Peacock, These decisions do indicate that the right of members in similar, though not identical situations, should be construed as being belonging to the legal representative or heirs of deceased members.
Our attention, however, was drawn to the decision of Supreme Court of Victoria in Re Meyer Dougals Pty. Ltd., ; by Gowans, J. Article 22 of Table A to the Victorian Companies Act, 1938 (4602) provides as follows that: "22.
A person becoming entitled to a share by reason of the death, bankruptcy or insolvency of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not before being registered as a member in respect of the share be entitled in respect of it to exercise any right conferred by membership in relation to meeting of the company.
" Gowans, J. in that case found that there was a "careful distinction between members and persons entitled to share by reason of the death of a member but who are not registered appear to deny the status of a member to a legal personal representative who is not a member".
On an analysis of various decisions, Gowans, J. was of the view that a de ceased 's estate and its representative may in a particular context have to be treated as not a member and in view of the provisions of section 186(1) of the Victorian Companies Act, 1961 which provides "any member of a company who complains that the affairs of the company are being conducted in manner oppressive to one or more of 557 the members (including himself) may . apply to the court for an order under that section", Gowans, J. came to the conclusion that there was no reason for treating the word "members" in that section as not applying to a legal repre sentative who is not entitled to be accorded the right which registration would give him to vote in regulating the con duct of the company 's affairs.
The object of the section, which is in para materia to section 399 of the Act, was to pro vide a remedy for the case where, notwithstanding the fact that a person possesses the right of a member enabling him to participate in the conduct of the affairs of the company, he can claim that he as a member or as one of a number of members, is or are being oppressed by those who conduct the affairs of the company.
According to Gowans, J., it should not be treated as applying to someone who is not so entitled and cannot so claim.
With respect, we are unable to accept this view.
Having regard to the purpose of the section as we conceive it, it would not be just construction to deny the legal representatives of the deceased member the right of maintain a petition under sections 397 and 398.
We would prefer to accept the view of Pennycuick, J. in Re Jermyn Street Turkish Baths Ltd. 's case (supra).
It appears to us that this will be in consonance with the equity of the sections.
In Gower 's Principles of Modern Company Law, at p. 68, reference has been made to Re Jermyn Street Turkish Baths Ltd. 's, case (supra) and also to Re Meyer Douglas Pry Ltd. 's, case (supra), which, according to the learned author, seems to be more convincing.
Mr. Nariman also referred us to the comments in Hahlo 's Casebook on Company Law, 2nd Edi tion, p. 35 1, where in footnote, reference was made to Re Jermyn Street Turkish Baths Ltd. 's, case (supra), which have been followed in some decisions.
It was noted as fol lows: "It appears doubtful whether personal repre sentatives of deceased shareholders, who themselves are not, or cannot become, registered as shareholders, can be regarded as "members" for the purposes of section 210 of the 1948 Act: Re Cuthburt Cooper & Sons Ltd., [1937] Ch.
392 and Re Meyer Douglas Ltd., at 655.
" We do not agree for the reason mentioned before.
It further appears to us the Australian judgment does not reconcile to logic in accepting that legal representative can petition for winding up, which is called the "sledge hammer remedy", but would refuse the lesser and alternative remedy of seeking relief against oppression and mismanage ment though the latter remedy requires establishment of winding up on just and equitable grounds as a precondition for its 558 invocation.
It would be rather incongruous to hold that the case for winding up on just and equitable grounds can be made out by the legal representatives under section 439(4)(b) of the Act but not the other.
This does not appear to be logi cal.
It appears to us that to hold that the legal represen tatives of a deceased shareholder could not be given the same right of a member under sections 397 and 398 of the Act would be taking a hyper technical view which does not ad vance the cause of equity or justice.
The High Court in its judgment under appeal proceeded on the basis that legal representatives of a deceased member represent the estate of that member whose name is on the register of members.
When the member dies, his estate is entrusted in the legal repre sentatives.
When, therefore, these vestings are illegally or wrongfully affected, the estate through the legal represen tatives must be enabled to petition in respect of oppression and mismanagement and it is as if the estate stands in the shoes of the deceased member.
We are of the opinion that this view is a correct view.
It may be mentioned in this connection that succession is not kept in abeyance and the property of the deceased member vests in the legal represen tatives on the death of the deceased and they should be permitted to act for the deceased member for the purpose of transfer of shares under section 109 of the Act.
In some situations and contingencies, the "member" may be different from a "holder".
A "member" may be a "holder" of shares but a "holder" may not be a "member".
In that view of the matter, it is not necessary for the present purpose to examine this question from the angle in which the learned Single Judge of the Calcutta High Court analysed the posi tion in the case of Kedar Nath Agarwal vs Jay Engineering Works Ltd. and Ors., , to which our attention was drawn.
Admittedly in the present case, the legal representa tives have been more than anxious to get theft names put on the register of members in place of deceased member, who was the Managing Director and Chairman of the company and had the controlling interest.
It would, therefore, be wrong to insist their names must be first put on the register before they can move an application under sections 397 and 398 of the Act.
This would frustrate the very purpose of the necessity of action.
It was contended on behalf of the appellant before the High Court that if legal representatives who were only potential members or persons likely to come on the register of members, are permitted to file an application under sections 397 and 398 of the Act, it would create havoc, as then persons having blank transfer forms 559 signed by members, and as such having a financial interest, could also claim to move an application under sections 397 and 398 of the Act.
The High Court held that this is a fallacy, that in the case of persons having blank transfer forms, signed by members, it is the members themselves who are shown on the register of members and they are different from the persons with the blank transfer forms whereas in the case of legal representatives it is the deceased member who is shown on the register and the legal representatives are in effect exercising his right.
A right has devolved on them though the death of the member whose name is still on the register.
In our opinion, therefore, the High Court was pre eminently right in holding that the legal representa tives of deceased member whose name is still on the register of members are entitled to petition under sections 397 and 398 of the Act.
In the view we have taken, it is not necessary to consider the contention whether as on the date of petition, they were not members.
In that view of the matter, it is not necessary for us to consider the decision of this Court in Rajahmundry Electric Supply Corpn.
Ltd. vs A. Mageshwara Rao & Ors., 13.
In view of the observations of this Court in Life Insurance Corporation of India vs Escorts Limited & Ors., ; at p. 1412, it is not necessary, in our opinion, to consider the contention as made on behalf of the appellant before the High Court that the permission of the Reserve Bank of India had been errone ously obtained and consequently amounts to no permission.
In the present context, we are of the opinion that the High Court was right in the view it took on the first aspect of the matter.
The second question was whether a combined petition under sections 397, 398 and 433(f) of the Act was maintainable.
In view of the observations of this Court in Shanti Prasad Jain vs Kalinga Tubes, and the reasoning of the Bombay High Court in Bilasrai Joharmal & Ors.
vs Akola Electric Supply Co. Pvt. Ltd., , we are of the opinion that the averments which a petitioner would have to make to invoke the jurisdiction under sections 397 and 398 are not destructive of the averments which are required to be made in a case for winding up under section 433(f) of the Act on the just and equitable ground, though they may appear to be contradictory.
As Halsbury 's Laws of England, 4th Edition, Volume 7, at p. 604 605, discusses that the prayer must be made stating that the affairs are such which fulfil the requirement of winding up but to wind up the company would unfairly prejudice that part of the members, but otherwise the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up, the Court may, with a view to bringing to an end the 560 matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company 's affairs in future or otherwise.
We are of the opinion that averments which a petitioner would have to make to invoke the juris diction of sections 397 and 398 of the Act are not destructive of the averments which are required to be made in a case for winding up under section 433(f) on the just and equitable ground, though they may appear to be rather conflicting if not contradictory.
We are in agreement with the High Court that the petition must proceed upto certain stage which is common to both winding up and though there may be some difference in procedure to be adopted, it is not such which is irrecon cilable and cannot simultaneously be gone into.
Indeed these are made in the manner indicated before.
It has to be borne in mind that a discretion is conferred on the court and it is only when the Court is satisfied that the facts justify the making of a winding up order on the ground that it is just and equitable that the company should be wound up, but if the Court is further of the opinion that it would be a remedy worse than the disease, then the Court can examine whether the alternative relief by way of a direction under ' section 397 can be granted.
This is a well accepted remedy exercised by the Courts.
We are, therefore, of the opinion that the High Court.was right in the view that a composite petition under sections 397,398 and 433(f) of the Act is main tainable.
The appeal, therefore, must fail and is accordingly dismissed.
We dismiss the appeal with costs, which is as sessed at Rs.5,000.
Y. Lal Appeal dis missed.
| IN-Abs | The appellant No. 1 is a private limited Company incor porated under the Indian Companies Act.
The Company had at all relevant times 7 share holders and the total number of shares subscribed and paid up was 2010 shares.
The appellant No. 2 is a shareholder and a whole time Director of the Company.
Consequent upon the death of one share holder, Mr. S.K. Desor, who had controlling interest in the Company, his legal representatives, wife and children respondents herein.
filed a petition under Section 397 and 398 of the Act and in the alternative prayed for winding up of the company.
A preliminary objection was raised on behalf of Mrs. Amrit K. Singh, appellant No. 2 regarding the maintainability of the petition on the ground that the respondents were not members of the company as their names had not been recorded in the register of members and as such they had no locus standi to file the petition in question.
A further objection was also taken that a composite petition under Sections 397 and 398 of the Act with an alternative prayer for winding up of the company was not maintainable.
A company Judge of the High Court before whom the peti tion came up for hearing held that the respondents who were the wife and children of the deceased share holder and who having obtained Reserve Bank 's permission and letters of administration according to law should be treated as members for the purpose of maintaining a petition under Sections 397 and 398 of the Act.
The company Judge also held that a composite petition was maintainable.
Appellant No. 2 preferred an appeal against the order of the Company Judge.
The appellants also moved this Court under Article 136 of the Constitution against the order of the Company Judge.
This court by its order dated 18th Janu ary 1989 stayed the further proceedings before the Single Judge and directed expeditious disposal of the appeal.
The Division Bench dismissed the appeal holding that the peti tion under 546 Sections 397 and 398 was maintainable.
Hence this appeal.
The same two questions as stated above arose for deter mination by this Court, Dismissing the appeal, this Court, HELD: Succession is not kept in abeyance and the proper ty of the deceased member vests in the legal representatives on the death of the deceased and they should be permitted to act for the deceased member for the purpose of transfer of shares under Section 109 of the Act.
[558D] In some situations and contingencies, the 'member ' may be different from a 'holder '.
A 'member ' may be a 'holder ' of shares but a 'holder ' may not be a 'member '.
[558E] To hold that the legal representatives of a deceased shareholder could not be given the same right of a member under Sections 397 and 398 of the Act would be taking a hyper technical view which does not advance the cause of enquiry or justice.
[558B] In the instant case, the legal representatives have been more than anxious to get their names put on the register of members in place of deceased member, who was the Managing Director and Chairman of the company and had the controlling interest.
It would.
therefore, be wrong to insist that their names must be first put on the register before they can move an application under Sections 397 and 398 of the Act.
This would frustrate the very purpose of the necessity of action.
[558F G] The decision of the English courts are not binding on the courts in India.
But the observations or the reasoning are of persuasive value.
[555C] Re Jermyn Street Turkish Baths Ltd., [1970] 3 All E.R. 37; Re Bayswater Trading Co. Ltd. ; James vs Quena Venture Nitrate Grounds Syndicate Ltd., [1896] 1 Chancery Division 456; Re Dlewellyn vs Kasintoe Rubber Estate Ltd., ; New Zealand Gold Extraction Company, (Newberyvautin Process) Ltd. vs Peocock, ; Re Meyer Dougals Pty Ltd., [1965] V.R. 638; Kedar Nath Agarwal vs Jay Engg.
Works Ltd. and Ors.
, ; Rajahmundry Electric Supply Corpn.
Ltd. vs A. Nageshwara Rao and Ors.
, ; ; Life Insurance Corporation of India vs
Escorts Ltd. and Ors., AIR 1986 SC 547 1370 at p. 1412; Shanti Prasad Jain vs Kalinga Tubes, and Bilasrai Joharmal and Ors.
vs Akola Electric Supply Co. Pvt. Ltd., , re ferred to.
|
ivil Misc.
Petition (C) No. 13066 of 1989.
IN Civil Appeal No. 2628 of 1980.
563 A.K. Sen and V.B. Joshi for the Petitioner.
G.L. Sanghi, C.M. Lodha, Shankar Ghosh, H.M. Singh and C.P. Mittal for the Respondents.
The Judgment of the Court was delivered by V. RAMASWAMI, J.
In this petition the petitioner has prayed for convicting Respondents 1 and 2 for committing the contempt of this Court by violating the terms and conditions of the undertaking filed in Civil Appeal No. 2628 of 1980 and for a direction that whosoever is in possession of the suit premises be handed over to the petitioner.
The peti tioner as the owner and landlord of the property, Tika No. 3, City Survey House, bearing No. 344/345, Jambli Naka, Thane, consisting of ground floor, first floor and second floor in which the business of restaurant known as Ramakr ishna Hindu Hotel or Ramakrishna Hotel is carried on, filed Civil Suit No. 2 13 of 1970 in the Court of Civil Judge, Senior Division, Thane, against the first respondent and four others, by name, P.A. Dange, V.A. Dange, Haribhan Shivale and Giri Anna Shetty for eviction from the above said premises.
The suit was decreed by the Trial Court.
The first respondent who was the first defendant in the suit alone filed an appeal against this decree before the Dis trict Court.
The appeal was dismissed confirming the order of eviction.
Thereafter, the first respondent filed writ petition No. 354 of 1975 in the High Court of Bombay and that writ petition was also dismissed.
Though defendants 2, 3, 4 and 5 did not file the appeal or take the matter fur ther to the High Court they were implead as respondents in the appeal and the writ petition filed by the first respond ent herein.
The first respondent thereafter filed Civil Appeal No. 2628 of 1980.
The said appeal was dismissed by this Court on 18th of August, 1987.
However, at the request of the appellant this Court allowed the appellant to contin ue to be in possession and carry on the business till 31.3.1989 subject to the "appellant and all those persons who are now occupying the premises as employees or staff and are staying in the premises file an usual undertaking in this Court within eight weeks from today stating inter alia that they will hand over and deliver over vacant possession of the premises on the expiry of the period mentioned above and also indicate that they will go on depositing the mesne profits until the possession is delivered.
In default of furnishing or filing the undertaking in the manner indicat ing within the 564 time aforesaid the decree of execution shall become executa ble forthwith." In pursuance of this order the first respondent K.M.M. Shetty filed an undertaking on 5.10.1987.
The first respond ent through his advocate had produced the muster roll show ing the names of persons employed by him for running the hotel business in the suit premises as well as a list of persons staying in the said hotel.
This list showed 17 persons as being the employees and persons staying in the hotel, and as directed by this Court the 17 persons also filed an undertaking.
Some time in the beginning of 1989 one Raghuram A. Shetty second respondent in the contempt application filed Civil Suit No. 306 of 1989 in the Thane Civil Court before the IIIrd Joint Civil Judge, Senior Division, Thane, for a declaration that the decree for eviction obtained in respect of the suit premises in Civil Suit No. 2 13 of 1970 cannot be executed against him and for a permanent injunction, against the petitioner herein.
Pending the suit he had also filed an application under Order 39 Rule 1 and 2 read with section 151 of CPC for a temporary injunction from executing the decree for eviction.
By an order dated 5.4.1989, the IIIrd Joint Civil Judge, Thane, granted a temporary injunc tion against the petitioner herein restraining him upto the disposal of Civil Suit No. 306 of 1989 from executing the decree for eviction given in Civil Suit No. 213 of 1970.
Thereafter, the petitioner has filed this contempt petition both against his original tenant K.M.M. Shetty and also against the second respondent who was the plaintiff in Civil Suit No. 306 of 1989.
The second respondent has filed a reply statement in which he has contended that P.A. Dange had taken over the hotel business which was being carried on by the tenant K.M.M. Shetty in the name and style of "Ramkrishna Hindu Hotel" at the ground floor of the suit premises on 29.11.1986 and under an agreement dated 2nd January, 1967 the said P.A. Dange with the consent of the tenant trans ferred the said business and the exclusive possession of the hotel to the second respondent herein.
Subsequently there was another agreement executed between the tenant and the second respondent on 1.8.1972 under which the second re spondent was paying royalty to the tenant and that to the knowledge of the petitioner he was in the occupation of the premises and carrying on the business and that in spite of it he had not been impleaded in the eviction suit or the subsequent proceeding and that therefore he was not bound by the decree for eviction.
A 565 rejoinder has been filed by the landlord petitioner to this reply.
As stated earlier the Suit No. 213 of 1970 was filed by the petitioner for eviction not only against the original tenant K.M.M. Shetty but also against P.A. Dange, V.A. Dange and two others.
The case of the petitioner landlord was that the tenant had sub let the premises to the said P.A. Dange defendant No. 2 and V.A. Dange defendant No. 3.
The tenant filed written statement contending that he had allowed the second defendant to manage and conduct the said hotel busi ness under the terms and conditions set out under an agree ment made and entered into between them and that Municipal licence for the business had always been and still in the name of the tenant first defendant.
Neither P.A. Dange nor V.A. Dange ever stated that they had parted with the posses sion to the second respondent either as a licensee or in any other capacity.
Again in the Writ Petition No. 354 of 1975 filed in the High Court the first respondent had stated that P.A. Dange was permitted to conduct the said business under an agreement dated 29th February, 1970 on his paying the tenant a sum of Rs.500 per month by way of royalty, that this agreement was subsequently renewed on 29th January, 1970 increasing the royalty amount from Rs.500 to Rs.600 per month but, however, during the pendency of the appeal before the learned District Judge, Thane, defendants 2 and 3 had returned the business together with the premises, stock in trade, furniture, fittings and all paraphernalia which were given to them for conducting the said business to the first respondent herein and that the first respondent had been in sole possession and occupation of the said premises and of the business conducted therein and he himself had been carrying on the business from that time.
Again in this Court when he filed the special leave petition the first respond ent prayed for stay of dispossession.
This Court by an order dated 5th November, 1980 granted stay of dispossession on condition that the respondent will continue to pay compensa tion equivalent to rent every month regularly to the peti tioner herein and that he shall not induct anybody else in the premises in question.
When the petitioner received notice in Civil Suit No. 306 of 1989 he sent the lawyer 's notice dated 14th March, 1987 to the first respondent inviting his attention to the undertaking given by him to vacate the premises before the 31st of March, 1989 and the consequences that may follow, if in breach of the said undertaking, he does not hand over possession.
In this notice he also brought to the notice of the first respondent that the suit was filed at the instiga tion of the first respon 566 dent and charged collusion between first and second respond ent and stated that the suit is based on false and ficti tious allegations intentionally made to postpone the date of delivery of the premises.
The first respondent sent a reply to this notice on 23.8.1989 stating that he is not at all concerned in any manner whatsoever with the suit filed by the second respondent, and that he would be filing necessary affidavit in the Suit No. 306 of 1989.
The first respondent filed an affidavit in the suit in which also he stated that he had nothing to do with the suit filed by the plaintiff and denied the claim of the plaintiff and further stated that the suit premises had to be handed over to the peti tioner by 31.3.1989 as per his undertaking given in this Court.
He had also prayed the Court to pass "such suitable orders to facilitate compliance of the orders" of this Court in respect of the suit premises.
he had enclosed copy of his reply to the lawyer 's notice sent by him to the petitioner along with this affidavit.
However, for the first time in the reply filed to the contempt application the first re spondent had stated that "the petitioner has with ulterior motives deliberately withheld from this Hon 'ble Court mate rial facts i.e. the respondent No. 1 has not been (in land lord 's knowledge) in the suit premises since 1967 i.e. even before the suit for eviction was filed in the trial court" and that "at that time of final hearing of the appeal, it was landlord 's duty to bring to the notice of this Hon 'ble Court that the answering respondent is not in possession of the dispute premises.
" He had further stated that when the undertaking was filed by him he was not in possession of the suit premises and that it was well within the knowledge of the landlord.
He had also stated that the second respondent had been in possession of the suit property.
We cannot now accept this statement of the first respondent that he was not in possession at the time when he gave the undertaking on the facts and circumstances stated above.
If the second respondent is in possession as he claims now, it would mean that the first respondent had been playing a fraud on the Court, and sweating false affidavits and making false state ments and obtaining orders on the basis of such false state ments.
It may be noted, however, that there was absolutely no need for making such false allegations and obtain orders which are of no use to him if he had not been in possession, as stated now.
If it is said that he might have been moti vated by a desire to spite the landlord and to deprive him of the possession it would clearly be an abuse of the proc ess of the Court.
Throughout P.A. Dange and the first respondent who were stated to have given a licence to the second respondent for carrying on the business were parties to the proceedings but they never informed 567 the Court about the possession being with the second re spondent.
As already stated the learned counsel for the first respondent produced in this Court at the time of hearing of the Civil Appeal the muster roll for running the hotel as well as a list of persons who are stated to be staying in the hotel.
In that list the second respondent 's name did not find a place.
Now if the first respondent states that the second respondent had been in the possession of the suit premises and carrying on the hotel business ever since 2nd January, 1967 the first respondent is guilty of deliberately suppressing the facts and giving a false under taking to this Court that he is in possession of the suit premises.
In the Civil Suit No. 306 of 1989, the second respondent had prayed for the injuction on the basis that he was a licensee originally from P.A. Dange and later under the tenant himself and that though there was no privity between the petitioner and the second respondent, by reason of certain amendments to the Bombay Rents, Hotel and Lodging House Rates Control Act he had become the tenant directly under the petitioner herein and entitled to protection.
An interim injuction has been granted by the IIIrd Joint Civil Judge, Thane, on the ground that it is necessary, till the plaintiff establishes his right, to allow him to be in possession.
The learned Judge was not well founded in this view.
In the light of the earlier statements made by the first respondent K.M.M. Shetty, P.A. Dange and V.A. Dange in the eviction proceedings and in this Court and in the light of the undertakings given by the first respondent and 17 others the learned Judge should have directed the plaintiff to prove his claim in the suit first before any relief is given against the defendants pending the suit.
It may be mentioned that the argument of the learned counsel of the petitioner was that the first respondent had falsely insti gated the second respondent to file the suit and obtain an injunction.
If this contention is true then the first re spondent is guilty of contempt in not handing over vacant possession as per the undertaking and in fact the second respondent would equally be guilty as abetor of the breach.
However, we are not going into the question of the second respondent 's right in Civil Suit No. 306 of 1989 and that may have to be decided after trial.
Suffice it to say that we are of the view that the order of injunction against the petitioner from executing the decree against the second respondent is not justified in this case.
We would like to add that as the facts of the undertaking given and the various statements made by the tenant in the eviction pro ceedings were before him, we would have expected the learned Civil Judge, Thane, to have directed the parties to obtain a clarification from this Court, if there 568 was any doubt as to the executability of the decree passed by this Court.
Be that as it may, we now direct that that portion of the order granting injunction against the petitioner from executing the eviction decree against the second respondent, on the facts and circumstances of this case, shall not be operative and that petitioner is entitled to execute the decree for eviction against all persons who are in posses sion of the property.
Now coming to the question of relief that is to be granted to the petitioner and the punishment to be imposed on the first respondent, the learned counsel for the first respondent contended that his client is an old man of more than 84 years and that in fact though he was willing to hand over vacant possession, on the facts and circumstances he could not comply with undertaking bona fide.
When a court accepts an undertaking given by one of the parties and passes orders based on such undertaking, the order amounts in substance to an injunction restraining that party from acting in breach thereof.
The breach of an under taking given to the Court by or on behalf of a party to a civil proceedingS. is, therefore, regarded as tantamount to a breach of injunction although the remedies were not always identical.
For the purpose of enforcing an undertaking that undertaking is treated as an order so that an undertaking, if broken, would involve the same consequences on the per sons breaking that undertaking as would their disobedience to an order for an injunction.
It is settled law that breach of an injunction or breach of an undertaking given to a court by a person in a civil proceeding on the faith of which the court sanctions a particular course of action is misconduct amounting to contempt.
The remedy in such circum stances may be in the form of a direction to the contemnor to purge the contempt or a sentence imprisonment or fine or all of them.
On the facts and circumstances of this case in the light of our finding that there was a breach of the undertaking we think that mere imposition of imprisonment or fine will not meet the ends of justice.
There will have to be an order to purge the contempt by directing the first respondent contemnor to deliver vacant possession immediate ly and issuing necessary further and consequential direc tions for enforcing the same.
In the foregoing circumstances, we find the first re spondent guilty of committing contempt by wilful disobedi ence of the undertaking given by him in this Court and accordingly we convict him and 569 sentence him to pay a fine of Rs.500 within the period of four weeks, failing which he shall suffer simple imprison ment for one month, and also direct him to deliver vacant possession of the premises forthwith to the petitioner to the extent possible by him.
We further direct the District Magistrate, Thane, to evict all those who are in physical possession of the property including the 2nd respondent and his men and if necessary with police help and give vacant possession of the premises to the petitioner forthwith.
However, we discharge the rule issued against the second respondent.
| IN-Abs | The Petitioner landlord filed a suit No. 213 of 1970 for eviction against the first respondent and four others in the court of Civil Judge, Senior Division, Thane.
The suit was decreed by the Trial Court.
The first respondent alone filed an appeal before the District Court.
The appeal was dis missed confirming the eviction.
Thereafter the first re spondent filed a Writ Petition in the High Court of Bombay which was also dismissed.
The first respondent then filed Civil Appeal No. 2628 of 1980 in this Court which was dis missed by this Court on 18.8.1987.
However at the request of the appellant this Court had allowed him to continue to be in possession and carry on the business till 31.3.89 subject to the appellant and all his employees in the business filing an usual undertaking in the Court that they will hand over and deliver vacant possession of the premises on the expiry of the period mentioned above and will go on deposit ing the mesne profits until possession is delivered.
In pursuance of this order an undertaking was filed by the first respondent as also by persons shown as his employees and staying in the premises.
Sometime in the beginning of 1989 one Raghuram A. Shetty Second respondent in this Petition filed Civil Suit No. 306 of 1989 in the Thane Civil Court for a declaration that the decree for eviction obtained in respect of the premises in question in civil suit No. 213 of 1970 cannot be executed against him and for a permanent injunction against the Petitioner herein.
He also moved an application for a tempo rary injunction from executing the said decree.
The Thane Civil Court granted a temporary injunction as prayed.
That is how the Petitioner herein filed this contempt petition both against the original tenant K.M.M. Shetty and the second respondent the Plaintiff in Civil Suit No. 306 of 1989.
After discussing in detail the various developments of the case 562 brought about by the first respondent as well as by the 2nd respondent herein, this Court directed that the order grant ing injunction against the Petitioner from executing the eviction decree against the 2nd respondent shall not be operative and that the Petitioner is entitled to execute the decree for eviction against all persons who are in posses sion of the property.
While holding the first respondent guilty of committing contempt by wilful disobedience of the undertaking given by him in this court, the Court, HELD: Breach of an injuction or breach of any undertak ing given to a Court by a person in civil proceedings on the faith of which the Court sanctions a particular course of action is misconduct amounting to contempt.
[568F] The remedy in such circumstances may be in the form of a direction to the contemnor to purge the contempt or a sen tence of imprisonment or time or all of them.
[568F] When a court accepts an undertaking given by one of the parties and passes an order based on such undertaking, the order amounts in substance to an injunction restraining that party from acting in breach thereof.
[568D] The breach of an undertaking given to the Court by or on behalf of a party to a civil proceeding is, therefore, regarded as tantamount to a breach of injunction although the remedies were not always identical.
For the purpose of enforcing an undertaking that undertaking is treated as an order so that an undertaking, if broken, would involve the same consequences on the persons breaking that undertaking as would their disobedience to an order for an injunction.
[568D E] In the light of this Court 's finding in the instant case, that there was a breach of the undertaking mere impo sition of imprisonment or fine will not meet the ends of justice.
There will have to be an order to purge the con tempt by directing the first respondent contemnor to deliver vacant possession immediately and issuing necessary further and consequential directions for enforcing the same.
[568G]
|
vil Appeal No. 10030 of 1983.
From the Judgment and Order dated 6.9.1983 of the Madhya Pradesh High Court in S.A. No. 475 of 1977.
A.B. Rohtagi and S.K. Gambhir for the Appellant.
V.M. Tarkunde and S.V. Deshpandey for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
This appeal is directed against the decree of the Madhya Pradesh High Court for eviction of the appellant from a house after holding him to be the respondents ' ten ant.
The appellant denied the title of the plaintiffs and their case that he has been in possession of the property as their tenant.
The trial court accepted the plaintiffs ' case and passed a decree in their favour, which was set aside on appeal by the first appellate court.
The decision was re versed by the High Court in second appeal by the impugned judgment.
Admittedly the house which was in possession of the defendant 's father Misri Lal as a tenant belonged to one Smt.
Raj Rani who sold the same on 11.8.1952 to the plain tiffs ' predecessor ininterest, Navinchand Dalchand.
In 1959 a suit for his eviction was filed by Navinchand, which was resisted on the ground that Smt.
Raj Rani had earlier trans ferred the house to a trust and she, therefore, could not later convey any title to Navinchand.
The trial court re jected the defence and passed a decree against which Misri Lal filed an appeal.
During the pendency of the appeal the parties resolved their dispute amicably.
Misri Lal accepted the title of Navinchand and a deed, Ext.
P. 20, creating a fresh lease in favour of Misri Lal under Navinchand as lessor, was executed with effect from 1.12.1962.
The appeal was disposed of by recording this fact and stating further that the arrears of rent had been paid off.
The compromise petition and the decree have been marked in the present suit as Ext.
P 21 and Ext.
Misri Lal continued to occupy the house till he died in 1972 leaving behind his son, the present appellant, as his heir and legal representative.
Navinchand sold the suit property to the plaintiffs respond ents on 4.1.1973, who sent a notice to the appellant on 14.3.1973.
Since the 538 appellant refused to recognise them as owners of the house, another notice terminating the tenancy was served in January 1976 and the present suit was filed in June of the same year.
The appellant resisted the claim in the plaint on the same old plea which his father Misri Lal had unsuccessfully taken in the earlier suit, namely, that Smt.
Raj Rani having transferred the disputed house to a trust in 1936 was not competent to re transfer it to Navinchand Dalchand, the vendor of the plaintiffs respondents.
The trial court disbe lieved the defence version holding that although Smt.
Raj Rani had executed a trust deed in 1936, but the same was not acted upon and the trust does not appear to have come into existence.
On appeal the first appellate court reversed the finding and further held that the defendant could not be estopped from challenging the title of the plaintiffs.
It has been the case of the appellant that the con sent of Misri Lal to the compromise in the earlier suit was obtained by force, but the plea was not substantiated by any evidence, and it has been pointed out by the High Court that the appellant admitted in his deposition that to his knowl edge no force had been used against Misri Lal.
The High Court further rightly rejected the argument that the decree, Ext.
P. 22, would not bind the parties since it was founded on a compromise and not on an adjudication by the court on the question of title.
The court also observed that the statements made in the compromise petition, Ext.
P. 21, in the earlier suit support the case of the plaintiffs inde pendently of the compromise decree, and further, the defence plea has to be rejected in view of the deed, Ext.
P. 20, creating a fresh lease.
These findings were sufficient for the disposal of the appeal but the High Court proceeded to consider the question whether Smt.
Raj Rani had in fact transferred the suit house in favour of a trust, and decided the issue against the appellant.
The grievance of Mr. Rohatagi, the learned counsel for the appellant, that in view of the limited scope of a second appeal under section 100 of the Code of Civil Procedure, the High Court was not justified in setting aside the find ing of the first appellate court on the question as to whether the property had been alienated in 1936 in favour of the trust or not is well founded.
After the court reached a conclusion against the defendant on the basis of the lease deed, Ext.
P. 20, the compromise petition, Ext.
P. 21, and the compromise decree, Ext.
P. 22, it should not have pro ceeded to decide the dispute relating to title on merits on the basis of the evidence.
However, this error cannot help 539 the appellant unless he is able to successfully meet the effect of Ext.
P. 20, Ext.
P. 21 and Ext.
P. 22.
It has been strenuously contended by Mr. Rohatagi that the principle that a tenant is estopped from challeng ing the title of his landlord is not available to the land lord 's transferee in absence of attornment by the tenant.
Reliance was placed on Kumar Krishna Prosad Lal Singha Deo vs Baraboni Coal Concern Ltd., and Others, A.I.R. 1937 P.C. 252; Mangat Ram and Another vs Sardar Meharban Singh and Others, ; D. Satyanarayana vs P. Jagdish, [ ; and Tej Bhan Madan vs 11 Addl.
District Judge and Others, ; , and a passage from Halsbury 's Laws of England 4th Edn.
16, Paragraph 1628.
The learned counsel strenuously contended that the appellant tenant cannot be estopped from challenging the derivative title of the plaintiffs as he was not inducted into the house by them.
He relied upon the comments of Sarkar on section 116 in his book on the . 7.
It is true that the doctrine of estoppel ordinarily applies where the tenant has been let into possession by the plaintiff.
Where the landlord has not himself inducted the tenant in the disputed property and his right, are founded on a derivative title, for example, as an assignee, donee, vendee, heir, etc., the position is a little different.
A tenant already in possession can challenge the plaintiff 's claim of derivative title showing that the real owner is somebody else, but this is subject to the rule enunciated by section 116 of the Evidence Act.
The section does not permit the tenant, during the continuance of the tenancy, to deny that his landlord had at the beginning of the tenancy a title to the property.
The rule is not confined in its application to cases where the original landlord brings an action for eviction.
A transferee from such a landlord also can claim the benefit, but that will be limited to the question of the title of the original landlord at the time when the tenant was let in.
So far claim of having derived a good title from the original landlord is concerned, the same does not come under the protection of the doctrine of estoppel, and is vulnerable to a challenge.
The tenant is entitled to show that the plaintiff has not as a matter of fact secured a transfer from the original landlord or that the alleged transfer is ineffective for some other valid reason, which renders the transfer to be non existent in the eye of law.
By way of an illustration one may refer to a case where the original landlord had the fight of possession and was, therefore, entitled to induct a tenant in the property but did not have any power of disposition.
the tenant in such a case can attack the derivative title of the transferee plaintiff but not on 540 the ground that the transferor landlord who had initially inducted him in possession did not have the right to do so.
Further since the impediment in the way of a tenant to challenge the right of the landlord is confined to the stage when the tenancy commenced, he is forbidden to plead that subsequently the landlord lost this right.
These exceptions, however, do not relieve the tenant of his duty to respect the title of the original landlord at the time of the begin ning of the tenancy.
Coming to the facts of the present case, it may be recalled that fresh tenancy had been created in favour of Misri Lal, father of the present appellant, under Navinchand by deed Ext.
P. 20, and this fact was fully established by the decree, Ext.
P. 22.
The appellant, in the shoes of his father, is as much bound by these documents as Misri Lal was, and he cannot be allowed to deny the relationship of landlord and tenant between Navinchand and himself.
It has not been the case of the appellant that Navinchand later lost the title or that he had transferred the same to anoth er person, nor does the appellant say that there has been any defect in the sale deed executed in favour of the present plaintiffs.
In other words, the acquisition of title by the plaintiffs from Navinchand, if he be presumed to be the rightful owner, is not impugned, that is, the derivative title of the plaintiffs is not under challenge.
What the appellant wants is to deny their title by challenging the title of their vendor Navinchand which is not entitled to do.
None of the decisions relied upon by Mr. Rohtagi assists him.
On the other hand, the judgments in Kumar Krishna Prosad Lal Singha Deo vs Baraboni Coal Concern Ltd. and Others, AIR 1937 PC 25 1 and Tej Bhan Madan vs Addl.
District Judge and Others, ; , demonstrate that the plea of estoppel of the plaintiffs is well founded.
The Privy Council Case arose out of a suit for realisation of royalties due on Coal raised by the lessee defendant company.
The original lease was granted by the father of the plaintiff, the Raja of Panchkote, in favour of one Radha Ballav Mukherjee.
The defendant was sued as assignee.
The original lease contained a clause giving the lessor a charge for royalties upon the collieries and its plant which was sought to be enforced.
Since there was some dispute about the ownership of the colliery, the defendant company by way of abundant caution obtained a second assignment from anoth er source, being the Official Assignee.
The plaintiff 's claim was denied by the company on the grounds that (i) his father the Raja was not the owner of the colliery and the company was in possession of the colliery as a lessee on the strength of the other assignment from the Official Assignee, 541 and (ii) the company, being merely a transferee from the original lessee Radha Ballav Mukherjee and not being itself the original lessee, could not be estopped from challenging the Raja 's or his son 's title.
While rejecting the defend ant 's stand the Privy Council observed thus: "What all such persons are precluded from denying is that the lessor had a title at the date of the lease and there is no exception even for the case where the lease itself dis closes the defect of title.
The principle does not apply to disentitle a tenant to dispute the derivative title of one who claims to have since become entitled to the reversion, though in such cases there may be other grounds of estoppel, e.g., by attornment, acceptance of rent, etc.
In this sense it is true enough that the principle only applies to the title of the landlord who "let the tenant in" 'as distinct from any other person claiming to be reversioner.
Nor does the principle apply to prevent a tenant from pleading that the title of the original lessor has since come to an end.
" The expression "derivative title" was referrable to the plaintiff, and the Privy Council concluded by observing that the case did not raise any difficulty as there was "no dispute as to the plaintiff 's derivative title".
While rejecting the argument on the basis that the company was not the original lessee and being merely an assignee was free to challenge the lessor 's title, it was said that "the tenancy under section 116 does not begin afresh every time the interest of the tenant or of the landlord devolves upon a new indi vidual by succession or assignment.
" The circumstances in the case before us are similar.
The appellant does not contend that Navinchand had subsequently lost his title or that there is any defect in the derivative title of the plaintiffs.
His defence is that Navinchand did not own the property at all at any point of time, and this he cannot be allowed to do.
He cannot be permitted to question his title at the time of the commencement of the tenancy created by Ext.
P. 20. 10.
In Tej Bhan Madan vs 11 Addl.
District Judge and Others, ; , the question was whether there was a disclaimer of the landlord 's title on the part of the appellant tenant so as to incur forfeiture of the tenancy.
The premises in question originally belonged to one Shamb hoolal Jain, who died leaving behind his wife, two sons and a daughter by the name of Mainawati.
The property was sold in execution of a money decree and was purchased by Maina wati in 1956.
Mainawati conveyed the property to one Gopi nath Agarwal and the 542 appellant who was in possession as tenant attorned the tenancy in his favour.
Subsequently Gopinath sold the same in favour of the third respondent, Chhaya Gupta, and both Gopinath and Chhaya Gupta asked the appellant to attorn the tenancy in favour of Chhaya Gupta.
The appellant declined to do so and challenged not only the title of Chhaya Gupta but also the validity of the sale in favour of Gopinath.
This led to the filing of the case for his eviction on the ground of disclaimer.
It is significant to note that the foundation of the proceeding for ejectment was the appellant 's denial of the title of Gopinath in whose favour he had earlier attorned the tenancy, and not the challenge of the deriva tive title of the third respondent.
Overruling the objec tions of the appellant, a decree for eviction was passed against him and his writ petition before the High Court was dismissed.
In this background he came to this Court and made an argument similar to the one pressed in the case before us.
Rejecting the appellant 's point, this Court observed thus: "The stance of the appellant against the third respondent 's title was not on the ground of any infirmity or defect in the flow of title from Gopinath, but on the ground that the latter 's vendor Mainawati herself had no title.
The derivative title of the third respondent is not denied on any ground other than the one that the vendor, Gopinath to whom appellant had attorned had himself no title, the implication of which is that if appellant could not have denied Gopinath 's title by virtue of the inhibitions of the attornment, he could not question third re spondent 's title either.
Appellant did himself no service by this stand.
" The case is clearly against the appellant.
The above passage as also the last sentence in paragraph 4 of the judgment which is mentioned below also indicates as to what can be termed as a derivative title which a tenant may be free to challenge: "But the appellant tenant declined to do so and assailed not only the derivative title of the third respondent to the property but also the validity of the sale in favour of Gopinath himself.
In D. Satyanarayana vs P. Jagdish, ; , the Court was dealing with one of the exceptions to the rule of estoppel which permitted a sub tenent: 543 "to show that since the date of the tenancy the title of the landlord came to an end or that he was evicted by a paramount title holder or that even though there was no actual eviction or dispossession from the property, under a threat of eviction he had attorned to the paramount title holder.
The facts were that the appellant was a sub tenant of the tenantrespondent and the landlord served a notice on him terminating the tenancy of the tenant respondent on the ground of unlawful subletting.
The appellant thereupon attorned in favour of the paramount title holder and started paying the rent directly to him.
The tenantrespondent, thereafter, commenced the eviction proceeding and a decree was passed which was challenged before this Court by the appellant tenant.
After enunciating the general rule of estoppel under section 116 of the Evidence Act the Court pointed out the exception where a tenant is evicted by the paramount title holder and is thereafter reinducted by him under a fresh lease.
Extending this exception to the tenant 's ap peal, it was held that the rule applied where the tenant can show: "That even though there was no actual eviction or dispossession from the property, under a threat of eviction he had attorned to the paramount title holder.
" The decision is patently not applicable to the case before us.
In Mangat Ram and Another vs Sardar Meharban Singh and Others, , the principle decided was stated in the following words: "The estoppel contemplated by section 116 is re stricted to the denial of title at the com mencement of the tenancy and by implication it follows that a tenant is not estopped from contending that the title to the lessor had since come to an end.
" The Lahore case is also clearly distinguishable.
After the death of the lessor her daughters claimed rent from the tenants.
The tenants disputed their derivative title and the court held that though the tenants would not dispute the title of the mother at the commencement of the lease, they were entitled to challenge the derivative title of the plaintiffs and that the daughters had to prove that the property was Sridhan of their mother which they inherited under the Hindu Law.
The principle was correctly enunciated there, but that does not help 544 the appellant at all.
To the same effect are the following observations in Halsbury 's Laws of England 4th Edn., Vol.
16, paragraph 1628 relied upon by Mr. Rohatgi: "Thus although an assignee of the lessor is to all intents and purposes in the same situation as the lessor, and takes the benefit of and is bound by a lease by estoppel, the lessee is not estopped from showing that the lessor had no such title as he could pass to the assign ee, or that the person claiming to be the assignee is not in fact the true assignee." (emphasis supplied) The significance of the words which have been underlined above has to be appreciated for correctly understanding the principle enunciated.
For the reasons mentioned above, we hold that the appeal has no merit and is accordingly dismissed with costs.
N.V.K. Appeal dis missed.
| IN-Abs | The respondents claimed to be the owners of the suit property by virtue of a registered sale deed in their favour by one Navinchand, who had purchased the property from his predecessor in interest Smt.
Raj Rani on 11.8.1952.
The appellant 's father Misri Lal was her tenant.
In 1959 a suit was filed by Navinchand for eviction of Misri Lal, which was resisted by the tenant on the ground that Smt.
Raj Rani had earlier transferred the house to a Trust and as such she could not later convey any title to Navinchand.
The Trial Court rejected the defence, and passed a decree against Misri Lal.
Misri Lal filed an appeal.
During its pendency, the parties resolved their dispute, by entering into a compromise.
A deed Ext.
P. 20 creating a fresh lease in favour of Misri Lal under Navinchand as lessor, was executed w.e.f. 1.12.1962.
A compromise petition exhibit P. 21 was filed and the case decreed in terms of the compromise exhibit P. 22 Misri Lal continued to occupy the house till he died in 1972 leaving behind his son, the appellant.
A fresh dispute started after Navinchand sold the suit property to the respondents plaintiffs on 4.1.73, who gave notice of the sale to the appellant on 14.3.73.
As the appellants refused to recognise them as owners, the respond ents terminated the tenancy and filed a suit for ejectment against the appellants.
This suit was resisted on the same old plea that Smt.
Raj Rani having transferred the suit property to a Trust was not competent to retransfer the property to Navinchand the vendor of the respondents.
The trial court disbelieved the defence version holding that although Smt.
Raj Rani had executed a trust deed in 1936, but the same was not acted upon and that the trust did not appear to have come into existence.
The suit was accordingly decreed.
535 On appeal, the first appellate court reversed the above finding and held that the defendant could not be estopped from challenging the title of the plaintiffs.
In second appeal, the High Court reversed the decree of the First Appellate Court, and held that the defendants were estopped from challenging the decree, Ext.
P. 22 which would bind the parties since it was founded on a compromise, and not on an adjudication by the court on the question of title.
It also observed that the statement made in the compromise petition exhibit P. 21 in the earlier suit supported the case of the plaintiffs independently of the compromise decree and that the defence plea had to be rejected in view of the deed Ext.
P. 20 creating a fresh lease.
In the appeal to this Court, it was contended on behalf of the appellant that having regard to the limited scope of a second appeal under section 100 C.P.C., the High Court was not justified in setting aside the finding of the Appellate court on the question whether the property had been alienat ed in 1936 in favour of the trust or not, that having reached a conclusion against the defendant on the basis of the lease deed exhibit P. 20, the compromise petition exhibit P. 21 and the compromise decree Ext.
P. 22, it should not have proceeded to decide the dispute relating to title on merits on the basis of evidence.
It was further contended that the appellant/tenant cannot be estopped from challenging the derivative title of the plaintiffs as he was not inducted into the house by them.
Dismissing the appeal, the Court, HELD: 1.
The doctrine of estoppel ordinarily applies where the tenant has been let into possession by the plain tiff.
Where the landlord had not himself inducted the tenant into the disputed property and his rights are founded on a derivative title, for example, as an assignee, donee, vend ee, heir, etc., the position is a little different.
[539D] 2.
A tenant already in possession can challenge the plaintiff 's claim of derivative title showing that the real owner is somebody else, but this is subject to the rule enunciated by section 116 of the Evidence Act, which does not permit the tenant during the continuance of the tenancy, to deny that his landlord had at the beginning of the tenan cy a title to the property.
The rule is not confined in its application to cases where the original landlord brings on action for eviction.
[539E] 536 3.
A transferee from such a landlord also can claim the benefit, but that will be limited to the question of the title of the original landlord at the time when the tenant was let in.
So far as claim of having derived a good title from the original landlord is concerned, the same does not come under the protection of the doctrine of estoppel and is vulnerable to a challenge.
The tenant is entitled to show that the plaintiff has not as a matter of fact secured a transfer from the original landlord or that the alleged transfer is ineffective for some other valid reason, which renders the transfer to be non existent in the eye of law.
[539F G] 4.
In a case where the original landlord had the right of possession and was, therefore, entitled to induct a tenant in the property but did not have any power of dispo sition, the tenant can attack the derivative title of the transferee plaintiff but not on the ground that the trans feror landlord who had initially inducted him in possession did not have the right to do so.
Since the impediment in the way of a tenant to challenge the right of the landlord is confined to the stage when the tenancy commenced, he is not forbidden to plead that subsequently the landlord lost this right.
These exceptions, however, do not relieve the tenant of his duty to respect the title of the original landlord at the time of the beginning of the tenancy.
[539H; 540A B] 5.
The tenancy under section 116 does not begin afresh every time the interest of the tenancy or of the landlord devolves upon a new individual by succession or assignment.
[541E] 6.
In the instant case, the acquisition of title by the plaintiffs from Navinchand, if he be presumed to be the rightful owner, is not impugned, that is, the derivative title of the plaintiffs is not under challenge.
What the appellant wants is to deny their title by challenging the title of their vendor Navinchand which he is not entitled to do.
[540D] 7.
The appellant in the instant case does not contend that Navinchand had subsequently lost his title or that there is any defect in the derivative title of the plain tiffs.
His defence is that Navinchand did not own the property at all at any point of time, and this he cannot be allowed to do.
He cannot be permitted to question his title at the time of the commencement of the tenancy created by Ext.
P. 20.
[541F] Kumar Krishna Prasad Lal Singha Deo vs Baraboni Coal Concern Ltd. & Ors., ; Mangat Ram and Another vs Sardar Meharban Singh and Others, ; D. Satyanara 537 yana vs
P. Jagdish; , and Tej Bhan Madan vs 11 Addl.
District Judge & Ors., ; , distin guished.
|
ivil Appeal No. 322 of 1973.
From the Judgment and Order dated 4.12.1970 of the Madhya Pradesh High Court in First Appeal No. 90 of 1962.
Awadh Bihan Rohtagis Vivek Gambhir and S.K. Gambhir for the Appellants.
U.R. Lalit and G.B. Sathe for the Respondents.
The Judgment of the Court was delivered by 762 K. RAMASWAMY, J.
1.
This appeal by special leave by the legal representatives of the plaintiff, Bhikubai, arises from decision in First Appeal No. 90/62 of the High Court of Madhya Pradesh, Indore Bench, dated July 18, 1982 reversing the decree of the trial court in O.S. No. 29/51 filed for possession and mesne profits of two houses, Nos. 88 of 89 situated at Nandlalpura, Indore City, mentioned in the plaint 'schedule.
In this appeal, we are only concerned with House No. 88 as the parties have settled their dispute regarding to the other house.
The admitted facts are that one Hariba Bhagwat of Mouza Pisore village had a son by name Appaji and a daughter Bajabai.
Appaji in turn had a son by name Rakhmaji and a daughter Bhikubai (the plaintiff).
Bajabai was married to Ganpatrao Page of Madhavagoan vil lage.
As they were issueless they adopted Rakhmaji.
Both the villages are situated in Ahmednagar District of Bombay Province.
They are Dhangars (Shepard) by caste.
All of them migrated to Indore.
Rakhmaji died in 1918 and Sonubai his childless widow succeeded to the two houses and other properties as limited owner.
She gifted House No. 88 to Shankar Lanke, a brahmin, first defendant by a registered gift deed dated October 31, 1944 under Ex DI 5.
Shankar Lanke in turn hypothecated House No. 88 to Hiralal, fifth defendant/first respondent on September 21, 1948 under Ex 5 D3.
Sonubai died on March 11, 1949.
Rakhmaji was the natural brother of Bhikubai, but by operation of law namely adoption, he became her father 's sister 's son, i.e. a band hu.
The case of the plaintiff was that the family is gov erned by the Bombay School of Hindu Law wherein female bandhu is an heir and thereby she was entitled to succeed to the estate of Rakhmaji.
Sonubai, as limited owner, had no power to dispose of the properties by way of gift and so the gift deed and the mortgage are void and do not bind her.
The respondents are in unlawful possession as trespassers.
The suit was resisted by the first defendant, the donee, on diverse grounds.
The material defence relevant for the disposal of this appeal is that the persons concerned are governed by the Banaras School of Hindu Law under which a female bandhu is not an heir, Hiralal 's case was that the mortgage was for consideration and that he had no objection to hand over the possession of the property provided the consideration of Rs. 12,000 borrowed by Shankar Lanke was paid to him.
The trial court framed as many as 14 issues with sub issues on each count.
It found on issue No. 6a, which is material for the purpose of this case, that the parties are governed by the Bombay School, and not the Banaras School, of Hindu Law; the plaintiff is the heir of Rakhmaji as his mother 's brother 's daughter, and though the consi 763 deration was paid under the mortgage obtained by Hiralal, it was not taken after due inquiry about existence of legal necessity and in good faith.
The gift deed was declared void and does not bind the plaintiff.
The plaintiff was held entitled to possession and mesne profits.
The claim for refund of the mortgaged money was rejected.
Accordingly, the suit was decreed.
Hiralal and another filed the appeal.
Shankar Lanke did not file any appeal.
It was contended before the High Court that the plaintiff 's family belonging to Dhangar caste were migrants from U.P. (Mathura) to Auran gabad from where they had further migrated to Central Prov ince (now Madhya Pradesh).
They are governed by the Banaras School of Hindu Law.
There is no proof that they abandoned the personal law, namely, Banaras School of Hindu Law, and adopted Bombay School of Hindu Law.
This contention found favour with the Hindu Court, which relief upon the statement made in Indore State Gazette of 193 1 at page 20, wherein it was claimed to have been recorded that Holkars belonged to Dhangar caste and it would appear that they were originally residents of the country side around Mathura and they mi grated to Aurangabad District and thereafter Phaltan Parga na.
At page 90, it was mentioned about Dhangars in general and that in Indore Shepard caste was the ruling family.
Many of the Dhangars were Shivail 's trusted Maoles used for Gureilla warfare.
In domestic life as also in language, dress and food they closely resemble the Marathas, though in the caste scale their position is lower.
Their deity is Khandoba.
The High Court also found that the parties, name ly, Rakhmaji 's father and Ganpatrao Page were residents of Ahmednagar District.
Their family God is Malhar Jijori, which is situated in the District of Poona.
They migrated from Maharashtra to Indore.
This finding is based on the evidence of, not only the plaintiff (PW 4), but also the admission made by the defendant No. 1 and his witness, D.W. No. 8 Placing reliance solely on the recital in the Indore State Gazette, it was concluded that the parties had migrat ed from Mathura and thereby they are governed by the Banaras School of Hindu Law, under which the female Bandhu is not an heir to succeed to the estate of the last male holder.
Alternatively, it also found that even applying the Bombay School of Hindu Law (Mitakshara), the plaintiff had not established that she was an heir to Rakhmaji.
Accordingly, the appeal was allowed.
At the outset, it is made clear that neither Hiralal, nor Shankar Lanke pleaded that the plaintiff or her ances tors had migrated from Mathura and settled down in Ahmedna gar District.
The specific plea of the plaintiff in para graph 5 of the plaint that they were original residents of Ahmednagar District was not disputed.
Hiralal 764 did not also plead that the Banaras School of Hindu Law would apply to the plaintiff 's family.
Shankar Lanke vaguely pleaded this but adduced no evidence in proof thereof.
Both the Courts have concurrently found that the plaintiff, Rakhmaji, and Ganpatrao Page are Dhangars by caste; their family God is Khandoba of Jijori; their manners and customs were also of Maharashtrian, vide D.W. 8 Khsumrao; and the High Court also further found that, "Undoubtedly true that the customs, manners, marriages and the way they worship the God are all the same as that of Maharashtrians or of the Marathas.
" But the customs, dress, language and manners may not by themselves show that person migrating from Mathura has given up the law of origin, though they are relevant facts.
It must also be proved that in a particular case that they have given up their law of origin, i.e. the Banaras School of Hindu Law, and adopted the law of domicile, i.e. the Bombay School of Hindu Law.
Accordingly, it was held that the parties are governed by the Banaras School of Hindu Law.
Migration is changing one 's abode, quitting one 's place of abode and settling permanently at another place.
The burden of proving migration lies on the person setting up the plea of migration.
As seen the respondents neither pleaded nor proved that the plaintiff 's family migrated from Mathura to Ahmednagar in Bombay Presidency.
When the plain tiff was examined as a witness no attempt Was made to elicit from her that they or their ancestors were migrants from Mathura and settled down in Ahmednagar.
On the other hand the specific plea of the plaintiff in her plaint that they were the original residents of Ahmednagar District remained undisputed.
In Hindu Law by Raghavachariar, 8th Edition, 1987 edited by Prof. section Venkataraman who was himself an authority on Hindu Law, in paragraph 32 stated that a fami ly 's original place of abode can be inferred from the Chief characteristics of the family.
In Keshao Rao Bapurao & Anr.
vs Sadasheorao Dajiba, AIR 1938 Nagpur 163.
Vivian Bose, J., as he then was, held that wherever a family is found cling ing to its individuality and retaining its identity as Maharashtrian, it must be presumed until the contrary is shown that it hailed from the race of group of people known as Maharashtrians and carried the law of Maharashtra with them.
Thus, it is clear that migration cannot be presumed but it must be established by abduction of evidence.
The question then arises is whether the recital in Indore State Gazette relied on, at the appellate stage, can form the sole base to establish that the plaintiff 's family were the migrants from Mathura in U.P. Section 37 of the Evidence Act, 1872 postulates that any statement made in a Government Gazette of a public nature is a relevant fact.
Section 57(13) declares 765 that on all matters of public history, the Court may resort for its aid to appropriate books or documents of reference, and Section 81 draws a presumption as to genuineness of Gazettes coming from proper custody.
Phipson on Evidence, The Common Law Library (Thirteenth Edition) at page 510 paragraph 25.07 stated that the Government Gazettes . , . . are admissible (and sometimes conclusive) evidence of the public, but not of the private matters contained therein.
In Rajah Muttu Ramalinga Setupati vs Perianayagum Pillai, [1873 74] L.R. 1 IA 209 at p. 238 the Judicial Committee, while considering the reliability of a report sent by the District Collector to the Commissioner about the management of a temple, held that when the reports express opinions on the private rights of parties, such opinions are not to be regarded as having judicial authority or force.
But being the reports of public officers made in the course of duty, and under statutory authority, they are entitled to great consideration so far as they supply infor mation of official proceedings and historical facts, and also in so far as they are relevant to explain the conduct and acts of the parties in relation to them, and the pro ceedings of the Government rounded upon them.
Same view was reiterated in Martand Rao vs Malhar Rao, [1927 28] L.R. 55 IA 45 at 48 on the question of reliability of official reports relating to succession to a Zamindari, and held that "their Lordships consider it necessary at the outset to point out that, though such official reports are valuable and in many cases the best evidence of facts stated therein, opinions therein expressed should not be treated as conclu sive in respect of matters requiring judicial determination, however, eminent the authors of such reports may be.
In Arunachellam Chetty vs Venkatachellapathi Guru Swamigal, [1919] L.R. 46 IA 204 it was held that while their Lordships do not doubt that such a report (Inam register) would not displace actual and authentic evidence in individual cases; yet the Board, when such is not available, cannot fail to attach the utmost importance, as part of the history of the property, to the information set forth in the Inam register.
This view was followed by this Court in Narayan Bhagwantrao Gosavi Balajiwale vs Gopal Vinayak Gosavi & Ors., ; at p. 788.
Same is the view expressed in The Poohari Fakir Sadavarthy of Bomdilipuram vs The Commissioner, Hindu Religious & Charitable Endowments, [1962] Suppl.
2 SCR 276 and held that Inam register is of great evidentiary value but the entries cannot be accepted on the face value without giving due consideration to other evidence on record.
In Mahant Shri Srinivasa Ramanuj Das vs Surajnarayan Dass & Anr., [1966] Supp.
SCR 436 at p. 447 relied on by Shri Lalit, learned senior counsel for the respondents, it was held that the statements in the Gazetteer can be consulted on matters of public history.
This is also 766 the case relating to entries in Inam Register.
Inam Fair Registers are maintained while exercising the statutory power and the entries were made in the relevant columns during the course of discharging official duties and so they are entitled to weight and great consideration, while as sessing the evidence.
Therefore, this Court did not lay any rule contrary to what has been laid by the Judicial Commit tee or by this Court in the decisions referred to hereinbe fore.
The Statement of fact contained in the official Gazette made in the course of the discharge of the official duties on private affairs or on historical facts in some cases is best evidence of facts stated therein and is enti tled to due consideration but should not be treated as conclusive in respect of matters requiting judicial adjudi cation.
In an appropriate case where there is some evidence on record to prove the fact in issue but it is not suffi cient to record a finding thereon, the statement of facts concerning management private temples or historical facts of status of private persons etc.
found in the Official Gazette may be relied upon without further proof thereof as corrobo rative evidence.
Therefore, though the statement of facts contained in Indore State Gazette regarding historical facts of Dhangars ' social status and habitation of them may be relevant fact and in an appropriate case the Court may presume to be genuine without any further proof of its contents but it is not conclusive.
Where there is absolutely no evidence on record in proof of the migration of the family of the plaintiff or their ancestors from Mathura area, the historical factum of some Dhangars having migrated from U.P. and settled down in Aurangabad District or in the Central Province by itself cannot be accepted as sufficient evidence to prove migration of the plaintiff family.
Further no evidence was placed on record connecting Holkars of Indore with Dhangars of Bombay Province.
Shri Lalit, learned counsel, admits that the statement of facts of Dhangars contained in Indore State Gazette is not conclusive evidence but he says that it may be taken into account as evidence connecting the family of the plaintiff.
In the absence of any evidence proving migration of the family of the plain tiff or their ancestors from Mathura to Ahmednagar, the historical factum of the migration of Dhangars from U.P. State mentioned in Indore State Gazette is of little assist ance to the respondents so as to hold that they carried with them to Indore the Banaras School of Hindu Law prevailing in Uttar Pradesh.
Even as regards the Dhangars as migrants, Thurston on Caste and Tribes of Southern India in Vol.
III p. 167 stated that the statement of the census Report of 190 1 establishes that Marathi Caste of Shepard are Dhangars and their home speech is Marathi and they are the residents 767 Of Bombay Presidency.
It would, thus, show that even in 1901, Dhangars were held to be original Marathis of Bombay Presidency.
We, therefore, hold that the case before us that Bhikubai, the plaintiff, and her family had migrated from Mathura to Ahmednagar District in Bombay Presidency has not been proved and admittedly, they migrated from Ahmednagar to Indore.
In India a Hindu is governed by his personal branch of law which he carries with him wherever he goes.
But the law of the province wherein he resides prima facie governs him and in this sense and to this extent only the law of domicile is of relevance or importance.
But if it is shown that a person came from another Province, the presumption will be that he is governed by the law or the special custom by which he would have been governed in his earlier home at the time of migration.
An inference of migration can well be made from the known facts of the chief characteristics of the family, the language, observance of customs and rites though they are not sufficient to prove that they are gov erned by a particular school of law.
The presumption can be displaced by showing that the immigrant had renounced the law of the place of his origin and adopted the law of the place to which he had migrated.
The onus lies on the person alleging that the family had renounced the law of its origin and adopted that prevailing in the place to which he had migrated vide Hindu Law by Raghavachariar, Eighth Edition, para 32 at pages 30 & 31.
The same view was expressed in Mulla 's Hindu Law, edited by Justice S.T. Desai, 15th Edn., in para 13A and 14.
In Hindu Law By S.V. Gupta (Vol. 1, Third Edition p. 50) article 10 it is stated that in case of migration of a Hindu from one part of India to another, it is presumed that he and his descendants continue to be governed by the law of the school to which he belonged before migration.
Such presumptions are rebuttable.
In Balwant Rao & Ors.
vs Baji Rao & Ors., AIR 1921 PC 59.
Lord Dunedin speaking for the Board held that it is absolutely settled that the law of succession in any given case is to be determined according to the personal law of the individu al whose succession is in question.
In that case it was found that Bapuji 's ancestors at one time lived in Bombay Province and his migration at the place of death was ob scured.
Therefore, it was held that the original law that prevailed in Bombay Province at the time of migration gov erns the succession to a Maharashtra Brahmin and Bombay School of Mitakshara Law would apply and the daughter would take her father 's property as an absolute owner and her hefts alone would be entitled to succeed to her estate.
This was reiterated by Bose, J. in Keshav Rao 's case in consider ing the question of migration by a Maharashtra Brahmin residing in Central 768 Provinces and was held to be governed by the Bombay School of Mitakshara Hindu Law when migration is not proved in the sense that the exact origin of the family cannot be traced.
Same view was followed in Udebhan Rajaram vs Vikram Ganu, Accordingly, we hold that the plaintiff and her family carried with them to Indore their personal law, namely, Hindu Law of the Mitakshara applicable to Bombay Province and not Banaras School of Hindu Law.
The question then is whether the plaintiff is an heir to Rakhmaji, the last male holder of the estate left by Sonubai, his widow.
In Bhagirathibai vs Kahnujirav, ILR 11 Bombay 285 the Full Bench held that under the Hindu Law as prevailing in Bombay Presidency, a daughter inheriting from a mother or a father takes as an absolute estate, which passes on her death to her own heirs, and not to those of the preceding owner.
Thereby Hindu female is recognised under the Bombay School of Hindu Law to be an heir to last male holder of the estate and takes the property as an absolute owner.
The immediate question, therefore, is wheth er the plaintiff is an heir as bandhu.
In Mayne 's Hindu Law, 12th edn., revised by Justice Alladi Kuppuswami, Chief Justice (Retd.) of Andhra Pradesh High Court, in paragraph 504 at p. 735 & 736 stated the meaning of the word 'bandhu ' thus: The term 'bandhu ' or 'bandhava ' meant relations in general and included both agnates and cognates though it was sometimes confined to agnates in some of the Smriti texts relating to succession and gotra kinship, as for instance in the Vishnusmriti and in some of the verses in Manusmriti.
The Mitakshara explains that the term 'bandhavas ' in the above test of Manu means Atma Bandhus, Pitrubandhus and Matrubandhus, vide Mit.
on Yajn.
III, 24 (Setlur edn.
1169)Naraharayya 's translation 56.
In paragraph 543, at page 761, dealing with the third division of heirs, namely, 'bandbus ' and of their enumera tion in paragraph 544 it was stated that the enumeration is only illustrative, which read thus: Para 543 "Bandhus The third division of heirs consists of bandhus (Table B).
They are the sapindas related through a female, being within five degrees from and inclusive of common ancestor, in the line or lines in which a female or females intervene (paras 121 126), In the portion of his work relating to succes sion, Vijnanesvara styles them as sapindas of a different gotra.
The term 'bandhu ' has therefore acquired in the system of the Mitak shara a distinctive and technical meaning and signifies bhinnagotra sapindas.
They are the 769 three classes: (1) atmabandhus or one 's own bandhus, (2) pitrubandhus or the father 's bandhus and (3) matrubandhus or the mother 's bandhus.
The relevant passage in the Mitaksha ra is as follows: "Cognates are of three kinds; related to the person himself, to his father, or to his mother, as is declared by the following text.
The sons of his own fa ther 's sister, the sons of his own cognate kindred.
The sons of his father 's paternal aunt, the sons of his father 's maternal aunt, and the sons of his father 's maternal uncle, must be deemed his father 's cognate kindred.
The sons of his mother 's paternal aunt, the sons of his mother 's maternal aunt, and the sons of his mother 's maternal uncle, must be reckoned his mother 's cognate kindred.
Here, by reason of near affinity, the cognate kin dred of the deceased himself, are his succes sors in the first instance; on failure of them, his father 's cognate kindred; or if there by none, his mother 's cognate kindred.
This must be understood to be the order of succession here intended.
Para 544 Enumeration only illustrative Evidently, the enumeration of the above nine bandhus was not intended to be exhaustive, but only illustrative.
When defining sapinda, Vijnanesvara says, "So also is the nephew a sapinda rela tion of his maternal aunts and uncles and the rest, because particles of the same body (the maternal grandfather) have entered into his and theirs; likewise does he stand in sapinda relationship with paternal uncles and aunts and the rest.
In the light of this, his definition of bandhus or bhinnagotra sapindas makes it clear that maternal aunts and uncles and their descendants as well as paternal aunts and their descendants are bandus and that his enumeration is purely illustrative.
Visvarupa and Mitra Misra in his Vir amitrodaya recognised this by including the maternal uncle and the like in the term 'bandhu ' purely by way of illustra tion.
Referring to the maternal uncle 's sons, the Virami trodaya says that it would be extremely im proper that their sons are heirs but they themselves though nearer, are not heirs.
After some fluctuation of opinion, it was finally settled that the enumeration of bandhus in the Mitakshara is not exhaustive but illustrative only.
" In paragraph 536, at page 757, it is stated that in Bombay, the daughters of descendants, ascendants and collat erals within five degree 770 inherit as bandhus in the order of propinquity, such as the son 's daughter, the daughter 's daughter, the brother 's daughter, the father 's sister and so on.
In Raghavachariar 's Hindu Law at page 412 in para 458, it is stated that the daughters of descendants, ascendants and collaterals upto fifth degree are bandhus and the test of nearness of blood is to be applied in ascertaining their order of succession.
In Mitakshara and Dayabhaga by Colebrooke, 1883 Edn., at p. 99, it is stated in Sec.
VI on the succession of cognate kindred, bandhu that on failure of gentiles, the cognates are heirs.
Cognates are of three kinds; related to the person himself, to his father, or to his mother.
At page 100, it is further stated that heir, by reason of near affinity, the cognate kindred of the deceased himself, are his successors in the first instance: on failure of them his father 's cognate kindred: or, if there be none, his mother 's cognate kindred.
This must be understood to be the order of succession here intended.
In Girdhari Lall Roy vs The Bengal Government, [1867] 79 Moore 's Indian Appeals 448 the question arose whether the maternal uncle of the last male holder is a bandhu entitled to succession of the estate of the deceased.
While consider ing the question exhaustively of the texts of Hindu Law on this topic including Sec.
VI of Colebrooke 's referred to above of the order of succession by bandhus, it was held by the Judicial Committee that if for the determination of the question under consideration, their Lordships were confined to the four corners of the Mitakshara, they would feel great difficulty in inferring, from the omission of "the maternal uncle" and "the father 's maternal uncle" from the persons enumerated in this text, that either of those relatives is incapable of taking by inheritance the property of a de ceased Hindu in preference to the King.
Such an inference, in the teeth of the passages which says that the King can take only if there be no relatives of the deceased, seems to be violent and unsound.
For the text does not purport to be an exhaustive enumeration of all Bandhus who are capable to inheriting, nor is it cited as such, or for that purpose, by the Author of the Mitakshara, as is used simply as a proof or illustration of his proposition, that there are three kinds of classes of bandhus, and all that he states further upon it is, the order in which the three classes take, viz., that the bandhus of the deceased himself must be exhausted before any of his father 's bandhus can take, and so on.
Accordingly, it was held that 'the maternal uncle is capable of inheriting the estate.
This view was followed in Muthus wami Mudaliyar & Ors.
vs Sunamedu Muthukumaraswami Mudali yar, [1895] 96 LR 231 A 83.
Accordingly, we hold that the enumeration of bandhus in various schools of Hindu Law of the rule of succession to the estate of the last 771 male Hindu as agnates or cognates or collaterals, are only illustrative and not exhaustive.
The Hindu Law of succession of Mitakshara School prevailing in Bombay Presidency recog nises that a female is an heir as a bandhu to succeed to the estate of the last male holder through her mother 's side within five degrees to the last male holder.
The plaintiff being the only nearest bandhu of Rakhmaji within five de grees through her mother, is entitled to succeed to his estate as an heir.
Accordingly, we hold that the plaintiff is entitled to the possession of the plaint schedule House No. 88 with mesne profits from the respondents.
The contention of Shri Lalit that the mortgagee respondent is entitled, in equity, to a decree for refund of the mortgage money which was admittedly found to have been paid cannot be accepted as the same was not paid to the plaintiff.
So far an the mortgagee 's claim against the mortgagor is concerned, he may pursue any remedy available to him under law.
Accordingly, the appeal is allowed, the decree of the High Court is set aside and that of the trial court is restored to the extent of House No. 88, with proportionate costs throughout.
R.N.J. Appeal allowed.
| IN-Abs | One Hariba Bhagwat had a son Appaji and daughter Baja bai.
Appaji in turn had a son Rakhmaji and a daughter Bhiku bai, the plaintiff who had flied a suit for possession and mesne profits of two houses.
The suit was decreed by the Trial Court but on appeal reversed by the High Court.
The Legal representative of the plaintiff then preferred this appeal by special leave confined to one of the houses, the parties having settled their dispute regarding the other house.
Bajabal and her husband Ganpat Rao Page being issueless had adopted Rakhmaji.
All of them belonged to villages situated in Ahmednagar District of Bombay Province, and are Dhangars (Shepards) by caste but had migrated to Indore.
On Rakhmaji 's death Sonubai his childless widow succeeded to the properties as limited owner.
She gifted the suit proper ty i.e. house No. 88 to Shanker Lanke a Brahmin, the first defendant by a registered gift deed dated October 31, 1944.
Shanker Lanke in turn hypothecated the House to one Hira Lal, the first respondent on September 21, 1948.
Sonubai died in 1947.
The case of the plaintiff was that the family is gov erned by the Bombay School of Hindu Law wherein female Bandhu is an heir and thereby she was entitled to succeed to the estate of Rakhmaji; Sonubai, the issueless widow of Rakhmaji as limited owner had no power to dispose of the properties, so the gift deed and mortgage are void and do not bind her and the respondents are in unlawful possession as trespassers.
The material defence relevant for the dis posal of this appeal is that the persons concerned are governed by the Banaras School of Hindu Law under which a female bandhu is not an heir.
Hiralal 's case was that he had no objection to hand over the possession provided he was paid the consideration of Rs. 12,000 borrowed by Shanker Lanke, the donee.
760 The Trial Court came to the conclusion that the parties are governed by the Bombay School and not the Banaras School ,of Hindu Law and the plaintiff is the heir of Rajkhmaji.
The gift deed was declared void and not binding on the plaintiff and the suit was decreed and the claim for refund of the mortgage money was rejected.
Hira Lal appealed.
It was contended before the High Court that the plaintiff 's family belonged to Dhangar caste, being migrants from U.P. (Mathura) to Aurangabad from where they had migrated to Central Province (now Madhya Pradesh) and were governed by the Banaras School of Hindu Law.
This contention found favour with the High Court which placing reliance solely on the recital of the Gazetteer concluded that the parties had migrated from Mathura and thereby they were governed by the Banaras School of Hindu Law under.
which the female Bandhu is not an heir to succeed to the estate of the last male holder.
Reversing the decree passed by the Trial Court, the suit was dismissed.
This Court in allowing the appeal by the legal represen tative of the plaintiff, HELD: In India a Hindu is governed by his personal branch of law which he carries with him where ever he goes.
But the law of the province wherein he resides prima facie governs him and in this case and to this extent only the law of domicile is of relevance or importance.
But if it is shown that a person came from another Province, the presump tion will be that he is governed by the law or the special custom by which he would have been governed in his earlier home at the time of migration.
[767B C] Migration is changing one 's abode, quitting one 's place of birth and settling permanently at another place.
The burden of proving migration lies on the person setting up the plea of migration.
Migration can not be presumed but it mast be established by abduction of evidence.
[764D G] Section 37 of the Evidence Act 1872 postulates that any statement made in Govt.
Gazette of a public nature is a relevant fact.
Section 57(13) declares that on all matters of public history, the Court may resort for its aid to appropriate books or documents of reference and section 81 draws a presumption as to the genuineness of Gazettes coming from proper custody.
[764H; 765A] The State of facts contained in the official Gazetteer made in the course of the discharge of the official duties on private affairs or on 761 historical facts in some cases is best evidence of facts stated therein and is entitled to due consideration but should not be treated as conclusive in respect of matters requiring judicial adjudication.
[766B C] The onus lies on the person alleging that the family had renounced the law of the origin and adopted that prevailing in the place to which he had migrated.
The plaintiff and her family on migration from Ahmednagar carried with them to Indore their personal law, namely the Bombay School of Hindu Law under which a Hindu female is recognised to be an heir to last male holder of the Estate and takes the property as an absolute owner.
The Plaintiff being the only nearest bandhu of Rakhmaji, is entitled to succeed to his estate as an heir and thus entitled to the possession of the House in question with mesne profits.
[767D; 768B; A] Keshao Rao Bapurao & Anr.
vs Sadasheorao Dajiba, AIR 1938 Nagpur 163; Rajah Mattu Ramalinga Setupati vs Peria nayagum Pillai, [1873 74] L.R. 11A 209 at p. 238; Martand Rao vs Malhar Rao, [1927 28] L.R. 551 A 45 at 48; Arunachel lam Chetty vs Venkatachellapathi Guru Swamigal, [1919] L.R. 46 IA 204; Narayan Bhagwantrao Gosavi Balajiwale vs Gopal Vinayak Gosavi & Ors., ; at p. 788; The Poohari Fakir Sadavarthy of Bomdilipuram vs The Commission er, Hindu Religious & Charitable Endowments, [1962] Suppl.
2 SCR 276: Mahant Shri Srinivasa Ramanuj Das vs Surajnarayan Dass & Anr., [1966] Snpp.
SCR 436 at p. 447; Balwant Rao & Ors.
vs Bali Rao & Ors., AIR 1921 P.C. 59; Udebhan Rajaram vs Vikram Ganu, ; Bhagirathibai vs Kah nujirav, ILR 11 Bombay 285; Girdhari Lall Roy vs The Bengal Government, [1867 79] Moore 's Indian Appeals 448 and Muthus wami Mudaliyar & Ors.
vs Sunamedu Muthukumaraswami Muddali yar, [1895 96] LR 23 IA 83, referred to.
|
(C) No. 1269 of 1989.
2 (Under Article 32 of the Constitution of India).
K.M. Sharma petitioner in person.
Soli J. Sorabjee, Attorney General, Santosh Hegde, Additional Solicitor General, A.K. Sen, Manbir Singh, Girish Chandra and Ms. A. Subhashini for the Respondents.
The Court delivered the following order: ORDER Two contentions were raised by the petitioner in this writ petition challenging the appointment of Respondent No. 1, Shri Devi Lal as Deputy Prime Minister of India: (i) that the oath administered to him as Deputy Prime Minister was not the oath in accordance with the prescrip tion of the Constitution; and (ii) he was still functioning as the Chief Minister of Haryana when the oath of office of his new assignment was administered to him.
Pursuant to notice, two affidavits have been filed one by the Respondent No. 1 and the other on behalf of the Union of India.
In the affidavit of Respondent No. 1 certain precedents have been relied upon and the practice which has been followed eversince the Constitution came into force has been referred to.
Learned Attorney General appearing on behalf of the Union of India has stated that the form prescribed in the Third Schedule pursuant to the requirement of Article 75(4) of the Constitution is only for a Minister of the Union and there is no separate form even for the Prime Minister.
Since the Prime Minister is also a member of the Council of Minis ters, he takes the same oath as the other ministers are required to take.
He maintains that yet in view of the fact that the Constitution describes him as the Prime Minister, while being sworn into office, he describes himself as Prime Minister and this practice is in vogue eversince 1950.
The oath register is by the incumbent signed as Prime Minister and all other ministers sign as Ministers.
He further indi cates that describing Shri Devi Lal as Deputy Prime Minister is descriptive only and for all purposes he is a Minister and there is no 3 constitutional sanction for the post of Deputy Prime Minis ter as such.
Relying on a bench decision of this Court in the case of Virji Ram Sutaria vs Nathalal Premji Bhavadia & Ors., , learned Attorney General further contends that the prescribed oath should be divided into two parts, one which is descriptive and the other which contains the sub stantial part.
And according to him, as long as the substantial part is properly followed, a mere mistake or error in the descriptive part would not vitiate the oath.
This Court in the reported decision said: "In this case, as we have already noted, the essential requirement of Article 173 read with Form VII A was that the person taking the oath or making the affirmation would bear true faith and allegiance to the Constitution and uphold the sovereignty and integrity of India.
The words which precede this portion are merely descriptive of the person and of his nomination as a candidate.
" In view of the clear statement.
made by the learned Attorney General that Respondent No. 1 is just a Minister like other members of the Council of Ministers though he has been described as Deputy Prime Minister but the description of him as Deputy Prime Minister does not confer on him any powers of the Prime Minister, along with his other submis sions, we think the first contention raised by the petition er has no force.
So far as the second contention is con cerned, the petitioner himself does not press it.
We accordingly reject the writ petition for the reasons indicated above.
No costs.
P.S. S Petition dismissed.
| IN-Abs | The petitioner challenged the appointment of Respondent No. 1 as Deputy Prime Minister of India on the ground that the oath administered to him as such was not the oath in accordance with the prescription of the Constitution.
The petition was contested by Respondent No. 1 and the Union of India.
It was contended for the latter that de scribing Respondent No. 1 as Deputy Prime Minister was descriptive and for all purposes he was a Minister, that the form of oath prescribed in the Third Schedule pursuant to the requirement of Article 75(4) of the Constitution is only for a Minister of the Union, and that there was no separate form even for the Prime Minister.
It was further submitted that the prescribed oath is susceptible of division into two parts, descriptive and substantial, and as long as the substantial part is properly followed, as in the instant case, a mere mistake or error in the descriptive part would not vitiate the oath.
Dismissing the writ petition, HELD: Respondent No. 1 is just a Minister like other Members of the Council of Ministers though he has been described as Deputy Prime Minister.
The description of him as Deputy Prime Minister does not confer on him any power of Prime Minister.
It cannot, therefore, be said that the oath administered to him as Deputy Prime Minister was not the oath in accordance with the prescription of the Constitution.
[3E, 2D]
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