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Criminal Appeal No. 258 of 1981.
869 From the Judgment and Order dated 12th Feb. 1981 of the Madhya Pradesh High Court in Misc.
Criminal Case No. 617 of 1980.
Appellant in person.
Uma Nath Singh for the Respondent.
The Judgment of the Court was delivered by section RATNAVEL PANDIAN,J.
The appellant, Mr. Pritam Pal Dhingra is a practising Advocate in the High Court of Madhya Pradesh at Jabalpur, having joined the Bar on 4.2.1979.
Earlier to joining the Bar, he was serving in the Army and retired on 23.12.65.
Thereafter, he was re employed in the Defence Accounts Department on 7.2.1966 as U.D.C. (Auditor).
On 29.2.76, the appellant served three months ' notice of resignation upon the departmental authorities for the reasons mentioned in the said notice and also requested to pay him the contributory provident fund benefits for his 10 years service though the date of his superannuation in the said post was 30.9.1986.
The Department not only refused to accept his resignation but also did not relieve him even after the expiry of three months.
According to the appellant, there was neither any departmental enquiry pending nor contemplated against him during those three months i.e. between 29.2.76 and 31.5.76.
However, a charge sheet dated 21.12.76 for imposing a major penalty on a complaint by Jt.
C.D.A. Vehicle Factory was served on him to which he submitted his written statement.
Then he served a final quit notice w.e.f. 8.1.77.
Though on the basis of the show cause notice, an enquiry was started, nothing came out of it.
Therefore, the appellant moved the High Court of Madhya Pradesh at Jabalpur by filing Writ Petition M.P. No. 786 of 1978 under Article 226 of the Constitution of India sworn on 27.11.78 requesting several prayers inclusive of issuance of directions to the respondent therein (the departmental authorities) to accept his resignation so as to enable him to take any other profession of his liking and to declare the retention of his service against his will after 31.5.1976 as illegal and malafide and to re imburse pay and allowances for the period of his enforced absence after the expiry of three months notice period etc.
The High Court issued show cause notice to the respondents 1 to 3 in the Writ Petition.
The respondent No. 3 thereafter accepted the resignation dated 29.2.76 of the appellant w.e.f. 15.1.79 by 870 which time the appellant claims to have completed 31 years of combined military and civil service i.e. from 29.11.47 to 15.1.79.
Meanwhile, the departmental enquiry initiated against him was dropped.
Then the appellant submitted supplemental applications praying that his resignation should be converted into one of voluntary retirement and that his military services should be counted with civil service and that he should be given all service benefits like pension, gratuity etc.
as well as consequential benefits on account of the delay in acceptance of his resignation.
Two applications being I.A.No. 908/79 and I.A. No. 4246/78 were filed by the appellant, they being one for amendment of the petition and the other for taking some additional grounds.
Both applications were allowed by a Division Bench of the High Court comprising of Mr. Justice J.S. Verma (as he then was) and Mr. Justice U.N. Bachawat, as the counsel for the respondents had no objection and granted one week time for incorporating the amendments in the petition.
At the request of the counsel for the respondent, Shri R.P. Sinha, the Court granted two weeks time to file the additional return by order dated 16.3.79.
The case was listed for further hearing on 2.4.79 on which date the writ petition was dismissed.
The appellant then on 16.4.79 moved an application to review the order dated 2.4.79.
The application was registered as M.C.C. No. 209 of 1979.
This application was too dismissed on 23.4.79 with the following observation: "The grievance of the petitioner in this review petition is that the writ petition (M.P. No. 786/78) was dismissed in motion hearing without hearing the petitioner.
The substance of the order dismissing the Writ Petition in motion hearing as stated earlier indicates that this averment made by the petitioner is not correct.
We also distinctly recollect that the petitioner was heard fully on the question of admission and it was only thereafter that the petition was dismissed by dictating that order in the Court in the presence of the petitioner.
We would, therefore, reiterate that this grievance of the petitioner that he was not heard at the time of motion hearing is wholly incorrect.
The submissions made by the petitioner in support of this review application are (1) that there is error apparent on the face of the record because the writ petition was dismissed in motion hearing without hearing the petitioner; (2) that, sum 871 marily dismissal of the writ petition was arbitrary because after notice had been issued to the respondents 1 to 3 show cause why the petition be not admitted, it was incumbent on the Court to admit the writ petition and hear both sides at length before passing any order; and (3) that, on account of above position, the petitioner was not given a fair deal before dismissing the writ petition in motion hearing.
As earlier stated, the petitioner was heard fully at the end of motion hearing and so also the counsel for respondents Nos. 1 to 3, Shri R.P. Sinha.
The main averment on the basis of which all the aforesaid submissions are based, i.e. lack of full opportunity to the petitioner is, therefore, wholly non existent.
We are constrained to observe that in making these submissions, the petitioner who is now enrolled as an Advocate, has not been fair to the Court.
The petitioner who is now enrolled as a lawyer was expected to exhibit at least the minimum decorum and sense of responsibility which is expected from a members of this noble profession.
We are pained to observe that the petitioner took a very unreasonable attitude and exhibited a behaviour which could not be appreciated even by the member of the Bar who were present when this order was being dictated in the Court room after the hearing.
However, taking into account the fact that the petitioner is a new entrant in the Bar, we have chosen not to take serious notice of the conduct of the petitioner in the hope that the petitioner having now become a member of the Bar will try to follow the high traditions of the Bar which he has chosen to join.
There is no merit in this Review application.
It is summarily dismissed.
" On being aggrieved by the above order of dismissal dated 2.4.79, the appellant filed Special Leave Petition No. 570 of 1979 before this Court but was not successful as the SLP was dismissed on 25.7.79.
The appellant on being disturbed by the dismissal of his Writ Petition moved a Contempt Petition on 16.4.80 under Section 16 of the (hereinafter referred to as `the Act ') making some 872 serious allegations against the two Hon 'ble Judges of the High Court who dismissed his Writ Petition on 2.4.79 and thereafter the Review Petition on 23.4.79 and also impleaded Shri R.P. Sinha as the third respondent in that petition.
According to the appellant, the contempt petition was registered as M.C.C. No. 136 of 1980 and placed before a Division Bench on 29.4.1980 which after hearing the appellant summarily dismissed contempt petition.
While it was so, the Registry of the High Court examined the allegations made in the affidavit filed by the appellant in M.C.C. No. 136/80 under Rule 5 of Rules regarding contempts framed by the High Court (Notification No. 8958 Nagpur dated the 24th October, 1953) and placed the matter before the learned Chief Justice of the said High Court who on that motion/reference passed an order on 2.5.1980 to place the matter before a Division for further action.
The Division Bench before which the matter was placed took cognizance of criminal contempt and directed issue of notice on 13.5.80 to the appellant directing to show cause as to why he should not be punished for contempt of Court to which the appellant filed his reply raising certain preliminary objections stating that the notice was bad for the reasons, namely, (1) The Section of the Act under which cognizance had been taken was not specifically mentioned; (2) Though the offending portions are marked the notice does not show sufficient cause as to why the words and expressions used therein have been construed as contemptuous; (3) The procedure followed by the High Court was contrary to the rules framed by it; and (4) No consent of the Advocate General has been obtained.
The appellant, on the basis of the above objections prayed to discharge the rule of contempt.
On 11.7.80 when the case came up for hearing, the learned Advocate General filed his reply to the preliminary objection and served a copy of the same to the appellant.
On the same day, the High Court passed an order reading thus: ". .
The Government Advocate further gives notice to the respondent that the contempt proceedings are under article 215 of the Constitution.
Let the respondent take inspection of the original record in case he would like to know the offending portions marked both 873 underlined and side marked and let him file his reply on merits within 15 days.
" Admittedly, the appellant inspected the Court records relating to this matter.
Even thereafter when the appellant persistently requested as under what Section of the Act he has been charged, he was informed that the proceedings were under the provisions of Article 215 of the Constitution of India.
For the proper understanding of the issue in question, we feel that it would be necessary to reproduce the offending words and passages as appearing in the contempt petition.
They are as follows: "7.
That on 2.4.79, when the case came up for hearing, the judicial process required that it was the non applicant, Shri R.P.Sinha who should have been heard in the first instance and he should have been asked by the Court whether he has filed the addition return but on account of misfortune of the petitioner and misconduct of the Presiding Judge, Justice Shri J.S. Verma that he while coming out of the chamber and occupying the seat in the temple of justice called out the petitioner and told him that after the acceptance of the resignation, the petition had become infructuous as such he was dismissing it summarily.
The petitioner was shocked to witness the most illegal and unconstitutional legal process adopted by the Hon 'ble Judge. . . . . . . . .
When the petitioner started arguing his case that his Fundamental Rights were infringed, the Hon 'ble Presiding Judge not only stopped the petitioner from arguing his case but threatened him for dire consequences in case the petitioner argued any more.
This amounts to desacrilege the sanctity of his own Court by the Judges.
. . . . . 9.
The Review Petition was heard by the same Bench in utter disregard of judicial cannon since no person against whom serious allegations have been levelled (against) can be a Judge in his own case.
The Review Petition was also 874 rejected summarily repeating the false averments more in explicit terms that they heard the petitioner as well as the counsel for the respondents thus super imposing the seal of truth over the falsehood.
GROUNDS 1.
The petitioner charges the Hon 'ble Court especially Justice J.S. Verma for adopting a most illegal and unconstitutional judicial process in utter disregard of cannons and principles of adjudication, for showing rude behaviour towards the petitioner.
The amounts to desacrilege the sanctity of his Court.
That when the attention of Justice Verma was drawn on 2.4.79, that he was violating the legal process, he misbehaved with the petitioner without any valid reason which amounts to misconduct of the Judges.
That again on 23.4.1979 when the Review Petition was being argued, he threatened the applicant/petitioner for dire consequences for no valid reasons.
That the High Court is a Temple of Justice and the Judges who occupy the seat of justice are just like Dharamraj.
Dharamraj 's are not supposed to utter falsehood atleast while occupying this sacred seat of Justice.
The Hon 'ble Judges have not only uttered falsehood in their order dated 2.4.79 ( Annexure `B ') but super imposed their false averments in their order dated 23.4.79 in which they stated that they distinctly recollect that the petitioner as well as the counsel for the respondents were heard.
The petitioner 's charge that they do not remember as to what they heard. . . 5.
. . . . . . . . . 6.
The charge against Justice U.N. Bachawat (the associate Judge) is that he silently witnessed the proceedings throughout.
He never uttered a single word or intervened when his senior faltered out and succumbed to the false averments 875 of the Presiding Judge as if was not an independent Judge but serving faithfully and obediently to his master.
. . . . . . . . . 8.
That the petitioner avers that both the contemner Judges have acted and bad faith and have fouled the seat of justice by clear malafides act of theirs and as such no protection can be extended to them under cover a bonafide act done in good faith as Judges.
That both the Judges have violated the sanctity attached to the seat of Justice and have committed a Contempt of their own Court.
Both have acted malafidely in bad faith.
PRAYER It is, therefore, prayed that Contempt Proceedings under Section 16 of the Contempt of Court Act, 1971, may be initiated against Justice J.S. Verma and Justice U.N. Bachawat of the Madhya Pradesh High Court on the aforesaid grounds.
" The High Court after examining the above scandalising remarks made by the appellant in his contempt petition rejected the objections of the appellant/contemner holding that the cognizance of the criminal contempt was taken by it on suo moto, that the contemner was informed that the Court was invoking its jurisdiction under Article 215 of Constitution of India to punish him for contempt, that the does not confer any new jurisdiction by its authority, that in a suo moto action by the High Court, consent of the Advocate General was not necessary, that non quoting of the provisions Section in the notice is immaterial and that the contemner had full notice of the charge of contempt levelled against him and concluded, "We see no defect in the notice served upon the contemner, nor do we find defect in the procedure followed." Then after referring to certain decisions of this Court in Perspective Publications vs State of Maharashtra, ; ; C.K. Daphtary vs O.P. Gupta, ; and Baradakanta Mishra vs Registrar of 876 Orissa High Court; , , the High Court made the following observation with reference to the facts of the case: "16.
The offending portions in paras 7 and 9, and repeated in grounds 1,2,3 and 4,8 and 9 attribute to Mr. Justice J.S. Verma (a) improper motive, (b) unfairness and undue basis in dealing with the case, (c) being a Judge who administers justice in a cursory manner without giving thought to the points involved, (d) of being intemperate in language, impatient and unjust, (e) who would arise false proceedings and when falsity has been brought his notice, would have the audacity to stick to the falsehood.
If the words have this import, the inevitable effect is undermining the confidence of the public in the judiciary.
The person who has indulged in scurrilous abuse of the Judge, must suffer in punishment.
" On the basis of the above observations, the High Court recorded its finding thus: "20.
In our reading of the offending portions duly marked in paras 7,9 and grounds 1,2,3 and 4,8 and 9 of the application dated 16.4.1980 in the context in which they have been written, there are imputations of malafides, bias and prejudice against Mr. Justice J.S. Verma.
The contempt involved in these passages is grossly scandalous.
Coming to the allegations in Ground No. 6 relating to Mr. Justice Bachawat, it was said that "he silently witnessed the proceedings.
He never uttered a single word or intervened when his senior faltered and succumbed to false averments of the Presiding Judge as if he was not an independent Judge but serving faithfully and obediently his master." Finally, the High Court held that the contemner, Mr. Pritam Lal is guilty of criminal contempt of not only scandalising the Court and lowering its authority but also substantially interfering with the due course of justice.
Coming to the question of sentence, the High Court taking note of the defiant attitude of the contemner who even did not think it necessary to 877 apologise but tried to justify the aspersions, sentenced the contemner to suffer simple imprisonment for two months.
Hence the present appeal.
The Contemner, Mr. Pritam Lal appeared before us in person and advanced his arguments which are similar to the submissions made before the High Court, inter alia contending that the impugned order of the High Court should be set aside with costs and suitable compensation on the ground of procedural irregularities in that (1) that the offending remarks have not been communicated to him as per Rules 5 and 9 framed by the High Court; (2) that the cognizance of the criminal cotmpt has not been taken in conformity with Section 15 of the Act; (3) that the procedure after cognizance as prescribed under Section 17 of the Act has not been followed; and (4) that Article 215 of the Constitution of India does not prescribe any procedure to be followed.
According to him he has not been given a fair and full hearing but on the other hand, the learned Judges have browbeaten and unjustly convicted him ignoring the well settled principle that every person has got an inalienable right of making fair criticism.
He has further added that the impugned order was pre conceived and pre judged one.
In addition to the oral arguments, he has filed detailed written arguments, signed on 15.11.88 citing a number of decisions which in our view, do not have any relevance to the facts of the case.
In the written submissions also, he has again made certain outrageous and contemptuous remarks about the Judges of the High Court, in attempting to justify his action which has led to the initiation of the proceedings of contempt of Court before the High Court.
As rightly pointed out by the High Court, these contentions in our opinion do not merit any consideration since every High Court which is a Court of Record is vested with `all powers ' of such Court including the power to punish for contempt of itself and has inherent jurisdiction and inalienable right to uphold its dignity and authority.
Whilst Article 129 deals with the power of the Supreme Court as Court of Record, Article 215 which is analogous to Article 129 speaks of the power of the High Court in that respect.
Prior to the , it was held that the High Court has inherent power to deal with a contempt of itself summarily and 878 to adopt its own procedure, provided that it gives a fair and reasonable opportunity to the contemner to defend himself.
But the procedure has now been prescribed by Section 15 of the Act in exercise of the powers conferred by Entry 14, List III of the Seventh Schedule of the Constitution.
Though the contempt jurisdiction of the Supreme Court and the High Court can be regulated by legislation by appropriate Legislature under Entry 77 of List I and Entry 14 of List III in exercise of which the Parliament has enacted the Act 1971, the contempt jurisdiction of the Supreme Court and the High Court is given a constitutional foundation by declaring to be `Courts of Record ' under Articles 129 and 215 of the constitution and, therefore, the inherent power of the Supreme Court and the High Court cannot be taken away by any legislation short of constitutional amendment.
In fact, Section 22 of the Act lays down that the provisions of this Act shall be in addition to and not in derogation of the provisions of any other law relating to contempt of courts.
It necessarily follows that the constitutional jurisdiction of the Supreme Court and the High Court under Articles 129 and 215 cannot be curtailed by anything in the Act of 1971.
The above position of law has been well settled by this Court in Sukhdev Singh Sodhi vs The Chief Justice and Judges and Judges of the PEPSU High Court, ; holding thus: "In any case, so far as contempt of a High Court itself is concerned, as distinct from one of a subordinate Court, the Constitution vests these rights in every High Court, so no Act of a legislature could take away that jurisdiction and confer it afresh by virtue of its own authority.
" It has been further observed: "The High Court can deal with it summarily and adopt its own procedure.
All that is necessary is that the procedure is fair and that, the contemner is made aware of the charge against him and given a fair and reasonable opportunity to defend himself." In R.L. Kapur vs State of Madras, ; a question arose did the power of the High Court of Madras to punish contempt of itself arise under the so that under Section 25 of the , Sections 63 to 70 of the Penal Code and 879 the relevant provisions of the Code of Criminal Procedure would apply.
This question was answered by this Court in the following words: "The answer to such a question is furnished by Article 215 of the Constitution and the provisions of the themselves.
Article 215 declares that every High Court shall be a court of record and shall have all powers of such a court including the power to punish for contempt of itself.
Whether Article 215 declares the power of the High Court already existing in it by reason of its being a court of record, or whether the article confers the power as inherent in a court of record, the jurisdiction is a special one, not arising or derived from the , and therefore, not within the purview of either the Penal Code or the Code of Criminal Procedure.
" After giving the above answer to the query raised, this Court has reiterated the view held in the case of Sukhdev Singh Sodhi (referred supra).
The view expressed in Sukhdev Singh Sodhi and followed in R.L. Kapur been referred with approval in a recent decision in Delhi Judicial Service Association vs State of Gujarat, ; , holding that the view of this Court in Sukhdev Singh Sodhi is "that even after the codification of the law of contempt in India, the High Court 's jurisdiction as a Court of Record to initiate proceedings and take seisin of the matter remained unaffected by the contempts of Courts Act, 1926.
" Beg, C.J. in Re section Mulgaokar, ; has explained the special power of the Supreme Court under Article 129 stating. "This Court is armed, by Article 129 of the Constitution, with very wide and special powers, as a Court of Record, to punish its contempts.
" In Delhi Judicial Service Association case (supra), it has been pointed out as follows: "Article 129 provides that the Supreme Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself.
Article 215 contains 880 similar provisions in respect of a High Court.
Both the Supreme Court as well as High Courts are courts of record having powers to punish for contempt including the power to punish for contempt of itself.
" Yet another question whether the provisions of the Code of Criminal Procedure are applicable to such Proceedings, has been negatively answered by this Court in Sukhdev Singh Sodhi case (supra) stating thus: "We hold therefore that the Code of Criminal Procedure does not apply in matters of contempt triable by the High Court.
The High Court can deal with it summarily and adopt its own procedure.
All that is necessary is that the procedure is fair and that the contemner is made aware of the charge against him and given a fair and reasonable opportunity to defend himself.
" See also Brahma Prakash Sharma and Others vs The State of Uttar Pradesh, From the above judicial pronouncements of this Court, it is manifestly clear that the power of the Supreme Court and the High Court being the Courts of Record as embodied under Articles 129 and 215 respectively cannot be restricted and trammelled by any ordinary legislation including the provisions of the and their inherent power is elastic, unfettered and not subjected to any limit.
It would be appropriate, in this connection, to refer certain English authorities dealing with the power of the superior Courts as Courts of Record.
The 1884 edition of Belchamber 's Practice of the Civil Court says at page 241 that "Every superior court of record, whether in the United Kingdom, or in the colonial possessions or dependencies of the Crown has inherent power to punish contempts, without its precincts, as well as in facie curiae. . ." In 9 Halsbury 's Law of England (4th Edition) by Lord Hailsham at page 3 under the caption "Criminal Contempt", the following passage is found: 881 "The superior courts have an inherent jurisdiction to punish criminal contempt. ." It is further stated at page 3 itself that the power to commit by summary process is arbitrary and unlimited, but that power should be exercised with the greatest caution.
In Re Clements and the Republic of Costa Rica vs Erlanger, at page 383, Lord Jessel, M.R. said: ". this jurisdiction of committing for contempt being practically arbitrary and unlimited should be most jealously and carefully watched, and exercised. ," Reference also may be bad to a decision of the Division Bench of the Bombay High Court in State of Bombay vs P., 1958 Bom.
Law Reporter, (60) Page 873 wherein it has been held that the jurisdiction which each Judge of the High Court possesses and uses as constituting a Court of Record is a jurisdiction which is inherent in the Court itself for punishment for contempt of Court, whether it is ex facie the Court or otherwise and that for the exercise of that jurisdiction it is not necessary to refer either to the Letters Patent or the Rules framed by the Court thereunder and that it is a jurisdiction which is being exercised in the same manner as was exercised in the Court of King 's Bench Division in England.
In special feature of the procedure to be followed in a contempt proceeding is the summary procedure which is recognised not only in India but also abroad.
It is an outstanding characteristic of the law of contempt both in England and Scotland that it makes use of a particular and summary procedure which is unknown to any other branch of those countries.
In England, this summary procedure began to be adopted by the common law Courts inspite of trial by jury and that the trial by jury for contempt has steadily declined and has now fallen entirely into disuse.
In other words, consequent upon the use of the summary procedure in England, a person alleged to be in contempt does not enjoy the benefit of some of the safeguards of the ordinary criminal law such as those provided by the Judges ' Rules in England and Wales and the right to trial by jury.
882 Rule 42 of the Federal Rules of Criminal Procedure of United States reads that ``A criminal contempt may be punished summarily if the Judge certifies that he saw or heard the conduct constituting the contempt and that it was committed in the actual presence of the Court." In Ex parte Terry, ; , 307; , , 80 (1888) and in Matsusow vs United States, ; , 339 (5th Cir.
1956), it has been ruled that "If the contempt be committed in the face of the court, the offender may be instantly apprehended and imprisoned at the discretion of the judges, without any further proof or examination.
" In the Contempt of Court by Oswald, the following passage relating to the summary power of punishment is found: "The summary power of punishment for contempt has been conferred on the courts to keep a blaze of glory around them, to deter people from attempting to render them contemptible in the eyes of the public.
These powers are necessary to keep the course of justice free, as it is of great importance to society.
" In the year 1899, Lord Moriss in delivering the judgment of the Judicial Committee in Mc Leod vs St. Aubin said: "The power summarily to commit for contempt is considered for the proper administration of justice." This has long been the practice in India also.
The power under Articles 129 and 215 is a summary power as held in the cases of Sukhdev Singh Sodhi, C.K. Daphtary (referred to above) and in Hira Lal Dixit vs State of U.P., ; Peacock, C.J.laid down the rule quite broadly in the following words in Re Abdool vs Mahtab, 1867 (8 WR) Cr. 32 at page 33: "there can be no doubt that every court of record has the power of summarily punishing for contempt.
" The above view is re stated in a number of decisions of this Court.
In the case of Sukhdev Singh Sodhi it has been observed: 883 ". .the power of a High Court to institute proceedings for contempt and punish where necessary is special jurisdiction which is inherent in all courts of record and section 1 (2) of the Code expressly excludes special jurisdiction from its scope.
" The position of law that emerges from the above decisions is that the power conferred upon the Supreme Court and the High Court, being Courts of Record under Articles 129 and 215 of the Constitution respectively is an inherent power and that the jurisdiction vested is a special one not derived from any other statute but derived only from Articles 129 and 215 of the Constitution of India (See D.N. Taneja vs Bhajan Lal, ; and therefore the constitutionally vested right cannot be either abridged by any legislation or abrogated or cut down.
Nor can they be controlled or limited by any statute or by any provision of the Code of Criminal Procedure or any Rules.
The caution that has to be observed in exercising this inherent power by summary procedure is that the power should be used sparingly, that the procedure to be followed should be fair and that the contemner should be made aware of the charge against him and given a reasonable opportunity to defend himself.
If we examine the facts of the present case in the backdrop of the proposition of law, the contentions raised by the appellant challenging the procedure followed by the High Court do not merit any consideration since the appellant has been served with a notice of contempt and thereafter permitted to go through the records and finally has been afforded a fair opportunity of putting forth his explanation for the charge levelled against him.
Incidently, we may say that the submission of the contemner that the impugned order is vitiated on the ground of procedural irregularities and that Article 215 of the Constitution of India is to be read in conjunction with the provisions of Sections 15 and 17 of the Act of 1971, cannot be countenanced and it has to be summarily rejected as being devoid of any merit.
The remaining important question for consideration are whether the statements which we have extracted in the preceding part of this judgment, made by the contemner amount to a scurrilous attack on the integrity, honesty and judicial impartiality of the learned Judges of the High Court and whether the contemner by his conduct as well as by making such 884 written scandalising statements and invective remarks have interfered and seriously disturbed the system of administration of justice by bringing it down to disrespect and disrepute.
There is an abundance of empirical decisions upon particular instances of conduct which has been held to constitute contempt of Court.
We shall now refer to a few.
Lord Russel of Killowen, L.C.J. has laid down the law of Contempt in at 40 as follows: "Any act done or writing published calculated to bring a Court or a Judge of the Court into contempt, or to lower his authority, is a Contempt of Court.
" The above proposition has been approved and followed by Lord Atkin in Andre Paul vs Attorney General, AIR 1936 PC 141.
Lord Justice Donovan in Attorney General vs Butterworth, , after making reference to Reg.
vs Odham 's Press Ltd., ex parte A.G. said, "Whether or not there was an intention to interfere with the administration of justice is relevant to penalty, not to guilt." This makes it clear that an intention to interfere with the proper administration of justice is an essential ingredient of the offence of contempt of court and it is enough if the action complained of is inherently likely so to interfere.
In Morris vs The Crown Office, at page 1081, Lord Denning M.R. said: "The course of justice must not be deflected or interfered with.
Those who strike at it strike at the very foundations of our society.
" In the same case, Lord Justice Salmon spoke: "The sole purpose of proceedings for contempt is to give our courts the power effectively to protect the rights of the public by ensuring that the administration of justice shall not be obstructed or prevented." 885 Frank Further, J in Offutt vs U.S., ; expressed his view as follows: "It is a mode of vindicating the magesty of law, in its active manifestation against obstruction and outrage." In Jennison vs Baker, at page 1006, it is stated: "The law should not be seen to sit by limply, while those who defy it go free, and those who seek its protection lose hope." Chinnappa Reddy, J. Speaking for the Bench in Advocate General, Bihar vs M.P. Khair Industries, ; citing those two decisions in the ases of Offut and Jennison (supra) stated thus: ". it may be necessary to punish as a contempt, a course of conduct which abuses and makes a mockery of the judicial process and which thus extends its pernicious influence beyond the parties to the action and affects the interest of the public in the administration of Justice.
The public have an interest, an abiding and a real interest, and a vital stake in the effective and orderly administration of justice, because, unless justice is so administered, there is the peril of all rights and liberties perishing.
The Court has the duty of protecting the interest of the public in the due administration of justice and, so it is entrusted with the power to commit for Contempt of Court, not in order to protect the dignity of the Court against insult or injury as the expression "Contempt of Court" may seem to suggest, but to protect and to vindicate the right of the public that the administration of justice shall not be prevented, prejudiced, obstructed or interfered with." Krishna Iyer, J. in his separate Judgment in re section Mulgaokar (supra) while giving the broad guidelines in taking punitive action in the matter of Contempt of Court has stated: ". .if the Court considers the attack on the judge or judges scurrilous, offensive, intimidatory or malicious beyond condonable limits, the strong arm of the law must, in the name of public interest and public justice, strike a blow on him who 886 challenges the supremacy of the rule of law by fouling its source and stream." In the case of Brahma Prakash (supra), this Court after referring to various decisions of the foreign countries as well as of the Privy Council stated thus: "It will be an injury to the public if it tends to create an apprehension in the minds of the people regarding the integrity, ability or fairness of the Judge or to deter actual and prospective litigants from placing complete reliance upon the Court 's administration of justice, or if it is likely to cause embarrassment in the mind of the Judge himself in the discharge of his judicial duties.
It is well established that it is not necessary to prove affirmatively that there has been an actual interference with the administration of justice by reason of such defamatory statement; it is enough if it is likely, or trends in any way, to interfere with the proper administration of law." In Ashram M.Jain vs A.T. Gupta, the facts were thus: The petitioner who filed a special leave petition accompanying by an affidavit affirming the statement made in the said SLP indulged in wild and vicious diatribe against the then Chief Justice of the High Court of Maharashtra.
When the SLP was heard, this Court directed notice to be issued to the petitioner as to why he should not be committed for contempt under the .
After hearing the parties and then not accepting the unconditional apology of the petitioner, this Court convicted the petitioner for contempt and sentenced him to suffer simple imprisonment for a period of two months.
In that case, Chinnappa Reddy, J. speaking for the Bench said: "The strains and mortification of litigation cannot be allowed to lead litigants to tarnish, terrorise and destroy the system of administration of justice by vilification of judges.
It is not that judges need be protected; judges may well take care of themselves.
It is the right and interest of the public in the due administration of justice that has to be protected." 887 Reference may be made to a recent decision of this Court in M.B. Sanghi vs High Court of Punjab and Haryana, ; In that case, the appellant, a practising advocate having failed to persuade the learned Subordinate Judge to grant an ad interim injunction pending filing of a counter by the opposite party, made certain derogatory remarks against the learned Judge who instead of succumbing to such unprofessional conduct made a record of the derogatory remarks and forwarded the same to the High Court through the District Judge to initiate proceedings for Contempt of Court against the appellant.
The High Court holding that the remarks made on the learned Sub Judge are disparaging in character and derogatory to the dignity of the judiciary found the appellant guilty of Section 2 (c) (i) of the .
The appellant therein though denied to have made the remarks, however, offered an unqualified apology.
But the High Court without accepting the apology punished the appellant therein with a fine of Rs. 1,000.
Ahmadi, J. of this Court in his separate judgment has observed: "The tendency of maligning the reputation of judicial officers by disgruntled elements who fail to secure the desired order is ever on the increase and it is high time it is nipped in the bud.
And, when a number of the profession resorts to such cheap gimmiks with a view to browbeating the judge into submission, it is all the more painful.
When there is a deliberate attempt to scandalise which would shake the confidence of the litigating public in the system, the damage caused is not only to the reputation of the concerned judge but also to the fair name of the judiciary.
Veiled threats, abrasive behaviour, use of disrespectful language and at times blatant condemnatory attacks like the present one are often designedly employed with a view to taming a judge into submission to secure a desired order.
Such cases raise larger issues touching the independence of not only the concerned judge but the entire institution.
The foundation of our system which is based on the independence and impartiality of those who man it will be shaken if disparaging and derogatory remarks are made against the presiding judicial officers with impunity.
It is high time that we realise that the much cherished judicial independence has to be protected not only from the executive or 888 the legislature but also from those who are an integral part of the system." After having made the above observation, the learned judge concerned with the conclusion of Agarwal, J. dismissing the appeal and while doing so, he expressed his painful thought as follows: "When a member of the bar is required to be punished for use of contemptuous language it is highly painful it pleases none but painful duties have to be performed to uphold the honour and dignity of the individual judge and his office and the prestige of the institution.
Courts are generally slow in using their contempt jurisdiction against erring members of the profession in the hope that the concerned Bar Council will chasten its member for failure to maintain proper ethical norms.
If timely action is taken by the Bar Councils, the decline in the ethical values can be easily arrested.
" We are in full agreement with the above view.
Reverting to the facts of the case, the offending criticism and the scandalising allegations made by the appellant/contemner are most fatal and dangerous obstruction of justice shaking the confidence of the public in the administration of justice and calling for a more rapid and immediate punitive action.
These calculated contemptuous remarks and the sweeping allegations which we have extracted above are derogatory in character not only to the dignity of the learned Judges casting aspersions on their conduct in the discharge of their judicial functions but also wounds the dignity of the Court.
It is highly painful to note that the appellant/contemner who is none other than an Advocate practising in the same highest Court of the state after having failed to wrench a decision in his favour in his own cause which he prosecuted as party in person has escalatingly scandalised the Court by making libellous allegations which are scurrilous, highly offensive, vicious, intimidatory, malacious and beyond condonable limit.
Even a cursory reading of the remarks made against the learned Judge of the High Court unambiguously show that the potentially prejudicial utterances and the outrageous allegations rumbustiously and invectively made by the contemner with malacious design of attempting to impair 889 the administration of justice have struck a blow on the judiciary and also seriously sullied the image, dignity and high esteem which the office of the Judge of the High Court carries with it and thus impeded the course of justice by fouling its source and steam.
In our opinion, the incident in question is a flagrant onslaught on the independence of the judiciary, destructive of the orderly administration of justice and a challenge to the supremacy of the Rule of Law.
The maxim "Salus populi suprema lex", that is "the welfare of the people is the supreme law" adequately enunciates the idea of law.
This can be achieved only when justice is administered lawfully, judicially, without fear or favour and without being hampered and thwarted, and this cannot be effective unless respect for it is fostered and maintained.
To punish an Advocate for Contempt of court, no doubt, must be regarded as an extreme measure, but to preserve the proceedings of the Courts from being deflected or interfered with, and to keep the streams of justice pure, serene and undefiled, it becomes the duty of the Court, though painful, to punish the contemner in order to preserve its dignity.
No one can claim immunity from the operation of the law of contempt, if his act or conduct in relation to Court or Court proceedings interferes with or is calculated to obstruct the due course of justice.
In view of the above heinous type of scandalising the Court, we unhesitatingly confirm the finding of the High Court that the appellant/contemner has made himself guilty of criminal contempt.
Coming to the question of sentence, it appears from order of the High Court that the appellant had adopted a defiant attitude and tried to justify the aspersions made by him even without thinking it necessary to apologise.
Before this Court also, the appellant has neither expressed any contrition nor has he any repentance for the vicious allegations made against the learned Judges of the High Court.
But on the other hand, he has exhibited a dogged determination to pursue the matter, come what may.
A reading of his memorandum of grounds and the written and signed arguments show that he was ventured into another bout of allegations against the High Court Judges and persisted in his campaign of vilification.
His present conduct has aggravated rather than mitigating his offence.
890 Therefore, having regard to the sentencing policy that punishment should be commensurate with the gravity of the offence, we hold that the sentence of 2 months, imprisonment in no way calls for interference and accordingly the sentence is confirmed.
For the reasons aforementioned, the Criminal Appeal is dismissed.
N.P.V. Appeal dismissed.
| IN-Abs | The appellant, an Advocate practising in the High Court was earlier working in the Defence Accounts Department, on re employment, after retiring from the Army.
He had filed a Writ Petition before the High Court, claiming certain benefits like pension, gratuity, pay and allowances etc., pertaining to the service rendered by him in the Defence Accounts Department and the Army.
The High Court dismissed the Writ Petition.
It also dismissed the appellant 's review application.
This Court also dismissed his Special Leave Petition against the High Court 's order.
Thereafter, the appellant, moved a Contempt Petition under Section 16 of the making some serious allegations against the two Judges of the High Court, who dismissed his Writ Petition and also the Review Petition.
A Division Bench of the High Court summarily dismissed the contempt petition.
865 Meanwhile, the Registry of the High Court examined the allegations made in the affidavit filed by the appellant under Rule 5 of the Rules regarding contempts framed by the High Court.
A Division Bench of the High Court, before which the matter was placed on the order of the Chief Justice, took cognizance of the criminal contempt and directed issue of notice to the appellant directing him to show cause as to why he should not be punished for contempt of Court.
The appellant filed his reply raising certain preliminary objections, contending that the notice was bad for the reasons that (1) the Section of the Act under which cognizance had been taken was not specifically mentioned; (2) the notice did not show sufficient cause as to why the words and expressions used in the offending portions marked had been construed as contemptuous (3) the procedure followed by the High Court was contrary to the rules framed by it; and (4) no consent of the Advocate General had been obtained, and prayed for discharge of the rule of contempt.
Meanwhile, on the basis of the High Court 's Order, the appellant inspected the Court records relating to this matter, and thereafter, he was also informed that the proceedings were under the provisions of Article 215 of the Constitution of India.
After examining the remarks made by the appellant in his contempt petition the High Court rejected the objections of the appellant/contemner and held that the contemner was guilty of criminal contempt of not only scandalising the Court and lowering its authority but also substantially interfering with the due course of justice.
Taking note of the defiant attitude of the contemner who even did not think it necessary to apologise but tried to justify the aspersions, the High Court sentenced the contemner to suffer simple imprisonment for two months.
In the appeal before this Court, the contemner who appeared before the Court in person, contended that the order of the High Court should be set aside on the ground of procedural irregularities in that (1) that the offending remarks had not been communicated to him as per Rules 5 and 9 framed by the High Court; (2) that the cognizance of the criminal contempt had not been taken in conformity with Section 15 of the Act; (3) that the procedure, after cognizance as prescribed under Section 17 of the Act had not been followed; and (4) that Article 215 of the Constitution of India did not prescribe any procedure to be followed.
He 866 also contended that he had not been given a fair and full hearing and that the Judges had browbeaten and unjustly convicted him ignoring the well settled principle that every person had an inalienable right of making fair criticism, and that the order in question was pre conceived and pre judged one.
In his written statement also he made certain remarks about the Judges of the High Court, in attempting to justify his action which had led to the initiation of proceedings for contempt of Court before the High Court.
Dismissing the appeal, this Court, HELD: 1.1 The power conferred upon the Supreme Court and the High Court, being Courts of Record under Articles 129 and 215 of the Constitution respectively, is an inherent power and the jurisdiction vested is a special one not derived from any other statute, but derived only from Articles 129 and 215 of the Constitution of India.
Therefore, the constitutionally vested right cannot be either abridged by any legislation including or abrogated or cut down.
Nor can they be controlled or limited by any statute or by any provision of the Code of Criminal Procedure or any Rules.
The special feature of the procedure to be followed in a contempt proceeding being summary procedure, which is recognised not only in India but also abroad, the caution that has to be observed in exercising this inherent power by summary procedure is that the power should be used sparingly, that the procedure to be followed should be fair and that the contemner should be made aware of the charge against him and given a reasonable opportunity to defend himself.
[883B D] Sukhdev Singh Sodhi vs The Chief Justice and Judges of the PEPSU High Court, ; ; R.L. Kapur vs State of Madras, ; ; Delhi Judicial Service Association vs State of Gujarat, ; ; section Mulgaokar; , ; Brahma Prakash Sharma and Others vs The State of Uttar Pradesh, ; and D.N. Taneja vs Bhajan Lal, ; relied on.
Hira Lal Dixit vs State of U.P., ; ; Advocate General, Bihar vs M.P. Khair Industries, ; ; Ashram M. Jain vs A.T. Gupta, and M.B. Sanghi vs High Court of Punjab and 867 Haryana; , , referred to.
State of Bombay vs P. 1958 Bom.
Law Reporter, (60) Page 873, referred to.
Clements and the Republic Costa Rica vs Erlanger, page 383, Ex parte Terry, ; , 307; , 80 (1888); Matsusow vs United Sates, ; , 339 (5th Cir.) 1956; Sukhdev Singh Sodhi, C.K. Daphtary; Re Abdool vs Mahtab, (1867) 8 WR Cr. 32 page 33; at 40; Andre Paul vs Attorney General, AIR 1936 PC 141, Attorney General vs Butterworth, (1963) 1 Q.B. 696; Reg.
vs Odham 's Press Ltd. Ex parte A.G., (1957) 1 Q.B. 73; Morris, vs The Crown Office, , 1081, Offutt vs U.S., ; Jennison vs Baker, 1006, referred to.
Belchamber 's Practice of the Civil Court, 1884 Ed.
P. 241; Contempt of Court.
By Oswald and Halbury 's Law of England (4th Edition) by Lord Hailsham page 3, referred to. 1.2.
In the instant case, the offending criticism and the scandalising allegations made by the appellant/contemner are most fatal and dangerous obstruction of justice shaking the confidence of the public in the administration of justice and calling for a more rapid and immediate punitive action.
These calculated contemptuous remarks and the sweeping allegations are derogatory in character, not only to the dignity of the Judges and casting aspersions on their conduct in the discharge of their judicial functions but also wounds the dignity of the Court.
It is highly painful to note that the appellant/contemner who is none other than an Advocate practising in the same highest Court of the State after having failed to wrench a decision in his favour in his own cause which he prosecuted as party in person has escalatingly scandalised the Court by making libellous allegations which are scurrilous, highly offensive, vicious, intimidatory, malacious and beyond condonable limit.
Even a cursory reading of the remarks made against the Judge of the High Court unambiguously show that the potentially prejudicial utterances and the outrageous allegations rumbustiously and invectively made by the contemner with malicious design of attempting to impair the administration of justice have struck a blow on the judiciary and also seriously sullied the image, dignity and high esteem which the office of the Judge of the High Court carried with it and thus impeded the course of justice by fouling its source 868 and stream.
The incident in question is a flagrant onslaught on the independence of the judiciary, destructive of the orderly administration of justice and a challenge to the supremacy of the Rule of Law.
The maxim "Salus populi suprema lex", that is, "the welfare of the people is the supreme law" adequately enunciates the idea of law.
This can be achieved only when justice is administered lawfully, judicially, without fear or favour and without being hampered and thwarted, and this cannot be effective unless respect for it is fostered and maintained.
[888E H,889A C] 1.3.To punish an Advocate for Contempt of Court, no doubt, must be regarded as an extreme measure, but to preserve the proceedings of the Courts from the being deflected or interfered with, and to keep the streams of justice pure, serene and undefiled, it becomes the duty of the Court, though painful, to punish the contemner in order to preserve its dignity.
No one can claim immunity from the operation of the law of contempt, if his act or conduct in relation to Court or Court proceedings interferes with or is calculated to obstruct the due course of justice.
In view of the heinous type of scandalising the Court, the finding of the High Court that the appellant/contemner has made himself guilty of criminal contempt is confirmed.
[889D E] 1.4 As regards the sentence, it is clear from the order of the High Court that the appellant had adopted a defiant attitude and tried to justify the aspersions made by him even without thinking it necessary to apologise.
Before this Court also, the appellant has neither expressed any contrition nor has he any repentance for the vicious allegations made against the Judges of the High Court.
But, on the other hand, he has exhibited a dogged determination to pursue the matter, come what may.
A reading of his memorandum of grounds and the written and signed arguments show that he was ventured into another bout of allegations against the High Court Judges and persisted in his campaign of vilification.
His conduct in this Court has aggravated rather than mitigating his offence.
[889F H] 1.5.
Therefore, having regard to the sentencing policy that punishment should be commensurate with the gravity of the offence, the sentence of 2 months ' imprisonment in no way calls for interference and is accordingly confirmed.
[890A]
|
have been rendered not only anomalous but even derogatory to the sovereignty of the State.
It is hoped that the unfortunate state of affairs shall be brought to end at the earliest.
[1062E G] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 896 of 1992.
WITH T.C. No. 27 of 1987.
From the Judgment and Order dated 26.4.1985 of the Andhra Pradesh High Court in O.S. Appeal No. 2 of 1984.
Raju Ramachandran and Jagan Mohan Rao for the Appellants.
G.L. Sanghi, S.K. Mehta, Dhruv Mehta, Aman Vachher and Arvind Verma for the Respondents.
The Judgment of the Court was delivered by THOMMEN, J.
We grant leave in SLP(C) No. 10542 of 1985 which arises from the order of the Division Bench of the Andhra Pradesh High Court affirming the finding of the learned Single Judge that the respondent 's suit against the appellants was maintainable and that the High Court was competent to try the same in exercise of its admiralty jurisdiction.
The Transferred Case No. 27 of 1987 is the appeal filed by defendents 1 and 2 against the judgment of the learned Single Judge of the Andhra Pradesh High Court decreeing the suit.
The case stood transferred to this Court pursuant to this Court 's Order dated 25.11.1986.
By our order dated August 28, 1991 we allowed Civil Appeal No. 3392 of 1991 filed by the 3rd defendant against the order of the High Court dismissing its petition for condonation of delay in presenting O.S.A.S.R. No. 39789 of 1988 in the High Court.
We held that the appeal filed by the 3rd defendant had to be heard on the merits particularly on the question of law regarding the liability of the agent.
1018 We shall now deal with the appeal arising from SLP (C) No. 10542 of 1985 where the only question is whether the learned Judges of the High Court have rightly held that the respondent 's suit was maintainable in respect of a cause of action alleged to have arisen on or after 1.2.1984 when the vessel, M.V. Elisabeth, was lying in the Port of Marmagao; on 8.2.1984 when the vessel left the Port without issuing bills of lading or other documents for the goods shipped as required by the plaintiff shipper; and, subsequently when the goods were discharged and handed over to the consignee at the port of destination at Ras Al Khaimah, United Arab Emirates during the period from 13.2.84 to 19.2.84, notwithstanding the direction of the plaintiff not to deliver the goods by reason of the buyer 's failure to pay the agreed price.
The 1st defendant, M.V. Elisabeth, is a vessel of foreign nationality and it is owned by the 2nd defendant which is a foreign company carrying on business in Greece, and the 3rd defendant is stated to be the local agent of the 2nd defendant at Goa.
The Planitiff is a private limited company having its registered office in Goa.
The case of the plaintiff is that the defendants acted in "breach of duty" by leaving the port of Marmagao on 8.2.84 and delivering the goods to the consignee in breach of the plaintiff 's directions to the contrary, thereby committing conversion of the goods entrusted with them.
The suit was instituted in Andhra Pradesh High Court invoking its admiralty jurisdiction by means of an action in rem.
The vessel was arrested when it entered the Port of Vishakhapatnam on 13.4.84 after returning from foreign ports.
On the owner of the vessel entering appearance and providing security by furnishing a Bank Guarantee under protest in the sum of Rs. 14,25,000 the vessel was released from detention.
The defendants moved an application in the High Court raising a preliminary objection to the jurisdiction of that Court.
They contended that the plaintiff 's suit against a foreign ship owned by a foreign company not having a place of residence or business in India was not liable to be proceeded against on the admiralty side of the High Court by an action in rem in respect of a cause of action alleged to have arisen by reason of a tort or a breach of obligation arising from the carriage of goods from a port in India to a foreign port.
They did not, however, contend that the alleged cause of action not having arisen in Andhra Pradesh, the suit ought not to have been filed in Andhra Pradesh.
Their sole contention on the question of jurisdiction was as regards the lack of admiralty jurisdiction of any court 1019 in Andhra Pradesh or any other State in India to proceed in rem against the ship on the alleged cause of action concerning carriage of goods from an Indian port to a foreign port.
The preliminary objection was overruled by the learned the learned Single Judge and his order was confirmed by the learned Judges of the Division Bench by their order which is challenged in S.L.P.(C) No. 10542 of 1985.
The suit was finally decreed by the learned Single Judge and appeal therefrom is the subject matter of the case transferred to this Court.
The crucial question for our consideration is, therefore, the dispute about jurisdiction.
If that question were to be answered in favour of the defendants, it would be unnecessary to express any view on the merits of the Transferred Case, for the suit itself would then stand dismissed.
Mr. Raju Ramachandran, appearing for the appellants (defendants), raises a fundamental objection as to the assumption of admiralty jurisdiction over a foreign ship in respect of a claim arising in connection with the carriage of goods from an Indian port to a port outside India.
The High Court, he says, ordered the arrest of the vessel in purported exercise of its jurisdiction on the admiralty side.
The power of the High Court on the admiralty side is, however, contained in and confined to the provisions of the Admiralty Court Act, 1861 (24 & 25 Victoriae, Ch. 10) made applicable to India by the Colonial Courts of Admiralty Act, 1890 (53 & 54 Victoriae) of Admiralty (India) Act, 1891 (Act No. 16 of 1891) declaring certain Indian Courts of unlimited civil jurisdiction as colonial courts of admiralty and declaring the High Court of Judicature of Madras as one of such courts.
Mr. Ramachandran does not dispute that by reason of the Andhra State Act, 1953, and the State Re organisation Act, 1956 read with the Government of India Acts, 1915 and 1935 and the Constitution of India, the High Court of Andhra Pradesh has, like the High Courts of Madras, Bombay and Calcutta, such admiralty jurisdiction as was granted by the British Statutes referred to above.
But the jurisdiction, counsel says, was not wider than what was granted under the British Statutes.
The extent of admiralty jurisdiction and the judicial power peculiar to that jurisdiction, as conferred on the Indian High Courts, remained frozen as on the date of the Admiralty Court Act, 1861.
The wider powers assumed by the British Courts under the subsequent statutes of that country did not enlarge the admiralty jurisdiction of the Indian High Courts.
In the absence of any 1020 subsequent British or Indian statute widening the admiralty jurisdiction of the Indian Courts, the jurisdiction of the Andhra Pradesh High Court over a foreign ship by means of an action in rem does not extend to any matter falling outside the Admiralty Court Act, 1861.
The only provision of that Act respecting cargo is what is contained in Section 6 which is confined to goods `carried into any Port in England or Wales in any Ship. ' Applying that provision to India by reason of the statutes referred to above, the Indian High Court exercising admiralty jurisdiction has no power to deal with any claim concerning outward cargo because Section 6 is confined to inward cargo.
The plaintiff 's case is founded on certain facts which clearly fall outside the ambit of Section 6 of the admiralty Court Act, 1861.
Consequently, the arrest of the vessel in purported exercise of admiralty jurisdiction in rem, concerning a claim relating to outward cargo, was null and void and of no effect.
This argument, supported as it is by considerable scholarly research on the part of counsel, amounts to an invocation to admit incompetence and disability on the part of the Indian Judicial System to render justice for want of legislative grant of power.
Counsel is fortified in his submission by certain decisions of Calcutta, Bombay and other High Courts.
Mr. G.L. Sanghi, appearing for the respondent plaintiff, on the other hand, submits that the impugned judgment of the High Court is sound and correct and requires no interference by this Court because what the High Court has stated is based on a realistic appreciation of the need for liberal construction of the statutes so as to support assumption of jurisdiction to render justice where justice is required to be done rather than resorting to a technical or narrow or pedantic construction resulting in a state of helplessness.
Counsel says that every person has a right to approach the Court of the land for appropriate remedy in respect of claims against a foreign ship and its owner, and to deny him that right and to compel him to pursue remedy in a foreign country according to an unfamiliar system of law and practice in strange and uncertain conditions, and consequently incurring high expenses with all the uncertainties of such a pursuit, is unjust and uncalled for.
All major systems of law the world over recognise the competence of the coastal State to assume jurisdiction over a foreign ship entering its waters in respect of certain well recognised claims, irrespective of where the cause of action arose or where the defendant has his place of residence or business.
the reason for this wide exercise of jurisdiction is that the foreign owner being not available within jurisdiction, and the stay 1021 of the foreign ship in the waters of the coastal State being necessarily brief, jurisdiction over the ship has to be exercised by its arrest and detention by means of an action in rem.
Counsel submits that the High Court being a Court of record with unlimited jurisdiction, it was never intended by the British Parliament that the admiralty power conferred on certain High Courts should remain frozen as on the date of the passing of the Admiralty Court Act, 1861 and the subsequent changes in the law of Great Britain should not widen the jurisdiction of the Indian High Courts.
In any case, counsel submits, the colonial statutes should not be so construed as to stand in the way of the Indian High Courts exercising unlimited jurisdiction except where the jurisdiction is barred expressly of by necessary implication.
In the absence of any such bar, the powers of the High Court are unlimited and there is no merit in the preliminary objection to the jurisdiction of the High Court.
The Andhra Pradesh High Court is the successor to the Madras High Court in respect of the territories transferred from Madras and included in the State of Andhra which was formed by the Andhra State Act, 1953 (Act 30 of 1953).
Vishakhapatnam is one of the areas so included in the State of Andhra.
Section 30 of this Act provides: "30.
Jurisdiction of Andhra High Court The High Court of Andhra shall have, in respect of the territories for the time being included in the State of Andhra, all such original, appellate and other jurisdiction as, under the law in force immediately before the prescribed day, is exercisable in respect of the said territories or any part thereof by the High Court at Madras.
" The High Court of Andhra was redesignated as the High Court of Andhra Pradesh when the State was so named by the .
Section 52 of that Act provides : "52.
Jurisdiction of High Courts for new States.
The High Court for a new State shall have, in respect of any part of the territories included in that new State, all such original, appellate and other jurisdiction as, under the law in force immediately before the appointed day, is exercisable in respect of that part of the said territories by any High Court or Judicial Commissioner 's Court for an existing State." 1022 In the port of Vishakhapatnam the Andhra Pradesh High Court has thus the same jurisdiction as was vested in the Madras High Court prior to the transfer of that territory.
The question is as regards the extent and nature of that jurisdiction.
The powers of the Madras High Court are traceable to the Admiralty Court Act, 1861 (24 & 25 Victoriae c. 104) by reason person of the Letters Patent of 1865 read with the Colonial Courts of Admiralty Act, 1890 and the colonial Courts of Admiralty (India) Act, 1891.
By the last two Acts, the Madras High Court was invested with the same admiralty jurisdiction as was vested in the High Court of England.
The Letters Patent of 1865 declared that the High Court of Madras would and continue to be a court of record and that it would exercise ordinary, original and civil jurisdiction within its local limits to try and determine suits.
The Government of India Act, 1915 declared that all the High Courts established by Letters Patent were courts of record and had such original and appellate jurisdiction including admiralty jurisdiction as had been vested in them by Letters Patent.
The Government of India Act, 1935 declared that `every High Court shall be a court of record ' and that its jurisdiction, the law administered by it and the powers of the judges were the same as immediately before the commencement of Part III of that Act (sections 220 and 223).
Article 225 of the Constitution of India declares : ". the jurisdiction of, and the law administered in, any existing High Court, and the respective powers of the Judges thereof in relation to the administration of justice in the Court, including any power to make rules of Court and to regulate the sittings of the Court and of members thereof sitting alone or in Division Courts, shall be the same as immediately before the commencement of this constitution : Provided . . ." Article 215 says : "Every High Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself".
In a number of decisions of the Calcutta and Bombay High Courts, 1023 the admiralty jurisdiction of the High Courts in India has been historically traced to the Charters of 1774 and 1798, as subsequently expanded and clarified by the Letters Patent of 1823, 1862 and 1865 read with the Admiralty Court Act, 1861, the Colonial Courts of Admiralty Act, 1890, and the Colonial Court of Admiralty (India) Act, 1891 and preserved by section 106 of the Government of India Act, 1915, section 223 of the Government of India Act, 1935 and Article 225 of the Constitution of India.
The pre constitution enactments have continued to remain in force in India as existing laws : See section 18 of the Indian Independence Act, 1947, and Article 372 of the Constitution of India.
See Kamalakar Mahadev Bhagat vs Scindia Stream Navigation Co. Ltd., ; Mrs. Sahida Ismail vs Petko R. Salvejkov & Ors., AIR 1973 Bombay 18; Jayaswal Shipping Company vs `S.S. Leelavati ', AIR 1954 Calcutta 415; Rungta Sons Pvt. Ltd. & Anr.
vs S.S. `Edison Mariner ' & Anr., 1961 62 (66) Calcutta Weekly Notes 1083 and Smt.
Reena Padhi vs `Jagdhir ', AIR 1982 Orissa 57.
The view taken in these decisions is that the admiralty jurisdiction of the High Court in India does not extend beyond the ambit of the provisions of the (English) Admiralty Court Act, 1861.
Further expansion of the jurisdiction of the English High Court under various statutes did not expand the jurisdiction of the Indian High Courts.
This means, no High Court in India has jurisdiction to order the arrest and detention of a foreign ship in an action in rem in respect of a cause of action relating to outward cargo, as distinguished from inward cargo.
The rationale of these decisions is that the chartered High Courts in India are Colonial Courts of Admiralty under Act 16 of 1891 exercising the same jurisdiction as was vested in the High Court of Admiralty of England under the Admiralty Court Act, 1861, and the subsequent merger of the English High Court of Admiralty with the English High Court of Justice in 1875 and the expansion of jurisdiction of that High Court under subsequent statutes did not expand the admiralty power of the Indian High Court of merge it with its ordinary original civil jurisdiction.
P.B. Mukharji, J. of the Calcutta High Court in Jayaswal Shipping Company vs `S.S. Leelavati ', AIR 1954 Cal.
415, 421, highlights this aspect thus : ".
Courts of Admiralty are courts of specific jurisdiction and if a controversy does not come within their specific jurisdiction, they cannot entertain it, and in that respect are unlike the courts of residuary jurisdiction such as the Common Law Courts or 1024 in India the Courts of ordinary original civil jurisdiction." In National Co. Ltd. vs Asia Mariner, , 647, S.K. Mukherjea, J. of the Calcutta High Court states : "The High Court at Calcutta as a Court of Admiralty is, therefore, a Court of prescribed jurisdiction.
Its jurisdiction is prescribed by clause 26 of the Charter of 1774 and by section 2(2) of the Colonial Courts of Admiralty Act, 1890.
The jurisdiction has not been extended or modified by any statute.
None of the subsequent British statutes by which the Admiralty Jurisdiction of the High Court in England has been extended or affected have been made applicable to India." The High Court as a Court of Admiralty is thus treated as a separate entity exercising a distinct and specific or prescribed or limited jurisdiction.
This reasoning is based on the assumption that the continuance in force of the Colonial Courts of admiralty Act, 1890 as an existing law carves out a distinct jurisdiction of the High Court limited in ambit and efficacy to what has been granted by the Admiralty Court Act, 1861, and that jurisdiction has remained stultified ever since.
This restrictive construction is, in our view, not warranted by the provisions of the Constitution.
The fact that the High Court continues to enjoy the same jurisdiction as it had immediately before the commencement of the Constitution, as stated in Article 225, does not mean that a matter which is covered by the Admiralty Court Act, 1861 cannot be otherwise dealt with by he High Court, subject to its own Rules, in exercise of its manifold jurisdiction, which is, unless barred, unlimited.
To the extent not barred expressly or by necessary implication, the judicial sovereignty of this country is manifested in the jurisdiction vested in the High Courts as superior courts.
S.K. Mukherjea, J., however, continues (ibid, para 94): "The Admiralty Court Act, 1861, although repealed in part in relation to Enlgand and Wales, remains in force in India.
None of the subsequent English statutes relating to Admiralty jurisdiction over cargo claims or contract of carriage have been made applicable to the High Courts in India exercising jurisdiction in Admiralty." 1025 A similar view is echoed in other decisions on the point.
In Kamalakar Mahadev Bhagat, vs Scindia Steam Navigation co. Ltd. , a learned Judge of the Bombay High Court stated : ".
It will thus be seen that the High Court of judicature at Bombay in particular being one of the Colonial Courts of Admiralty under Act 16 of 1891 today exercises the same admiralty jurisdiction as was exercised by the High Court of Admiralty in England in 1890 when the Colonial Courts of Admiralty Act was passed by the British Parliament.
We have, therefore, to examine and ascertain as to what was the scope and nature of jurisdiction of the High Court of Admiralty in England either under any statute or otherwise in the year 1890, because, it would be just that jurisdiction which is exercisable by the High Court of Judicature at Bombay down to date." (p. 190) With respect we disagree.
All this is reminiscent of a bygone age.
The learned Judge failed to take note of the fact that in 1890 the Court of Admiralty had ceased to be a separate and distinct institution.
By the Judicature Act of 1873, the High Court of Admiralty was merged with the High Court of Justice.
It is, however, true that the substantive powers in admiralty matters were derived from the Admiralty Court Act, 1861, and those powers were not widened until 1920.
The learned Judge further observes: ".
In my opinion, therefore, the present suit falls within the exclusive Admiralty jurisdiction of the High Court and could not have been filed on the Ordinary Original Side of the High Court, much less in the City Civil Court.
In this view of the matter, I am unable to agree with the view expressed by the learned Principal Judge of the City Civil Court that actions in personam used to be entertained in the Common Law Courts in England in respect of damage done by ship on the high seas and that even at present in England it is open to a suitor to file an action in personam in the King 's Bench Division in respect thereof.
In my opinion, no such action ever lay in the Common Law Courts of England, nor can it ever lie in the Queen 's Bench Division of the High Court of England at the present time. ".
(p.200 ibid.
) 1026 All this observation, as we shall presently see, is inconsistent with the true character of the constitution of the courts in England and the powers exercised by them consequent upon the statutory changes between 1873 and 1981.
It is true that the Colonial statutes continue to remain in force by reason of Article 372 of the Constitution of India, but that does not stultify the growth of law or blinker its vision or fetter its arms.
Legislation has always marched behing time, but it is the duty of the Court to expound and fashion the law for the present and the future to meet the ends of justice.
We do not accept the reasoning of the High Court in the decisions cited above on the question of jurisdiction, whatever be the correctness of their decisions on the peculiar facts of those cases in regard to which we express no view.
But the narrow view adopted in those decisions on the source and ambit of the admiralty jurisdiction of the High Courts is, in our opinion not warranted.
Mr. Ramachandran has laid much stress on the section of the Privy Council in The Yuri Maru vs The Woron, , which was relied on by the Bombay High Court in Mrs. Sahida Ismail (supra) to come to the conclusion, which it did, as to the lack of jurisdiction of the Indian High Courts to go beyond what was permitted by the Colonial Courts of Admiralty Act, 1890.
Before we deal with the decision of the Privy Council, it is important to notice that the Colonial Courts of Admiralty were vested with the same admiralty jurisdiction which was vested in the High Court of England `whether existing by virtue of any statute or otherwise ' and they were entitled to exercise the same jurisdiction in like manner and to the same extent as the High Court in England.
We shall now read the provisions of the Colonial Courts of Admiralty Act, 1890, so far as they are material.
"2. (1).
Colonial Courts of Admiralty Every Court of law in a British possession, which is for the time being declared in pursuance of this Act to be a court of Admiralty, or which, if no such declaration is in force in the possession, has therein original unlimited civil jurisdiction, shall be a court of Admiralty, with the jurisdiction is this Act mentioned, and may for the 1027 purpose of that jurisdiction exercise all the powers which it possesses for the purpose of its other civil jurisdiction, and such court in reference to the jurisdiction conferred by this Act is in this Act referred to as a Colonial Court of Admiralty . . . . . (2) The jurisdiction of a Colonial Court of Admiralty shall, subject to the provisions of this Act, be over the like places, persons, matters, and things, as the Admiralty jurisdiction of the High Court in England, whether existing by virtue of any statute or otherwise, and the Colonial Court of Admiralty may exercise such jurisdiction in like manner and to as full an extent as the High Court in England, and shall have the same regard as that Court to international law and the comity of nations.
(3). . . . . .
Provided as follows : (a) Any enactment in an Act of the Imperial Parliament referring to the Admiralty jurisdiction of the High Court in England, when applied to a Colonial Court of Admiralty in a British possession, shall be read as if the name of that possession were therein substituted for England and Wales; and . ." (emphasis supplied) These provision show that the admiralty jurisdiction conferred on the Colonial Courts of Admiralty was identical to that of the High Court in England.
The Colonial Courts of Admiralty were, in relation to their respective territories, invested with the same jurisdiction 'over places, persons, matters and things" as in the case of the English High Court in respect of England and Wales.
This jurisdiction was derived from the statutes which then existed in England namely, the Admiralty Court Acts of 1840 and 1861, as well as from other sources such as custom and practice as recognised by the Courts exercising admiralty jurisdiction.
This is clear from the words "whether existing by virtue of any statute or otherwise".
The proviso makes the position even clearer.
What the Colonial Courts of Admiralty Act, 1890 did was not to incorporate any particular English Statute into Indian law for the purpose of conferring admiralty jurisdiction, but to assimilate the competent courts in India to 1028 the position of the English High Court in the exercise of admiralty jurisdiction.
It would, therefore, appear that any expansion of Admiralty jurisdiction of the High Court in England was intended likewise to expand the jurisdiction of the Colonial Court of Admiralty.
This should have been regarded as the position with respect to a Colonial Court of unlimited jurisdiction.
Section 3 of this Act provides : "(3) The legislature of a British possession may by any Colonial law (a) declare any court of unlimited civil jurisdiction, whether original or appellate, in that possession to be a Colonial Court of Admiralty. " (b) confer upon any inferior or subordinate court in that possession such partial or limited Admiralty jurisdiction under such regulations and with such appeal (if any) as may seem fit: Provided that any such Colonial law shall not confer any jurisdiction which is not by this Act conferred upon a Colonial Court of Admiralty." Section 3 thus draws a distinction between courts of unlimited jurisdiction falling under clause (a) and courts of limited jurisdiction falling under clause (b).
The admiralty jurisdiction of the former was wider than that which was conferred on the latter.
Section 7 confers power to make rules of court to regulate the procedure and practice of the court in the exercise of its admiralty jurisdiction.
This section provides : "S.7.
(1) Rules of court for regulating the procedure and practice (including fees and costs) in a court in a British possession in the exercise of the jurisdiction conferred by this Act, whether original or appellate, may be made by the same authority and in the same manner as rules touching the practice, procedure, fees, and costs in the said court in the exercise of its ordinary civil jurisdiction respectively are made.
. . . . . . 1029 (2) . . . . . . (3) Such rules may provide for the exercise of any jurisdiction conferred by this Act by the full court, or by any judge or judges thereof, and subject to any rules, where the ordinary civil jurisdiction of the court can in any case be exercised by a single judge, any jurisdiction conferred by this Act may in the like case be exercised by a single judge.
" By virtue of this provision, admiralty rules were made for Calcutta and Bombay High Courts.
The Madras High Court adopted admiralty rules by virtue of the powers conferred by the Letters Patent of the High Court and the Government of India Act, 1915.
By Act 16 of 1891, certain courts in British India were declared to be Colonial Courts of Admiralty.
The High Courts of Judicature at Fort William in Bengal, at Madras and at Bombay were three of the six Courts declared to be Colonial Courts of Admiralty.
* The preamble to this Act, in so declaring, stated : "WHEREAS it is provided by the Colonial Courts of Admiralty Act, 1890, that the Legislature of a British possession may by any colonial law declare any Court of unlimited civil jurisdiction in that possession to be a Colonial Court of Admiralty; . . . ." It was because of the unlimited civil jurisdiction that was already vested in these High Courts that they were declared to be Colonial Courts of Admiralty having the same jurisdiction in extent and quality as was vested in the High Court of England by virtue of any statute or custom.
The High Courts were declared to be competent to regulate their procedure and practice in exercise of admiralty jurisdiction in accordance with the Rules made in that behalf.
There is, therefore, neither reason nor logic in imposing a fetter on the jurisdiction of these High Courts by limiting it to the provisions of an imperial statute of 1861 and freezing any further growth of jurisdiction.
This is all the more true because the Admiralty Court Act, 1861 was in substance reappealed in England a long time ago.
See Halsbury 's Laws of England 4th ed.
* (1) The other Courts are : (a) The Court of the Recorder of Rangoon (b) The Court of the Resident at Aden (c) The District Court of Karachi.
1030 Vol.
I(1), para 307; Halsbury 's Statutes of England, Vol.
I, p.9 Assuming that the admiralty powers of the High Courts in India are limited to what had been derived from the Colonial Courts of Admiralty Act, 1890, that Act, having equated certain Indian High Courts to the High Court of England in regard to admiralty jurisdiction, must be considered to have conferred on the former all such powers which the latter enjoyed in 1890 and thereafter during the period preceding the Indian Independence Act, 1947.
What the Act of 1890 did was, as stated earlier, not to incorporate any English statute into Indian law, but to equate the admiralty jurisdiction of the Indian High Courts over places, persons, matters and things to that of the English High Court.
As the admiralty jurisdiction of the English High Courts expanded with the progress of legislation, and with the repeal of the earlier statutes, including in substance the Admiralty Court Acts of 1840 and 1861, it would have been reasonable and rational to attribute to the Indian High Courts a corresponding growth and expansion of admiralty jurisdiction during the pre independence era.
But a restrictive view was taken on the question in the decisions of the High Courts cited above.
There is no reason why the jurisdiction of the Indian High Courts should have been considered to have frozen and atrophied on the date of the Colonial Courts of Admiralty Act, 1890.
If this had not been considered to have happened, and a liberal construction had been adopted by courts, the admiralty jurisdiction of the High Court would in any case have been considered to have progressed up to the level of the English Administration of Justice Act, 1928, which was the last of a series of enactments in England on the subject prior to 1947, and consequently the Indian High Court would have been treated as a consolidated court on the basis of (English) Supreme Court of Judicature (Consolidation) Act, 1925, exercising identical and unlimited jurisdiction, and not a distinct or `prescribed ' admiralty jurisdiction, limited and confined to the Admiralty Court Act, 1861, as it is now treated to be by some of the High Courts in the decisions cited above.
All this is perhaps the result of the reasoning in the decision of the Privy Council in The Yuri Maru vs The Waron, The Yuri Maru which arose from Canada concerned the jurisdiction of the Exchequer Court.
The decision is summarised in the head note as follows: "The effect of section 2, sub s 2, of the Colonial Courts of Admiralty is to limit the jurisdiction of Colonial Courts of Admiralty established under the Act to the Admiralty jurisdiction of the High Court of England, as it existed at the passing of the Act; the extension of the Admiralty jurisdiction of the High Court by the Administration of Justice Act, 1920 (Imp.), s.22, repealed and re enacted by the Supreme Court of Judicature (Consolidation) Act, 1925 (imp.), s.22, does not apply to Colonial Courts of Admiralty.
Consequently, the Exchequer Court of Canada, which was established by the Admiralty Act (R.S. Can., 1906, c.141) as a Colonial Court of Admiralty, has not, under section 22, sub section
1(xii), of the above Imperial Act of 1925, jurisdiction in rem to try an action for damages for breach of a charterparty. . . ." The Privy Council thus rejected the contention that the jurisdiction of the Canadian Court of Admiralty was automatically extended with the progress of legislation in England widening the admiralty jurisdiction of the English High Court.
Nevertheless, the Privy Council significantly left it to the Canadian legislature to pass appropriate laws for widening the jurisdiction of the Canadian Courts.
Speaking for the Board, Lord Merrivale concluded : "On the whole, the true intent of the Act appears to their Lordships to have been to define as a maximum of jurisdictional authority for the Courts to set up thereunder, the Admiralty jurisdiction of the High Court in England as it existed at the time when the Act passed.
What shall from time to time be added or excluded is left for independent legislative determination".
The Exchequer Court of Canada was established by the Admiralty Act R.S. Canada, 1906, c. 141, as a Colonial Court of Admiralty.
It is not clear whether that Court was in its jurisdiction comparable to the Indian High Courts.
Assuming that it was comparable at the relevant time, and whatever be the relevance of The Yuri Maru (supra) to Courts like the Exchequer Court of canada, we see no reason why the jurisdiction of the Indian High Courts, governed as they now are by the Constitution of India, should on any way be subjected to the jurisdictional fetters imposed by the Privy Council in that 1032 decision.
Legal history is good guidance for the future, but to surrender to the former is to lose the latter.
A short account of the English statutes on admiralty jurisdiction and the power exercised by the English Courts over foreign ships will be helpful in understanding the nature and extent of the admiralty jurisdiction of the Indian Courts.
We shall, therefore, briefly discuss the salient features of the admiralty jurisdiction of the English Courts.
The customs and practices of the commercial and maritime courts and the Law Merchant administered by them and the jurisdiction assumed by the Admiral over ships and things at sea and the conflict which arose between the Court presided over by him and the common law and equity courts leading to curtailment of the powers of the Admiral and ultimately resulting in consolidation of all the courts by the Supreme Court of Judicature Act.
1873 (which came into force in 1875) are vividly described by eminent Scholars of English legal history and maritime law.
See Holdworth 's A History of English Law, Volumes I, 5 and 8; Roscoe 's Admiralty Practice, 5th ed.; Marsden: Select Pleas of the Court of Admiralty, Volumes I and II; Law and Custom of the SEa, ibid Volumes I and II; Benedict on Admiralty, 6th ed.
(1940) Vol.
I; Gilmore and Black, Law of Admiralty, 1957.
The wide jurisdiction vested in the English Courts is derived from ancient principles of Maritime Law developed by custom and practice as well as from subsequent statutes many of which have incorporated the provisions of International Conventions unifying the laws practised in several maritime countries.
It is beyond the scope of this judgment to embark on a survey of maritime history except to notice that both the Admiralty Court and the Common Law Courts claimed jurisdiction over cases governed by maritime law.
Although admiralty Judges were often compelled to abandon jurisdiction to the Courts of Common Law in various matters, maritime cases involving hypothecation, salvages, torts committed on the high seas and the like, where the Common Law Courts could not give effective redress, were left to the jurisdiction of the admiralty Judges.
The admiralty had, however, `fallen into a feeble and neglected condition and for long its proceedings excited no attention '.
But in the Eighteenth Century, the learning and ability of Lord Stowell `raised the Court to a position of the highest importance ' (Roscoe 's Admiralty Practice, 5th ed.
p. 14).
1033 In the words of Holdswoth*, "Modern legislation has restored to the court of Admiralty many of the powers, and much of the jurisdiction of which it had been deprived in the seventeenth century.
But Admiralty law has lost the international character which it once possessed.
It is essentially English Law.
"The law which is administered in the Admiralty Court of England is the English maritime law.
It is not the ordinary municipal law of the country, but it is the law which the English court Admiralty, either by Act of Parliament or by reiterated decisions and traditions and principles, has adopted as the English Maritime law**, `Neither the laws of the Rhodians, nor of Oleron, nor of Visby, nor of the Hanse towns, are of themselves any part of Admiralty law of England.
But they contain many principles and statements of marine practice, which, together with principles found in the Digest, and in the French, and other Ordinances, were used by the judges of the English court of Admiralty, when they were moulding and reducing to form the principles and practice of their court '.
*** The Admiralty Court Act, 1840 was the first of a series of statutes extending and defining the jurisdiction of the High Court of Admiralty in England.
This Act was followed by the Admiralty Court Act, 1861 confering larger powers upon the High Court of Admiralty.
Section 6 of this Act empowered the High Court of Admiralty to assume jurisdiction over foreign ships in respect of claims to cargo carried into any port in England or Wales.
**** Significantly, the Act did not apply to outward cargo.
* A History of English Law, W.S. Holdswoth, vol. 1, pp. 558 59.
** The Gaetano and Maria, (1882) 7PD at p. 143.
*** The Gas Floot Whitton, N:2 (1896) P. at pp.
47. 48.
" ***** The section reads : "6.
As to Claims for Damage to Cargo imported.
The High Court of Admiralty shall have Jurisdiction over any Claim by the Owner or Consignee or Assignee of any Bill of Lading of any Goods carried into any Port in England or Wales in any Ship.
for Damage done to the Goods or any Part thereof by the Negligence or Misconduct of or for any Breach of Duty or Breach of Contract on the Part of the Owner.
Master, or Crew of the Ship, unless it is shown to the Satisfaction of the Court that at the Time of the Institution of the Cause any Owner or Part Owner of the Ship is domiciled in England or Wales : Provided always, that if in any such Cause the Plaintiff do not recover Twenty Pounds he shall not be entitled to any Costs.
Charges, or Expenses incurred by him therein, unless the Judge shall certify that the Cause was a fit one to be tried in the said Court." (emphasis supplied) See the observation of Dr. Lushington in the "Kasan" (January 13, 1863) and in the "Bahia" (April 21, 1863 English Report, Vol. 167.
p. 268, 298.
1034 Section 7 of the Act, however, conferred jurisdiction on the High Court of Admiralty "over any claim for damage done by any ship".
This Act was followed by the Judicature Act of 1873, which came into force in 1875 and which merged the High Court of Admiralty with the High Court of Justice resulting in a fusion of admiralty law, common law and equity.
It is of interest to note that the provision contained in section 6 of the Admiralty Court Act, 1861 limiting the jurisdiction of the Admiralty Court to claims respecting inward cargo was discarded by the Administration of Justice Act, 1920 which extended the jurisdiction of the High Court to (a) any claim arising out of an agreement relating to the use or hire of a ship; (b) any claim relating to the carriage of goods in any ship, and (c) any claim in tort in respect of goods carried in any ship.
The Act thus applied to both inward and outward cargoes.
The Admiralty Court Act, 1861 and the subsequent enactments were consolidated by the Supreme Court of Judicature (consolidation) Act, 1925.
The admiralty jurisdiction of the English High Court was redefined by this Act to include various matters such as any claim "for damage done by a ship"; any claim "arising out of an agreement relating to the use or hire of a ship"; or "relating to the carriage of goods in a ship"; or "in tort in respect of goods carried in a ship".
This jurisdiction was, however, not available if "at the time of the institution of the proceedings any owner or part owner of the ship was domiciled in England" [See section 22 (1), (iv) and (vii)].
By the Administration of Justice Act, 1928, the jurisdiction vested in the High Court by the Supreme Court of Judicature (Consolidation) Act, 1925 was declared to belong to all divisions of the High Court.
The admiralty Court was thus empowered to entertain, apart from actions in rem, any claim in personam which could be brought in any other division of the High Court.
By the Administration of Justice Act, 1956, the admiralty jurisdiction of the High Court was further widened and redefined so as to include not only the claims specified under section 1(i) of Part I but also "any other jurisdiction which either was vested in the High Court of Admiralty immediately before the date of the commencement of the Supreme Court of Judicature Act, 1873 (i.e., 1.11.1875), or is conferred by or under an Act which came into operation on or after that date on the High Court as being a court with Admiralty jurisdiction and any other jurisdiction connected with ships or aircraft vested in the High Court apart from this section which is for the time being assigned by rules of court to the Probate, Divorce and Admiralty 1035 Division".
Sub Section (4) of this section removed the restriction based on the ownership of the ship.
It says that the jurisdiction applied to all ships or aircraft, "whether British or not and whether registered or not and wherever the residence or domicile of their owners may be" and "in relation to all claims, wheresoever arising".
The jurisdiction in regard to the questions or claims specified under section 1(i) includes "any claim for damage done by a ship", "any claim for loss of or damage to goods carried in a ship", "any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship" [See clauses (d), (g) & (h)].
These claims are now specifically mentioned under clauses (e), (g) and (h) respectively of section 20(2) of the Supreme Court Act, 1981, amongst other claims, as falling under the Admiralty jurisdiction of the High Court.
Part II of this Act is derived substantially from Part I of the 1956 Act which was enacted to give effect to the Brussels Convention of 1952 relating to the arrest of sea going ships and the rules concerning civil jurisdiction in matters of collision (Cmd 8954).
Section 20 of the Supreme Court Act, 1981 enumerates various questions and claims falling under the admiralty jurisdiction of the English High Court.
Apart from matters covered by the Merchant Shipping Acts 1894 to 1979 [referred to in sub section (3)] and certain other matters, various questions and claims are enumerated in sub section (2).
They include: "any claim for loss of or damage to goods carried in a ship; any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship; any claim for damage received by a ship; and any claim for damage done by a ship.
* * The specific questions and claims enumerated in sub section (2) of section 20 of the Supreme Court Act, 1981 are : "(a) any claim to the possession or ownership of a ship or to the ownership of any share therein; (b) any question arising between the co owners of a ship as to possession, employment or earnings of that ship; (c) any claim in respect of a mortgage of or charge on a ship or any share therein; (d) any claim for damage received by a ship; (e) any claim for damage done by a ship; (f) any claim for loss of life or personal injury sustained in consequence of any defect in a ship or in her apparel or equipment, or in consequence of the wrongful act, neglect or default of footnote contd.
on next page 1036 Sub section (7) of this section specifically provides that the admiralty jurisdiction of the High Court extends to "all ships or aircrafts, whether British or not and wherever the residence or domicile of their owners may be, and to all claims wherever arising".
It reads: Sub Section (7).
The preceding provisions of this section apply (a) in relation to all ships or aircraft, whether British or not and wherever the residence or domicile of their owners may be; (i) the owners, charterers or persons in possession or control of a ship; or (ii) the master or crew of a ship, or any other person for whose wrongful acts, neglects or defaults the owners, charterers or persons in possession or control of a ship are responsible, being an act, neglect or default in the navigation or management of the ship, in the loading, carriage or discharge of goods, on.
in or from the ship, or in the embarkation, carriage or disembarkation of persons on, in or from the ship.
(g) any claim for loss of or damage to goods carried in a ship; (h) any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship; (i) any claim in the nature of salvage (including any claim arising by virtue of the application, by or under section 51 of the Civil Aviation Act 1949, of the law relating to salvage to aircraft and their apparel and cargo); (j) any claim in the nature of towage in respect of a ship or an aircraft; (k) any claim in the nature of pilotage in respect of a ship or an aircraft; (l) any claim in respect of goods or materials supplied to a ship for her operation or maintenance : (m) any claim in respect of the construction, repair or equipment of a ship or in respect of dock charges or dues; (n) any claim by a master or member of the crew of a ship for wages (including any sum allotted out of wages or adjudged by a superintendent to be due by way of wages); (o) any claim by a master, shipper, chartered or agent in respect of disbursements made on account of a ship; (p) any claim arising out of an act which is or is claimed to be a general average act; (q) any claim arising out of bottomry; (r) any claim for the forfeiture or condemnation of a ship or of goods which are being or have been carried, or have been attempted to be carried, in a ship, or for the restoration of a ship or any such goods after seizure, or for droughts of Admiralty." 1037 (b) in relation to all claims, wherever arising (including, in the case of cargo or wreck salvage, claims in respect of cargo or wreck found on land); and (c) so far as they relate to mortgages and charges, to all mortgages or charges, whether registered or not and whether legal or equitable,including mortgages and charges created under foreign law: Provided that nothing in this sub section shall be construed as extending the cases in which money or property is recoverable under any of the provisions of the Merchant Shipping Acts 1894 to 1979".
This jurisdiction is wide enough to cover all claims in tort or contract arising out of any agreement for carriage of goods by sea.
* The whole jurisdiction of the English High Court is now vested in all the divisions alike.
All Divisions of the High Court and all the Judges of that Court have equal power, authority and jurisdiction, although admiralty actions are assigned to the Queen 's Bench Division and taken up by the Admiralty Court.
**The special requirements of an action in personam, namely, the habitual residence or place of business of the defendant or the cause of action having their nexus with England and Wales or the determination of a connected matter in the English High Court or the submission of the defendant to the jurisdiction of that court, are not applicable to a proceeding commenced as an admiralty action in rem.
See O. 75, rule 4(3) of the Rules of the Supreme Court, 1965.
*** The Civil Jurisdiction and Judgments Act, 1982 enacted into English Law and Scottish Law the EEC Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters.
Describing the unified court structure in England, Jackson sums up: "The Admiralty Court developed independently, having its own battle with common law courts over jurisdictional boundaries.
* See the Principle stated in The Fehmam.
** See Halsbury, op.
4th ed.
I(I) para 309.
See also Supreme Court Act, 1981.
*** See also the editor 's general note on O.75.
rule 5 on the practice of the English High Court.
1038 During the 18th and early 19th centuries it influence and power decreased, but through statutes of 1840 and 1861 the court received a firm foundation on which it has built since.
It came in from the cold into the general union of courts in 1873 5 and is now integrated into the High Court, being a branch of the Queen 's Bench Division.
. . . . . . . . . . Once under the umbrella of the unified court structure, common law and equitable principles became directly available in the Admiralty Court.
No longer need claimants have to seek these elsewhere and no longer did jurisdictional boundaries necessarily indicate the availability of substantive rights and remedies." [D.C. Jackson, Enforcement of Maritime Claims, (1985) p. 8} "The law of admiralty, or maritime law, . (is the) corpus of rules, concepts, and legal practices governing . the business of carrying goods and passengers by water." (Gilmore and Black, The Law of Admiralty, page (1).
The vital significance and the distinguishing feature of an admiralty action in rem is that this jurisdiction can be assumed by the coastal authorities in respect of any maritime claim by arrest of the ship, irrespective of the nationality of the ship or that of its owners, or the place of business or domicile or residence of its owners or the place where the cause of action arose wholly or in part. ". .
In admiralty the vessel has a juridicial personality, an almost corporate capacity, having not only rights but liabilities (sometimes distinct from those of the owner) which may be enforced by process and decree against the vessel, binding upon all interested in her and conclusive upon the world, for admiralty in appropriate cases administers remedies in rem, i.e., against the property, as well as remedies in personam, i.e., against the party personally. ".
Benedict, The Law of American Admiralty, 6th ed.
I p.3.
Admiralty Law confers upon the claimant a right in rem to proceed against the ship or cargo as distinguished from a right in personam to proceed against the owner.
The arrest of the ship is regarded as a mere procedure to obtain security to satisfy judgment.
A successful plaintiff in 1039 an action in rem has a right to recover damages against the property of the defendant.
`The liability of the shipowner is not limited to the value of the res primarily proceeded against .
An action . though originally commenced in rem, becomes a personal action against a defendant upon appearance, and he becomes liable for the full amount of a judgment unless protected by the statutory provisions for the limitation of liability '.
(Roscoe 's Admiralty Practice, 5th ed.
p.29) The foundation of an action in rem, which is a peculiarity of the Anglo American law, arises from a maritime lien or claim imposing a personal liability upon the owner of the vessel.
A defendant in an admiralty action in personam is liable for the full amount of the plaintiff 's established claim.
Likewise, a defendant acknowledging service in an action in rem is liable to be saddled with full liability even when the amount of the judgment exceeds the value of the res or of the bail provided.
An action in rem lies in the English High Court in respect of matters regulated by the Supreme Court Act, 1981, and in relation to a number of claims the jurisdiction can be invoked not only against the offending ship in question but also against a `sistership ' i.e., a ship in the same beneficial ownership as the ship in regard to which the claim arose.
"The vessel which commits the aggression is treated as the offender, as the guilty instrument or thing to which the forfeiture attaches, without any reference whatsoever to the character or conduct of the owner. " Per Justice Story, The United States vs The Big Malek Adhel, etc., [43 US (2 How.) 210, 233 (1844)] Merchant ships of different nationalities travel from port to port carrying goods or passengers.
They incur liabilities in the course of their voyage and they subject themselves to the jurisdiction of foreign States when they enter the waters of those States.
They are liable to be arrested for the enforcement of maritime claims, or seized in execution or satisfaction of judgments in legal actions arising out of collisions, salvage, loss of life or personal injury, loss of or damage to goods and the like.
They are liable to be detained or confiscated by the authorities of foreign States for violating their customs regulations, safety measures, rules of the road, health regulations, and for other causes.
The coastal State may exercise 1040 its criminal jurisdiction on board the vessel for the purpose of arrest or investigation in connection with certain serious crimes.
In the course of an international voyage, a vessel thus subjects itself to the public and private laws of various countries.
A ship travelling from port to port stays very briefly in any one port.
A plaintiff seeking to enforce his maritime claim against a foreign ship has no effective remedy once it has sailed away and if the foreign owner has neither property nor residence within jurisdiction.
The plaintiff may therefore detain the ship by obtaining an order of attachment whenever it is feared that the ship is likely to slip out of jurisdiction, thus leaving the plaintiff without any security.
A ship may be arrested (i) to acquire jurisdiction; or (ii) to obtain security for satisfaction of the claim when decreed; or (iii) in execution of a decree.
In the first two cases, the court has the discretion to insist upon security being furnished by the plaintiff to compensate the defendant in the event of it being found that the arrest was wrongful and was sought and obtained maliciously or in bad faith.
The claimant is liable in damages for wrongful arrest.
This practice of insisting upon security being furnished by the party seeking arrest of the ship is followed in the United States, Japan and other countries.
The reason for the rule is that a wrongful arrest can cause irreparable loss and damages to the shipowner; and he should in that event be compensated by the arresting party.
(See Arrest of Ships by Hill, Soehring, Hosoi and Helmer, 1985).
The attachment by arrest is only provisional and its purpose is merely to detain the ship until the matter has been finally settled by a competent court.
The attachment of the vessel brings it under the custody of the marshal or any other authorized officer.
Any interference with his custody is treated as a contempt of the court which has ordered the arrest.
But the marshal 's right under the attachment order is not one of possession, but only of custody.
Although the custody of the vessel has passed from the defendant to the marshal, all the possessory rights which previously existed continue to exist, including all the remedies which are based on possession.
The warrant usually contains a monition to all persons interested to appear before the court on a particular day and show cause why the property should not be condemned and sold to satisfy the claim of the plaintiff.
1041 The attachment being only a method of safeguarding the interest of the plaintiff by providing him with a security, it is not likely to be ordered if the defendant or his lawyer agrees to "accept service and to put in bail or to pay money into court in lieu of bail".
(See Halsbury 's Laws of England, 4th edn.
Vol. 1, p. 375 etc.).
The service of the warrant is usually effected by affixing it on the main mast or single mast of the ship.
A ship which has been arrested under an order of attachment may be released by the court if sufficient bail is put in to cover the claim of the plaintiff as well as the costs of the action.
The sureties are liable for the amount entered in the bail bond.
If the ship or cargo under arrest before judgment has not been released by the defendant by putting in sufficient bail and if the property is found deteriorating, the court has the power to order the sale of the property after notice has been duly issued to the parties interested.
If the plaintiff has finally obtained a decree of condemnation and sale of the ship, the court will issue an order to the competent officer commanding him to sell the property, in execution of the decree, and to bring the proceeds into court.
Thereupon the officer shall issue proper notice and arrange for the sale of the property by auction.
The proceeds of the sale are paid into the registry of the court and shall be disposed of by the court according to law.
A personal action may be brought against the defendant if he is either present in the country or submits to jurisdiction.
If the foreign owner of an arrested ship appears before the court and deposits security as bail for the release of his ship against which proceedings in rem have been instituted, he submits himself to jurisdiction.
An action in rem is directed against the ship itself to satisfy the claim of the plaintiff out of the res.
The ship is for this purpose treated as a person.
Such an action may constitute an inducement to the owner to submit to the jurisdiction of the court, thereby making himself liable to be proceeded against by the plaintiff in personam.
It is, however, imperative in an action in rem that the ship should be within jurisdiction at the time the proceedings are started.
A decree of the court in such an action binds not merely the parties to the writ but everybody in the world who might dispute the plaintiff 's claim.
1042 It is by means of an action in rem that the arrest of a particular ship is secured by the plaintiff.
He does not sue the owner directly and by name; but the owner or any one interested in the proceedings may appear and defend.
The writ is issued to "owners and parties interested in the property proceeded against.
" The proceedings can be started in England or in the United States in respect of a maritime lien, and in England in respect of a statutory right in rem.
A maritime lien is a privileged claim against the ship or a right to a part of the property in the ship, and it "travels" with the ship.
Because the ship has to "pay for the wrong it has done", it can be compelled to do so by a forced sale.
(See The Bold Buccleaugh, In addition to maritime liens, a ship is liable to be arrested in England in enforcement of statutory rights in rem (Supreme Court Act, 1981).
If the owner does not submit to the jurisdiction and appear before the court to put in bail and release the ship, it is liable to be condemned and sold to satisfy the claims against her.
If, however, the owner submits to jurisdiction and obtains the release of the ship by depositing security, he becomes personally liable to be proceeded against in personam in execution of the judgment if the amount decreed exceeds the amount of the bail.
The arrest of the foreign ship by means of an action in rem is thus a means of assuming jurisdiction by the competent court.
The admiralty action in rem, as practised in England or in the United States, is unknown to the civil law.
In countries following the civil law, all proceedings are initiated by actions in personam.
The President of the Court having competence in the matter has the power to order an attachment of the ship if he is convinced that the plaintiff is likely to lose his security unless the ship is detained within jurisdiction.
His hands are not fettered by the technicalities of an action in rem and the scope of the proceedings are not limited to maritime liens or claims.
* According to the French law, arrest of a ship is allowed even in respect of non maritime claims and whether or not the claimant is a secured or unsecured creditor.
A vessel may be arrested either for the purpose of mobilising the vessel as security (Saisie conservatoire) or in execution of judgment (Saisie Execution) whether or not the claim has any relation to the vessel.
Arrest of the vessel has the advantage of forcing the owner to furnish security to guarantee satisfaction of any decree that may be passed against him.
On * See D.C. Jackson, Enforcement of Maritime Claims, (1985) Appendix 5, p. 437 et seq.
1043 furnishing sufficient security with the Court, he is usually allowed to secure the release of the vessel.
Maritime law is part of the general law of France and other `civil law countries ' and is dealt with by the ordinary courts or tribunals.
The presence of any property belonging to the defendant within the territorial jurisdiction confers jurisdiction on the French Court.
(See the observation of Lord Diplock in The Jade , 923).
The real purpose of arrest in both the English and the Civil Law systems is to obtain security as a guarantee for satisfaction of the decree, although arrest in England is the basis of assumption of jurisdiction, unless the owner has submitted to jurisdiction.
In any event, once the arrest is made and the owner has entered appearance, the proceedings continue in personam.
All actions in the civil law whether maritime or not are in personam, and arrest of a vessel is permitted even in respect of non maritime claims, and the vessel is treated as any other property of the owner, and its very presence within jurisdiction is sufficient to clothe the competent tribunal with jurisdiction over the owner in respect of any claim.
(See D.C.Jackson, Enforcement of Maritime Claims, (1985) Appendix 5).
Admiralty actions in England, on the other hand, whether in rem or in personam, are confined to well defined maritime liens or claims and directed against the res(ship, cargo and freight) which is the subject matter of the dispute or any other ship in the same beneficial ownership as the res in question.
Maritime law is as much a part of the general legal system as any other branch of the law.
With the merger of the Admiralty and Common Law Courts in England in 1875 and the fusion of their legal precepts and concepts, this branch of the law, despite its peculiarities about actions in rem, is no longer treated as a separate and independent branch.
It is not the exclusive preserve of the English High Court, for certain county courts in that country are specially authorised to exercise this jurisdiction.
This is much more true of the civil law system where no distinction is drawn between maritime law and other branches of the law, and they are administered alike by the same courts or tribunals.
It may not be correct to say that the admiralty jurisdiction of the English Courts is dependent entirely on statutes.
It may be true in a very limited sense as regards the jurisdiction of the High Court after the merger of the High Court of Admiralty with the High Court of Justice by the 1044 Supreme Court of Judicature Act, 1873 which came into force in 1875: See Supreme Court of Judicature (Commencement) Act, 1874.
Even so, statutes are codifications of legal principles developed by the decisions of Courts and those principles remain the life blood of the statutes.
The observation of Lord Diplock in The Jade (1976) 1 All.
E.R. 920, on which much reliance is placed by Mr. Ramachandran in support of his arguments, has to be so understood.
(See also Halsbury 's Laws of England, Vol. 1, para 307).
Remedy for enforcement of maritime liens was available prior to the introduction of statutes.
"Admiralty law was derived from the laws of Oleron, supplemented by the civil law" Per Lord Halsbury, L.C; Currie vs M.Knight, [1897] AC 97.
For a long time the Admiralty Court developed the law independently fighting its battles with the Common Law Courts on the question of jurisdictional boundaries.
By statutory intervention the court structure came to be unified and substantive rights and remedies became available without regard to jurisdictional boundaries.
Although statutes now control the field, much of the admiralty law is rooted in judicial decisions and influenced by the impact of civil law, common law and equity.
The ancient maritime codes like the Rhodian Sea Law, the Basilika, the Assizes of Jerusalem, the Rolls of Oleron, the Laws of Visby, the Hanseatic Code, the Black Book of the British Admiralty, Consolato del Mare, and others are, apart from statute, some of the sources from which the law developed in England.
Any attempt to confine admiralty or maritime law within the bounds of statutes is not only unrealistic but incorrect.
Although this branch of the law in England is now governed generally by statutes, the law in all its aspects can be understood only by viewing it in the context of decisions of courts and the general principles which are common to common law and equity.
Unlike in the "civil law countries", there is no maritime code in England containing all aspects of maritime law.
The Merchant Shipping Acts and the Carriage of Goods by Sea Act contain the substantive rules, but the jurisdictional and other aspects of maritime claims have to be traced to numerous other statutes and sources.
English Maritime Law `is still composed of rules having their roots in statute, rules of court and judicial doctrine of Admiralty, common law and equity '.
(See D.C. Jackson, Enforcement of Maritime Claims, 1985, p.9).
See also Halsbury, op.
cit., Vol.
(1), para 307.
As Christopher Hill puts it: ". .
Britain is a 1045 common law country and that Admiralty law has been superimposed over the years by various statutory enactments from time to time.
The right to seize a vessel by legal process is therefore partly based on rights conferred by general maritime law and partly upon the right to take legal action of this nature granted by statute . ".
Maritime Law, 2nd ed.
p. 93.
In tracing the history of admiralty law in India, it is likewise misleading and incorrect to confine it to statutes.
Statutes have been codifications of rules of law as developed by usage, practice and custom.
As stated by Westropp, C.J., of the Bombay High Court in Bardot & Anr.
vs The American Ship Or Vessel `Augusta ', 1873(x) Bombay High Court Reports, 110, at p. 113: ".
If we have jurisdiction to entertain this suit, it must be sought for in the general maritime law administered by Courts of Admiralty . . . . . . . . . . we must hold it to be quite clear that the Statutes 3 & 4 Vict.
c. 65 (1840), 24 Vict. c. 10 (1861), and 26 & 27 Vict.
c. 24 (1863), do not increase or in any wise affect our jurisdiction either in Admiralty or Vice Admiralty, and that if we have jurisdiction to entertain this cause, that jurisdiction must be sought for outside those Statutes.
" Where statutes are silent and remedy has to be sought by recourse to basic principles, it is the duty of the court to devise procedural rules by analogy and expediency.
Actions in rem, as seen above, were resorted to by courts as a device to overcome the difficulty of personal service on the defendant by compelling him to enter appearance and accept service of summons with a view to furnishing security for the release of the res; or, in his absence, proceed against the res itself, by attributing to it a personality for the purpose of entering a decree and executing the same by sale of the res.
This is a practical procedural device developed by the courts with a view to rendering justice in accordance with substantive law not only in cases of collision and salvage, but also in cases of other maritime liens and claims arising by reason of breach of contract for the hire of vessels or the carriage of goods or other maritime transactions, or tortious acts, such as conversion or negligence occurring in connection with the carriage of goods.
Where substantive law demands justice for the party aggrieved, and the statute has not provided the remedy, it is the duty of the court to devise 1046 procedure by drawing analogy from other systems of law and practice.
To the courts of the "civil law countries" in Europe and other places, like problems seldom arise, for all persons and things within their territories (including their waters) fall within their competence to deal with.
They do not have to draw any distinction between an action in rem and an action in personam.
It is likewise within the competence of the appropriate Indian Courts to deal, in accordance with the general principles of maritime law and the applicable provisions of statutory law with all persons and things found within their jurisdiction.
The power of the court is plenary and unlimited unless it is expressly or by necessary implication curtailed.
Absent such curtailment of jurisdiction, all remedies which are available to the courts to administer justice are available to a claimant against a foreign ship and its owner found within the jurisdiction of the concerned High Court.
This power of the court to render justice must necessarily include the power to make interlocutory orders for arrest and attachment before judgment.
The High Court in India are superior courts of record.
They have original and appellate jurisdiction.
They have inherent and plenary powers.
Unless expressly or impliedly barred, and subject to the appellate or discretionary jurisdiction of this Court, the High Courts have unlimited jurisdiction, including the jurisdiction to determine their own powers.
(See Naresh Shridhar Mirajkar and Ors., vs State of Maharashtra and Anr.
, ; As stated in Halsbury 's Laws of England.
4th edition, Vol. 10, para 713 : "Prima facie, no matter is deemed to be beyond the jurisdiction of a superior court unless it is expressly shown to be so, while nothing is within the jurisdiction of an inferior court unless it is expressly shown on the face of the proceedings that the particular matter is within the cognizance of the particular court.
" The observation of this Court in Raja Soap Factory and Others vs S.P. Shantharaj and Others, ; , that section 151 of the Code of Civil Procedure did not confer on the High Court jurisdiction which was not specifically vested was made in the context of section 105 of the Trade and Merchandise Marks Act (43 of 1958) which conferred a specific jurisdiction in respect of a passing off action.
That observation is not 1047 relevant to the question regarding the inherent and plenary jurisdiction of the High Court as a superior court of record.
The Andhra Pradesh High Court, as a successor to the Madras High Court, is vested with all the appellate and original jurisdiction, including admiralty jurisdiction to order the arrest and detention of a ship.
In decisions such as Jayaswal Shipping Company vs `S.S. Leelavati ', AIR 1954 Calcutta 415; Kamalakar Mahadev Bhagat vs Scindia Steam Navigation Co. Ltd., Bombay, ; Rungta Sons Private Ltd. & Anr.
vs S.S. `Edison Mariner ' & Anr., 1961 62 (66) Calcutta Weekly Notes 1083; National Co. Ltd. vs Asia Mariner, 1967 68 (72) Calcutta Weekly notes 635; Mrs. Sahida Ismail vs
Petko R. Salvejkov & Ors., AIR 1973 Bombay 18 and Smt.
Reena Padhi vs `Jagdhir ', AIR 1982 Orissa 57, the High Courts took an unduly restrictive view of the courts ' admiralty jurisdiction by limiting it to what was permitted by the Admiralty Court Act, 1861 and the Colonial Courts of Admiralty Act, 1890.
This was, in our view, an unjustified abdication of jurisdiction and a self assumed fetter on competence to render justice.
In equating the admiralty jurisdiction of the Indian High Court to that of the English High Court, the Colonial Court of Admiralty Act, 1890 significantly refers to the admiralty jurisdiction of the High Court in England `whether existing by virtue of any statute or otherwise '.
This is an enabling statute, and not a statute of limitation of power.
It aids, and does not fetter, the growth of jurisdiction.
There is no reason why the words `statute or otherwise ' should be so construed as to exclude the various sources from which the admiralty jurisdiction in England developed.
Apart from statutes, the powers of that Court, as seen above, were derived from custom and practice and the principles developed by common law and equity as well as by the generally recognised principles of civil law developed and practised in Europe.
There is no reason, as rightly stated by Westropp.
C.J. of the Bombay High Court in Bardot (supra), why the expression `statute or otherwise ' should be so construed as to exclude all these vast areas of legal principles which enriched and strengthened the maritime laws of England.
Likewise, there is no reason why those principles should also not be drawn upon to enrich and strengthen the jurisprudence of this country, even if the jurisdiction of our courts were to be, by compulsions of history, considered to be curtailed and dovetailed to the colonial past a proposition which is neither correct nor consistent with our status as a sovereign republic.
It is 1048 time to take a fresh look at the old precedents.
In this connection we would refer to the recent decision of this Court in Delhi Judicial Service Association, Tis Hazari Court, Delhi vs State of Gujarat & Ors., JT This Court stated : ". .The constitution has assigned a new role to the Constitutional Courts to ensure rule of law in the country.
Time has come to have a fresh look at the old precedents and to lay down law with the changed perceptions keeping in view the provisions of the Constitution. " See also S.P. Gupta vs Union of India, [1982] 2 SCR, 365, 520 521, 597 598.
It is well recognised in international law that a merchant ship, though generally governed by the laws of the flag State, subjects itself to the jurisdiction of a foreign State as it enters its waters.
The Geneva Convention on the Territorial Sea and Contiguous Zone, 1958 and the Law of the Sea Convention, 1982 affirm that the sovereignty of a State extends over its internal and territorial waters.
* "A foreign vessel, no matter what flag she flies, owes temporary and local allegiance to the sovereign of any port to which she comes.
And the persons in such a vessel likewise must obey the law and regulations of the port.
Such jurisdiction is discretionary.
Once a foreign vessel passes out of territorial waters, she owes no further duty to the place which she has left, unless she is `hotly persued '.
But her conduct on the high seas or in foreign ports may subject her to penalties on returning on a subsequent visit".
(Benedict, The Law of American Admiralty, Sixth Edition, pages 121 & 122).
In the words of Chief Justice Marshal of the United States Supreme Court "it would be obviously inconvenient and dangerous to society and would subject the laws to continual infraction, and the government to degradation, if such (alien) individuals or merchants (trading in ships) did not owe temporary and local allegiance, and were not amenable to the jurisdiction of the country." (The Schooner Exchange vs M ' Faddon & Ors., * See Nagendra Singh, International Maritime Law Conventions, British Shipping Laws, Vols.
I to IV.
1049 [1812] 11 U.S. (7 Cranch) 114, 143.) All foreign merchant ships and persons thereon fall under the jurisdiction of a coastal State as they enter its waters.
Subject to the right of `innocent passage ', the coastal State is free to exercise jurisdiction over such ships in respect of matters the consequence of which extend beyond the ships.
Such ships are subject to the local jurisdiction in criminal, civil and administrative matters.
This jurisdiction is, however, assumed only when, in the opinion of the local authorities, the peace or tranquillity of the port is disturbed, when strangers to the vessel are involved or when the local authorities are appealed to.
Questions which affect only the internal order and economy of the ship are generally left to the authorities of the flag State.
Coastal States are entitled to assume jurisdiction in respect of maritime claims against foreign merchant ships lying in their waters.
These ships are liable to be arrested and detained for the enforcement of maritime claims.
The courts of the country in which a foreign ship has been arrested may determine the cases according to merits, provided they are empowered to do so by the domestic law of the country or in any of the cases recognised by the International Convention relating to the Arrest of Seagoing Ships, Brussels, 1952.
* The maritime claims in respect of which the power of arrest is recognised in law include claims relating to damage caused by any ship either in collision or otherwise; claims relating to carriage of goods in any ship whether by charterparty or otherwise, loss of or damage to goods etc.
These principles of international law, as generally recognised by nations, leave no doubt that, subject to the local laws regulating the competence of courts, all foreign ships lying within the waters of a State, including waters in ports, harbours, roadsteads, and the territorial waters, subject themselves to the jurisdiction of the local authorities in respect of maritime claims and they are liable to be arrested for the enforcement of such claims.
In India, carriage of goods by sea is governed by the , the Indian Carriage of Goods by Sea Act, 1925, the , and general statutes, such as the , the Contract Act, 1872, the Evidence Act, 1872, the Indian Penal Code, 1860, the , the Civil * See also the International Conventions for the Unification of Certain Rules relating to Maritime Liens and Mortgages of 10th April, 1926 and May 27, 1967.
1050 Procedure Code, 1908, the Criminal Procedure Code, 1973, the , etc.etc.
as well as the general principles of law such as the law of tort, public and private international law etc.
In this connection, reference may also be made to the and the concerning the administration of the port and the jurisdiction over ships in port, the containing various regulatory measures affecting ships, goods and persons in connection with importation or exportation of goods, as well as the provisions governing employment of labour.
The emphasises the negotiable and other characteristics of a bill of lading.
The Carriage of Goods by Sea Act, 1925, contains the Hague Rules regulating the respective rights and liabilities of the parties to a contract governed by bills of lading or similar documents of title for carriage of goods by sea "from any port in India to any other port whether in India or outside India".
The embodies rules regarding registration of Indian ships; transfers or mortgages of ships or shares; national character and flag; employment of seamen; safety, nuclear ships; collisions, accidents at sea and liability; limitation of liability; navigation; prevention of pollution; investigation and enquiries; wreck and salvage; coasting trade; sailing vessels; penalties and procedure, etc.
Many of these provisions have been adopted from rules formulated by various international conventions.
It is true that Indian statutes lag behind the development of international law in comparison to contemporaneous statutes in England and other maritime countries.
Although the Hague Rules are embodied in the Carriage of Goods by Sea Act, 1925, India never became a party to the International Convention laying down those rules (Internationl Convention for the Unification of Certain Rules of Law relating to Bills of Lading, Brussels 1924).
The Carriage of Goods by Sea Act, 1925 merely followed the (United Kingdom) Carriage of Goods by Sea Act, 1924.
The United Kingdom repealed the Carriage of Goods by Sea Act, 1924 with a view to incorporating the Visby Rules adopted by the Brussels Protocol of 1968.
The Hague Visby Rules were accordingly adopted by the Carriage of Goods by Sea Act, 1971 (United Kingdom).
Indian legislation has not, however, progressed, notwithstanding the Brussels Protocol of 1968 adopting the Visby Rules or the United Nations Convention on the Carriage of Goods by Sea, 1978 adopting the Hamburg Rules.
The Hamburg Rules prescribe the minimum liabilities of the carrier far more justly and equitably than the Hague Rules so as to correct the tilt in the latter in favour 1051 of the carriers.
The Hamburg Rules are acclaimed to be a great improvement on the Hague Rules and far more beneficial from the point of view of the cargo owners.
India has also not adopted the International Convention relating to the Arrest of Sea going Ships, Brussels, 1952.
Nor has India adopted the Brussels Conventions of 1952 on civil and penal jurisdiction in matters of collision; nor the Brussels Conventions of 1926 and 1967 relating to maritime liens and mortgages.
* India seems to be lagging behind many other countries in ratifying and adopting the beneficial provisions of various conventions intended to facilitate international trade.
Although these conventions have not been adopted by legislation, the principles incorporated in the conventions are themselves derived from the common law of nations as embodying the felt necessities of international trade and are as such part of the common law of India and applicable for the enforcement of maritime claims against foreign ships.
The contains various provisions to enforce territorial jurisdiction.
The Act being essentially regulatory in character, the various authorities, tribunals and Courts entrusted with the administration and enforcement of its provisions are specifically stated.
The High Court is defined under section 3(15) as follows : "3(15).
`High Court ', in relation to a vessel, means the High Court within the limits of whose appellate jurisdiction (a) the port of registry of the vessel is situate; (b) the vessel is for the time being; or (c) the cause of action wholly or in part arises;" (a) International Convention relating to the Arrest of Seagoing Ships, Brussels, 10 May 1952 (IMC); (b) International Convention on Certain Rules concerning Civil Jurisdiction in Matters of Collision, Brussels, 10 May 1952 (IMC); (c) International Convention for the Unification of Certain Rules relating to Penal Jurisdiction in Matters of Collision, Brussels, 10 May 1952 (IMC); and (d) International Conventions for the Unification of Certain Rules of Law relating to Maritime Liens and Mortgages Brussels, 10 April 1926, and the Revised Convention on Maritime Liens and Mortgages, Brussels, 29 May 1967 (IMC).
1052 Accordingly, a foreign ship falls within the jurisdiction of the High Court where the vessel happens to be at the relevant time i.e., at the time when the jurisdiction of the High Court is invoked, or, where the cause of action wholly or in part arises.
The detention of a foreign ship is authorised in terms of sections 443 and 444.
In view of their vital significance in the enforcement of maritime jurisdiction, we shall read these two sections in full.
Section 443 defines the character and scope of the power of detention: "section 443.
Power to detain foreign ship that has occasioned damage.
(1) Whenever any damage has in any part of the world been caused to property belonging to the Government or to any citizen of India or a company by a ship other than an Indian ship and at any time thereafter that ship is found within Indian jurisdiction, the High Court may, upon the application of any person who alleges that the damage was caused by the misconduct or want of skill of the master or any member of the crew of the ship, issue an order directed to any proper officer or other officer named in the order requiring him to detain the ship until such time as the owner, master or consignee thereof has satisfied any claim in respect of the damage or has given security to the satisfaction of the High Court to pay all costs and damages that may be awarded in any legal proceedings that may be instituted in respect of the damage, and any officer to whom the order is directed shall detain the ship accordingly.
(2) Whenever it appears that before an application can be made under this section, the ship in respect of which the application is to be made will have departed from India or the territorial waters of India, any proper officer may detain the ship for such time as to allow the application to be made and the result thereof to be communicated to the officer detaining the ship, and that officer shall not be liable for any costs or damages in respect of the detention unless the same is proved to have been made without reasonable grounds.
(3) In any legal proceedings in relation to any such damage aforesaid, the person giving security shall be made a defendant and shall for the purpose of such proceeding be deemed to be 1053 the owner of the ship that has occasioned the damage." (emphasis supplied) The power of enforcement of an order of detention of a foreign ship is dealt with by section 444.
"section 444.
Power to enforce detention of ship.
(1) Where under this Act a ship is authorised or ordered to be detained, any commissioned officer of the Indian Navy or any port officer, pilot, harbour master, conservator of port or customs collector may detain the ship.
(2) If any ship after detention, or after service on the master of any notice of, or order for, such detention proceeds to sea before she is released by competent authority, the master of the ship shall be guilty of an offence under this sub section.
(3) When a ship so proceeding to sea takes to sea, when on board thereof in the execution of his duty any person authorised under this Act to detain or survey the ship, the owner, master or agent of such ship shall each be liable to pay all expenses of, and incidental to, such person being so taken to sea and shall also be guilty of an offence under this sub section.
(4) When any owner, or master or agent is convicted of an offence under sub section (3), the convicting magistrate may inquire into and determine the amount payable on account of expenses by such owner, master or agent under that sub section and may direct that the same shall be recovered from him in the manner provided for the recovery of fines.
" These provisions relate to detention by reason of damage caused in any part of the world by a foreign ship to property belonging to the Government of India or to an Indian citizen or company.
The sections are wide in terms and the expression `damage ' is not necessarily confined to physical damage.
Ordinarily damage is caused by physical contact of the ship, such as in collision.
But damage can also be caused to property by breach of contract or acts of commission or omission on the part of the carrier or his agents or servants by reason of the negligent operation and management of the vessel, as, for example, when cargo is damaged by exposure to 1054 weather or by negligent stowage; or, by the misconduct of those in charge of the ship, like when cargo is disposed of contrary to the instructions of the owner or by reason of theft and other misdeeds.
In all these cases, damage arises by reason of loss caused by what is done by the ship or by the breach, negligence of misdeeds of those in charge of the ship.
It must however be noticed that the expression `damage done by any ship ' has been construed by the English Courts as not to apply to claims against the carrying ship for damage done to cargo.
In the Victoria , the Court so construed section 7 of the Admiralty Court Act, 1861 (24 Victoriae c. 10)*.
It has been held to apply only to physical damage done by a ship by reason of its coming into contact with something.
See The Vera Cruz, ; Currie vs M.Knight, and The Jade, In view of the specific provisions of the English statutes of 1920, 1925, 1956 and 1981, it was unnecessary for the English Courts to construe the expression broadly so as to include cargo claims and the like.
The last two enactments contain an exhaustive list of maritime claims and questions in regard to which the High Court can exercise jurisdiction over any merchant ship by arresting it as it enters the waters of Britain.
This power, as already noticed, is available, whatever be the nationality of the ship or its owner or the domicile or place of residence or business of the owner, or wherever the cause of action has arisen.
About the words `damage done by a ship ' in section 7 of the Admiralty Court Act, 1861 and the decision in The Victoria to the effect that the section had no application to claims against the carrying ship for damage to cargo, the following observation significantly appears in Halsbury 's Laws of England, 4th ed.
I (1), para 319 N. 12. ". but this question is academic in the light of the fact that jurisdiction in respect of claims for damage to cargo carried in a ship is now expressly given by the Supreme Court Act 1981 section 20(2)(g).
" In the absence of any statute in India comparable to the English statutes on admiralty jurisdiction, there is no reason why the words `damage caused by a ship ' appearing in section 443 of the should be so narrowly construed as to limit them to * Section 7 reads : "The High Court of Admiralty shall have jurisdiction over any Claim for Damage done by any ship." 1055 physical damage and exclude any other damage arising by reason of the operation of the vessel in connection with the carriage of goods.
The expression is wide enough to include all maritime questions or claims.
If goods or other property are lost or damaged, whether by physical contact or otherwise, by reason of unauthorised acts or negligent conduct on the part of the shipowner or his agents or servants, wherever the cause of action has arisen, or wherever the ship is registered, or wherever the owner has his residence or domicile or place of business, such a ship, at the request of the person aggrieved, is liable to be detained when found within Indian jurisdiction by recourse to sections 443 and 444 of the read with the appropriate rules of practice and procedure of the High Court.
These procedural provisions are but tools for enforcement of substantive rights which are rooted in general principles of law, apart from statutes, and for the enforcement of which a party aggrieved has right to invoke the inherent jurisdiction of a superior court.
The Indian Carriage of Goods by Sea Act, 1925 applies to carriage of goods by sea under bills of lading or similar documents of title from a port in India to any other port whether in or outside India.
(See section 2).
The Act imposes certain responsibilities and liabilities and confers certain rights and immunities upon the carrier (see Articles III & IV).
In respect of a claim relating to an outward cargo, the cargo owner has a right to bring a suit against a shipowner subject to the period of limitation specified under Act, namely, one year [Article III (6)].
The substantive rights recognised by the statute are of equal application to foreign merchant ships as they are to Indian merchant ships.
The Carriage of Goods by Sea Act does not, however, contain any provision for the enforcement of the right by arresting the foreign vessel found in Indian waters.
In the absence of arrest, no effective remedy against a foreign owner may be available to the cargo owner.
The same is the position with regard to claims relating to cargo carried under a charterparty.
It is, therefore, necessary that he should have recourse to the remedy available to him under the .
That Act, as stated earlier, confers a right to arrest a vessel in respect of any damage caused by a ship.
If that expression, in the absence of any other more appropriate statute, is understood sufficiently broadly as an enabling provision to effectively assume jurisdiction over a foreign ship for the enforcement of a substantive right recognised by law, there would be no difficulty in finding a remedy for the right the law has conferred on the cargo owner.
1056 The empowers the concerned High Court to arrest a ship in respect of a substantive right.
A right conferred by the Indian Carriage of Goods by Sea Act, 1925 in respect of outward cargo is one of those rights which can be enforced by arrest and detention of the foreign ship in order to found jurisdiction over the vessel and its owners, just as it can be done in respect of inward cargo by reason of the substantive rights conferred by the Admiralty Court Act, 1861 read with the Colonial Courts of Admiralty Act, 1890, and other rules of law.
The same principle must hold good for carriage under a charterparty.
These and other laws, such as the law of contract, tort, crime, mortgage, marine insurance, customs, port operations, etc., and the Civil and Criminal Procedure Codes as well as the relevant rules of court regulating procedure and practice together constitute the body of substantive and procedural laws governing claims relating to inward and outward cargo, and such claims are enforceable against foreign ships by recourse to arrest and detention when found within jurisdiction.
Viewed in this light, and by this reasoning, the Andhra Pradesh High Court, as a successor to the Madras High Court, does not lack admiralty jurisdiction in respect of claims relating to outward cargo.
The admiralty jurisdiction of the High Court is dependent on the presence of the foreign ship in Indian waters and founded on the arrest of that ship.
This jurisdiction can be assumed by the concerned High Court, whether or not the defendant resides or carries on business, or the cause of action arose wholly or in part, within the local limits of its jurisdiction.
Once a foreign ship is arrested within the local limits of the jurisdiction of the High Court, and the owner of the ship has entered appearance and furnished security to the satisfaction of the High Court for the release of the ship, the proceedings continue as a personal action.
The provides a detailed code of substantive and procedural rules regulating shipping as an industry control exercised over it by the competent authorities in confirmity with various international conventions which have, under the auspices of International Organisations such as the IMO or the ILO, unified and developed various aspects of shipping laws.
Conventions regulating sea traffic, safety of life at sea, employment of seamen, wages, hours of work, social security, etc.
are cases in point.
Likewise, the substantive rules concerning transport of goods are contained in the and the Indian Carriage of Goods by Sea Act, 1925.
But the jurisdictional questions concerning arrest 1057 of foreign ships for enforcement of claims against the shipowner as a transporter of goods, which in England are regulated by the Supreme Court Act 1981, are in many respects left unregulated by Indian legislation.
While the provisions of various international conventions concerning arrest of ships, civil and penal jurisdiction in matters of collision, maritime liens and mortgages etc. have been incorporated into the municipal laws of many maritime States, India, as stated above, lags behind them in adopting these unified rules.
* By reason of this void, doubts about jurisdiction often arise, as in the present case, when substantive rights, such as those recognised by the Carriage of Goods by Sea Act, are sought to be enforced.
The remedy lies, apart from enlightened judicial construction, in prompt legislative action to codify and clarify the admiralty laws of this country.
This requires thorough research and investigation by a team of experts in admiralty law, comparative law, and public and private international law.
Any attempt to codify without such investigation is bound to be futile.
No Indian statute defines a maritime claim.
The Supreme Court Act, 1981 of England has catalogued claims with reference to the unified rules adopted by the Brussels Convention of 1952 on the Arrest of Seagoing Ships.
** * See for example, the Brussels Conventions listed above.
See also the Administration of Justice Act, 1956 and the Supreme Court Act, 1981 incorporating the international rules into English law.
** International Convention for the Unification of Certain Rules relating to the Arrest of Seagoing Ships, Brussels, May 10, 1952.
Article 1 of this Convention reads: (1) "Maritime Claim" means a claim arising out of one or more of the following: (a) damage caused by any ship either in collision or otherwise;(b) loss of life or personal injury caused by any ship or occurring in connection with the operation of any ship;(c) salvage;(d) agreement relating to the use or hire of any ship whether by charterparty or otherwise;(e) agreement relating to the carriage of goods in any ship whether by charterparty or otherwise; (f) loss of or damage to goods including baggage carried in any ship; (g) general average; (h) bottomry; (i) towage (j) pilotage; (k) goods or materials wherever supplied to a ship for her operation or maintenance; (l) construction, repair or equipment of any ship or dock charges and dues; (m) wages of Masters, Officers, or crew; (n) Master 's disbursements, including disbursements made by shippers, charterers or agents on behalf of a ship or her owner; (o) disputes as to the title to or ownership of any ship;(p) disputes between co owners of any ship as to the ownership, possession employment or earnings of that ship; (q) the mortgage or hypothecation of any ship.
footnote contd.
on next page 1058 Although India has not adopted the various Brussels Conventions*, the provisions of these Conventions are the result of international unification and development of the maritime laws of the world, and can, therefore, be regarded as the international common law or transnational law rooted in and evolved out of the general principles of national laws, which, in the absence of specific statutory provisions, can be adopted and adapted by courts to supplement and complement national statutes on the subject.
In the absence of a general maritime code, these principles aid the courts in filling up the lacunae in the and other enactments concerning shipping.
"Procedure is but a handmaiden of justice and the cause of justice can never be allowed to be thwarted by any procedural technicalities." S.P. Gupta vs Union of India, [1982] 2 SCR, 365, 520, 521.
It is important to remember that the Brussels Convention on Arrest of Ships merely restricts or regulates the power of the coastal States and is not intended to confer power which they did not otherwise have as sovereign States.
`Arrest ' to which the convention refers is detention of a ship to secure a maritime claim, and not seizure of a ship in execution or satisfaction of judgment.
The judicial power of this country, which is an aspect of national sovereignty is vested in the people and is articulated in the provisions of the Constitution and the laws and is exercised by courts empowered to exercise.
It is absurd to confine that power to the provisions of imperial statutes of a bygone age.
Access to court which is an important right vested in every citizen implies the existence of the power of the Court to render justice according to law.
Where statute is silent and judicial intervention is required, Courts strive to redress grievances according to what is perceived to be principles of justice, equity and good conscience.
In the words of Chief Justice Marshal : (2)"Arrest" means the detention of a ship by judicial process to secure a maritime claim, but does not include the seizure of a ship in execution or satisfaction of a judgment.
(3) "Person" includes individuals, partnerships and bodies corporate, Governments, their Departments, and Public Authorities.
(4) "Claimant" means a person who alleges that a maritime claim exists in his favour.
See the Conventions listed above.
1059 "The jurisdiction of courts is a branch of that which is possessed by the nation as an independent sovereign power.
The jurisdiction of the nation within its own territory is necessarily exclusive and absolute.
It is susceptible of no limitation not imposed by itself. ".
The Schooner Exchange vs M 'Faddon & Ors.
U.S. Supreme Court Reports, Cranch 5 9, p. 114, 133 ; Admiralty jurisdiction is an essential aspect of judicial sovereignty which under the Constitution and the laws is exercised by the High Court as a superior court of record administering justice in relation to persons and things within its jurisdiction.
Power to enforce claims against foreign ships is an essential attribute of admiralty jurisdiction and it is assumed over such ships while they are within the jurisdiction of the High Court by arresting and detaining them.
All persons and things within the waters of a State fall within its jurisdiction unless specifically curtailed or regulated by rules of international law.
The power to arrest a foreign vessel, while in the waters of a coastal State, in respect of a respect of a maritime claim, wherever arising, is a demonstrable manifestation and an essential attribute of territorial sovereignty.
This power is recognised by several international conventions.
* These conventions contain the unified rules of law drawn from different legal systems.
Although many of these conventions have yet to be ratified by India, they embody principles of law recognised by the generality of maritime States, and can therefore be regarded as part of our common law.
The want of ratification of these conventions is apparently not because of any policy disagreement, as is clear from active and fruitful Indian participation in the formulation of rules adopted by the conventions, but perhaps because of other circumstances, such as lack of an adequate and specialised machinery for implementation of the various international conventions by coordinating for the purpose the concerned Departments of the Government.
Such a specialised body of legal and technical experts can facilitate adoption of internationally unified rules by national legislation.
It is appropriate that sufficient attention is paid to this aspect of the * See the Conventions referred to above.
See also Nagendra Singh, International Maritime Conventions, British Shipping Laws, Vol.4 1060 matter by the concerned authorities.
Perhaps the Law Commission of India, endowed as it ought to be with sufficient authority, status and independence, as is the position in England, can render valuable help in this regard.
Delay in the adoption of international conventions which are intended to facilitate trade hinders the economic growth of the nation.
The British statute assimilating Indian High Courts to the position of the English High Court in respect of admiralty jurisdiction is an enabling legislation and it is but one of the strands of jurisdiction vested in the High Court by virtue of the constitutional provisions.
The jurisdiction of the High court is governed by the Constitution and the laws, and the continuance in force of the existing laws in not a fetter but an additional source of power.
Access to court for redressal of grievance being an important right of every person, it is essential that the jurisdiction of the courts is construed harmoniously and consistently with its vital function in that respect, so that absence of legislation will not jeopardise that right.
Admiralty jurisdiction, despite the peculiarities of its origin and growth rooted as it is in history and nurtured by the growing demands of international trade is nevertheless a part of the totality of jurisdiction vested in the High Court as a superior court of record, and it is not a distinct and separate jurisdiction as was once the position in England before the unification of courts.
The 1890 and 1891 Acts specifically conferred admiralty jurisdiction on the Indian High Courts by reason of their being courts of unlimited jurisdiction.
These Acts did not create any separate or distinct jurisdiction, but merely equated the Indian High Courts to the position of the England High Court (united and consolidated as that Court has been since 1875) for the exercise of admiralty powers within the jurisdiction of the former.
The contrary view expressed in some of the decisions of the High Courts referred to earlier is clearly wrong.
Once a foreign ship is arrested in Indian waters by an order of the High Court, in exercise of the admiralty jurisdiction vested in it by statute, or inherent in it as a court of record, in respect of any maritime claim against its owner, wherever the cause of action may have arisen, and whether or not the ship is subsequently released by the owner furnishing security, proceeding must continue against the owner as in any other suit.
The arrest of the vessel while in Indian waters by an order of the concerned High Court, as defined under the [section 1061 3(15)] attracts the jurisdiction of the competent court to proceed with the trial, as in the case of any other suit, as an action against the owner, and any decree obtained by the plaintiff is executable against any property of the owner available within jurisdiction, including the security furnished by him for release of the vessel.
All foreign ships entering Indian waters are presumed to know that they fall within the jurisdiction of this country during their stay here.
The vessel in question was lying in the Port of Vishakhapatnam when she was arrested in respect of a cause of action relating to cargo.
The sole contention of the defendants as regards jurisdiction was that no High Court in India was invested with admiralty jurisdiction to order the arrest of the vessel in respect of a cause of action relating to outward cargo because section 6 of the Admiralty Court Act, 1861 (read with the Colonial Courts of Admiralty Act, 1890) conferring admiralty jurisdiction on Indian High Courts confined it to `claims for damage to cargo imported '.
This contention for the reasons we have stated, has no merits.
The High Court, in our view, rightly assumed jurisdiction by the arrest of the vessel while it was lying in the port of Vishakhapatanam.
The High Court of Andhra Pradesh undoubtedly possesses jurisdiction over claims relating to inward and outward cargo.
In the circumstances, the preliminary objection to the jurisdiction of the Andhra Pradesh High Court was totally devoid of merits.
Accordingly, the appeal arising from SLP(C) No. 10542 of 1985 has to be dismissed.
In the light of our order dated 28th August, 1991 allowing the Civil Appeal No. 3392 of 1991 filed by the 3rd defendant against the order of the High Court dismissing the petition for condonation of delay in presenting O.S.A.S.R. No. 39789 of 1988, the Transferred Case No. 27 of 1987 arising from the judgment of the learned Single judge decreeing the plaintiff 's suit and the 3rd defendant 's appeal have to be heard and disposed of together on the merits, and the right forum for the purpose will be the High Court itself.
In the circumstances, the Transferred Case No. 27 of 1987 has to be returned to the High Court.
R.M. SAHAI, J. Admirality jurisdiction, an unfamiliar branch of jurisprudence, was the object matter of illuminating debate in this appeal directed against judgment of the Andhra Pradesh High Court.
But what was surprising to hear, even, in 1991 was that the admirality jurisdiction exercised 1062 by the High Courts in Indian Republic is still governed by the obsolete English Admiralty Courts Act, 1861 (referred hereinafter as `the Act ') applied by (English) Colonial Courts of Admiralty Act, 1890 (in brief `1890 Act ') and adopted by Colonial Courts of Admirality (India) Act, 1891 (Act XVI of 1891).
Yet there appeared no escape from it, notwithstanding its unpleasant echo in ears.
The shock was still greater when it transpired that this state of affairs is due to lack of legislative exercise, even, when in wake of decision of this Court in State of Madras vs C.G.Menon & Ors., ; , that `Article 372 of the Constitution cannot save this law (Fugitive Offenders Act 1881*) because the grouping is repugnant, to the concept of a sovereign democratic republic. ', the Law Commission in its Fifth Report on British Statutes applicable to India went into detail on scope of Article 372 of the Constitution and observed that the British statutes which were expressly applicable to India because India was a, `British possession ' are still supposed to be applicable to India without any change in the context, therefore, it impressed upon the urgency as far back as 1957 to enact, 'own laws on the subject matter of those statutes where it is necessary to do so and take legislative action making it clear that these statutes are no longer applicable to India. ' In pursuance of this recommendation exercise was undertaken and (The) British Statutes (Applicable to India) Repeal Act 1960 (Act 57 of 1960) was enacted on 26th December 1960 repealing as many as 259 statutes mentioned in the Schedule.
But the Admirality jurisdiction remained untouched.
In respect of Colonial Courts of Admiralty Act the recommendation of the Commission was that, ` The necessary substantive provisions of the English Statute may be incorporated into our Act XVI of 1891 so as to make it the comprehensive Indian law relating to courts of admirality. ' Unfortunately nothing was done.
Neither the law was made up to date and brought in line with international conventions on maritime law passed in 1952 etc.
nor even the salient features of English law as amended by Administration of Justice Act, 1920, and 1956 were adopted.
And rights and interests of citizen of the independent sovereign state continued to be governed by legislations enacted for colonies by the British Parliament.
Various provisions in 1890 Act have been rendered not only anomalous but even derogatory to the sovereignty of the State.
No further need be said except to express the hope that the unfortunate state of affairs shall be brought to end at the earliest.
Be that as it may the intricate issue of Admiralty jurisdiction of the Bracket supplied.
1063 Andhra Pradesh High Court a successor of High Court of Madras, to entertain a suit for arrest of a foreign ship for tort committed by the owner or master of ship while carrying cargo outside India has to be decided on the law as it stands.
Entire thrust of attack, against direction by the High Court for arrest of the foreign ship, was found on absence of any provision in 1861 Act empowering the High Court to exercise jurisdiction over any claim by the owner or consignee of India in respect of bill of lading of any goods carried out of any Indian port in any foreign ship.
True Sections 5 to 8 and 10 to 11 conferring jurisdiction on High Court of Admiralty do not provide for it.
Section 6 is confined to, `any claim by the owner or consignee or assignee of any Bill of Lading of any goods carried into any port in England or Wales in any ship (to be read as India by virtue of proviso to sub section 3 of Section 2 of Colonial Courts of Admiralty Act 1890*) for damage done to the goods or any part thereof by the Negligence or misconduct of or any breach of duty '.
But this Act had on application till 1890.
Before it the High Court of Madras enjoyed Admiralty jurisdiction under the Madras Supreme Court Act, then Letters Patent of 1862 and 1865.
Finally it came to be governed by 1890 Act, enacted, to amend the law respecting to exercise of Admiralty jurisdiction in British possession. ' It was under sub section (1) of Section 2 of this Act read with Section 2 of 1891 act that the then Presidency High Courts, being courts of unlimited civil jurisdiction, were declared court of Admiralty.
Sub section (2) of Section 2 of 1890 Act spelt out the jurisdiction of Admiralty courts.
It reads as under: "(2) The jurisdiction of a Colonial Court of Admiralty shall, subject to the provisions of this Act, be over the like places, persons, matters, and things, as the Admiralty jurisdiction of the High Court in England, whether existing by virtue of any statute or otherwise, and the Colonial Court of Admiralty may exercise such jurisdiction in like manner and to as full an extent as the High Court in England, and shall have the same regard as that Court to international law and the comity of nations.
" Each part of the sub section is inclined towards expanding jurisdiction.
It not only declared those over which the court could exercise jurisdiction but it also amplified the manner and extent of exercise of jurisdiction.
It was made co extensive with the jurisdiction exercised by the High Court in England.
Use of the expression, `existing by virtue of any Statute or * Bracket supplied.
1064 otherwise ', widened the operative field extending the limit and authority to exercise jurisdiction beyond any existing statute, to custom practice or in any other manner in which it could be exercised.
It was recognition of wide jurisdiction exercised by the High Court of England.
What then was the jurisdiction that the Court of England exercised in 1890 ? The law of Admiralty was developed by English courts both as a matter of commercial expediency and due to equity and justice.
Originally it was a part of common law jurisdiction, but the difficulty of territorial limitations, constraints of common law and the necessity to protect the rights and interests of its own citizens resulted in growth of maritime lien a concept distinct from common law of equitable lien as it represents a charge on maritime property of a nature unknown alike to the common law or equity.
The Privy Council explained it as `a claim or privilege upon a thing to be carried into effect by legal process.
* Law was shaped by exercise of discretion to what appeared just and proper in the circumstances of the case.
Jurisdiction was assumed for injurious act done on high seas and the scope was extended, `not only to British subjects but even to aliens.
** Maritime law has been exercised all over the world by Maritime powers.
In England it was part of Municipal law but with rise of Britain as empire the law grew and it is this law, that is, `Maritime Law that is administered by the Admiralty Court '***.
From the Maritime law sprang the right known as Maritime lien ascribing personality to a ship for purposes of making good loss or damage done by it or its master or owner in tort or contract.
In England it grew and developed in course of which its scope was widened from damage done by a ship to claims of salver, wages, Bottomrey, supply of necessaries and even to bills of lading.
Its effect was to give the claimant a charge on res from the moment the lien arose which follows the res even if it changed hands.
In other words a maritime lien represented a charge on the maritime property.
The advantage which accured to the maritime lienee was that he was provided with a security for his claim up to the value of the res.
The essence of right was to identify the ship as wrongdoer and compel it by the arrest to make good the loss.
Although the historical review in England dates back to the 14th Century but its statutory recognition was much later and `maritime law came to jurisprudential maturity in the first half of the 19th Century '.
**** * The Bold Buccleugh, (1851) 7 Moo.
P.C.267.
** The hailey, L.R.2 PC 193.
*** Halsbury 's Laws of England, IVth Edn., Vol.
**** Maritime Liens by D.R. Thomas.
1065 And the first statutory recognition of such right came in 1840 when the Admiralty Court Act of 1840 was enacted empowering the admiralty court to decide all questions as to the title or ownership of any ship or vessel or the procedure thereof remaining in the territory arising in any cause of possession, salvage, damage, wages or bottomrey.
By clause (6) of the Act jurisdiction was extended to decide all claims and demands whatsoever in the nature of salvage for services rendered to or damage received by any ship or sea going vessel or in the nature of towage or for necessaries supplied to any foreign ship or sea going vessel and the payment thereof whether such ship or vessel may have been within the body of a country or upon the high seas at the time when the services were rendered or damage received or necessary furnished in respect of such claims.
But the most important Act was passed in 1861 which expanded power and jurisdiction of courts and held the field till it was replaced by Administration of Justice Act, 1920.
The importance of the Act lay in introducing the statutory right to arrest the res on an action in rem.
Section 35 of the 1861 Act provided that the jurisdiction by the High Court of Admiralty could be exercised either by proceedings in rem or proceedings in personam.
`The essence of the rem in procedure is that `res ' itself becomes, as one might say, the defendant, and ultimately the `res ' the ship may be arrested by legal process and sold by the Court to meet the plaintiff 's claim.
The primary object, therefore, of the action in rem is to satisfy the claimant out of the `res '*.
If the 1840 Act was important for providing statutory basis for various types of claims then 1861 Act was a step forward in expanding the jurisdiction to claims of bill of lading.
Section 6 of the Act was construed liberally so as to confer jurisdiction and the expression `carried into any port was ' was expanded to mean not only when the goods were actually carried but even if they were to be carried.
** Further the section was interpreted as providing additional remedy for breach of contract.
*** By the jurisdiction Act of 1873 the court of Admiralty was merged in High Court of justice.
Result was that it obtained jurisdiction over all maritime cases.
Therefore, what was covered by enactments could be taken cognisance of in the manner provided in the Act but there was no bar in respect of any cause of action which was otherwise cognizable and arose in Admirality.
Section 6 of 1861 Act was confined to claim by the owner or consignee or assignee of any bill of lading of any goods carried into any port * Maritime Law by Christopher Hill.
** The Ironsides, 167 English Reports 205, The St. Cloud, 167 English Report 269, The Norway, 167 English Report 347.
*** The Ironsides, 167 English Reports 205.
1066 in England or Wales (to be read as India).
But it did not debar any action or any claim by the owner or consignee or assignee of any bill of lading in respect of cargo carried out of the port.
Even if there was no provision in 1861 Act, as such, the colonies could not be deprived under 1890 Act from exercising jurisdiction on those matters which were not provided by 1861 Act but could be exercised or were otherwise capable of being exercised by the High Court of England.
`The theory was that all matters arising outside the jurisdiction of common law i.e. outside the body of a country were inside the jurisdiction of Admiralty '*.
`That this court had originally cognisance of all transaction civil and criminal, upon the high seas, in which its own subjects were concerned, is no subject of controversy '**.
To urge, therefore, that the Admirality court exercising jurisdiction under 1890 Act could not travel beyond 1861 Act would be going against explicit language of the Statute.
Even now, the Admiralty jurisdiction of the High Court of Justice in England derived `partly from statute and partly from the inherent jurisdiction of Admiralty '***.
Observations of Lord Diplock in the Jade**** that Admiralty jurisdiction was statutory only have to be understood in the context they were made.
By 1976 the statutory law on Admiralty had become quite comprehensive.
Brother Thommen, J., had dealt with it in detail.
Therefore those observations are not helpful in deciding the jurisdiction that was exercised by the High Court in England in 1890.
From what has been narrated above it is apparent that law of Admiralty progressed gradually from ordinary courts, to courts of Admiralty and ultimately to High Court commencing in commercial expediency, equity and justice and ending with statutory enactments covering entire field from collision on ships to cargo even.
All this was existing when 1890 Act was enacted.
But the statutes of 1840 and 1861 were not exhaustive and English courts could take cognizance for various wrongs either in tort or contract.
Therefore, when colonial courts were conferred jurisdiction it was not restricted or confined to statutes, as the power was being conferred on High Courts which were, then and even now, not only courts of unlimited civil jurisdiction but higher courts possessed of every jurisdiction which was not expressly or impliedly conferred on other courts.
The * Carter History of English Courts.
** Lord Stowell in `The Hercules ' *** Halsbury 's Laws of England, IVth Edn.
**** The Jade 1976 (1) All Eng.
Reports 921.
1067 word `otherwise ' literally means in a different way.
Effect of its use in 1890 Act in law, was to confer not only statutory jurisdiction possessed of by English courts but all that which was being exercised or was capable of being exercised either under custom and practice or for sake of equity and justice.
In the Iron Sides (supra) it was observed that Act of 1861 was passed not because the power or jurisdiction prior to it did not exist but no one ventured to exercise it.
No such restriction was placed on exercise of power under 1890 Act.
Rather the Act permitted exercise of it and that too to its fullest extent.
This deliberate expansion of power and jurisdiction after existence of two statutes for nearly thirty years was founded on experience and necessity or arming the courts for every dispute that could arise relating to Admiralty jurisdiction, as the law on Admiralty was a growing law.
Its development could not be stiffled by its very nature.
It was with this intention that the Parliament used the word, `otherwise ' in 1890 Act.
No word in a statute has to be construed as surplus age.
Nor it can be rendered ineffective or purposeless.
Courts are required to carry out the legislative intent fully and completely.
The two legislations of 1840 and 1861 took care of those actions which appeared to be settled till then.
But they did not close the door for the growth of law.
They were enacted to `improve the Admiralty practice ' as the jurisdiction which were conferred by the statutes were already being exercised.
Action in personam or rem were not unknown.
It was provided statutory base only.
Statutes till 1920 in England were not creation of new rights but recognition of what was existing by practice or custom.
It can thus be safely inferred that the jurisdiction to entertain a claim for tort or breach of contract by owner or master of ship while carrying cargo outside the port could be exercised or was capable of being exercised in 1890 by the High Court of England if occasion arose.
The rationale of extending jurisdiction in Admirality over cargo carried into the port has been existence of a right in owner or consignee arising out of contract or agreement entered between him and the master or owner of the ship.
It was the enforcement of the right which was safeguarded by providing a remedy to arrest a ship if the goods were carried into any port.
Same rationale applies to redress the owner of bill of lading if the master of the ship in breach of agreement entered into any port committed tort by acting against it in course of outward journey.
Such breach would have been actionable and a suit could be filed in the court where agreement was entered.
Basis of Maritime Law has been necessity to provide remedy for wrong done on high seas.
Inclusion or expansion of 1068 jurisdiction was in relation to any cause which could have been cognisable under ordinary law.
Bottomrey, salvage, seaman wages or towage are all causes for which action could be brought in court of law but their enforcement was rendered illusory with disappearance of the person beyond territorial waters.
To overcome this difficulty this jurisdiction was created making it actionable against person and finally the res itself.
What was basic was the existence of cause of action, arising out of tort or contract in relation to the master or owner of the ship.
Applying this test the cause of action arose in Indian territory and if the owner of the ship would have remained in this country a suit for breach of contract could have been filed.
Therefore the owner of bill of lading was not precluded from approaching the Admiralty court for redress when the foreign ship which was guilty of violations appeared in Indian waters.
On this construction the colonial courts could exercise the jurisdiction in respect of cargo going outside the port in exercise of jurisdiction under Act of 1890 not on statutes but as the High Court of England could exercise such power.
Emphasis on absence of any instance in which English courts assumed jurisdiction in respect of goods carried out of English port was searching for existence of jurisdiction not in law but on precedent.
Test is not whether the jurisdiction was ever exercised by English courts but whether it was capable of being exercised.
If it could, then colonial courts were empowered to exercise it.
Reliance was placed on Yuri Maru*, a decision because of which the courts in Bombay and Calcutta got stuck, and could not see beyond 1861 Act.
Distinction on facts, apart, the court was primarily concerned if the jurisdiction of colonial court expanded or dimunited by change of jurisdiction of High Court of England by different enactments passed from time to time.
Incidentally it was also observed that there was conflict for long even in England on advantage of extending the process in rem and if a port of call could be benefited by existence of a power in all and sundry to arrest vessels found within its limits.
This observation cannot be construed as determinative of limited jurisdiction possessed by the courts.
No effort was made in the decision to adjudicate upon the impact of the expression or `even otherwise '.
Rather it turned on impossibility of automatic extension of jurisdiction of colonial court to exercise power under the English law enacted subsequently because of the use of word `existing ' in 1890 Act.
Without entering into the controversy if 1890 Act was a legislation by * 1927 Appeal Cases 906.
1069 reference or by incorporation and their consequences, on which arguments were addressed in extenso, suffice it to say that in absence of any consideration of the expression `otherwise ' this Court does not find any difficulty in construing the expression as permissive of jurisdiction.
Legislations may create a right or it may recognise one founded on custom or practice.
Admiralty statutes in England fell in latter category.
In such legislations the background of enactment, the necessity to codify it, the propose sought to be achieved by it all become relevant.
Admiralty jurisdiction in England was rooted in remote past.
It developed and expanded with rise and growth of Britain and its recognition as a superior maritime power.
Law and practice revolved round it.
Right to proceed against owner of ship for wrongs done on high seas was accepted and followed.
Statutes of 1840 and 1861 provided legislative base only.
Viewed in the background of enactment of 1890 it would be too artificial to confine the exercise of power by the High Courts in Admiralty to what was contained in 1861 Act.
Even otherwise for deciding the jurisdiction exercised by the High Court in India founded on jurisdiction exercised by the High Court of England it is not necessary to be governed by the decision given by English courts.
Law develops by pragmatic approach to problems arising under an Act and not by abdication or surrender, 1890 Act is an unusual piece of legislation expansive in scope, wider in outlook, opening out the wings of jurisdiction rather than closing in.
It 's authority and power to exercise jurisdiction was linked with power exercised by the High Court in England, the width of which was not confined to statute but went deep into custom, practice, necessity, and even exigency.
Law of 1890 apart, can the Indian High Courts after 1950 be denied jurisdiction to arrest a foreign ship to satisfy the claim of owner of a bill of lading for cargo taken outside the county? Without entering into any comparative study of jurisdiction of High Court of England and the High Courts in our country the one basic difference that exists today is that the English courts derive their creation, constitution and jurisdiction from Administration of Justice Act or Supreme Court Act but the High Courts in our country are established under the Constitution.
Under it Article 225 preserved the jurisdiction, including inherent jurisdiction, which existed on the date the Constitution came into force and Article 226 enlarged it by making it not only a custodian of fundamental rights of a citizen but as 1070 repository of power to reach its arms to do justice.
A citizen carrying on business which is a fundamental right cannot be rendered helpless on premise that the jurisdiction of High Courts stood frozen either under statute of England or any custom or practice prevailing there or the High Court of England cannot exercise the jurisdiction.
Brother T.K. Thommen, J., while dealing with right of rem and in personam has considered the justification for conferment of such right to a claimant in respect of a merchant ship traveling from port to port.
Can it be successfully urged today that such a ship or its master and owner is immune from tort or breach of contract committed by him in respect of cargo taken out of port.
A citizen of a colonial state may or may not but a citizen of an independent republic cannot be left high and dry.
The construction of law has to be in consonance with sovereignty of a state.
The apprehension that assumption of such jurisdiction would be on general attributes of sovereignty is not well founded.
This coupled with expansive jurisdiction that the High Courts enjoyed in relation to Admiralty under 1890 Act preserved under Article 225 provided justification for direction to arrest the ship, for the tortious act done by master or owner of the ship in respect of goods carried outside the port even if there was no specific provision like Section 6 of the 1861 Act.
Entertaining a claim arising out of breach of contract in relation to cargo taken out of any Indian port pertains to jurisdiction.
It must arise out of Statute.
But the power to direct arrest of a ship in exercise of the jurisdiction is one relating to competency.
The High Court in India being courts of unlimited jurisdiction, repository of all judicial power under the Constitution except what is excluded are competent to issue directions for arrest of foreign ship in exercise of statutory jurisdiction or even otherwise to effectuate the exercise of jurisdiction.
Since the jurisdiction to entertain a suit on tort or contract in relation to cargo going out of the country in a ship is found to exist under 1890 Act the High Court of Andhra Pradesh was competent to direct arrest of the foreign ship when it appeared in India waters.
The High Court, therefore, rightly negatived the objection to issue direction to arrest the ship.
Necessity to add few words to the opinion of brother Thommen, J., arose without narrating facts or extracting sections as they have been dealt in detail by him, both to impress upon the urgency of enacting up to date law on Admiralty and to express agreement only on scope of 1890 Act as well as the extensive jurisdiction enjoyed by High Courts after 1950.
1071 ORDER For the reasons stated by us in our separate but concurring judgments dated 26.2.1992, we dismiss the appeal arising from SLP(C) No. 10542 of 1985.
The Transferred Case No. 27 of 1987 is returned to the Andhra Pradesh High Court to be heard and disposed of on the merits together with the 3rd defendant 's appeal O.S.A.S.R. No. 39789 of 1988.
We make no order as to costs.
G.N. Appeal dismissed.
| IN-Abs | The appellant vessel, which was lying in the port of Marmagao, left the port without issuing bills of lading or other documents required by the Respondent company for the goods shipped by it.
On reaching the port of destination, despite the direction of the respondent company not to deliver the goods by reason of the buyer 's failure to pay the agreed price, the appellants handed over the goods to the consignee.
Since the appellants acted in breach of duty thereby committing conversion of the goods entrusted to them, the respondent instituted a suit against the appellants invoking the admiralty jurisdiction of the Andhra Pradesh High Court by means of an action in rem.
The vessel was arrested when it entered the port of Vishakapatnam, and later released on the owner 's furnishing security by way of Bank guarantee.
In the proceedings before the High Court, the appellant raised a preliminary objection as to jurisdiction stating that the suit against a foreign ship owned by a foreign company not having a place of residence or business in India, could not proceed on the admiralty side of the High Court by an action in rem in respect of a cause of action by reason of a tort or a breach of obligation arising from the carriage of goods from an Indian port to a foreign port.
This objection was overruled by a Single Judge of the High court and later confirmed by a Division Bench, against which the present appeal has been preferred.
Finally the suit was decreed by a Single Judge and the appeal therefrom is the subject matter of the other matter before this Court, viz., the Transfer Petition.
On behalf of the appellants it was contended that the power of the High Court on the admiralty side was confined to the provisions of the Admiralty Court Act, 1861 made applicable to India by the Colonial Courts of Admiralty Act, 1890 read with the declaring certain Courts of unlimited civil jurisdiction as Colonial Courts of Admiralty, but it remained frozen as on the date of Admiralty Court Act, 1861; that the wide powers assumed by the British Courts under the subsequent statutes of that country did not enlarge the 1005 admiralty jurisdiction of the High Court in India; that section 6 of the Admiralty Court Act, 1861, the only provision relating to cargo, confined itself to inward cargo only, and therefore the case did not fall under the ambit of section 6 of the Act; and that the arrest of the vessel in purported exercise of admiralty jurisdiction in rem concerning a claim relating to outward cargo, was null and void.
On behalf of the respondents it was contended that every person has a right to approach the Court of the land for appropriate remedy in respect of claims against a foreign ship and its owner, and to deny him that right and to compel him to pursue remedy in a foreign country according to an unfamiliar system of law and practice in strange and uncertain conditions and consequently incurring high expenses with all the uncertainties of such a pursuit, was unjust and uncalled for; that all major systems of law the world over recognise the competence of the coastal State to assume jurisdiction over a foreign ship entering its waters in respect of certain well recognised claims, irrespective of where the cause of action arose or where the defendant has his place of residence or business; that the reason for such wide jurisdiction being the non availability of the foreign owner within the local jurisdiction, and the stay of the foreign ship in the waters of the coastal State being necessarily brief, jurisdiction over the ship has to be exercised by its arrest and detention by means of an action in rem; that the High Court being a court of record with unlimited jurisdiction, it was never intended by the British Parliament that the admiralty power conferred on certain High Courts should remain frozen as on the date of the passing of the Admiralty Court Act, 1861 and that the subsequent changes in the law of Great Britain should not widen the jurisdiction of the Indian High Courts; and that the colonial statutes should not be so construed as to stand in the way of the Indian High Courts exercising unlimited jurisdiction except where the jurisdiction is barred expressly or by necessary implication.
Dismissing the appeal and returning the Transferred Case to the High Court, this Court, HELD : (By the court) : The High Court of Andhra Pradesh undoubtedly possesses jurisdiction over claims relating to inward and outward cargo.
Therefore the High Court rightly assumed jurisdiction by the arrest of the appellant vessel 1006 while it was lying in the port of Vishakhapatnam.
(Per Thommen, J) : 1.
The Andhra Pradesh High Court is the successor to the Madras High Court in respect of the territories transferred from Madras and included in the State of Andhra which was formed by the Andhra State Act, 1953.
In the port of Vishakhapatnam the Andhra Pradesh High Court has thus the same jurisdiction as was vested in the Madras High Court prior to the transfer of that territory.
[1021D; 1022A] 2.1.
The fact that the High Court continues to enjoy the same jurisdiction as it had immediately before the commencement of the Constitution, as stated in Article 225 of the Constitution does not mean that a matter which is covered by the Admiralty Court Act, 1861 cannot be otherwise dealt with by the High Court, subject to its own Rules, in exercise of its manifold jurisdiction, which unless barred, is unlimited.
To the extent not barred expressly or by necessary implication, the judicial sovereignty of this country is manifested in the jurisdiction vested in the High Courts as superior courts.
[1024E,F].
It is true that the Colonial statutes continue to remain in force by reason of Article 372 of the Constitution of India, but that does not stultify the growth of law or blinker its vision or fetter its arms.
Legislation has always marched behind time, but it is the duty of the Court to expound and fashion the law for the present and the future to meet the ends of justice.
[1026B,C] Kamalakar Mahadev Bhagat vs Scindia Steam Navigation Co. Ltd., ; Mrs. Sahida Ismail vs Petko R. Salvejkov & Ors., AIR 1973 Bombay 18; Jayaswal Shipping Company vs S.S. Leelavati, AIR 1954 Calcutta 415; Rungta Sons Pvt. Ltd. & Anr.
vs S.S. Edison Mariner & Anr., 1961 62 (66) Calcutta Weekly Notes 1983; Smt.
Reena Padhi vs Jagdhir, AIR 1982 Orissa 57; National Co. Ltd. vs Asia Mariner, , overruled.
What the Colonial Courts of Admiralty Act, 1890 did was not to incorporate any particular English Statute into Indian law for the purpose of conferrring admiralty jurisdiction, but to assimilate the competent Courts in India to the position of the English High Court in the exercise 1007 of admiralty jurisdiction.
It would, therefore, appear that any expansion of Admiralty jurisdiction of the High Court in English was intended likewise to expand the jurisdiction of the Colonial Courts of Admiralty.
This should have been regarded as the position with respect to a Colonial Court of unlimited jurisdiction.
[1027H; 1028A,B] The Yuri Maru vs The Woron, , referred to.
It was because of the unlimited civil jurisdiction that was already vested in the High Courts that they were declared to be Colonial Courts of Admiralty having the same jurisdiction in extent and quality as was vested in the High Court of England by virtue of any statute or custom.
The High Courts were declared to be competent to regulate their procedure and practice in exercise of admiralty jurisdiction in accordance with the Rules made in that behalf.
There is, therefore, neither reason nor logic in imposing a fetter on the jurisdiction of these High Courts by limiting it to the provisions of an imperial statute of 1861 and freezing any further growth of jurisdiction.
This is all the more true because the Admiralty Court Act, 1861 was in substance repealed in England a long time ago.
[1029F H] Halsbury 's Laws of England, 4the Ed.
1(1), para 307; Halsbury 's Statutes of England, Vol. 1, para 9, referred to.
The wide jurisdiction vested in the English Courts is derived from ancient principles of Maritime Law developed by custom and practice as well as from subsequent statutes many of which have been incorporated in the provisions of International Conventions unifying the laws practised in several maritime countries.
[1032E F] The Geetano and Maria, (1862) 7 PD; The Gas Float Whitton, N.2 (1896), referred to.
A History of English Law, Vol.1,5 and 8; Rescoe 's Admiralty Practice, 5the Ed.; Marsden : Select Pleas of the Court of Admiralty, Vol.
I & II; Law and Custom of the Sea, Vol.
I and II; Benedict on admiralty, 6th Ed.
(1940) Vol.
I; Gilmore and Black, Law of Admiralty, (1957); A History of English Law, W.S. Holdsworth, Vol.
I, pp.
558 59, referred to.
The provision contained in section 6 of the Admiralty Court Act, 1861 limiting the jurisdiction of the Admiralty Court to claims respecting inward cargo was discarded by the Administration of Justice Act, 1920 1008 which extended the jurisdiction of the High Court to (a) any claim arising out of an agreement relating to the use or hire of a ship; (b) any claim relating to the carriage of goods in any ship, and (c) any claim in tort in respect of goods carried in any ship.
The Act thus applied to both inward and outward cargoes.
[1034B,C] 7.
The vital significance and the distinguishing feature of an admiralty action in rem is that this jurisdiction can be assumed by the coastal authorities in respect of any maritime claim by arrest of the ship, irrespective of the nationality of the ship or that of its owners, or the place of business or domicile or residence of its owners or the place where the cause of action arose wholly or in part.
[1038E F] The Fehmarn, (1958) I All E.R. 333, referred to.
Halsbury, op.
4th Ed.
I(1) para 309; D.C. Jackson, Enforcement of Maritime Claims, (1985); Gilmore and Black, The Law of Admiralty, p. 1; The Law of American Admiralty, 6th Ed.
I p.3; Rescoe 's Admiralty Practice, 5th Ed.
p.29, referred to.
It is within the competence of the appropriate Indian Courts to deal, in accordance with the general principles of maritime law and the applicable provisions of statutory law, with all persons and things found within their jurisdiction.
The power of the court is plenary and unlimited unless it is expressly or by necessary implication curtailed.
All remedies which are available to the courts to administer justice are available to a claimant against a foreign ship and its owner found within the jurisdiction of the concerned High Court.
This power of the court to render justice must necessarily include the power to make interlocutory orders for arrest and attachment before judgment.
[1046B D] The Bold Buccleaugh, ; The Jade, [1976] I All.
E.R. 921, 923; Currie vs M. Knight, ; Bardot & Anr.
vs The American Ship or Vessel Augusta, 1873 (x) Bombay High Court Reports, 110, referred to.
Enforcement of Maritime Claims, 1985 p. 9; Halsbury 's Laws of England, 4th Ed.
I p. 375; Halsbury 's Laws of England, Vol.1, para 307; referred to.
The High Court in India are superior courts of record.
They have 1009 original and appellate jurisdiction.
They have inherent and plenary powers.
Unless expressly or impliedly barred, and subject to the appellate or discretionary jurisdiction of this Court, the High Courts have unlimited jurisdiction, including the jurisdiction to determine their own powers.
[1046D E] Naresh Shridhar Mirajkar & Ors.
vs State of Maharashtra Raja Soap Factory and Ors.
vs S.P. Shantharaj and Ors., ; , distinguished.
Halsbury 's Laws of England, 4th Ed. Vol.10, para 713, referred to.
In the instant case, the Andhra Pradesh High Court, as a successor to the Madras High Court, is vested with all the appellate and original jurisdiction, including admiralty jurisdiction to order the arrest and detention of a ship.
[1047A B] 11.
In equating the admiralty jurisdiction of the Indian High Court to that of the English High Court, the Colonial Court of Admiralty Act, 1890 significantly refers to the admiralty jurisdiction of the High Court in England `whether existing by virtue of any statute or otherwise '.
This is an enabling statute, and not a statute of limitation of power.
It aids, and does not fetter, the growth of jurisdiction.
There is no reason why the words `statute or otherwise ' should be so construed as to exclude the various sources from which the admiralty jurisdiction in England developed.
Apart from statutes, the powers of that Court were derived from custom and practice and the principles developed by common law and equity as well as by the generally recognised principles of civil law developed and practised in Europe.
There is no reason why those principles should also not be drawn upon to enrich and strengthen the jurisprudence of this country, even if the jurisdiction of our courts were to be, by compulsions of history, considered to be curtailed and dovetailed to the colonial past a proposition which is neither correct nor consistent with our status as a sovereign republic.
It is time to take a fresh look at the old precedents.
[1047D H; 1048A] Delhi Judicial Service Association, Tis Hazari Court, Delhi vs State of Gujarat & Ors.
JT ; S.P. Gupta vs Union of India, [1982] 2 SCR 365, relied on.
1010 12.
It is well recognised in iternational law that a merchant ship, though generally governed by the laws of the flag State, subjects itself to the jurisdiction of a foreign State as it enters its waters.
The Geneva Convention on the Territorial Sea and the Contiguous Zone, 1958 and the Law of the Sea Convention, 1982 affirm that the sovereignty of a State extends over its internal and territorial waters.
[1048D] The Schooner Exchange v.M. Faddon & Ors., [1812] 11 U.S. (7 Cranch) 114, 143, referred to.
Nagendra Singh, International Maritime Law Conventions, British Shipping Laws; Benedict, The Law of American Admiralty, 6th Ed.
121 & 122, referred to.
Coastal States are entitled to assume jurisdiction in respect of maritime claims against foreign merchant ships lying in their waters.
These ships are liable to be arrested and detained for the enforcement of maritime claims.
The courts of the country in which a foreign ship has been arrested may determine the cases according to merits, provided they are enpowered to do so by the domestic law of the country or in any of the cases recognised by the International Convention relating to the Arrest of Seagoing Ships, Brussels, 1952.
The maritime claims in respect of which the power of arrest is recognised in law include claims relating to damage caused by any ship either in collision or otherwise; claims relating to carriage of goods in any ship whether by charterparty or otherwise, loss of or damage to goods etc.
These principles of International law, as generally recognised by nations, leave no doubt that, subject to the local laws regulating the competence of courts, all foreign ships lying within the waters of a State, including waters in ports, harbours, roadsteads and the territorial waters, subject themselves to the jurisdiction of the local authorities in respect of maritime claims and they are liable to be arrested for the enforcement of such claims.
[1049C F] 14.
In the absence of any statute in India comparable to the English statutes on admiralty jurisdiction, there is no reason why the words `damage caused by a ship ' appearing in section 443 of the should be so narrowly construed as to limit them to physical damage and exclude any other damage arising by reason of the operation of the vessel in connection with the carriage of goods.
The 1011 expression is wide enough to include all maritime questions or claims.
If goods or other property are lost or damaged, whether by physical contact or otherwise, by reason of unauthorised acts or negligent conduct on the part of the shipowner or his agents or servants, wherever the cause of action has arisen, or wherever the ship is registered, or wherever the owner has his residence or domicile or place of business, such a ship, at the request of the person aggrieved, is liable to be detained when found within Indian jurisdiction by recourse to sections 443 and 444 of the read with the appropriate rules of practice and procedure of the High Court.
These procedural provisions are but tools for enforcement of substantive rights which are rooted in general principles of law, apart from statutes, and for the enforcement of which a party aggrieved has a right to invoke the inherent jurisdiction of a superior court.
[1054G; 1055A D] Victoria, ; The Vera Cruz, ; Currie vs M.Knight, ; The Jade, (1976) 1 All.
E.R. 920, referred to.
Halsbury 's Laws of England, 4th Ed.
I(1), para 319 N. 12, referred to.
The empowers the concerned High Court to arrest a ship in respect of a substantive right.
A right conferred by the Indian Carriage of Goods by Sea Act, 1925 in respect of outward cargo is one of those rights which can be enforced by arrest and detention of the foreign ship in order to found jurisdiction over the vessel and its owners, just as it can be done in respect of inward cargo by reason of the substantive rights conferred by the Admiralty Court Act, 1861 read with the Colonial Courts of Admiralty Act, 1890, and other rules of law.
The same principle must hold good for carriage under a charterparty.
These and other laws, such as the law of contract, tort, crime, mortgage, marine insurance, customs, port operations, etc.
and the Civil and Criminal Procedure Codes as well as the relevant rules of court regulating procedure and practice together constitute the body of substantive and procedural laws governing claims relating to inward and outward cargo, and such claims are enforceable against foreign ships by recourse to arrest and detention when found within jurisdiction.
Viewed in this light, and by this reasoning, the Andhra Pradesh High Court, as a successor to the Madras High Court, does not lack admiralty jurisdiction in respect of claims to outward cargo.
[1056A D] 1012 16.
The jurisdictional questions concerning arrest of foreign ships enforcement of claims against the shipowner as a transporter of goods, which in England are regulated by the Supreme Court Act, 1981, are in many respects left unregulated by Indian legislation.
While the provisions of various international conventions concerning arrest of ships, civil and penal jurisdiction in matters of collision, maritime liens and mortgages etc. have been incorporated into the municipal laws of many maritime States, India, lags behind them in adopting these unified rules.
By reason of this void, doubts about jurisdiction often arise, as in the present case, when substantive rights, such as those recognised by the Carriage of Goods by Sea Act, are sought to be enforced.
The remedy lies, apart from enlightened judicial construction, in prompt legislative action to codify and clarify the admiralty laws of this country.
This requires thorough research and investigation by a team of experts in admiralty law, comparative law, and public and private international law.
Any attempt to codify without such investigation is bound to be futile.
[1056H; 1057A C] 17.
The judicial power of this country, which is an aspect of national sovereignty, is vested in the people and is articulated in the provisions of the Constitution and the laws and is exercised by courts empowered to exercise it.
It is absurd to confine that power to the provisions of imperial statutes of a bygone age.
Access to court which is an important right vested in every citizen implies the existence of the power of the Court to render justice according to law.
Where statute is silent and judicial intervention is required, Courts strive to redress grievances according to what is perceived to be principles of justice, equity and good conscience.
[1058E,F] S.P. Gupta vs Union of India, [1982] 2 SCR 365, relied on.
The Schooner Exchange vs M 'Faddon & Ors.
, U.S. Supreme Court Reports, Cranch , referred to.
All persons and things within the waters of a State fall within its jurisdiction unless specifically curtailed or regulated by rules of international law.
The power to arrest a foreign vessel, while the waters of a coastal State, in respect of a maritime claim, wherever arising, is a demonstrable manifestation and an essential attribute of territorial sovereignty.
This power is recognised by several international conventions.
These conventions contain the unified rules of law drawn from different legal systems.
Although many of these conventions have yet to 1013 be ratified by India, they embody principles of law recognised by the generally of maritime States, and can therefore be regarded as part of our common law.
A specialised body of legal and technical experts can facilitate adoption of internationally unified rules by national legislation.
It is appropriate that sufficient attention is paid to this aspect of the matter by the concerned authorities.
Perhaps the Law Commission of India, endowed as it ought to be with sufficient authority, status and independence as is the position in England, can render valuable help in this regard.
[1059D H; 1060A] 19.
The jurisdiction of the High Court is governed by the Constitution and the laws, and the continuance in force of the existing laws is not a fetter but an additional source of power.
Access to court for redressal of grievance being an important right of every person, it is essential that the jurisdiction of the court is construed harmoniously and consistently with its vital function in that respect, so that absence of legislation will not jeopardise that right.
[1060C,D] 20.
Once a foreign ship is arrested in Indian waters by an order of the High Court, in exercise of the admiralty jurisdiction vested in it by statute, or inherent in it as a court of record, in respect of any maritime claim against its owner, wherever the cause of action may have arisen, and whether or not the ship is subsequently released by the owner furnishing security, proceedings must continue against the owner as in any other suit.
[1060G,H] 21.
All foreign ships entering Indian waters are presumed to know that they fall within the jurisdiction of this country during their stay here.
It cannot be said that no High Court in India was invested with admiralty jurisdiction to order the arrest of the vessel in respect of a cause of action relating to outward cargo because section 6 of the Admiralty Court Act, 1861 (read with the Colonial Courts of Admiralty Act, 1890) conferring admiralty jurisdiction on Indian High Courts confined it to `claims for damage to cargo imported '.
In the instant case, the appellant vessel was lying in the port of Vishakhapatnam when she was arrested in respect of a cause of action relating to cargo.
The High Court, therefore, rightly assumed jurisdiction by the arrest of the vessel while it was lying in the port of Vishakhapatnam, as the High Court possesses jurisdiction over claims relating to inward and outward cargo.
[1061B E] 1014 (PER SAHAI.J. CONCURRING); 1.1.
The Law of admiralty progressed gradually from ordinary courts, to courts of Admiralty and ultimately to High Court commencing in commercial expedience, equity and justice and ending with statutory enactments covering entire field from collision on ships to cargo even.
All this was existing when the 1890 Act was enacted.
But the statutes of 1840 and 1861 were not exhaustive and English courts could take cognizance for various wrongs either in tort or contract.
Therefore when colonial courts were conferred jurisdiction it was not restricted or confined to statutes, as the power was being conferred on High Courts which were, then and even now, not only courts of unlimited civil jurisdiction but higher courts possessed of every jurisdiction which was not expressly or impliedly conferred on other courts.
The word `otherwise ' literally means in a different way.
Effect of its use in the 1890 Act in law, was to confer not only statutory jurisdiction possessed of by English courts but all that which was being exercised or was capable of being exercised either under custom and practice or for sake of equity and justice.
The deliberate expansion of power and jurisdiction after existence of two statutes for nearly thirty years was founded on experience and necessity of arming the courts for every dispute that could arise relating to Admiralty jurisdiction, as the law on Admiralty was a growing law.
Its development could not be striffled by its very nature.
It was with this intention that the Parliament used the word, `otherwise ' in 1890 Act.
No word in a statute has to be construed as surplusage.
Nor it can be rendered ineffective or purposeless.
Courts are required to carry out the legislative intent fully and completely.
The two legislations of 1840 and 1861 took care of those actions which appeared to be settled till then.
But they did not close the door for the growth of law.
They were enacted to `improve the Admiralty practice ' as the jurisdiction which were conferred by the statutes were already being exercised.
Action in personam or rem were not unknown.
It was provided statutory base only.
Statutes till 1920 in England were not creation of new rights but recognition of what was existing by practice or custom.
Thus, the jurisdiction to entertain a claim for tort or breach of contract by owner or master of ship while carrying cargo outside the port could be exercised or was capable of being exercised in 1890 by the High Court of England if occasion arose.
[1066E H; 1067A F] 1.2.
The rationale of extending jurisdiction in Admiralty over cargo carried into the port has been existence of a right in owner or consignee 1015 arising out of contract or agreement entered into between him and the master or owner of the ship.
It was the enforcement of the right which was safeguarded by providing a remedy to arrest a ship if the goods were carried into any port.
Same rationale applies to redress the owner of bill of lading if the master of the ship in breach of agreement entered into any port committed tort by acting against it in course of outward journey.
Such breach would have been actionable and a suit could be filed in the court where agreement was entered.
Basis of Maritime Law has been necessity to provide remedy for wrong done on high seas.
Inclusion or expansion of jurisdiction was in relation to any cause which could have been cognisable under ordinary law.
Bottomrey, salvage, seaman wages or towage are all causes for which action could be brought in court of law but their enforcement was rendered illusory with disappearance of the person beyond territorial waters.
To overcome this difficulty jurisdiction was created making it actionable against person and finally the res itself.
What was basic was the existence of cause of action, arising out of tort or contract in relation to the master or owner of the ship.
Applying this test, the cause of action arose in Indian territory and if the owner of the ship would have remained in this country a suit for breach of contract could have been filed.
Therefore the owner of bill of lading was not precluded from approaching the Admiralty Court for redress when the foreign ship which was guilty of violations appeared in Indian waters.
On this construction the colonial courts could exercise the jurisdiction in respect of cargo going outside the port in exercise of jurisdiction under the Act of 1890 not on statutes but as the High Court of England could exercise such power.
[1067F H; 1068A D] Yuri Maru; 1927 Appeal cases 906, distinguished.
State of Madras vs C.C. Menon & Ors., ; , referred to.
The Bold Buccleugh, ; The Hailey, ; The Ironsides, 167 English Reports 205; The St. Cloud, 167 English Reports 269; The Norway, 167 English Reports 347; The Hercules, ; The Jade, [1976] 1 All Eng.
Reports 921, referred to.
Halsbury 's Laws of England, 4th Ed.
1: Maritime Liens by D.R. Thomas; Maritime Law by Christopher Hill; Carter History of English Courts, referred to.
Without entering into any comparative study of jurisdiction of High 1016 court of England and the High Courts in our country, the one basic difference that exists today is that the English Courts derive their creation, constitution and jurisdiction from Administration of Justice Act or Supreme Court Act but the High Courts in our country are established under the Constitution.
Under it, Article 225 preserved the jurisdiction, including inherent jurisdiction, which existed on the date the Constitution came into force and Article 226 enlarged it by making it not only a custodian of fundamental rights of a citizen but as repository power to reach its arms to do justice.
A citizen carrying on business which is fundamental right cannot be rendered helpless on premise that the jurisdiction of High Courts stood frozen either under statute of England or any custom or practice prevailing there or the High Court of England cannot exercise the jurisdiction.
A citizen of an independent republic cannot be left high and dry.
The construction of law has to be in consonance with sovereignty of a state.
The apprehension that assumption of such jurisdiction would be on general attributes of sovereignty is not well founded.
This coupled with expansive jurisdiction that the High Courts enjoyed in relation to admiralty under the 1890 Act preserved under Article 225 of the Constitution provided justification for direction to arrest the ship, for the tortious act done by master or owner of the ship in respect of goods carried outside the port even if there was no specific provision like Section 6 of the 1861 Act.
Entertaining a claim arising out of breach of contract in relation to cargo taken out of any Indian port pertains to jurisdiction.
It must arise out of Statute.
But the power to direct arrest of a ship in exercise of the jurisdiction is one relating to competency.
The High Courts in India being courts of unlimited jurisdiction, repository of all judicial powers under the Constitution except what is excluded are competent to issue directions for arrest of foreign ship in exercise of statutory jurisdiction or even otherwise to effectuate the exercise of jurisdiction.
[1069F H; 1070A F] 3.
In the instant case, since the jurisdiction to entertain a suit on tort or contract in relation to cargo going out of the country in a ship is found to exist under 1890 Act, the High Court of Andhra Pradesh was competent to direct arrest of the foreign ship when it appeared in Indian waters.
[1070F G] 4.
In respect of Colonial Courts of Admiralty Act the Law Commission recommended that the necessary substantive provisions of the English Statute may be incorporated into the Act so as to make it the 1017 comprehensive Indian law relating to courts of admiralty.
Neither the law was made up to date and brought in line with international conventions on maritime law passed in 1952 etc.
nor even the salient features of English law as amended by Administration of Justice Act, 1920, and 1956 were adopted.
And rights and interests of citizen of the independent sovereign state continue to be governed by legislations enacted for colonies by the British Parliament.
|
: Criminal Appeal No 572 of 1981.
From the Judgment and Order dated 26.8.1980 of the Patna High Court in Criminal Appeal No. 15 of 1976.
Ranjit Kumar for the Appellants.
D. Goburdhan for the Respondent.
The Judgment of the Court was delivered by PUNCHHI, J.
This appeal by special leave is against the judgment 609 and order of the High Court at Patna dated August 26, 1980 passed in Criminal Appeal No 15 of 1976.
The facts giving rise to this appeal are that a dacoity took place at about midnight on the night intervening 5th 6th April, 1970 in the house of Dhaniram Singh, P.W.11, in village Awadhiya.
According to the prosecution 25 to 30 persons armed with guns, lathis, bhalas and gharasa etc.
committed the dacoity and apart from looting away belongings of Dhaniram Singh, his uncle Khobari Singh was shot dead and as many as 8 persons including Dhaniram Singh P.W.11 re ceived injuries.
The First Information Report was lodged by Dhaniram Singh, P.W.11, at 6.30 a.m. on April 6, 1970 at police station, Bhabhua at a distance of about 7 miles from the place of the occurrence.
In it he could name 7 persons specifically as being members of the gang of dacoits.
The remaining dacoits were left unnamed.
The investigating agency when set into motion took steps as necessary.
But at this stage, it would be sufficient to mention that neither could the investigation recover the looted property valued by the concerned P.Ws.
at about Rs. 8,000 nor could it get the particulars of a large number of other participants in the dacoity.
When the matter went to triaL before the First Additional Sessions Judge, Arrah, against the 6 named per sons and one other, the old Criminal Procedure of 1898 governed the trial and before hand there were commitment proceedings before a Magistrate in which evidence was recorded.
At the commitment stage, 10 persons were put to face the enquiry.
One accused named Kanhaiya Singh in the meantime died.
Two other accused Sukhari Singh and Gulab Gosain also died.
There remained 6 of the original accused named in the F.I.R. and one more, Ram Naresh Singh, not so named to face trial and bear the conviction.
The Learned Additional Sessions Judge convicted all the 7 accused under Section 396 I.P.C. and imposed on them a sentence of life imprisonment.
On appeal to the High Court two of them namely Ram Naresh Singh the one unnamed in the F.I.R. and Charittar Ahir, one of the so named, were acquitted but the convic tions of Munni Singh, Fekoo Singh, Behari Singh, Dadan Singh and Guput Singh, the appellants herein, were maintained.
The appellants are residents of village Awadhiya where the occurrence took place.
The victims of the crime and other prosecution witnesses are also from Awadhiya.
The village appears to be a small one consisting only of 26 27 houses comprising of various castes like Brahmins, Rajputs, 610 Kahars, Ahirs and Kurmis.
This is what Hira Singh, P.W.2 has deposed at the trial.
The first informant suggested that there was a simmering discontent between his family and the family of Sukhari Singh accused.
Munni Singh, appellant is the son of Sukhari Singh, Fekoo Singh and Behari Singh, appellants are the nephews of Sukhari Singh and Guput Singh, appellants, is the brother of Sukhari Singh.
Thus they are closely related.
There was a pond measuring about 3 acres in the village, which Sukhari Singh claimed, had been bestowed on him by the erstwhile Zamindar before the coming into force of the Zamindari Abolition Act.
He had taken control of the Tank but some time before the occurrence had sown "singhara" in it and had prevented people to let their cattle come there to drink water from it.
The Panchayat of the village when approached had taken note of it and had 3/4 days prior to the occurrence suggested to Sukhari Singh that he should rather surrender the Tank in the name of the Shiva Temple.
But, he had correspondingly suggested to the Pan chayat that the place constructed and occupied by the com plainant party Khobari Singh and others for tying their cattle at the bank of the pond, which was part of unsettled lands, should also be likewise given to the shiva Temple.
The Panchayat was not agreeable to the counter suggestion because the possession and usage of that land by Khobari Singh was very old.
With such grudge in mind, it is the case of the prosecution, that the assault was masterminded and made at the house of the complainant with the sole purpose to avenge and to commit dacoity.
The details of the occurrence are provided by Dhaniram Singh, P.W.11, the first informant.
He stated that on the day of the occurrence he was in his village having come on a month 's leave from his posting as a Weapon Senior Engineer in District Kanpur.
On the night of the incident, three cots lay spread in the outer courtyard of their house.
He was sleeping on one of them, and on the remaining two individu ally were his cousin Baliram Singh, P.W.3, and his uncle Khobari Singh (deceased).
He was awaken by some noise as if some persons were coming.
He stood up and switched on his five cell torch and saw 20 25 dacoits armed with lathis, bhallas, Garasas, and guns coming towards his house.
On his focussing the torch they stopped.
Then the dacoits also switched on their torches.
Dhaniram Singh then claims that he recognised in the torch light the accused inclusive of 5 appellants.
Munni Singh and Fekoo, appellants had guns and the remaining 5 had some other arms.
Sukhari Singh shouted kill kill.
Munni Singh then fired with his gun towards Dhaniram Singh but 611 he rolled down and by the fall hurt himself on the thigh and the gun fire did not hit him.
Then he got up and started running.
One of the dacoits hit him with a stick with an iron ring.
There was some oozing of blood but it was not profuse.
He ran for about 30 steps to get to his wheat field, which was about 2 to 3 feet below the level of his courtyard.
From there he claims to have seen the remaining part of the occurrence.
He saw that when his uncle Khobari Singh had been awakened Munni Singh appellant fired at him and he fell down.
Other dacoits who were near him started hitting him with spears.
One of the dacoits held a ladder in his hand, through which he climbed up to the roof of the inner house, from where he jumped into the female apartment and opened the outer door.
Then the dacoits entered the house and started looting and plundering.
Two dacoits scold ed his brother Baliram, P.W.3 to keep lying down on his cot.
In the occurrence, however, Baliram Singh. P.W.3, received no injury.
The dacoits were active for about 15 to 20 minutes.
On hearing the noise and commotion, other villag ers then started collecting.
The dacoits then decamped with the looted goods.
Some of the villagers followed them to some distance but the dacoits kept firing on them.
With the result that some of them were injured.
Khobari Singh and other injured persons were removed to be taken to the hospi tal but Khobari Singh died on the way and then Dhaniram Singh proceeded to the Police Station, Bhabua, taking the dead body of his uncle with him where the Office in charge, P.W.12 Ram Nagad Tiwari, recorded his statement at 6.30 a.m. on 6.4.1970.
Shri Tiwari went to the spot and saw the evi dence of dacoity in the form of things lying scattered and some of the articles left behind by the dacoits.
He had the injured persons examined medically.
He arrested the accused persons.
Finally investigation was completed by another officer and the accused persons were put up for trial as mentioned earlier.
Before the High Court, as also here, it is admitted that there was commission of dacoity in the house of the first informant on the day as alleged, in which Khobari Singh was killed and others were injured.
It is also not disputed that the dacoity being a conjoint act all persons participating in the crime would be equally liable for the killing of Khobari Singh.
Thus the only exercise before the High Court, as also here, is to determine who were the persons who took part in the commission of the dacoity.
It is note worthy that prosecution had four sets of witnesses 612 which could establish identity of the dacoity.
Three sets became redundant and only on the basis of one set was iden tity of the appellants established.
The first set consisted of three injured persons Ramadar Singh, Dinanath Singh and Dhirja Singh who were not examined at the trial by the prosecution.
This set did not help the prosecution at all.
The second set consisted of the evidence of Baliram Singh, P.W.3 Rambali Singh, P.W.4 and Jhuri Singh P. W. 9 .The names of P.Ws 4 and 9 were not mentioned in the F.I.R. and their evidence was left out of consideration by the Trial Judge as well as the High Court.
Even the statement of P.W.3 was left aside by the High Court.
So this set too did not further the prosecution case.
In the third set was the evidence of P.W.1 Bishwanath Chaubey, P.W. 5 Jokhan Bind and P.W. 8 Chirkut Singh who did not identify any of the da coits.
None of these witnesses was declared hostile.
Thus their evidence rather goes adverse to the prosecution.
The fourth set consisted of evidence of P.W.2 Hira Singh and P.W.11 Dhaniram Singh whose evidence has been relied upon by the High Court to identify the 5 appellants and on the basis of the very same evidence two co accused, that is, Ram Naresh Singh and Charittar Ahir were acquitted because P.W. 2 named one and excluded the other and P.W.11 named the other one and excluded the former, giving rise to a doubt about the complicity of those two.
Thus we are left to see whether the conviction of the appellants can be based on the evidence of these eye witnesses P.Ws 2 and 11.
We have already given a condensed version of Dhaniram Singh, P.W.11.
Now according to the Hira Singh P.W.2, his house is 4 5 houses away from the house of the complainant and when he became awake on hearing the noise he went to see the occur rence taking a torch which kept lighting.
According to him he hid himself behind a Bahaya tree and from where he could keep watching the activities of the dacoits whose faces he saw.
As he says he could identify 8 dacoits.
These were Munni Singh, Fekoo Singh Dadan Singh, Guput Singh and Behari Singh appellants as respectively armed.
In addition there were Sukhari Singh (since deceased), Ram Naresh Singh and Kanhiya Singh who are no longer in the picture.
After the departure of the dacoits he went close to the scene and found Khobari Singh to have been hit by gun shots and that his condition at that time was serious.
Then he went in the company of P.W. 11 firstly towards the hospital and then to the police Station.
According to this witness though he focussed the torch for 3 or 4 minutes before he went in hiding, the focus did not fall on the faces of the dacoits and after having gone in hiding he 613 had not lit his torch.
Yet he claims that he had identified the dacoits in the torch light.
He is also certain that no dacoit had muffled his face.
The appellants, according to him, had painted their faces but were not in a position to conceal their identity.
He admitted that 3 or 4 day prior to the incident, a Panchayat had been convened in which Sukhari Singh was asked to surrender the Tank but he said he would if Khobari Singh demolishes and surrenders the house built on the bank of the Tank first.
And further that when the Panchayat told Sukhari Singh that the house having been there for a long time, could not be demolished and even Khobari Singh was not agreeable to do so, all were angry with the accused persons on account of the Tank.
So far as Dhaniram Singh, P.W.11 is concerned, he too admits about the convening of the Panchayat 3 or 4 days earlier on which acount Sukhari Singh had nursed an angry feeling due to the happenings in the Panchayat.
With regard to the actual ocurrence, P.W. 11 says that when the first shot aimed at him had not hit him, and the second shot had been fired at his uncle, he then ran 25 30 steps and hid himself in the field of the wheat crop and while running he heard the firing of the third shot.
At that juncture he claimed to have kept lighting his torch now and then from the place of his hiding to see what was happening.
The point which rises for consideration is whether P.Ws2 and 11 could individually, with the aid of their respective torches, identify the dacoits which were 25 30 in number and would the dacoits let them be identified by letting them switch on their torches off and on as claimed ? Would these two wit nesses not have attracted attention of the dacoits to be taken care of in priority in their place of hiding ? It seems to us that seeing the formidable force of the dacoits and their number these two P.Ws. would have been so non pulsed that they would not have dared to betray their presence by switching on and off their torches especially when they were unarmed and were no match to the might of the dacoits.
These two witnesses do not claim that they could identify the dacoits by means other than their torches.
This part of the story of the prosecution obviously does not inspire confidence.
It is also worthy of notice that P.W.11 was injured on the head before he ran for safety.
That was enough to shake and frighten him.
But before the receipt of such injury he claims to have switched on his torch first and to have seen in the first glimpse the appellants and others.
But his flash of the torch was met instantaneously with numerous torch flashes by the dacoits and it was like day light as said by P.W.1 Bishwanath Chaubey.
It is 614 difficult in this situation to believe P.W. 11 that he could in a split second have such a perception so as to identify all the five appellants and some others, It is obvious and natural that behind a lit torch darkness prevails hiding the identify of the torch bearer and persons situated close.
So identity of the dacoits was not possible by P.W.11 Moreover it is ununder standable that when the dacoits had chosen dark hours for committing the dacoity, obviously to take advantage of the darkness, and when they were 25 30 in number, most of them unknown persons, where was the need for the appellants to be in the forefront to risk themselves for identification.
This view we are entertaining apart from what the High Court has opined that muffling of faces and concealment of identify by dacoits is not universally parac tised.
Thus in the facts and circumstances of the case, we entertain a grave doubt about the participation of the appellants in the crime because of the failure of the prose cution to lead convincing evidence about the identity of the appellants as dacoits.
There is even no corroboration worth the name in the form of recovery of fire arms and other weapons, or of the looted articles from the appellants, so as to lend some assurance to the particpation of the appel lants in the cirme.
It may well be that the motive asserted by the prosecution relating to the dispute about the pond may have given cause to Dhaniram Singh, P.W.11 to assume that the appellants were responsible for the dacoity commit ted in his house and for Hira Singh P.W. 2, to entertain that belief in a sweep.
For the foregoing reasons, we find it difficult to sustain the conviction of the appellants.
Accordingly, they are acquited of the charge.
The appeal is accepted.
| IN-Abs | The appellants, the victims of the dacoity and other prosecution witnesses were residents of the village, where the crime took place in the house of P.W.11.
The accused were closely related.
P.W. 11 's cousin and uncle were P.W. 3 and the deceased, respectively, and P.W. 2 was also a close relative of P.W. 11.
There was a simmering discontent between the family of P.W. 11 and the family of the accused, Sukhari Singh.
The accused Sukhari Singh claimed that a pond was bestowed of him by the erstwhile Zamindar before the coming into force of the Zamindari Abolition Act.
As the tank was under the control of the accused, he prevented the cattle of the villagers from drinking water from it.
3/4 days prior to the occurrence of dacoity, the Pan chayat of the village suggested to the accused Sukhari Singh to surrender the tank in the name of a Shiva temple.
The accused suggested to the Panchayat the place constructed and occupied by the complainant party, (the deceased and his relatives) for tying their cattle on the unsettled lands at the bank of the pond also should be likewise given to the Shiva temple.
The Panchayat was not agreeable to the counter suggestion of the accused.
It was the case of the prosecution that the dacoity was mastermined and made at the house of the complainant with a sole purpose to avenge.
On the night intervening 5th 6th April, 1970 the P.W. 11, the first informant and his cousin, P.W.3 and his uncle, the deceased were sleeping 606 on the cots lay spread in the outer courtyard of their house.
P.W. 11 was awaken by some noise as if some persons were coming.
He stood up and switched on his five cell torch and saw 20 25 dacoits armed with lathis, bhallas, garasas, and guns coming towards his house.
On his focussing the torch they stopped.
Then the dacoits also switched on their torches.
P.W.11 recognised in the torch light the accused inclusive of 5 appellants.
Accused sukhari Singh shouted, "kill kill." Accused Munni Singh fired with his gun at P. W. 11 but the gun fire did not his him.
While P.W. 11 was running, one of the dacoits hit him with a stick with an iron ring.
There was some oozing of blood but it was not profuse.
He ran for about 30 steps to get to his wheat field, which was about 2 to 3 feet below the level of his courtyard.
From there he saw the remaining part of the occurrence.
P.W. 11 's uncle was shot by the accused Munni Singh and he fell down Other dacoits who were near him started hitting him with spears.
One of the dacoits held a ladder in his hand, through which he climbed up to the roof of the inner house, from where he jumped into the female apartment and opened the outer door.
Then the dacoits entered the house and started looting and plundering.
Two dacoits scolded his cousin P.W. 3 to keep lying down on his cot.
In the occurrence, P.W.3 received no injury.
The dacoits were active for about 15 to 20 minutes.
On hearing the noise and commotion of the vil lagers, the dacoits decamped with the looted goods.
Some of the villagers followed them to some distance but the dacoits kept firing on them.
With the result that some of them were injured.
P.W. 11 's uncle and other injured persons were removed to be taken to the hospital, but P.W. 's uncle died on the way.
Then P.W.11 proceeded to the Police Station, taking the dead body of his uncle with him, and lodged F.I.R. P.W.12 went to the spot and saw the evidence of dacoity in the form of thing lying scattered and some of the articles left behind by the dacoits.
He had the injured persons examined medically.
He arrested the accused persons Finally investigation was completed by another officer and the accused persons were put up for trial.
The matter went to trial under the old Code of Criminal Procedure before the First Additional Sessions Judge against the 6 named persons and one other.
There were commitment proceedings before a Magistrate 607 in which evidence was recorded.
At the commitment stage, 10 persons were put to face the enquiry, out of which three accused died.
There remained 6 of the original accused named in the F.I.R. and one more, not so named to face trial.
The trial court convicted all the 7 accused under Section 396, IPC and imposed on them a sentence of life imprisonment.
On appeal, the High Court acquitted two of them, namely Ram Narain Singh, the one unnamed in the F.I.R. and one Charittar Ahir, one of the so named and maintained the convictions of other accused.
This appeal by special leave was by the other accused challenging the judgment of the High Court, Allowing the appeal of the accused, this Court, HELD : 1. 01.
The prosecution had four sets of witnesses which could establish identity of the dacoity.
Three sets became redundant and only on the basis of one set was identity of the appellants established.
The first set consisted of three injured persons who were not examined at the trial by the prosecution.
This set did not help the prosecution at all.
The second set consisted of the evidence of P.W. 3, P.W.4 and P.W.9.
The names of P.Ws.4 and 9 were not mentioned in the F.I.R. and their evidence was left out of consideration by the Courts below.
Statement of P.W. 3 was left aside by the High Court.
In the third set was the evidence of P.W.I P.W.5 and P.W.8, who did not identify any of the dacoits.
None of these witnesses was declared hos tile.
Thus their evidence rather goes adverse to the prose cution.
The fourth set consisted of evidence of P.W.2 and P.W.11 whose evidence has been relied upon by the High Court to identify the 5 appellants and on the basis of the very same evidence two co accused, were acquitted because P.W.2 named one and excluded the other and P.w.11 named the other one and excluded the former giving rise to a doubt about the complicity of those two.
[611 612D] 1.02.
Seeing the formidable force of the dacoits and their number, the two P.Ws.2 and 11 would have been so non pulsed that they would not have dared to betray their presence by switching on and off their torches especially when they were unarmed and were no match to the might of the dacoits.
These two witnesses do not claim that they could identify the 608 dacoits by means other than their torches.
This part of the story of the prosecution obviously does not inspire confi dence.
It is also worthy of notice that P.W.11 was injured on the head before he ran for safety.
That was enough to shake and frighten him.
But before the receipt of such injury he claims to have switched on his torch first and to have seen in the first glimpse the appellants and others.
But his flash of the torch was met instantaneously with numerous torch flashes by the dacoits and its was like day light as said by P.W.1.
[613 F H] 1.03.
It is difficult in the situation to believe P.W.11 that he could in a split second have such a perception so as to identify all the five appellants and some others.
It is obvious and natural that behind a lit torch darkness prevails hiding the identity of the torch bearer and persons situated close.
So identity of the da coits was not possible by P.W.11.
[613 H614 A] 1.04.
In the facts and circumstances of the case, there is a grave doubt about the participation of the appel lants in the crime because of the failure of the prosecution to lead convincing evidence about the identity of the appel lants as dacoits.
There is even no corroboration worth the name in the form of recovery of fire arms and other weapons, or of the looted articles from the appellants, so as to lend some assurance to the participation of the appellants in the crime.
It may well be that the motive asserted by the prose cution relating to the dispute about the pond may have given cause to P.W.11 to assume that the appellants were responsi ble for the dacoity committed in his house and for P.W.2, to entertain that belief in a sweep.
[614 C E]
|
Appeal No. 152 of 1955.
Appeal by special leave from the judgment and order dated March 25, 1953, of the Jammu and Kashmir High Court in Civil First Appeal No. 4 of 2009.
N.C. Chatterjee, Gopi Nath Kunzru and Naunit Lal, for the appellants.
H.N. Sanyal, Additional Solicitor General of India, Jaswant Singh, Advocate General for the State of Jammu and Kashmir, R. H. Dhebar and T. M. Sen, for the respondent.
March 2.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
This appeal by special leave arises from a suit filed by the appellant in a representative capacity (Civil Suit No. 4 of 2008) against the State of Jammu & Kashmir praying for a declaration that the Jammu & Kashmir Big Landed Estate Abolition Act, XVII of 2007 (hereinafter called the Act) is void, inoperative and ultra vires of Yuvaraj Karan Singh who enacted it and for a further declaration that the appellant was entitled to retain the peaceful possession of his lands.
273 It appears that the validity of the Act was similarly challenged by Maghar Singh by his suit filed on the Original Side of the High Court of Jammu & Kashmir (Civil Suit No. 59 of 2007); and Mr. Justice Kilam who had heard the said suit had rejected the plaintiff 's contentions and held that the Act was valid.
When the appellant ' suit came for trial before the District Court it was conceded on his behalf that the points raised by him against the validity of the Act had been decided by Mr. Justice Kilam and that, in view of the said decision, the appellant could not usefully urge anything more before the District Court.
The learned District Judge who was bound by the decision of Mr. Justice Kilam applied it to the suit before him and held that the Act was valid and that the appellant was not entitled to the two declarations claimed by him.
In the result the appellant 's suit was dismissed.
Against this decree the appellant preferred an appeal in the High Court of Jammu & Kashmir (Civil Appeal No. 4 of 2009).
Maghar Singh whose suit had been dismissed by Mr. Justice Kilam had also preferred an appeal (No. 29 of 2008) before the High Court.
The two appeals were heard together by a Division Bench of the High Court which held that the Act was valid and that the appellants were not entitled to any declaration claimed by them.
Both the appeals were accordingly dismissed.
Against the decree passed by the High Court dismissing his appeal the appellant applied to the High Court for leave to appeal to this Court.
The said application was, however, dismissed.
Thereupon the appellant applied for, and obtained, special leave to appeal to this Court.
In dealing with this appeal it is necessary to narrate in some detail the events which took place in Kashmir and the constitutional changes which followed them in order to appreciate fully the background of the impugned legislation.
A clear understanding of this background will help us to deal with the appellant 's case in its proper perspective.
In 1925 Maharaja 35 274 Hari Singh succeeded Maharaja Pratap Singh as the Ruler of Kashmir.
It appears that for some time prior to 1934 there was public agitation in Kashmir for the establishment of responsible government.
Presumably as a sequel to the said agitation Maharaja Hari Singh issued Regulation 1 of 1991 (1934).
The Regulation began with the statement of policy that it was the declared intention of the Maharaja to provide for the association of his subjects in the matter of legislation and the administration of ' the State and that it was in pursuance of the said intention that the Regulation was being promulgated.
This Regulation consisted of 46 sections which dealt with the legislative, executive and judicial powers of the Maharaja himself, referred to the subjects which should be reserved from the operation of the Regulation, made provision for the constitution of the Legislature of the State, conferred authority on the Council to make rules for specified purposes and referred to other relevant and material topics.
It is relevant to refer to only two sections of this Regulation.
Section 3 provides that all powers legislative, executive and judicial in relation to the State and its government are hereby declared to be, and to have been always, inherent in and possessed and retained by His Highness the Maharaja of Jammu & Kashmir and nothing contained in the Regulation shall affect or be deemed to have affected the right and prerogative of His Highness to make and pass regulations, proclamations and ordinances by virtue of his inherent power.
Section 30 lays down that Do measure shall be deemed to have been passed by the Praja Sabha until and unless His Highness has signified his assent thereto.
The Regulation leaves it to the absolute discretion of His Highness whether to assent to such a measure or not.
Five years later the Maharaja promulgated the Jammu & Kashmir Constitution Act 14 of 1996 (1939).
From the preamble to this Constitution it appears that, before its promulgation, the Maharaja had issued a proclamation on February 11, 1939, in which he had announced his decision as to the further steps to 275 be taken to enable his subjects to make orderly progress in the direction of attaining the ideal of active co operation between the executive and the Legislature of the State in ministering to the maximum happiness of the people.
In accordance with this desire the text of the Constitution contained in Regulation 1 of 1991 was thoroughly overhauled and an attempt was made to bring the amended text into line with that of similar Constitutions of its type.
This Con stitution is divided into six parts and includes 78 sections.
Part 1 is introductory.
Part 2 deals with the executive; Part 3 with the Legislature; Part 4 with the Judicature; Part 5 contains miscellaneous provisions; and Part 6 provides for repeal and saving and includes transitional provisions.
It is significant that section 5 of this Act, like section 3 of the earlier Regulation, recognises and preserves all the inherent powers of His Highness, while section 4 provides that the State was to be governed by and in the name of His Highness, and all rights, authority and jurisdiction which appertain or are incidental to the government of the State are exercisable by His Highness except in so far as may be otherwise provided by or under the Act or as may be otherwise directed by His Highness.
The other provisions of the Act are all subject to the over riding powers of His Highness specifically preserved by section 5.
As we will point out later on, in substance the Constitutional powers of the Maharaja under the present Act were exactly the same as those under the earlier Act.
While the State of Jammu & Kashmir was being governed by the Maharaja and the second Constitution as amended from time to time was in operation, political events were moving very fast in India and they culminated in the passing of the Indian Independence Act, 1947.
Under section 7 (1) (b) of this Act the suzerainty of His Majesty over the Indian States lapsed and with it lapsed all treaties and agreements in force at the date of the passing of the Act between His Majesty and the Rulers of the Indian States, all obligations of His Majesty existing at that date towards Indian States or the Rulers thereof, and all powers, 276 rights, authority or jurisdiction exercisable by His Majesty at that date in or in relation to Indian States by treaty, grant, usage, sufferance or otherwise.
The proviso to the said section, however, prescribed that, notwithstanding anything in para.
(b), effect shall, as nearly as may be, continue to be given to the provisions of any such agreement as therein referred to in relation to the subjects enumerated in the proviso or other like matters until the provisions in question are denounced by the Ruler of the Indian State on the one hand or by the Dominion or Province concerned on the other hand, or are superseded by subsequent agreements.
Thus, with the lapse of British paramountcy the State of Jammu & Kashmir, like the other Indian States, was theoretically free from the limitations imposed by the said paramountcy subject to the provisions of the proviso just mentioned.
On October 22, 1947, the tribal raiders invaded the territory of the State; and this invasion presented a problem of unprecedented gravity before the Maharaja.
With the progress of the invading raiders the safety of the State was itself in grave jeopardy and it appeared that, if the march of the invaders was not successfully resisted, they would soon knock at the doors of Srinagar itself.
This act of aggression set in motion a chain of political events which ultimately changed the history and political constitution of Kashmir with unexpected speed.
On October 25, 1947, the Maharaja signed an Instrument of Accession with India which had then become an Independent Dominion.
By the First Clause of the Instrument the Maharaja declared that he had acceded to the Dominion of India with the intent that the Governor General of India, the Dominion, Legislature, the Federal Court and any other Dominion Authority established for the purpose of the Dominion shall, by virtue of the Instrument of Accession, subject always to the terms thereof and for the purposes only of the Dominion, exercise in relation to the State of Jammu & Kashmir such functions as may be vested in them by or under the Government of India Act, 1935, as in force in the Dominion of India on August 15, 1947.
277 We may usefully refer to some other relevant clauses of this Instrument.
By el. 3 the Maharaja agreed that the matters specified in the Schedule attached to the Instrument of Accession were the matters with respect to which the Dominion Legislature may make laws for this State.
Clause 5 provides that the Instrument shall not be varied by any amendment of the Government of India Act, 1935, or of the Indian Independence Act, 1947, unless such amendment is accepted by the Maharaja by an Instrument supplementary to the original Instrument of Accession.
By el. 7 it was agreed that the Maharaja would not be deemed to be committed to the acceptance of any future Constitution of India nor would his discretion be fettered to enter into agreements with the Government of India under any such future Constitution.
Clause 8 is very important.
It says that nothing in the Instrument affects the continuance of the Maharaja 's sovereignty in and over his State, or, save as provided by or under the Instrument, the exercise of any powers, authority and rights then enjoyed by him as Ruler of the State, or the validity of any law then in force in the State.
The Schedule attached to the Instrument refers to four topics, defence, external affairs, communications and ancillary, and under these topics twenty matters have been serially enumerated as those in respect of which the Dominion Legislature had the power to make laws for the State.
Thus, by the Instrument of Accession, the Maharaja took the very important step of recognising the fact that his State was a part of the Dominion of India.
Meanwhile,, the invasion of the State had created tremendous popular fervour and patriotic feelings in resisting the act of aggression and this popular feeling inevitably tended to exercise pressure on the Maharaja for introducing responsible and popular government in the State.
The Maharaja tried to pacify the popular demand by issuing a proclamation on March 5, 1948.
By this proclamation he stated that in accordance with the traditions of his dynasty he had from time to time provided for increasing association of his people with the administration of the State with the object of 278 realising the goal of full responsible government at as early a date as possible, and he added that he had noted with gratification and pride the progress made so far and the legitimate desire of his people for the immediate establishment of a fully democratic constitution based on adult franchise with a hereditary Ruler from his dynasty as the constitutional head of an executive responsible to the Legislature.
It appears that before this proclamation was issued the Maharaja had already appointed Sheikh Mohammed Abdullah who was then the popular leader of the people as the head of the emergency administration.
By the pro clamation the Maharaja replaced the emergency administration by a popular interim government and provided for its powers, duties and functions pending the formation of a fully democratic constitution.
Clause 1 of the proclamation provides for the composition of the Ministry, whereas by cl. 2 the Prime Minister and other ministers are required to function as a cabinet and act on the principle of joint responsibility.
A Dewan appointed by the Maharaja is to be a member of the Cabinet.
Clause 4 provides that the Council of Ministers shall take appropriate steps, as soon as resto ration of normal conditions has been completed, to convene a National Assembly based on adult franchise having due regard to the principle that the number of representatives from each voting area should, as far as practicable, be proportionate to the population of that area.
Clause 5 then lays down that the Constitution to be framed by the National Assembly shall provide adequate safeguards for the minorities and contain appropriate provisions guaranteeing freedom of conscience, freedom of speech and freedom of assembly.
Clause 6 states that when the work of framing the Constitution is completed by the National Assembly the Constitution would be submitted through the Council of Ministers to the Maharaja for his acceptance.
The proclamation ended with the expression of hope that the formation of a popular interim government and the inauguration in the near future of a fully democratic Constitution would ensure the contentment, happiness and the moral and material advancement 270 of the people of the State.
Through under this proclamation a popular interim government was set up, the constitutional position still was that the popular government had theoretically to function under the Constitution of 1939.
It appears that before the popular government was thus installed in office the Maharaja had deputed four representatives of the State to represent the State in the Constituent Assembly called in the Dominion of India to frame the Constitution of India.
After the popular interim government began to function the political events in the State gathered momentum and the public began to clamour for the framing of a democratic Constitution at an early date.
When the atmosphere in the State was thus surcharged, the Maharaja issued his final proclamation on June 20, 1949, by which he entrusted to Yuvaraj Karan Singh Bahadur all his powers and functions in regard to the government of the State because he had decided for reasons of health to leave the State for a temporary period.
" Now therefore I hereby direct and declare ", says the proclamation, " all powers and functions whether legislative, executive or judicial which are exercisable by me in relation to the State and its government including in particular my right and prerogative of making laws, of issuing proclamations, orders and ordinances, or remitting, commuting or reducing sentences and of pardoning offenders, shall, during the period of my absence from the State, be exercisable by Yuvaraj Karan Singh Bahadur ".
As subsequent events show this was the last official act of the Maharaja before he left the State.
After Yuvaraj Karan Singh took the Maharaja 's place and began to function under the powers assigned to him by the said proclamation, the interim popular government installed earlier was functioning as before.
On November 25, 1949, Yuvaraj Karan Singh issued a proclamation by which he declared and directed that the Constitution of India shortly to be adopted by the Constituent Assembly of India shall, in so far as it is applicable to the State of Jammu & Kashmir, govern the constitutional relationship between 280 the State and the contemplated Union of India and shall be enforced in the State by him, his heirs and successors in accordance with the tenor of its provisions.
He also declared that the provisions of the said Constitution shall, as from the date of its commencement, supersede and abrogate all other constitutional provisions inconsistent therewith which were then in force in the State.
The preamble to this proclamation shows that it was based on the conviction that the best interests of the State required that the constitutional relationship established between the State and the Dominion of India should be continued as be tween the State and the contemplated Union of India; and it refers to the fact that the Constituent Assembly of India which had framed the Constitution of India included the duly appointed representatives of the State and that the said Constitution provided a suitable basis to continue the constitutional relationship between the State and the contemplated Union of India.
On January 26, 1950, the Constitution of India came into force.
This proclamation was followed by the Constitution (Application to Jammu & Kashmir) Order, 1950 (C. O. 10) which was issued on January 26, 1950, by the President in consultation with the Government of Jammu & Kashmir and in exercise of the powers conferred by cl.
(1) of article 370 of the Constitution.
It came into force at once.
Clause (2) of this order provides that for the purposes of sub cl.
(i) of article 370 of the Constitution, the matters specified in the First Schedule to the Order correspond to matters specified in the Instrument of Accession governing the accession of the State of Jammu & Kashmir to the Dominion of India as the matters with regard to which the Dominion Legislature may make laws for that State; and accordingly the power of Parliament to make laws for that State shall be limited to the matters specified in the said First Schedule.
Clause (3) provides that, in addition to the provisions of article 1 and article 370 of the Constitution the only other provisions of the Constitution which shall apply to the State of Jammu & Kashmir shall be those specified in the 281 Second Schedule to the Order and shall so apply subject to the exceptions and modifications specified in the said Schedule.
The First Schedule to the Order specified 96 items occurring in the Union List; while the Second Schedule set out the Articles of the Constitution made applicable to the State together with the exceptions and modifications.
Later on we will have occasion to refer to some of these Articles on which the appellant has relied.
It appears that, after the interim popular Government took office, the Revenue Minister made a statement of policy at a meeting of the special staff of revenue officers held in the Governor 's office on August 13, 1950.
The Minister stated that whatever the difficulties, the Cabinet was determined to go ahead and transfer the proprietorship of the land to the tiller.
The main idea underlying the proposed agricultural reform was that a land lord shall not possess more than 20 acres of agricultural land.
In addition, he would be allowed 8 kanals for his use and Sagzar and 4 kanals for his second house if in existence, and 10 kanals for Bedzar or Safedzar.
It was contemplated that a committee would be appointed to settle the details and other matters incidental to the said agricultural plan.
It was presumably in pursuance of this plan adopted by the interim Cabinet that the Act was promulgated by Yuvaraj Karan Singh on October 17, 1950.
The preamble to the Act shows that it was promulgated because no lasting improvement in agricultural production and efficiency was possible without the removal of the intermediaries between the tiller of the soil and the State, and so for the purpose of improving agricultural production, it was expedient to provide for the abolition of such proprietors as own big landed estates and to transfer the land held by them to the actual tiller.
The Yuvaraj enacted the law in exercise of the powers vested in him under section of the.
Constitution Act of 1996 and the 'proclamation issued by Maharaja Hari Singh on June 20, 1949.
The Act consists of 47 sections and purports to, carry out its 36 282 policy of improving the agricultural production of the State by providing for the extinction of the proprietors ' titles and the transfer of the lands to the tillers, and by setting up a self contained machinery for the carry ing out of the scheme of the Act and for settlement of all incidental disputes arising thereunder.
For the purpose of this appeal, however, it is necessary to refer to a few relevant sections which deal with the broad features of the extinction of the proprietors ' rights and the transfer of lands to the tillers.
section 2 of the Act inter alia defines land, proprietor and tiller, while section 3 excludes certain specified lands from the operation of the Act.
Section 4, sub section
(1) provides for the extinction of the right of ownership in certain lands and it lays down that not withstanding anything contained in any law for the time being in force, the right of ownership held by a proprietor in land other than the land mentioned in sub section
(2) shall, subject to the other provisions of the Act, extinguish and cease to vest in him from the date the Act comes into force.
Sub section (2) of section 4 enumerates lands which are excluded from the operation of sub section
They are (a) units of land not exceeding 182 kanals including residential sites, Bedzars and Safedzars, (b) Kahikrishmi areas, Araks, Kaps and unculturable wastes including those used for raising fuel or fodder, and (c) orchards.
The proviso to sub section
(2) gives government the power to dispose of lands mentioned in cl.
(b) in such a manner as may be recommended by the committee to be set up for that purpose.
Section 26 of the Act deals with the question of payment to the proprietors.
It provides that there shall, until the Constituent Assembly of the State settles the question of compensation, with respect to the land expropriated under this Act, be paid by the government to every proprietor who has been expropriated, an annuity in the manner indicated in the section.
In other words, subject to the final decision of the Constituent Assembly, section 26 contemplates the payment of annuity to the expropriated proprietors according to the scale prescribed in the section.
With the rest of the sections we are not concerned in the present appeal.
283 After the Act was enacted by the yuvaraj he issued a proclamation on April 20, 1951, directing that a Constituent Assembly consisting of representatives of the people elected on the basis of adult franchise shall be constituted forthwith for the purpose of framing a Constitution for the State of Jammu & Kashmir.
The proclamation sets out the manner in which members of the said Constituent Assembly would be elected and makes provisions for the holding of the said elections.
It also authorised the Constituent Assembly to frame its own agenda and make rules for regulating its procedure and the conduct of its business.
The preamble to this proclamation shows that the Yuvaraj was satisfied that it was the general desire of the people that a Constituent Assembly should be brought into being for the purpose of framing a Constitution for the State and that it was commonly felt that the convening of the said Assembly could no longer be delayed without detriment to the future well being of the State.
The Yuvaraj also felt no doubt that the proclamation issued by the Maharaja on March 5, 1948, in regard to the convening of the national assembly as per cls.
4 to 6 no longer met the requirements of the situation in the State.
Thus this proclamation was intended to meet expeditiously the popular demand for the framing of a democratic constitution ; and it indicates that a decisive stage bad been reached in the political history of the State.
In accordance with this proclamation a Constituent Assembly was elected and it framed the Constitution for the State.
By the Constitution thus framed the hereditary rule of the State was abolished, and a provision was made for the election of a Sadar i Riyasat to be at the head of the State.
On November 13, 1952, the Yuvaraj was elected to the office of the Sadar i Riyasat and with his election the dynastic rule of Maharaja Hari Singh came to an end.
On November 15, 1952, the Constitution (Application to Jammu & Kashmir) Second Amendment Order, 1952 (C. O. 43) was issued; and it came into force on November 17, 1952.
By this Order the earlier Order of 1950 was amended as a result of which all references 284 in the said Order to the Rajpramukh shall be construed as references to the Sadar i Riyasat of Jammu & Kashmir.
Similarly in the Second Schedule to the said Order some amendments were made.
On the ,same day a Declaration (C. O. 44) was made by the President under article 370, sub article
(3) of the Constitution that from November 17, 1952, the said article 370 shall be operative with the modification that for the explanation in el.
(1) thereof the new explanation shall be substituted.
The effect of this new explanation was that the government of the State meant the person for the time being recognised by the President, on the recommendation of the Legislative Assembly of the State, as the Sadar i Riyasat of Jammu & Kashmir acting on the advice of the Council of Ministers of the State for the time being in force.
On November 18, 1952, Yuvaraj Karan Singh was recognised as the Sadar i Riyasat of Jammu & Kashmir.
On May 14, 1954, another Constitution (Application to Jammu & Kashmir) Order (C. O. 48) was made by the President which inter alia applied article 31A and 31B to the State with certain modifications and included the Act in the Ninth Schedule of the Constitution.
The last two Orders were issued subsequent to the enactment of the Act and so they would have no bearing on the decision of the points raised before us.
We have briefly referred to them for the sake of completing the narrative of the material events.
The validity of the Act is impeached mainly on the ground that Yuvaraj Karan Singh had no authority to promulgate the said Act.
It is this argument which has been urged before us by Mr. Chatterjee in different and alternative forms that needs careful examination.
The first attack against the competence of Yuvaraj Karan Singh proceeds on the assumption that at the time when Maharaja Hari Singh conveyed his powers to Yuvaraj Karan Singh by his proclamation of June 20, 1949, he was himself no more than a constitutional monarch and as such he could convey to Yuvaraj Karan Singh no higher powers.
Let us first deal with this argument.
Prior to the passing of the Independence Act, 1947, the sovereignty of Maharaja 285 Hari Singh over the State of Jammu & Kashmir was subject to such limitations as were constitutionally imposed on it by the paramountcy of the British Crown and by the treaties and agreements entered into between the Rulers of the State and the British Government.
It cannot be disputed that so far as the internal administration and governance of the State were concerned Maharaja Hari Singh, like his predecessors, was an absolute monarch ; and that all powers legislative, executive and judicial in relation to his State and its governance inherently vested in him.
This position has been emphatically brought out by section 3 of Regulation 1 of 1991 (1934).
Though by this Regulation Maharaja Hari Singh gave effect to his intention to provide for the association of his subjects in the matter of legislation and administration of the State, by section 3 he fully preserved in himself all of his pre existing legislative, executive and judicial powers.
Section 3 not only preserves the said powers but expressly provides that nothing contained in the Regulation shall affect or be deemed to have affected the right and prerogative of His Highness to make and pass regulations, proclamations and ordinances by virtue of his inherent authority.
It is thus clear that the rest of the provisions of the Regulation were subject to the overriding powers preserved by His Highness.
It is, however, urged that this constitutional position was substantially altered by the subsequent Constitution Act of 1996 (14 of 1996).
We are unable to accept this argument.
Sections 4 and 5 of this Act in terms continue to preserve all the powers legislative, executive and judicial as well as the right and prerogative of His Highness just as much as section 3 of Regulation 1 of 1991.
It is significant that the provisions of Pt.
II which deals with the executive, like those of Pt.
III which deals with the Legislature, begin with the express provision that they are subject to the provisions of sections 4 and 5.
In other words, the powers conferred on the executive and the Legislature, limited and qualified as they are, are made expressly subject to the overriding powers of His Highness, 286 Besides, there are specific provisions in the Act which clearly emphasise the preservation of the said powers.
Section 24 which enumerates the reserved matters over which the Praja Sabha had no authority to legis late provides by cl.
(i) that the provisions of the Act and the rules made thereunder and their repeal or modifications constitute reserved matters.
Besides cl.(j) confers on His Highness the authority to add other specified matters to the list of reserved matters from time to time.
These provisions make it clear that his Highness could enlarge the list of reserved matters thereby limiting the jurisdiction of the Praja Sabha.
Similarly the legislative procedure prescribed by section 31, sub sections
(2) and (3) clearly shows that it is only such bills as received the assent of His Highness that be came law, His Highness 's power to assent or not to assent to the bills submitted to him being absolutely unfettered.
The ordinances issued by His Highness under section 38 cannot be repealed or altered by the Praja Sabha by virtue of section 39 ; and lastly section 72 expressly preserves the inherent power and prerogative of His Highness.
Thus there can be no doubt that though this Act marked the second step taken by His Highness in actively associating his subjects with the ad ministration of the State, it did not constitute even a partial surrender by His Highness of his sovereign rights in favour of the Praja Sabha.
So far as the said powers are concerned, the constitutional position under this Act is substantially the same as under the earlier Act.
It is contended by Mr. Chatterjee that the prerogative rights which are preserved by sections 5 and 72 of this Act represent only such rights as had not been entrusted to the Praja Sabha and in support of this contention he referred us to the observation made by Dicey that " the discretionary authority of the Crown originates generally not in Act of Parliament, but in the prerogatives term which has caused more perplexity to students than any other expression referring to the constitution.
The prerogative appears to be both historically and as a matter of actual fact nothing else than the residue of discretionary or arbitrary 287 authority, which it any given time is legally left in the hands of the Crown"(1).
This observation has been cited with approval by the House of Lords in the case of Attorney General vs De Keyser 's Royal Hotel Ltd. (2).
We do not see how this statement can assist us in determining the constitutional status, and the extent of the powers, of Maharaja Hari Singh in relation to the governance of the State.
The said discussion in Dicey 's treatise has reference to the special features of the history of English constitutional development; and it would naturally be of no relevance in dealing with the effect of the Constitution of 1996 with which we are concerned.
As we have just indicated this Constitution emphatically brings out the fact that the Maharaja was an absolute monarch and in him vested all the legislative, executive and judicial powers along with the prerogative rights mentioned in sections 5 and 72.
Whilst this was the true constitutional position the Independence Act, 1947, was passed by the British Parliament; and with the lapse of the British paramountcy the Rulers of Indian States were released from the limitations imposed on their sovereignty by the said paramountcy of the British Crown and by the treaties in force between the British Government and the States; this was, however, subject to the proviso prescribed by section 7 of the Independence Act under which effect had to be given to the provisions of the agreements specified in the proviso, until they were denounced by the Rulers of the States or were superseded by subsequent agreements.
In the result, subject to the agreements saved by the proviso, Maharaja Hari Singh continued to be an absolute monarch of the State, and in the eyes of international law he might conceivably have claimed the status of a sovereign and independent State.
But it is urged that the sovereignty of the Maharaj was considerably affected by the provisions of the Instrument of Accession which he signed on October 25, 1947.
This argument is clearly untenable.
It is true that by cl.
I of the (1) Dicey on " Law of the Constitution ", 9th Ed., P. 424.
(2) ; , 526.
288 Instrument of Accession His Highness conceded to the authorities mentioned in the said clause the right to exercise in relation to his State such functions as may be vested in them by or under the Government of India Act, 1935, as in force in the said Dominion on August 15, 1947, but this was subject to the other terms of the Instrument of Accession itself; and el. 6 of the Instrument clearly and expressly recognised the continuance of the sovereignty of His Highness in and over his State.
We must, therefore, reject the argument that the execution of the Instrument of Accession affected in any manner the legislative, executive and judicial powers in regard to the government of the State which then vested in the Ruler of the State.
There is one more argument which has been urged before us on the question of Maharaja Hari Singh 's powers.
It is said that when Maharaja Hari Singh issued his proclamation on March 5, 1948, replacing the emergency administration by a popular interim government headed by Sheikh Mohammad Abdullah and constituting a Council of Ministers who were to function as a Cabinet and act on the principle of joint responsibility, he virtually introduced a popular democratic government in the State, surrendered his sovereign rights, and became a constitutional monarch.
There is no substance in this argument.
The proclamation merely shows that, under pressure of public opinion and as a result of the difficult and delicate problem raised by the tribal raid, the Maharaja very wisely chose to entrust the actual administration of the government to the charge of a popular Cabinet; but the description of the Cabinet as a popular interim government did not make the said Cabinet a popular Cabinet in the true constitutional sense of the expression.
The Cabinet had still to function under ,the Constitution Act 14 of 1996 (1939) and whatever policies it pursued, it had to act under the overriding powers of His Highness.
It is thus clear that until the Maharaja issued his proclamation on June 20, 1949, all his powers legislative, executive and judicial as well as his right and prerogative vested in him as before.
That is why the argument that Maharaja, 289 Hari Singh had surrendered his sovereign powers in favour of the Praja Sabha and the popular interim government, thereby accepting the status of a constitutional monarch cannot be upheld.
The next point which calls for our decision is .
What was the effect of the proclamation issued by Maharaja Hari Singh in favour of Yuvaraj Karan Singh on June 20, 1949 ? The terms of this proclamation have already been set out by us.
There is no doubt that, during the temporary period that the Maharaja wanted to leave the State for reasons of health, he conferred on Yuvaraj Karan Singh all his powers and functions in regard to the government of the State.
Since the Maharaja was himself an absolute monarch, there was no fetter or limitation on his power to appoint somebody else to exercise all or any of his powers.
There was no authority or tribunal in the State which could question his right or power to adopt such a course.
As Chief Justice Kania has observed in Re: (1) " A legislative body which is sovereign like an autocratic Ruler has power to do anything.
It may, like a Ruler, by an individual decision, direct that a certain person may be put to death or a certain property may be taken over by the State.
A body of such character may have power to nominate someone who can exercise all its powers and make all its decisions.
This is possible to be done because there is no authority or tribunal which can question the right or power of the authority to do so ".
Similarly, Mahajan, J., has observed in the same case that " The Parliament being a legal omnipotent despot, apart from being a legislature simpliciter, it can in exercise of its sovereign power delegate its legislative functions or even create new bodies conferring on them power to make laws "; and the learned Judge added that " whether it exercises its power of delegation of legislative power in its capacity as a mere legislature or in its capacity as an omnipotent despot, it is not possible to test it on the touchstone of judicial precedent or judicial scrutiny as courts of justice in England cannot inquire into it ".
In his judgment Mukherjea J., has also made similar (1)[1951] S.C.R. 747.
766, 889, 969.
37 290 observations after quoting the words of Sir Edward Coke in regard to the " transcendent and absolute power and jurisdiction of Parliament ".
What is true of the British Parliament would be truer about an absolute and despotic monarch, the exercise of whose J. paramount power as a sovereign is not subject to any popular and legislative control.
If that be the true position, the proclamation issued by Maharaja Hari Singh authorising Yuvaraj Karan Singh to exercise all his powers would clothe him with all such powers and he would be in the same position as his father so long as the proclamation stood.
Besides, it would be permissible to observe that though the proclamation purports to have been issued on the ground that Maharaja Hari Singh was leaving the State for a temporary period for reasons of health, it was clear even then that the temporary departure of the Maharaja really meant his permanent retirement from the State.
It was realised by him as much as by his subjects that to face the stress and strain caused by the unusual problems raised by the act of aggression against the State, it was necessary that he should quit and young Yuvaraj Karan Singh should take his place.
Thus considered the proclamation really amounted to his abdication and installation by him of Yuvaraj Karan Singh as the Ruler of the State.
It is, however, not necessary to consider any further this aspect of the matter in dealing with the authority of Yuvaraj Karan Singh, because, as we have just held, Maharaja Hari Singh was competent to delegate his powers to Yuvaraj Karan Singh for a temporary period as his proclamation purported to do; and by virtue of such delegation, Yuvaraj Karan Singh was clothed with all the authority which his father possessed as the Ruler of the State until the proclamation was revoked.
Therefore the argument that Maharaja Hari Singh 's proclamation issued on June 20, 1949, did not confer on Yuvaraj Karan Singh the specified powers cannot be accepted.
The next contention is that the powers of Yuvaraj Karan Singh were substantially limited by the proclamation issued by him on November 25, 1949.
We are not impressed even by this argument.
By this 291 proclamation Yuvaraj Karan Singh purported to make applicable to his State the Constitution of India which was shortly going to be adopted by the Constituent Assembly of India in so far as was applicable; in other words, this proclamation did not carry the constitutional position any further than where it stood after and as a result of the execution of the Instrument of Accession by Maharaja Hari Singh.
It is thus clear that the proclamation did not affect Yuvaraj Karan Singh 's authority and powers as the Ruler of the State which had been conferred on him by the proclamation of his father issued in that behalf.
Mr. Chatterjee, however, has very seriously pressed before us his contention that, as a result of the application of certain specified articles of the Constitution to the State of Jammu & Kashmir, all vestiges of sovereignty which Yuvaraj Karan Singh could have claimed had vanished; and in consequence he had become merely a constitutional monarch of the State without any legislative authority or powers.
Indeed it is this part of the case on which Mr. Chatterjee placed considerable emphasis.
In this connection, it would be relevant to recall that by the Constitution Order 10, in addition to the provisions of article 1 and article 370, certain other provisions of the Constitution were made applicable to the State with exceptions and modifications as specified in the Second Schedule.
Articles 245, 254 and 255 as well as article 246 as modified from Pt.
XI of the Constitution were applied to the State.
Similarly from Pt.
XIX article 366 was applied, and from Pt.
XXI articles 370 and 385 were applied.
In this connection it is also necessary to bear in mind that Pt.
VI which deals with the States in Pt.
A of the First Schedule has not been applied, nor has Pt.
VII which consisted of article 238 been applied.
article 238 provides for the application of provisions of Pt.
VI to States in Pt.
B of the First Schedule.
Schedule Seven which consists of the three Legislative Lists has also not been applied.
It is thus clear that though by the application of article I the State became a part of the territory of India and con stituted a State under Part B, the provisions of 292 Pt.
VI and Pt.
VII did not apply to it nor did the Schedule prescribing the three Legislative Lists.
This fact is of considerable importance and significance in dealing with the appellant 's contention.
Since Mr. Chatterjee has strongly relied on the application of article 370 of the Constitution to the State in support of his argument that the Yuvaraj bad ceased to hold the plenary legislative powers, it is necessary to examine the provisions of this Article and their effect.
This Article was intended to make temporary provisions with respect to the State of Jammu & Kashmir.
It reads thus: " article 370: (1) Notwithstanding anything in this Constitution, (a)the provisions of article 238 shall not apply in relation to the State of Jammu & Kashmir; (b)the power of Parliament to make laws for the said State shall be limited to (i)those matters in the Union List and the Con current List which, in consultation with the Government of the State, are declared by the President to correspond to matters specified in the Instrument of Accession governing the accession of the State to the Dominion of India as the matters with respect to which the Dominion Legislature may make laws for that State; and (ii)such other matters in the said Lists as, with the concurrence of the Government of the State, the President may by order specify.
Explanation.
For the purposes of this article, the Government of the State means the person for the time being recognised by the President as the Maharaja of Jammu and Kashmir acting on the advice of the Council of Ministers for the time being in office under the Maharaja 's Proclamation dated the fifth day of March, 1948; (c)the provisions of article I and of this article shall apply in relation to that State; (d)such of the other provisions of this Constitution shall apply in relation to that State subject to such exceptions and modifications as the President may by order specify; 293 Provided that no such order which relates to the matters specified in the Instrument of Accession of the State referred to in paragraph (i) of sub clause (b) shall be issued except in consultation with the Government of the State: Provided further that no such order which relates to matters other than those referred to in the last preceding proviso shall be issued except with the concurrence of that Government.
(2) If the concurrence of the Government of the State referred to in paragraph (ii) of sub clause (b) of clause (1) or in the Second proviso to sub clause (d) of that clause be given before the Constituent Assembly for the purpose of framing the Constitution of the State is convened, it shall be placed before such Assembly for such decision as it may take thereon.
(3)Notwithstanding anything in the foregoing provisions of this article, the President may, by public notification, declare that this article shall cease to be operative or shall be operative only with such exceptions and modifications and from such date as he may specify: Provided that the recommendation of the Constituent Assembly of the State referred to in clause (2) shall be necessary before the President issues such a notification.
" Clause (1) (b) of this Article deals with the legislative power of the Parliament to make laws for the State; and it prescribes limitation in that behalf.
Under paragraph (1) of sub cl.
(b) of cl.
(1) Parliament has power to make laws for the State in respect of matters in the Union List and the Concurrent List which the President in consultation with the Government of the State declares to correspond to matters specified in the Instrument of Accession; whereas in regard to other matters in the said Lists Parliament may, under paragraph (ii), have power to legislate for the State after such other matters have been specified by his order by the President with the concurrence of the Government of the State.
It is significant that paragraph (i) refers to consultation with the Government of the State while paragraph (ii) requires its concurrence, 294 Having thus provided for consultation with, and the concurrence of, the Government of the State, the explanation shows what the Government of the State means in this context.
It means according to the ,appellant, not the Maharaja acting by himself in his own discretion, but the person who is recognised as the Maharaja by the President acting on the advice of the Council of Ministers for the time being in office.
It is on this explanation that the appellant has placed considerable reliance.
Sub clauses (c) and (d) of cl.
(1) of the Article provide respectively that the provisions of article I and of the present Article shall apply in relation to the State; and that the other provisions of the Constitution shall apply in relation to it subject to exceptions and modifications specified by the Presidential order.
These provisions are likewise made subject to consultation with, or concurrence of, the Government of the State respectively.
Having provided for the legislative power of the Parliament and for the application of the Articles of the Constitution to the State, Art .
370, el.
(2) prescribes that if the concurrence of the Government of the State required by the relevant sub cls. of cl.
(1) has been given before the Constituent Assembly of Kashmir has been convened, such concurrence shall be placed before such Assembly for such decision as it may take thereon.
This clause shows that the Constitution makers attached great importance to the final decision of the Constituent Assembly, and the continuance of the exercise of powers conferred on the Parliament and the President by the relevant temporary provisions of article 370(1) is made conditional on the final approval by the said Constituent Assembly in the said matters.
(3) authorises the President to declare by public notification that this article shall cease to be operative or shall be operative only with specified exceptions or modifications; but this power can be exercised by the President only if the Constituent Assembly of the State makes recommendation in that behalf.
Thus the proviso to el.
(3) also emphasises the importance 295 which was attached to the final decision of the Constituent Assembly of Kashmir in regard to the relevant matters covered by article 370.
The appellant contends that the scheme of this Article clearly shows that the person who would be recognised by the President as the Maharaja of Jammu & Kashmir was treated as no more than a constitutional Ruler of the State.
In regard to matters covered by this Article he could not function or decide by himself and in his own discretion.
The con sultation contemplated by this Article had to be with the Maharaja acting on the advice of the Council of Ministers and the concurrence prescribed by it had to be similarly obtained and given, and that brings out the limitations on the powers of the Maharaja.
It is also urged that the final decision in these matters has been deliberately left to the Constituent Assembly which was going to be convened for the framing of the Constitution of the State, and that again emphasises the limitations imposed on the powers of the Maharaja.
This argument assumes that under the explanation to article 370(1) it is the person recognised by the President as the Maharaja who has to act on the advice of ' the Council of Ministers in relation to matters covered by article 370.
But, it is possible to take the view that the said clause really indicates that in recognising any person as the Maharaja of the State the President has to act on the advice of the Council of Ministers for the time being in office under the Maharaja 's proclamation dated March 5, 1948.
If that be the true construction of the explanation, then the argument that, before the Maharaja is consulted or his concurrence is obtained, he must act on the advice of his Ministers would not be valid.
We would, however, like to deal with the argument even on the assumption that the construction put by the appellant on the explanation is right.
On the said construction the question which falls to be determined is: Do the provisions of article 370(1) affect the plenary powers of the Maharaja in the matter of the governance of the State ? The effect of the application of the present Article has to be judged in 296 the light of its object and its terms considered in the context of the special features of the constitutional re lationship between the State and India.
The Constitution makers were obviously anxious that the said relationship should be finally determined by the Constituent Assembly of the State itself; that is the main basis for, and purport of, the temporary provisions made by the present Article ; and so the effect of its provisions must be confined to its subject matter.
It would not be permissible or legitimate to hold that, by implication, this Article sought to impose limitations on the plenary legislative powers of the Maharaja.
These powers had been recognised and specifically provided by the Constitution Act of the State itself; and it was not, and could not have been, within the contemplation, or competence of the Constitution makers to impinge even indirectly on the said powers.
It would be recalled that by the Instrument of Accession these powers have been expressly recognised and preserved and neither the subsequent proclamation issued by Yuvaraj Karan Singh adopting, as far as it was applicable, the proposed Constitution of India, nor the Constitution Order subsequently issued by the President, purported to impose any limitations on the said legislative powers of the Ruler.
What form of government the State should adopt was a matter which had to be, and naturally was left to be, decided by the Constituent Assembly of the State.
Until the Constituent Assembly reached its decision in that behalf, the constitutional relationship between the State and India continued to be governed basically by the Instrument of Accession.
It would therefore be unreasonable to assume that the application of article 370 could have affected, or was intended to affect, the plenary powers of the Maharaja in the matter of the governance of the State.
In our opinion, the appellant 's contention based on this Article must therefore be rejected.
The application of articles 245, 254 and 255, and of article 246 as modified,, does not seem to have any bearing on the question of the authority and powers of the Ruler of the State.
Their application merely serves to provide for the legislative powers of the Parliament 297 to make laws in respect of matters covered by article 370.
Incidentally we may point out that the application of articles 246 and 254 as provided by the Constitution Order 10 of 1950 has been subsequently modified by the Constitution Order 48 of 1954.
Similarly article 255 which was originally applied by the first Order has been deleted by the latter Order.
This shows that it was subsequently realised that the original application of the said Articles prescribed by the earlier Order was more anticipatory and notional and required either suitable modification or cancellation.
The appellant has then relied upon the provisions of article 385.
It provides: " article 385.
Until the House or Houses of the Legislature of a State specified in Part B of the First Schedule has or have been duly constituted and summoned to meet for the first session under the provisions of this Constitution, the body or authority functioning immediately before the commencement of this Constitution as the Legislature of the corresponding Indian State shall exercise the powers and perform the duties conferred by provisions of this Constitution on the House or Houses of the Legislature of the State so specified.
" It is difficult to see how this Article supports the appellants contention.
In fact it is not easy to appreciate what the application of this Article to the State really meant.
As we have already pointed out the application of the specified Articles to the State was not intended to affect, and constitutionally could not have affected, the form of the government prevailing in the State and the plenary legislative powers of the Maharaja in regard to the government of the State.
As in regard to the application of articles 245, 254 and 255, so in regard to this Article as well, it was subsequently realised that the application of the Article was purely notional and could serve no purpose.
That is why by C. O. 48 of 1954 this Article has been deleted from the list of Articles applied to the State.
It seems to us that the initial formal application of this Article cannot justify the appellant 's case that the plenary legislative powers vesting in the Ruler of the State 38 298 were not only affected but, as the appellant contends, completely extinguished.
The constitutional position in regard to the government of the State continued to be the same despite the application of this Article.
In dealing with the application of this Article and articles 245, 254 and 255, it would be permissible to rely on the rule of construction set out in Maxwell that " a thing which is within the letter of a statute is generally to be considered as not within the statute unless it is also the real intention of the Legislature It is evident that the Constitution makers have treated the problem of Kashmir on a special basis and that though the association of Kashmir with India which began with the Instrument of Accession has been steadily and gradually growing closer and closer on a democratic basis, it still presents features not common to any other State included in the Union of India.
We have no doubt that at the time when the Act was passed the plenary legislative powers of the Yuvaraj had not been affected in any manner.
The result is that Yuvaraj Karan Singh was competent to enact the Act in 1950 and so the challenge to the validity of the Act on the ground that he did not possess legislative competence in that behalf cannot succeed.
It is clear that the validity of the Act cannot be chal lenged on the ground that the Act did not provide for the payment of compensation.
For one thing section 26 of the Act did contemplate the payment of compensation.
Besides, as the law of the State then stood, there was no limitation on the legislative power of the Ruler such as is prescribed by article 31 of the Constitution; and article 31 had not been then applied to the State.
Subsequently when article 31(2) was extended to the State the Act no doubt became the existing law and it has been saved by the new and modified cl.
(5) of the said Article.
There is another aspect of the matter to which reference must be made.
Section 26 of the Act had left the final decision on the question of the payment of compensation to the Constituent Assembly of the State; and it is common ground that the Constituent Assembly has decided not to pay any compensation.
Mr. Chatterjee contends that this decision is (1) Maxwell on " Interpretation of Statutes ", 10th Ed., P. 17.
invalid because the Constituent Assembly itself was, not properly called and constituted.
There is no substance in this argument.
After Yuvaraj Karan Singh was put in charge of the duties of governing the State by Maharaja Hari Singh by his proclamation issued on June 20, 1949, he began to function as a Ruler and was entitled to exercise all his powers in that behalf He realised that the original plan of Maharaja Hari Singh to call a national assembly which he announced on March 5, 1948, would not meet the requirements of the situation which had radically changed; and the Yuvaraj thought that a Constituent Assembly on a broader basis should be called and should be entrusted with the task of framing a Constitution without any delay.
It is idle to suggest that the Yuvaraj was bound to convene the national assembly on the same lines as were laid down by Maharaja Hari Singh in his proclamation and with the same object, for the same purpose, and subject to the same conditions.
It was for the Yuvaraj to consider the situation which confronted him and it was within his competence to decide what solution would satisfactorily meet the requirements of the situation.
We have no doubt that the Yuvaraj was perfectly competent to issue the proclamation on April 20, 1951, under which the Constituent Assembly ultimately came to be elected and convened.
If the Constituent assembly was properly constituted and it decided not to pay any compensation to the landlords it is difficult to understand how the validity of this decision can be effectively challenged.
That leaves only one question to be considered.
It is contended that the Act is invalid under article 254 of the Constitution because it is inconsistent with the two earlier Acts, No. 10 of 1990 and No. 4 of 1977.
It is unnecessary to enquire whether there is any repugnancy between the Act and the earlier Acts to which the appellant refers.
In our opinion the argument based on the provisions of article 254 must be rejected on the preliminary ground that it is impossible to invoke the assistance of this Article effectively because in terms the essential conditions for its application are absent in the present case.
This argument assumes that under article 254(1) if there is repugnancy between 300 any provision of a law made by the Legislature of a State and any provision of an existing law with respect to One of the matters enumerated in the Concur rent List, then subject to the provisions of cl.
(2), the law made by the Legislature of the State was to the extent of the repugnancy void.
The appellant concedes that there is no scope for applying the provisions of el.
(2) of article 254 which deals with cases where the subsequent law has been reserved for the consideration and assent of the President; but this aspect of the matter itself shows that the whole Article would in substance be inapplicable to the State.
Clause (2) of article 254, which is its integral and important part, postulates that the Legislature of the State, in enacting a law on the relevant matter may reserve it for consideration of the President and his assent, and thereby save the consequences of cl.
(1) ; and cl.
(2) was clearly inapplic able to the State.
Besides, it is clear that the essential condition for the application of article 254(1) is that the existing law must be with respect to one of the matters enumerated in the Concurrent List; in other words, unless it is shown that the repugnancy is between the provisions of a subsequent law and those of an existing law in respect of the specified matters, the Article would be inapplicable; and, as we have already pointed out, Schedule Seven which contains the three Legislative Lists was not then extended to the State; and it is, therefore, impossible to predicate that the matter covered by the prior law is one of the matters enumerated in the Concurrent List.
That is why article 254 cannot be invoked by the appellant.
On this view, it is not necessary to consider whether the construction sought to be placed by the appellant on this Article is otherwise correct or not.
The result is that all the grounds urged by the appellant against the validity of the Act fail, and so it must be held that the High Court was right in taking the view that the plaintiff had not shown that the Act was ultra vires.
The appeal accordingly fails and is dismissed with costs.
Appeal dismissed.
| IN-Abs | This appeal challenged the validity of the Jammu and Kashmir Big Landed Estate Abolition Act, XVII Of 2007 which was enacted by Yuvaraj Karan Singh on October 17, 1950, in exercise of the powers vested in him by section 5 of the Jammu and Kashmir Constitution Act 14 of 1996 (1930) and the final proclamation issued by Maharaja Hari Singh on June 20, 1949, by which he entrusted all his powers and function to the Yuvaraj.
The object of the Act was to improve agricultural production by abolishing big landed estates and transferring land to the actual tillers of the soil.
The suit out of which the present appeal arises was brought by the appellant in a representative capacity for a declaration that the Act was void, inoperative and ultra vires and that he was entitled to retain peaceful possession of his lands.
Both the trial Court as also the High Court in appeal found against him and dismissed the suit.
Hence this appeal by special leave.
The validity of the Act was challenged mainly on the ground that Yuvaraj Karan Singh had no authority to promulgate the Act.
It was contended that (i) when Maharaja Hari Singh conveyed his powers to the Yuvaraj by his proclamation of June 20, 1949, he was himself a constitutional monarch and could convey no higher powers, (2) the said proclamation could not confer on the Yuvaraj the powers specified therein, (3) the powers of the Yuvaraj were substantially limited by his own proclamation issued on November 25, 1949, by which he sought to make applicable to his State the Constitution of India, that was soon to be adopted by its Constituent Assembly, in so far as it was applicable, (4) as a result of the application of certain specified Articles, including article 370 of the Constitution of India to the State of Jammu Kashmir, the Yuvaraj became a constitutional monarch without any legislative authority or powers and (5) the decision of the Constituent Assembly of the State not to pay compensation was invalid since the Assembly itself was not properly constituted.
Held, that Yuvaraj Karan Singh, when lie promulgated the Act, had the power to do so and its validity was beyond question.
271 It was indisputable that prior to the passing of the Independence Act, 1947, Maharaja Hari Singh like his predecessors, was an absolute monarch so far as the internal administration of his State was concerned.
Section 3 Of the Regulation 1 of 1991 (1934) issued by the Maharaja not only preserved all his preexisting powers but also provided that his inherent right to make any regulation, proclamation or ordinance would remain unaffected.
The Constitution Act 14 of 1996 (1939) promulgated by him did not alter the position.
Sections 4 and 5 of that Act preserved all the powers that he had under section 3 of the Regulation 1 of 1991 and section 72 preserved his inherent powers so that he remained the same absolute monarch as he was before.
With the lapse of British paramountcy on the passing of the Independence Act, 1947, the Maharaja continued to be the same absolute monarch, subject to the agreements saved by the proviso to section 7 Of the Act, and in the eyes of international law could conceivably claim the status of an independent sovereign.
It was unreasonable to suggest that the provisions of the Instrument of Accession signed by the Maharaja on October 25, 1947, affected his sovereignty, in view of cl. 6 thereof, which expressly recognised its continuance in and over his State.
There was no substance in the argument that as a result of his proclamation issued on March 5, 1948, which replaced the emergency administration by a popular interim Government headed by Sheik Mohammad Abdullah and constituted a Council of Ministers who were to function as a cabinet, the Maharaja became a constitutional monarch.
The cabinet had still to function under the Constitution Act 14 of 1996 (1939) under the overriding powers of the Maharaja.
When the Maharaja on June 20, 1949, therefore, issued the proclamation authorising the Yuvaraj to exercise all his powers, although for a temporary period, it placed the Yuvaraj in the same position as his father till the proclamation was revoked.
The Maharaja was himself an absolute monarch and there could be no question as to his power of delegation.
In Re. ; , , referred to.
The proclamation issued by the Yuvaraj on November 25, 1949, did not vary the constitutional position as it stood after the execution of the Instrument of Accession by the Maharaja nor could it in any way affect the authority conferred on the Yuvaraj by his father.
The contention that the application of certain specified Articles of the Indian Constitution to the State by the Constitution (Application to Jammu and Kashmir) Order (C. O. 10) issued by the President on January 26, 1950, affected the sovereign powers of the Yuvaraj was not correct.
Neither the scheme of article 370 nor the explanation to cl.
(1) of that Article Contemplated that the Maharaja was to be a constitutional ruler.
The temporary provisions of that Article were 272 based on the assumption that the ultimate relationship between India and the State should be finally determined by the Constituent Assembly of the State itself.
So, that Article could not, either expressly or by implication, be intended to limit the plenary legislative powers of the Maharaja.
Till the Constituent Assembly of the State, therefore, made its decision, the Instrument of Accession must hold the field.
The initial formal application of article 385, which was sub sequently deleted from the list of Articles applied to the State, could not justify the conclusion that it had adversely affected the legislative powers of the Yuvaraj.
There was no substance in the contention that the decision of the Constituent Assembly not to pay compensation was invalid as the Assembly itself was not properly called or constituted.
There could be doubt that the Yuvaraj was perfectly competent to issue the proclamation dated April 20, 1951 in variation of the Maharaja 's, under which the Assembly was ultimately constituted, and so the Assembly was properly convened.
|
Petition (Civil No. 651 of 1986.
(Under Article 32 of the Constitution of India).
P.P. Rao, Ms. Bina Gupta, Ms. Vandana Saggar and Ms. Monika Mohil for the Petitioners.
V.C. Mahajan, K. Swamy, Ms. A. Subhashini and Ms. Niran jana Singh for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
This petition under Article 32 of the Costitution has been filed by Prahalad Singh claiming that he and other similarly placed Compositors working in the Government of India Presses all over India are entitled to the status and salary of Compositors, Grade I in the "highly skilled" category with effect from January 1, 1966, The said relief is claimed on the sole ground that one T.R. Thakur has already been given Grade I in the "highly skilled" category as a result of the judgment in his favour given by the Himachal Pradesh High Court.
The writ petition (C.W. 61/69) filed by T.R. Thakur was allowed by the learned Single Judge of the High Court on May 21,1971 and Letters Patent Appeal against the said judgment was dismissed on May 9, 1979.
The High Court held that the categorisation as "highly skilled" and "skilled" on the basis of seniority alone was unreasonable and discriminatory.
No special leave 154 petition against the judgment of the High Court was brought to this Court and as such the judgment has become final.
Prahalad Singh and others have claimed that they are entitled to the benefit of the judgment given by the High Court in Thakur 's case.
According to them the said judgment is applicable in principle to all the Compositors whether they were parties before the High Court or not.
This peti tion came for hearing before a Bench of this Court consist ing of R.S. Pathak, CJI, M.N. Venkatachalia, J.
The Bench in its order dated April 28, 1989 observed as under : "The principal objection to the grant of relief to the Petitioner and those for whom he claims to act is the gross delay with which the writ petition appears to have been bought in this Court.
To surmount that difficulty the petitioner relies upon the plea that the judgment of the High Court in T.R. Thakur 's case is a judgment operative in principle in favour of all compositors situated in the circumstances in which T.R. Thakur found himself.
There are other pleas which have been taken by the petitioner, but the substantial one is whether he and the other compositors can enforce in their favour the benefit grant ed in T.R. Thakur 's case although they were not parties to that proceeding.
At first blush it would seem that the High Court considered the particular facts of T.R. Thakur, the petitioner before it, and while granting relief it appears, in terms, to have confined it to T.R. Thakur.
It is an important point whether, as the petitioner now contends before us, the direction issued by the High Court can be regarded as a direction operative in re spect of all compositors employed in the Government of India Presses all over India, The point is important since the objection on the plea of laches seems to be a substantial one in view of the several compositors who have over the years been promoted to the category of "highly skilled" compositors, and interfering with their status now could mate rially prejudice them.
At the same time, it cannot be doubted that there can be cases where although the facts of a particular petitioner have been taken into consideration what the Court indents, when it adjudicates on the claim, is to lay down the law to be ap plied by the respondents to all similar situa tions.
There are other cases where relief may be granted or refused upon the consideration of a question involved the question being one which affects several persons of the category to which the petitioner belongs and the grant or refusal of the relief may turn on 155 the particular facts of that case.
Various possible categories of cases can be conceived in this context.
We think it desirable that in cases such as this the Court should formulate a set of appropriate guidelines indicating when directions rendered by the Court in one particular case can be regarded as operative in other cases.
As the matter will be governed both by principle and by the practice of the Court, it is appropriate that this case be referred to a larger Bench for consideration on this and the other points arising in it.
" This is how the writ petition has come before us for final heating.
It is not necessary to go into the merits of the question posed by the Two Judges Bench of this court because we are of the view that the High Court judgment in Thakur 's case does not lay down the correct law.
The facts which led 'to the filing of the writ petition by Thakur are as under: Prior to January 1, 1966, there was one grade of Compos itors (Rs. 110 Rs.
180) in the Government of India Presses.
In the year 1963 a committee called "The Committee for Categorisation of the Government of India Press Workers" was constituted to review the classification of posts of indus trial workers in the Government of India printing presses.
The said Committee, inter alia, made the following recommen dations : "There was an equally persistent and wide spread demand from the workers that the cate gory of Compositors should be treated as highly skilled instead of skilled as at present.
We have very carefully examined this case as well and were unable to subscribe to this demand.
Hand composing in the Govt.
of India presses is essentially a skilled job.
The Managers were, however, of the opinion that 10 15% of the Compositors are frequently expected to handle composition work of mathe matical or scientific discourses.
For this, a knowledge application of diacritical marks superior and inferior letters/figures, scien tific signs/symbols etc.
are essential.
This work, admittedly, involved much higher skill than originally hand composition.
The Commit tee,therefore, recommend that a suitable percentage of compositors should be upgraded to the highly skilled category with pay scale of Rs. 175 205.
This category should be given an appropriate designation to distinguish it from the ordinary grade of Compositors who should still be in the skilled group.
" 156 Accepting the above recommendations, the Government of India, by an order dated March 14, 1966, divided the exist ing cadre of Compositors Compositors Grade I (Rs. 150 Rs. 206) and Compositors Grade II (Rs. 11 O 180).
It was further decided that the Compositors Grade I would be classified as "highly skilled" and Compositors Grade II as "skilled".
The ratio of Grade I to Grade II was fixed as 20: 80.
The initial constitution of the cadre of Compositors Grade I was done by appointing 20% of the Compositors on the basis of seniority cure fitness but trade test was made obligatory for future promotions to Grade I.
While implementing the above said decision of the Gov ernment of India, 18 Compositors who were senior to Thakur were given the pay scale of Compositor Grade I. Thakur challenged the denial of higher pay scale of Compositor Grade I to him on the ground that he and the 18 Compositors who were promoted were performing the same duties and were holding similar posts which were inter changeable.
According to him all of them were performing the duties of "highly skilled" Compositors and as such the higher grade could not have been denied to him.
The learned Single Judge allowed the writ petition and held that the categorisation of the senior most persons as "highly skilled" was arbitrary and discriminatory.
The learned Judge issued the following directions: "In the light of the above I am of the view that the petitioner is entitled to the relief prayed for and direction is issued to the respondents not to enforce the revised scale of pay in such a manner as to subject the petitioner to a lower scale of pay than the one allowed to the compositors who have been so fixed in the scale laid down for the highly skill compositors.
" The Letters Patent Appeal filed by the Union of India against the judgment of the learned Single Judge was dis missed by the Division Bench of the High Court on the fol lowing reasoning: "The contention of the appellants, as raised by them in paragraph 5 of their return.
that by length of service a person acquires more and more skill and, therefore, the test of seniority for the purpose of putting a person in the higher category of Grade I was justi fied, not acceptable because it is very well known that a mere length of service does not always result in more skill in the working of the person concerned.
Seniority would have of course relevance in a situation where two persons having equal skill are to be consid ered.
But unless such a situation arose it is very much evident that initial placing of the 157 present incumbents on the post of Compositor in the higher category of Grade I could not have been done in total disregard of the degree of skill which each of these incumbents possessed.
" Academic pursuit and experience are two primary sources of learning.
A Compositor 's job in a printing press is a skilled job requiring special technique.
In such a job it would be reasonable to measure the standards of skill by length of experience.
The High Court, in our view, fell into error in quash ing the classification based on experience arising out of length of service.
It is obvious from the recommendations of the Committee quoted above that "highly skilled" category was created to handle the nature of work which involved higher skill than the original hand composition.
The Com positors with longer service and who were found fit for promotion were appointed to Grade I and were categorised as "highly skilled".
Experience itself is merit and can be a valid basis for classification.
This Court in State of U. P. vs j.
P. Chaurasaia; , has upheld the classifica tion based on experience as reasonable classi fication.
Jagannatha Shetty, J. speaking for this Court observed: "Article 14 permits reasonable classification founded on different bases.
It is now well established that the classification can be based on some qualities or characteristics of persons grouped together and not in others who are left out.
Those qualities or characteris tics must, of course, have a reasonable rela tion to the object sought to be achieved.
In service matters, merit or experience could be the proper basis for classification to promote efficiency in administration.
He or she learns also by experience as much as by other means.
It cannot be denied that the quality of work performed by persons of longer experience is superior than the work of newcomers.
Even in Randhir Singh case, this principle has been recognised.
O. Chinnappa Reddy, J. observed that the classification of officers into two grades with different scales of pay based either on academic qualification or experience or length of service is sustainable.
Apart from that, higher pay scale to avoid stagna tion or resultant frustration for lack of promotional avenues is very common in career service.
There is selection grade for District Judges. 'there is senior time scale in Indian Administrative Service.
There is supertime scale in other like services.
The entitlement to these higher pay scales depends upon sen iority 158 cure merit or merit cure seniority.
The dif ferentiation so made in the same cadre will not amount to discrimination.
The classifica tion based on experience is a reasonable classification.
It has a rational nexus with the object thereof.
To hold otherwise, it would be detrimental to the interest of the service itself.
" We, therefore, hold that the judgment of the Himachal Pradesh High Court in T.R. Thakur 's case does not lay down correct law and is overruled.
The only ground on which this petition is based, having become non existent, the petition ers are not entitled to the relief claimed by them and the writ petition is liable to be dismissed.
We are, however, of the view that the cadre of Composi tors Grade I 'highly skilled ' should be enlarged.
The Com positors are persistently demanding the upgrading of the whole of the cadre.
The "Committee" also recommended that suitable percentage be upgraded.
The Government created the higher grade for 20% of them.
Keeping in view the large number of Compositors all over the country and to remove stagnation we are of the opinion that the ratio between the two cadres should be 33 1/3: 66 2/3%.
We, therefore, commend to the respondents to increase the strength of the cadre of Compositor Grade I 'highly skilled ' to 33 1/3 per cent with effect from April 1, 1992.
The writ petitions is disposed of in the above terms with no order as 0 costs.
V.P.R. Petition dismissed.
| IN-Abs | Petitioner claiming that he and other similarly placed Compositors working in the Government of India presses all over India were entitled to the status and salary of Compos itors, Grade I in the "highly skilled" category with effect from January 1, 1966 on the ground that the decision of the Himachal Pradesh High Court in Thakurs case was applicable in principle to all the Compositors, filed the present petition under Article 32 of the Constitution.
The High Court in Thakur 's case held that the categori sation as "highly skilled" and "skilled" on the basis of seniority alone was unreasonable and discriminatory.
As no special leave petition against the judgment of the High Court was brought to this Court the judgment became final.
Over ruling Thakur 's case and dismissing the petitions this Court, HELD: I.Academic pursuit and experience are two primary sources of learning.
A Compositor 's job in a printing press is a skilled job requiring special technique.
In such a job it would be reasonable to measure the standards of skill by length of experience.
The High Court fell into error in quashing the classification based on experience arising out of length of service.
[157 B] 2.
"Highly skilled" category was created to handle the nature work which involved higher skill than the original hand composition.
The Compositors with longer service and who were found fit 153 for promotion were appointed to Grade I and were categorised as "highly skilled".
Experience itself is merit and can be a valid basis for classification.
[157 C D] 3.
Keeping in view the large number of Compositors all over the country and to remove stagnation the ratio between the two cadres should be 33 1/3: 66 2/3 %.
[158 D] 4.
The respondents are directed to increase the strength of the cadre of Compositor Grade I 'highly skilled ' to 33 1/3 percent with effect from April 1, 1992.
[158 D] Thakur 's Case (Writ petition C.W. No. 61/69) dated 21.5.1971; overruled.
State of U.P.v.
J.P. Chaurasia; , ; re ferred to.
|
ivil Appeal No. 4437 of 1990.
From the Order dated 30.6.1990 of the Disciplinary Committee of the Bar Council of India in B.C.I. TR Case No. 127 of 1988.
Satish Chandra, V.B. Joshi and Umesh Bhagwat for the Appellant.
Respondent in person (NP) The Judgment of the Court was delivered by G. N. Ray, J.
This Civil Appeal is directed against the order dated June 30, 1990 passed by the disciplinary Committee of the Bar Council of India under Section 36B of the Advocate Act, 1961 in BCL Tr.
Case No. 127 of 1988 arising out of the complaint made before the Bar Council of Maharashtra in D.C. No.22 of 1987.Shri Ramesh Chandra Vit haldas Sheth made a complaint on February 9, 1987 to the D.C. No.21 of Bar Council of Maharastra against the respondent Devendra Bhaishankar Mehta,an Advocate practising in Bombay inter alia alleging professional misconduct against the said advocate.
It was alleged by the respondent complainant,that he carries on business of manufacturing at Jhalod and he owns a proprietary firm named as M/s Ravi Dyechem Manufacturing Industries and M/s Vithaldas Dye Stuff Manufacturing Company.
The complainant was in need of finan cial accommodation and was in search of a reliable financier and Mr. Balu Bhai Modi impressed the complainant that they would give financial accommodation on being satisfied about the documents of security.
It was represented to the com plainant that a firm of Solicitors run by the said Shri Devendra Bhaishankar Mehta would examine the papers for the purpose of financing and the said Shri Devendra Bhai Mehta was also an investor.
The complainant on such representation agreed to get financial loan through the said Balu Bhai Modi.
The complainant alleged that an inspection of factory and other premises at Jhalod was made by Shri Balu Bhai and he was informed that the said properties were in excellent condition and the estimated value was Rs.12 lakhs.
He 692 was also assured that since the properties were valuable and in excellent condition a lower rate of interest would be considered and he was also told that a loan up to Rs.7 lakhs would be advanced to him provided the complainant would be advanced to him provided the complainant would pay a draft or cash at the rate of 5 and 1/2% on the advance of the amount of loan towards legal and other expense.
He was also informed that a meeting of the financiers would be held including Mr. Devendra Bhai Mehta who was one of such finan ciers.
Thereafter a meeting was arranged at the residence of the said Shri Devendra Bhaishankar Mehta and in such meeting Shri Devendra Bhaishankar Mehta falsely represented to the complaint that he was an advocate of the firm of solicitors M/s Dayalji and Deepchand and he worked only for the genuine financiers and he would look to the interests of the loan seekers.
Shri Devendra Bhaishankar Mehta also represented to the complainant that he was himself a member of the internal group of the financiers who would advance the loan and hence he was not only preparing the mortgage deed for the proposed loan but also scrutinising it for his own satisfaction.
He also assured the complainant that once the mortgage deed was drafted by him the complainant would get loan within ten days because thereafter only the formalities were required to be gone into.
The said Shri Mehta induced the complainant to part with money for legal expenses and informed the complainant that out of 5, and 1/2% of the amount of loan required to be paid by the complainant by way of legal expenses, Shri Devendra Bhaishankar Mehta would keep 3 and 1/2% for the stamp duty payable to the Government and he also represented that the disbursement could be expedited only if the complainant would pay cash to Balubhai Modi on April 10, 1986.
Shri Devendra Mehta also promised that he would see that the loan proposal was passed in the internal group of meeting of the financiers of which he himself was one of the financiers and he would ensure that Shri Balu Bhai Modi would sanction the loan as early as possible.
Thereafter Shri devendra Mehta had inspected the documents and returned most of the original documents and assured the complainant that he would get loan in a few days.
On April 10, 1986 the complainant went to the office of Shri Balu B. Modi and handed over to him a sum of Rs.25,000 for the loan of Rs.7 lakhs @ 14%.
Shri Balu B. Modi told the typist to prepare the stamp receipt and also informed the complainant to arrange for the payment of balance of Rs.13,500.
The complainant informed him that he would pay the balance to Shri Devendra Mehta at the time of disbursement of loan.
Shri Balu Bhai Modi told the 693 complainant to pay to Shri Devendra Mehta within a week and he instructed the typist to put the date as April 17, 1986 by which date the complainant would pay the balance sum of Rs.13,500.
The complainant alleged that thereafter he had contacted Shri Devendra Bhaishankar Mehta who represented to the complainant that if the complainant could not pay the balance of Rs.13,500 in a week, how internal group of finan ciers would believe that the complainant would repay the loan of Rs.7 lakhs.
He, therefore, advised the complainant that he should pay a balance of Rs.13,500 and the complain ant accordingly paid the said balance sum.
Shri Devendra Bhaishankar Mehta, thereafter, made all attempts to delay the advancement of loans by unending demands and the com plainant had to forward about 200 documents to Shri Devendra Bhaishankar Mehta, but Shri Mehta ultimately conveyed to the complainant through Shri Balu Bhai Modi that as the clear ance certificate under Section 230 A(i) of the Income Tax Act had not reached the Office of the concerned authorities and as the said advancement of loan was very heavy, he would neither advance his share of finance nor he would agree to the disbursement until a sum of Rs.10,000 would be handed to Shri Devendra Bhaishankar Mehta.
The complainant caused an enquiry and came to know that the Certificate under Section 230 A(i) had reached the office on June 5, 1986.
He, howev er, paid Rs.10,000 in July,1986 to Shri Devendra Bhaishankar Mehta in the presence of Shri Balu Bhai Modi, when Shri Devendra Bhaishankar Mehta told the complainant that he would issue the receipt at the time of the disbursement of the loan and he should be trusted.
The complainant further alleged that despite such payment and other steps taken by the complainant, instead of disbursing the proposed loan, Shri Balu Bhai Modi lodged a false complaint against the complainant in Social Security Branch of Bombay Police on September 5, 1986.
The complainant thereafter made an appli cation to the C.I.D. Branch of Bombay Police on September 8, 1986.
The complainant alleged that because of the friendly relationship by the racketeers including the said Shri Balubhai Modi and Shri Devendra Bhaishankar Mehta with the police, nothing was heard about his complaint but ultimately on the personal intervention by the Commissioner of Police, Bombay, his application was duly registered and Shri Balub hai Modi was chargesheeted in Criminal Case No. 1110/86.
The complainant was advised by the police to make an application to the Bar Council against Shri Devendra Bhai Mehta.
The complainant also alleged in his petition of complaint to the State Bar 694 Council that Shri Devendra Bhai Mehta had indulged in fraudulent activities in respect of other persons and a list of witness was attached to the said latter of complaint.
As the complainant case before the State Bar Council, could not be disposed of within the statutory period , the complaint stood transferred to the Disciplinary Committee of the Bar Council of India and numbered as B.C.I. Tr.
Case No.127/88.
As aforesaid, the judgment dated June 30, 1990 in the B.C.I. Tr.
Case No.127 of 1988 is the subject matter of Civil appeal No. 4437 of 1990.
When the complaint case was pending before the Disci plinary Committee of the State Bar Council of Maharashtra, the said Disciplinary Committee called upon the appellant to file and affidavit.
Pursuant to the direction of the State Bar Council of Maharashtra, the appellant filed an affidavit dated November 26, 1987 indicating therein the particulars of the documents drafted by the appellant at the instance of the said Shri Balubhai Modi for advancing loans to different persons intending to get loan accommodation.
The complain ant respondent also deposed before the Disciplinary Commit tee of the State Bar Council and had applied for issuing summons to the witnesses namely to the deponents of the affidavits affirmed by Shri Munjibhai M. Shah and Shri Devendra Shashikant Dyanmhotre, who had stated in their affidavits that they had also become victim of fraudulent action and cheating by the said Shri Balubhai Modi in conni vance with the appellant Devendra Mehta.
The appellant op posed examination of such persons as witnesses in the pro ceedings inter alia on the ground that the said affidavits had disclosed independent grievances of the deponents and the said deponents had not complained before the Bar Coun cil.
It, however, appears that the State Bar Council of Maharashtra overruled such objections of the appellant.
The appellant in an attempt to stall the proceeding before the State Bar Council moved a Writ Petition under Articles 226 and 227 of the Constitution of India being Writ Petition No. 1897 of 1988 in the High Court of Bombay inter alia chal lenging the legality and validity of the said complaint proceeding before the State Bar Council.
Such Writ Petition, however, was rejected by the Bombay High Court on April 27, 1988 and the matter thereafter proceeded before the State Bar Council and then stood transferred to the Disciplinary Committee of Bar Council of India.
The Disciplinary Commit tee of Bar Council of India examined and recorded evidences of Prafulchandra Shah (CW 2), Munjibhai M. Shah (CW 3), Shashikant D. Dyanmhotre (CW 5), Bhawanji Bharot (CW 6) and Mahesh Ramanlal Shah (CW 4).
It may be noted here 695 that Mahesh R. Shah (CW 4) an advocate had acted for Praful chandra Shah in Criminal Case.
The appellant and complainant had also deposed in the said disciplinary proceeding before the Bar Council of India and their respective statements were also recorded.
The Disciplinary Committee of the Bar Council of India scrutinised and analysed the evidences and materials on record and by giving elaborate reasoning, the Disciplinary Committee inter alia came to the finding that it was established beyond reasonable doubt that there was a racket for defrauding and/or cheating to aspirant loanees and Shri Balubhai Modi and the appellant advocate were parties to such racket.
The Disciplinary Committee had also come to the finding that it was established that the appellant had received Rs. 10,000 from the complainant respondent on July 11, 1986.
The Disciplinary Committee also came to the finding that the appellant in connivance with the complainant defrauded the complainant in receiving large sum of money on the pretext of legal expenses and other incidental costs for advancing the proposed loan to the complainant but such loan was never advanced to the complainant and instead of disbursing the loan.
Shri Balubhai Modi got a false complaint lodged against the complainant in Social Security Branch on September 5, 1986.
The Disciplinary Committee also came to the finding that a case of professional misconduct under Section 35 of the had been established against the appel lant.
On the question of punishment to be imposed on the appellant, the Disciplinary Committee of the Bar Council of India inter alia came to the finding that in the facts and circumstances of the case, the offence of misconduct commit ted by the concerned Advocate was of a very serious nature.
The Advocate had no feeling of regret and remorse.
There was no extraneous circumstances of the basis of which the mem bers of the Committee could persuade themselves to take a lenient and liberal view about the punishment and a lenient view would not be justified in the facts of the case.
The Committee felt that the name of the said Advocate should be removed from roll of the Advocates.
The Disciplinary Commit tee has noted that the Committee has taken into considera tion the guidelines given by the decisions of this court in several namely in Re: P an Advocate ; in M. veerbhadra Rao vs Tek Chand ; for imposing the punishment on the concerned Advocate.
The Disciplinary Committee therefore passed the following order in exercise of power under Section 35(3)(d) read with Section 36 and 36 B under Section 43 of .
696 ORDER: "The name of respondent Advocate Mr. Devendra Bhaishankar Mehta, Advocate on the State Roll of the Bar Council of Maharashtra be removed from its Roll.
He shall pay Rs.2,000 as costs of these proceedings to complainant Mr. Rameshchandra Vithaldas Sheth.
" At the hearing of this appeal, it has been very strongly contended before us by the learned counsel for the appellant that the Disciplinary Committee of the Bar Cous teau of India had proceeded with a closed mind presumably being influenced by the serious nature of complaint made by the complainant respondent without appreciating properly that the appellant had no role in the matter of alleged fraudulent activities and of cheating by Shri Balubhai Modi and/or some other persons.
The appellant had only rendered the professional service as an Advocate in a fair and proper manner.
It has been contended by the learned counsel for the appellant that the appellant is a practising counsel and he was engaged by the said Shri Balubhai Modi for preparing the documents of mortgage, on inspection of the records of the complainant for advancing the proposed loan for Rs. seven lakhs.
The appellant in his professional capacity had to give his advice.
Accordingly, he had looked into the docu ments placed before him by Shri Balubhai Modi and the com plainant and prepared the draft deed for mortgage and he had also advised his client Shri Balubhai Modi for compliance of the conditions mentioned in the draft deed before advance ment of loan so that his client Shri Modi was properly secured.
The learned counsel has also contended that such action on the part of the appellant was only fair and proper and any responsible.
Advocate when engaged by a client was expected to do in the manner in which he had acted.
The learned counsel has further contended that it is not a case of the complainant or anybody that the appellant had given any advertisement for advancing loan to any person and it is also nobody 's case that he on his own had induced persons to seek such loan and/or he had referred the complainant or any other person to Shri Balubhai Modi or to any other person for getting such loan.
It has been contended by the learned counsel that it is the positive case of the complainant respondent that pursuant to the advertisement given by Shri Balubhai MOdi he had approached Shri Balubhai Modi for a loan for running his business and Shri Balubhai Modi had clearly stated to the complainant that such loan could be advanced if 697 on inspection of the properties of the complainant the financiers would decide that such loan could be advanced to the complainant and such loan would be advanced on the basis of advice to be taken from the lawyer of the financiers and on execution of proper mortgage deed, on scrutiny of the relevant papers and documents.
The appellant did not come into the picture at all when the complainant pursuant to the advertisement had contacted Shri Balubhai Modi.
It has also been submitted by the learned counsel that admittedly the complainant was referred to the appellant in his capacity as a legal practitioner engaged by the said Shri Balubhai Modi and/or the financiers.
The learned counsel has contended that only in the capacity of an Advocate engaged by a cli ent, the appellant had drafted the deed of mortgage and he had also clearly indicated to the complainant and also to the said Shri Balubhai Modi when the Conference was held in his place that for advancement of loan, the mortgage deed as drafted by him should be executed and the complainant should fulfil the terms and conditions indicated by the appellant in the draft deed.
Since the complainant failed to satisfy the terms and conditions as drafted by the appellant, he had advised Shri Balubhai Modi that he could not approve the advancement of loan.
The learned counsel has further submit ted that it is an admitted case that thereafter the com plainant got another document prepared by somebody else and the appellant refused to approve such document because the same was not drafted by him and he did not want to take any responsibility in the matter on the basis of a document not drafted by him.
The learned counsel has contended that such action on the part of the appellant clearly indicates that the appellant was a responsible lawyer who wanted to safe guard the interest of his client and despite request he did not agree to approve any document not drafted by him.
It has been submitted by the learned counsel for the appellant that if the appellant had real intention to defraud the complain ant and to be a party to the alleged racket, he would not have dealt in a straightcut manner and would not have washed his hands in the matter of execution of the document of mortgage.
The learned counsel for the appellant has further submitted that the case of payment of any money directly by the complainant to the appellant as sought to be made was not true and should not be accepted.
The appellant had received his professional fees only from his client namely, Shri Balubhai Modi.
He had further submitted that the com plainant respondent falsely stated before the Bar Council that the appellant had extorted Rs.10,000 from him and such payment of Rs.10,000 698 was made by the complainant directly to the appellant.
He has submitted that such case was not made out by the complainant in his complaints before the Police.
The complainant made embellishment to his case by falsely alleg ing that the appellant had asked the complainant to pay a sum of Rs.10,000 on the assurance that on such payment mortgage deed would be executed without any delay so that the complainant would get the loan of Rs. Seven lakhs and the appellant had actually received Rs.10,000 from him.
The learned counsel has contended that such uncorroborated testimony of the complainant about payment of Rs.10,000 by him to the appellant is not at all convincing and should not be accepted more so when such case had not been made out in the beginning and a false case of payment of Rs.10,000 was sought to be introduced at a later state.
The learned coun sel has contended that if the judgment/order under appeal is scrutinised in the proper perspective, it will clearly reveal a closed mind and a biased approach of the members of the Disciplinary Committee.
The Committee unfortunately presumed various facts against the appellant on mere surmise and conjecture for the purpose of coming to the finding that the appellant had been a member of the racket and he had taken part in defrauding and cheating the complainant a large sum of money by assuring him that a loan of Rs. seven lakhs would be advanced to him.
The learned counsel has also contended that the Disciplinary Committee has committed a grave error in law in considering the evidences of four witnesses who were total strangers to the case of alleged fraud and cheating of the complainant.
Such witnesses had no knowledge whatsoever about the alleged deal relating to the case of the complainant and they claimed to be aspirants of getting loans individually in different transactions.
The learned counsel has also submitted that the Disciplinary Committee has committed a grave error in law in considering the evidences of CW 2 Prafulchandra Shah, CW 3 Munjibhai M. Shah, CW 5 Shashikant D dyanmohtre and CW 6 Bhawanji Bharot because the alleged case of complicity of the appellant in being a member of the racket to cheat the said aspiring loanees had not been put to the appellant when he was under cross examination.
The learned counsel had further submitted that the appellant is a practising advocate and he has a status and respect in the Society.
In discharge of his professional duties, he has acted as a responsible member of the legal profession when he was engaged by Shri Balubhai Modi.
It is neither possible nor desirable for an Advocate to cause enquiries about the real intention of the client in the proposed transaction between the client 699 and a third party.
Even if it is accepted that Shri Balubhai Modi gave advertisements to dupe the intending loanees for the purpose of cheating them on false assurance of loans, the Disciplinary Committee should have adverted to the real question in issue as to whether or not the appellant himself made any false representation to the complainant and had taken part in defrauding or cheating the complainant.
The mere fact that he was engaged by a dishonest person cannot be any ground to hold that the appellant himself was guilty of misconduct only because he had acted as an advocate of a party who may be guilty of the offence of fraud or cheating.
The part played by the appellant as an advocate was required to be analysed with an open mind and with reference to the documents and evidences on record but unfortunately the Disciplinary Committee miserably failed and neglected to discharge the responsibilities and the duties and functions entrusted to the Committee.
The Committee has accepted inadmissible evidences and uncorroborated testimony of the complainant, which in the facts and circumstances of the case were required to be discarded.
It has been submitted by the learned counsel for the appellant that it is only unfor tunate that instead of holding that the complainant unjustly tried to implicate the appellant by falsely alleging against him that he was guilty of misconduct, the Disciplinary Committee, on mere suspicion has drawn adverse inferences against the appellant and based its finding which really lay in the realm of surmise and conjecture.
The learned counsel has submitted that this being a statutory appeal, this Court Should intrinsically consider the facts and circumstances of the case and should make proper evaluation of the evidences on record and in doing so should discard the improper and unjust finding made by the Disciplinary Committee.
The learned counsel for the appellant has contended that the Court may have a concern to ensure that the professional morality and standard are maintained by the members of the profession but at the same time the Court should not loose sight of the fact that any finding based on surmise and conjecture against the appellant will not only do a great harm to his avocation in life and professional career but will also cause immense harm in the matter of his standing and repute in the society and to his friends and relatives and such harms cannot be compensated in any manner.
In the facts and circumstances of the case the learned counsel for the appellant has contended, that the complainant has miser ably failed to establish the complaint made to the Discipli nary Committee and the disciplinary proceeding was liable to be dismissed with exemplary cost.
This 700 Court should therefore allow the appeal and dismiss the complaint with cost.
After giving careful consideration to the facts and circumstances of the case and materials on record and arguments advanced at the hearing of the appeal, we, howev er, do not subscribe to the view that the Disciplinary Committee of the Bar Council has proceeded with a closed mind and with a definite bias presumably being influenced by the serious nature of allegation as sought to be contended by the learned counsel for the appellant.
The Judgment and Order under appeal clearly reveal that the Disciplinary Committee has taken pains in scrutinising and analysing the facts of the case as dispassionately as practicable.
It also appears to us that the weaknesses in the case of the com plainant was not lost sight of and has been specifically adverted to by the Disciplinary Committee even when such infirmity was not pointed out by the appellant at the hear ing.
It was contended that Rs.10,000 was not advanced by the complainant and the case of such advancement of Rs.10,000 to the appellant advocate by the complainant himself was false and after thought.
The Disciplinary Committee has not only considered the case of the appellant as argued but has also taken into consideration the other possible argument in favour of the appellant though not argued.
It was on consid eration of all aspects of the matter, the Disciplinary Committee has come to the finding by giving cogent reasons therefor.
To illustrate this aspect, reference may be made to paragraph 18 of the judgment under appeal : "If really A was not merely an advocate, but also a financier, would D utter the words: "I will pay Rs.10,000 fees to A only after the registration of the documents", and even if he so utters these words, would C not feel suspect about the same ? In fairness to A.
We have addressed this question to ourselves though A did not address us on this.
But in the predicament in which C was placed, in the situation in which he was made to drive himself from pillar to post and particularly having gone out of pocket to the tune of Rs 40,000 after com plying with the necessary formalities so far and keen as he was to get the loan of Rs. 7,00,000 as early as possible, it is quite possible that his conduct might not be that of a person who would be one of the accurate calculation and assessment.
" 701 It has been strongly contended by the learned counsel for the appellant before us that the other aspirant loanees who had also approached Shri Balubhai Modi and were referred to Shri Devendra Mehta for taking legal steps to enable the said aspirant loanees to get the proposed loan should not have been examined in the case of Shri Devendra Mehta be cause they were not witnesses to the case of fraud and cheating of the complainant and they had no personal knowl edge of the case and they had also not made any complaint to the Bar Council in respect of their cases.
Such contention, in out view, is devoid of any merit and should be discarded.
The complainant specifically alleged that there was a racket to which the concerned advocate and Shri Balubhai Modi were parties.
The complainant has indicated the modus operandi by which he became victim of the fraudulent activities of the said members of the racket.
To bring home the case of racket the depositions of other persons who had also approached Shri Balubhai Modi for advancement of loan and had been dealt with by Shri Modi and Shri Devendra Mehta in similar manner and though they had to part with substantial amount towards legal and other expenses for getting the proposed loan, such loan had not been ultimately sanctioned to them, became relevant and necessary to be looked into.
As a matter of fact, before the Bombay High court the appellant also challenged the propriety and correctness of the Disciplinary Committee of the State Bar Council to examine other loanees dealt with by Shri Balubhai Modi and Shri Devandra Mehta but the High Court of Bombay did not accept such contention by holding inter alia that, read in proper context, it cannot be said that the allegation of racket was totally absent.
It may be noted here that the Disciplinary Committee was anx ious to independently assess the facts and circumstances of the dispassionate manner without being influenced by any observation of the Bombay High Court in disposing of the Writ Petition of Shri devendra Mehta.
Such anxiety is clear ly demonstrated by the observation of the Disciplinary Com mittee in paragraph 2 (c) of the judgment/order under appeal which may be quoted hereunder: "2(c) The High Court also went through C 's evidence before the State D.C and opined that read in proper context it cannot be said that the allegation of a "a racket" was totally absent therein.
All said and done, when the State D.C. properly exercised its discretion, the High Court thought it improper to entertain the writ petition under article 227 of the Constitution.
702 We must say at this stage that at the time of assessing the whole evidence at the end of full dress inquiry we have taken sufficient care and caution to see that the findings of the State D.C. on the preliminary issue and the High Court 's dismissal in limine of A 's writ petition declining to interfere with the said findings do not weigh with us for the said assessment.
Suffice it to say, we have briefly narrated the details for keeping the record straight.
" It has also been contended by the learned counsel for the appellant that the Disciplinary Committee could not appreciate the facts and circumstances of the case in their proper perspective in view of the fact that the Committee proceeded with a preconceived notion.
It was precisely on account of such a pre conceived view and bias, the Discipli nary Committee failed to appreciate that the appellant had only acted in responsible manner expected of an advocate engaged by a client.
The learned counsel has contended that it was nobody 's case that the appellant had floated a pro posal to advance loan and he had given any advertisement in response to which the complainant had come in contact of Shri balubhai Modi.
It is an admitted case that in response to an advertisement by Shri Balubhai Modi, the complainant had approached Shri Balubhai Modi for loan and only then he was referred to the appellant by Shri Modi because the appellant was engaged by Shri Modi as a counsel.
Although the appellant had always dealt with the complainant only in his capacity as an advocate engaged by Shri Modi, a false complaint was lodged by the complainant that the appellant had assured him and represented him that he himself was a financier and he should pay the amount in question to Shri Balubhai Modi and also to the appellant towards legal ex penses and other expenses so that loan for Rs.7 lakhs would be advanced to him without delay.
Such case, according to the learned counsel, could not be established by any corrob orative evidence but has been accepted by the Disciplinary committee on mere surmise and conjecture.
We are, however, unable to accept the said contention of the learned counsel.
We have carefully considered the materials on record and the reasonings of the Disciplinary Committee in the impugned judgment and we are unable to hold that the findings of the Disciplinary committee are outcome of any closed mind or bias on the part of the committee and/or findings of the Committee really lay in the realm of surmise and conjecture.
We have already indicated the anxiety of the Disciplinary Committee to dispassionately assess the facts of the case 703 without being influenced by any observation of the High Court of Bombay.
The Committee was alive to various aspects of the case and has taken care in meticulously scrutinising and analysing the evidence on record and the materials and the Committee has based its finding by giving cogent reasons and the inferences drawn from the established facts also appear to us quite reasonable.
It may be indicated at this stage that Shri Balubhai Modi had died during the pendency of the proceedings before the Disciplinary Committee of the Bar Council of India and there was no occasion to proceed further with the criminal proceeding initiated against him and/or to examine him in the instant case.
It is always permissible to draw reasonable inference from the facts established in a proceeding and such reasonable inference cannot be termed as finding based on surmises and conjec tures.
There is no doubt that in any proceeding, judicial or quasi judicial.
there is requirement of proof and such requirement cannot be substituted by surmise and conjecture.
But proof may be established directly on the basis of the evidence adduced in the proceeding or the allegation of fact may be established by drawing reasonable inferences from other facts established by evidence.
In the instant case, the committee, in our view, has referred to the admitted facts and also the facts established in evidence and on a proper analysis of the facts so established and/or admitted it has drawn reasonable inference .
The Disciplinary Commit tee deserves commendation in disposing of the complainant 's case fairly and dispassionately.
In the matter of imposition of punishment, the Disciplinary Committee has referred to the relevant decisions of this Court imposed the penalty by recording good reasons for the same.
We are not oblivious of the fact that a member of legal profession should not be permitted to be exposed to the hazards of false and malicious allegation against such member and extreme care and caution is required to be taken in dealing with the case of allegation of unfair and improp er conduct on the part of a member of legal profession.
There is no manner of doubt that the impugned decision of Disciplinary Committee has a very serious implication on the reputation and standing of the appellant in the society and to the members of his family.
friends and relatives.
The im pugned decision has also a serious bearing on the profes sional career of the appellant and avocation of life in future.
But giving out anxious thought and consideration in the matter we have not been able to come to the finding that the impugned order was improper and unjust and the findings 704 are not tenable law and/or the decision has resulted in a failure of justice to the appellant.
During the course of arguments before us, we had pointedly asked the learned counsel for the appellant to show us any material on record that in any other case on the advice tendered by the appel lant any loan was in fact given by Mr. Balu Bhai Modi in order to dispel the inference that the appellant was not a member of the racket and was only discharging his profes sional duty.
The learned counsel for the appellant was unable to show any evidence worth the name to prove the innocence of the appellant.
The evidence of many other applicants seeking loan shows that they were also duped and met the same fate as the complainant ' speaks volumes against the conduct of the appellant.
An advocate indulging in such nefarious activities is not entitled to continue as a member of legal profession which is based on the implicit faith and confi dence in the mind of the client.
From a perusal of the entire evidence placed on record and read before us, leads us to the irresistible conclusion that the appellant was not only having full knowledge about the racket but was also active member in the complicity of such racket and was get ting substantial financial advantage.
The appellant was not a silent spectator merely given his legal advice, but was an important link in the modus operandi of running a racket by Balu Bhai Modi.
It is really unfortunate that a member of a legal profession has indulged in fraudulent activities in a calculated manner for financial gain at the cost of an innocent person.
To say the least, an advocate enrolled under the , having a licence to represent the case of litigants is expected to maintain a high stand ard of morality and un impeachable sense of legal and ethi cal propriety.
It is not the case of a lapse to take appro priate steps by an Advocate and/or a case of negligence in discharging the duties so that any lenient view may be taken against the concerned advocate.
The concerned advocate has not only misused the trust reposed in him but has played an active part in defrauding or cheating the complainant who on the basis of the false representation of the concerned advocate had to part with substantial amount to his serious loss and prejudice.
In such facts and circumstances of the case, we do not find any reason to reduce the punishment imposed on the appellant.
This appeal, therefore, fails and is dismissed with costs.
| IN-Abs | The appellant was an Advocate practising in Bombay.
Respondent No.1 (the complainant) made a complaint to the Bar Council of Maharashtra alleging professional misconduct against the appellant.
His case was that he was a proprietor of a firm engaged in a business of manufacturing.
He was in need of financial accommodation and a financier impressed upon him that on examination of his papers by a solicitors ' firm run by the appellant, he would be given loan.
He was also told that the appellant was also one of the investors.
The complainant on such representation agreed to get loan through the financier.
On inspection of properties of the complainant the financier told him that a loan upto Rs.7 lakh would be advanced to him provided he would pay at the rate of 5 1/2% on the advance of amount of loan towards legal and other expenses.
In a meeting held at the residence of the appellant in connection with the proposed loan the appellant told the complainant that he was an advocate of a certain firm and he worked only for the genuine financiers and would look to the interests of the loan seekers.
He also told that he was himself a member of the internal group of the financiers.
The appellant induced the complainant to part with certain money for legal expenses and in formed him 688 that out of 5 1/2% of the amount of loan required to be paid by him by way of legal expenses the appellant would keep 3 1/2% for the stamp duty payable to the Government.
He also told that the disbursement could be expedited only if the complainant paid cash to the financier before certain date.
On the stipulated date the complainant paid RS.25,000 to the financier.
He also paid the balance of Rs.13,500 to the appellant.
Thereafter the appellant made all attempts to delay the disbursement and asked the complainant to pay Rs.10,000 more which the latter paid.
However, the proposed loan was not disbursed and instead of it, the financier made a complaint against the complainant in the Social Security Branch.
The complainant made a complainant to the CID Branch of Bombay Police against the financier and the appellant.
The financier was chargesheeted.
On the advice of the police the complainant made an application to the Maharashtra Bar Council.
He also alleged that the appellant had indulged in fraudulent activities in respect of other persons and at tached a list of witnesses to the complaint.
The appellant challenged the proceedings before the High Court, but the Write Petition was dismissed and the proceedings before the State Bar Council continued.
The complaint before the State Bar Council could not be disposed of within the statutory period and the case stood transferred to the Disciplinary Committee of the Bar Council of India.
Meanwhile the financier died.
The Disciplinary Committee analysing the evidences dispassionately and considering the affidavits filed on behalf of both the parties as also the affidavits filed by some witnesses alleging that they had also become the victim of fraudulent action and cheating by the financier and the appellant, held that there was a racket for defrauding and/or cheating to aspirant loanees, and the financier and the appellant advocate were parties to such racket; that the appellant in connivance with the financier defrauded the complainant in receiving large sum of money on the pretext of legal expenses and other incidental costs for advancing the proposed loan to the complainant, but such loan was never advanced to him; that the appellant had received Rs.10,000 from the complainant; that a case of professional misconduct under section 35 of the had been established against the appellant.
The Committee, therefore, ordered the name of the appellant to be removed from the State Roll of the Bar Council of Maharashtra.
689 In the appeal to this Court,it was contended on behalf of the appellant that he had no role in the matter of alleged fraudulent activities of cheating by the financier and/or some other persons as he was engaged by the financier for preparing the document of mortgage after inspection of records of the complainant for advancing the proposed loan and he had only rendered the professional service as an advocate in a fair and proper manner; that the appellant had only received his professional fees from the financier and did not receive any amount from the complainant; that the finding of the Disciplinary Committee that the appellant had been a member of the racket and had taken part in defrauding and cheating the complainant was based on surmises and conjectures; and that the Disciplinary Committee committed a grave error in law in considering the evidence of witnesses who were total strangers to the case of alleged fraud and cheating.
Dismissing the appeal, this court, HELD: 1.1.
The appellant advocate has not only misused the trust reposed in him but has played an active part in defrauding or cheating the complainant who on the basis of the false representation of the appellant had to part with substantial amount to his serious loss and prejudice.
[p.704 E G] 1.2 A perusal of the entire evidence placed on record leads to the irresistible conclusion that the appellant was not only having full knowledge about the racket but was also an active member of such racket and was getting substantial financial advantage.
The appellant was not a silent spectator merely giving his legal advice, but was an important link in the modus operandi of running a racket by the financier.
[p. 704 C D] 1.3.
The evidence of many other applicants seeking loan showing that they were also duped and met the same fate as the complainant, speaks volumes against the conduct of the appellant.
[p. 704 B] 1.4.
An advocate indulging in such nefarious activities is not entitled to continue as a member of legal profession which is based on the implicit faith and confidence in the mind of the client.
[p. 704 B C] 690 1.5.
It is not the case of a lapse to take appropriate steps by and advocate and/or a case of negligence in discharging the duties so that any lenient view may be taken against the concerned advocate.
[p. An advocate enrolled under the , having a licence to represent the case of litigants is expected to maintain a high standard of morality and unimpeachable sense of legal and ethical propriety.
[p.704E] 2.
The complainant specifically alleged that there was a racket to which the appellant and the financier were parties.
He indicated the modus operandi by which he became victim of the fraudulent activities of the said members of the racket.
To bring home the case of racket, the deposi tions of other persons who had also approached the financier for advancement of loan and had been dealt with by him and the appellant in similar manner and though they had to part with substantial amount towards legal and other expenses for getting the proposed loan, such loan had not been ultimately sanctioned to them, became relevant and necessary to be looked into.
[p. 701 B D] 3.1.
It is always permissible to draw reasonable infer ence from the facts established in a proceeding and such reasonable inference cannot be termed as finding based on surmises and conjectures.
There is no manner of doubt that in any proceeding, judicial or quasi judicial, there is requirement of proof and such requirement cannot be substi tuted by surmise and conjecture.
But proof may be estab lished directly on the basis of the evidence adduced in the proceeding or the allegation of fact may be established by drawing reasonable inferences from other facts established by evidence.
[p. 703 B D] 3.2.
In the instant case, the Committee, has referred to the admitted facts and also the facts established in evidence and on a proper analysis of the facts so established and/or admitted, it has drawn reasonable inference.
The Committee was alive to various aspects of the case and has taken care in meticulously scrutinising and analysing the evidence on record and the materials, and the Committee has based its finding by giving cogent reasons and the inferences drawn from the established facts also appear quite reasonable.
The Disciplinary Commit tee deserves commendation in disposing of the complainant 's case fairly and dispassionately.
In the matter of imposition of punishment, the Disciplinary Committee 691 has referred to the relevant decisions of this Court and has imposed the penalty by recording good reasons for the same.
[p.703 A; D E] Re: P an Advocate ; and M. Veerbhadra Rao vs Tak Chand, ; , referred to.
|
Appeal No. 104[NT] of 1979.
From the Judgment and Order dated 3.10.1978 of the Punjab and Haryana High Court in 1.]".
Reference No. 60 of 1974.
191 WITH Civil Appeal Nos. 1801 to 1804/89 & 6254 (NT)/90 Dr. V.Gauri Shankar, S.Rajappa, Ms. A. Subhashini and Manoj Arora for the Appellants.
T.A.Ramaehandran and Ms. Janki Ramachandran for the Respond ents.
The Judgement of the Court was delivered by RANGANATHAN, J. These appeals involve a common question and hence can be disposed of by a common order.
The respond ent assessees are steel rolling mills engaged in the manu facture of M.S. (Mild Steel) rods, bars or rounds.
The question for consideration is whether they are entitled to a higher rate of development rebate specified in s.33(1) (b) (B) (i)(a) and to relief under s.80 I (as it stood at the relevant time) of the Income tax Act, 1961.
The answer to this question entirely turns on whether the assessees are engaged in the manufacture or production of any one or more of the articles or things specified in the relevant Schedule to the Act.
They claim that the articles manufactured by them fail under item 1 of the list of articles and things set out in the relevant Schedule which reads: "Iron and steel (Metal), ferro alloys and special steels".
This contention was rejected by Income Tax Officer but has been accepted by the Appellate Assistant Commissioner, the Tribunal and the High Court.
Hence these appeals by the Revenue.
It has been brought to our notice that there is a dif ference of judicial opinion on this issue among the High Courts.
The Calcutta High court in Indian Steel and Wire Products Ltd. vs Commissioner of Income Tax, , and the Allahabad High Court in Commissioner of Income Tax vs Kay Charan Pvt. Ltd., have answered the question in the negative and against the assessee.
On the other hand, the Kerala High Court in C.I. T.v.
Mittal Steel Re rolling and Allied Industries (1 ') Ltd. and CIT vs West India Steel Co. Ltd. , FB.
The Madras High Court in the judgment under appeal, reported as Addl.
Commissioner of Income tax v, Trich Steel Rollling Mills Ltd., , the Punjab & Haryana High Court in C.I.T. vs Krishna Copper and Steel Rolling Mills, (1979) 119 I.T.R. 256; (hereunder appeal) C.I.T.v.
Ludhiana Steel Rolling Mills, ; and the Allahabad High Court in Singh Engineering Works Pvt. Ltd. vs C.I.T., have taken a view in favour of the assessee.
This controversy needs to be resolved.
192 It may be useful, at this stage, to refer to three decisions of this Court, the decisions or observations in which have influenced the High court.
(1) The first of these is State of Madhya Bharat vs Hiralal, (1966) 17 S.T.C. 313.
This case arose under the Madhya Bharat Sales Tax Act.
Under section 5 of the said Act, two notifications had been issued.
The first notifica tion exempted from sales tax certain listed goods, one of which was "iron and steel", while the second notification specified the rates and stages lot levy of sales tax on a number of articles, one of which was"goods prepared from any metal other than gold and silver".
Hiralal, who owned a re rolling mill, purchased scrap iron locally and imported iron plates from outside and, after converting them into bars, flats and plates in his mills, sold them in the market.
He claimed exemption under the first of the above notifications.
This claim was upheld by this Court The judgment of the Court is a short one, the relevant paragraph of which reads as follows: "Learned cournsel for the State contends that the expression "iron and steel means iron and steel in the original condition and not iron and steel in the shape of bars, flats and plates.
In our view, this contention is not sound.
A comparison of the said two Notifica tions brings out the distinction between raw materials of iron and steel and the goods prepared from iron and steel; while the former is exempted from tax, the latter is taxed.
Therefore, iron and steel used as raw material for manufacturing other goods are exempted from taxation.
So long as iron and steel continue to be raw materials, they enjoy the exemption.
Scrap iron purchased by the re spondent was merely re rolled into bars, flats and plates.
They were processed for conven ience of sale.
The raw material were only re rolled to give them attractive and acceptable forms.
They did not in the process lose their character as iron and steel.
The dealer sold "iron and steel" in the shape of bars, flats and plates and the customer purchased "iron and steel" in that shape.
We, therefore, hold that the bars, flats and plates sold by the assessee are iron and steel exempted under the Notification.
The conclusion arrived at by the High Court is correct." (2) The second decision referred to is Devidass Gopal Krishnan vs State of Punjab, (1967) 20 S.T.C. 430.
Here, one batch of appellants before the Court carried on business in rolling steel.
They purchased steel scrap and steel ingots and converted them into rolled steel sections.
They 193 contended that the levy of a purchase tax on the steel scrap and ingots side by side with a sales tax on the rolled steel sections constituted double taxation of the same commodity contrary to the provision of section 15 of the .
This contention was rejected.
It was held that the process by which the steel scrap (or ingot) lost its identity and became rolled steel sections was a process of manufacture and that, since the goods purchased and those sold were different, no question of double taxation arose: (3) The third decision, Hindustan Aluminium Corporation Ltd. vs State of U.P., (1981) 48 S.T.C. 411, involved the interpretation of certain notifications issued under section 3A(2) of the U.P. Sales Tax Act, 1948.
The two notifications with which the Court was concerned prescribed rates of tax at which certain goods were taxable.
item no.6 in the notification of 1973 described the goods as: "All kinds of minerals and ores and alloys except copper, tin, zinc, nickel or alloy of these metals only.
" Item No. 1 of the second notification read: All kinds of minerals, ores, metals, and alloys including sheets and circles used in the manufacture of brass wares and scraps containing only any of the metals, copper, tin, zinc, or nickel except those included in any other notification 'issued under the Act.
" The appellant Corporation, which carried on the business of manufacturing and dealing in aluminium metal and vations aluminium products, claimed the benefit of these notifica tions for its products.
The High Court held that, while aluminium ingots, wire bars and billets would fall in the category of "metals and alloys", rolled products prepared by rolling ingots and extrusions manufactured from billets must be regarded as different commercial commodities from the ingots and billets and therefore outside the category of "metals and alloys".
Such rolled products included plates, coils, sheets, circles and strips.
The extrusions were manufactured in the shape of bars, rods, structurals, tubes, angles, channels and different types of sections.
This conclusion was upheld by this Court The Court referred to the history of the notifications issued by the State Govern ment from time to time in this behalf and came to the con clusion that the inference was irresistible that when such a notification referred to a metal, it referred to the metal in the primary or original form in which it was saleable and not to any subsequently fabricated form.
The Court rejected the contention that the word "all" used in the notification in referring to 194 "all kinds of minerals, ores, metals and alloys" should be given its fullest amplitude so as to include even subse quently fabricated forms of the metal.
The Court felt that this construction was inconsistent with the scheme of the earlier notifications to which reference had been made and observed: "While broadly a metal in its primary form and a metal in its subsequently fabricated form may be said to belong to the same genus, the distinction made between the two constitutes a dichotomy of direct significance to the con troversy before US." After referring to its earlier decisions in State of M.P.v.
Hiralal, (1966) 17 S.T.C. 313, Devi Dass Gopal Krish nan vs The State of Punjab, (1967) 20 S.T.C. 430 and State of Tamil Nadu vs Pyarelal Malhotra, (1976) 37 S.T.C. 3 19, the Court concluded: "We are of the definite opinion that the only interpretation possible is that aluminium rolled products and extrusions are regarded as distinct commercial items from aluminium ingots and billets in the notification issued under the U.P. Sales Tax Act.
" The above decisions were rendered in the context of the Sales Tax Acts and notifications thereunder.
They, however, bring out two points.
First, they make it clear that there is a real and clear dichotomy between "iron and steel" and "products or goods made of iron and steel" and, indeed, between any metal as such and the products or goods fabri cated therefrom.
This is also clear from the various entries in the relevant schedules under the Income Tax Act itself.
For instance, item 2 in the List is: "Aluminium, copper, lead and zinc (Metal).
While ingots and sheets manufactured from scrap have been held to fall under item 2, finished commercial products like alumimum pigments, aluminium arti cles and aluminium caps have been held to tall outside it.
See C.I. T.v.
Rashtriya Metal Industries Ltd., a case under the ; Indian Aluminium Co. Ltd. vs CI.T., ; (1983)140 I.T.R 114 (Cal); Jeewanlal, (1929)Ltd.
vs CI.T. and CI.T. vs Fitwell Caps P. Ltd. 'So also, item 7 refers, inter alia, to "cables" which is only a type of thick copper wire used for the transmission of electricity.
It has been held that insulated copper wires of a type known as winding wires will not fall under item 7 as they are not used for the above purpose and that an industry engaged in its manufacture is not an industry eligible for the reliefs of the kind presently under consideration: See: Hindustan 195 Wire Products vs C.I.T., This deci sion is of no direct relevance here except to point out that no atttempt was made in the case to contend that they will fall under item 2 of the Schedule which covers "aluminium, copper, lead and zinc (metals)".
Item 11 in the Schedule refers to "steel castings and forgings and malleable iron and steel castings".
The expressions "casting" and "forging" refer to processes used in the manufacture or production of articles of iron and steel and also mean, particularly when used in the plural, the articles produced by the process (vide: Glossary of Tenns published by the Bureau of Indian Standards and relating to Iron and Steel: , "Forging").
Item 21 which refers to "Seamless Tubes" also furnishes a similar indication.
There is, therefore, a distinction between the article or thing referred to in the Schedule as "iron and steel (metal)" and articles or things manufactured from "iron and steel".
Secondly, the decision in State of MB.
vs Hiralal, (1966) 17 S.T.C. 313 shows that even the expression "iron and steel" which is wider than the expression we are concerned with as it is not further qualified by the word "metal" was held to mean iron and steel used as raw material for the manufacture of other goods.
The Court held that bars, flats and plates only represented such raw material in attractive and acceptable forms.
Sri Gauri Shankar, for the Revenue, contended that the use of the appellation "metal" in the entry we are concerned with further restricts the nature of the qualify ing industry but we are not inclined to agree.
Obviously it is not used to denote the metal in its pristine form as an ore or as an extraction from the ore.
In the context of a manufacturing industry it is used, we think, for emphasising the distinction between the metal used as a raw material in the manufacture of various articles and the commercial articles made therefrom.
We would, therefore, attach the same meaning to the expression as Hiralal (supra) did.
In that case, the Court held that the bars, flats and pieces turned out by the assessee from the scrap metal were not products manufactured from the raw material but only repre sented the raw material rolled out in attractive and accept able forms.
Per contra, in Devidass Gopal Krishnan, [1962] 20 S.T.C. 430 rolled steel sections were held to be products manufactured from steel scrap and ingots.
But that will not be conclusive here because the relevant provision here contemplates something manufactured out of iron ore or iron scrap.
The question really therefore is: having regard to the nature of the iron and steel industry and its processes, do M.S. bars, rods and rounds represent the raw material for the manufacture of the articles of iron and steel or are they themselves articles made of iron and steel? For deciding the above issue, learned counsel on both sides have placed before us a good deal of literature about the iron and steel industry as well as the glossary of terms used therein: 196 (a) A succinct summary of the processes involved, illus trated by a figurative chart, is given in the very first page of "The Making, Shaping and Treating of Steel", edited by Lankford and others (10th Edition),.
page 1.
It is unnec essary to set out the process in detail here except to note that molten pig iron coming out of the blast furnace and iron scrap are fed into steel making furnaces, wherefrom by a basic oxygen process or electric process or open hearth process, molten steel is ladled out into moulds to form ingots.
There are three stages in the manufacture of the steel: (i) the first stage when ingots are obtained by Lapping and then teeming the molten steel into rectangular moulds; (ii) the second stage where semi finished steel is cast in the form of blooms, billets and slabs by reheating the ingots to an appro priate temperature and rolling or forging them into shapes; and (iii) the production from blooms, billets and slabs again by process of hot rolling, cold rolling, forging, extruding, drawing etc. of finished steel products; bars, plates, structural shapes, rails, wire, tubular products, coated and uncoated sheet steel etc.
all in the many forms required by users of steel.
The third of the processes involves heating the blooms, billets and slabs in heating furnaces and then processing them through various types of mills: (i) Structural mills : for obtaining structural shapes like beams, angles, tees, zees, channels, piling etc.
(ii) Rail mills : for producing standard rails, crane rails and joint bars; (iii) Bar mills : for producing bars which may be flat, round, halfround, triangular, square, haxagonal or octagonal; (iv) Seamless pile mills: for producing pipes and tubes and skelp mills and other tubular products; continuous Butt weld pipe mills (v) Plate mills : for manufacturing plates; and (vi) Hot strip mills : for producing sheets, strips and coils.
and cold reduction mills 197 (b)The Explanatory Not to Chapter 72 (iron and Steel) of the Harmonised Commodity Description and Coding Nomenclature (HCCN) are also on the same lines.
The chapter covers the ferrous metals (pig iron, spilgeleisen, ferro alloys and other materials) as well as certain products of the iron and steel industry (ingots and other primary products and the principal products derived therefrom) of iron or non alloy steel, of stainless steel and of other alloy steel.
It is pointed out that iron ore, waste, scrap metal, pre reduced iron ore and other ferrous waste is converted by reduction in blast furnaces or electric furnaces into pig iron or sponge iron or lump iron.
Electrolysis or other chemical processes are used only when iron of exceptional purity is required for special use.
Most of the pig iron is converted into steel in steel works but some are used in foundries (iron works) for manufacture of ingot moulds, cast iron tubes and pipes and castings and the remainder are cost into the forms of pigs or blocks, m casting machines or sand beds or produced in the form of irregularly shaped lumps (plate iron) or granulated.
Pig iron, cast iron, sponge iron waste and scrap constitute the primary steel making materials.
Steel making processes are either pneumatic or hearth proc esses and the steel produced,by these and other processes are classified in various ways.
Although molten steel may be cast (in foundries) into its final shape in,_ moulds (steel castings), most molten steel is cast into ingots in moulds.
_At the casting, pouring and solidification stages, steel is classified as 'rimming ' or effervescent, 'killed ' or:non effervescent and 'semi killed ' or balanced steel.
After they have solidified and their temperature has been equalised, the ingots are rolled into semi finished productrs (blooms, billets, rounds, slabs, sheet bars) on primary cogging or roughing mills (blooming, slabbing etc.) or converted by drop hammer or on a forging press into semi finished forg ings.
Semi finished products and, in certain cases, ingots are subsequently converted into finished products.
These may be flat products (such as wide flats, universal plates, wild coil, sheets, plates and strip) or long products (such as bars and rods, hot rolled, in irregularly wound coils, other bars, and rods, angles, shapes, sections and wire).
These products are obtained by plastic deformation, hot or cold.
The hot processes are hot rolling, forging or hot drawing and the cold processes.
, are cold rolling, extrusion, wire drawing, bright drawing, centreless grinding or precision turning.
The chapter proceeds to classify the various products in considerable detail. (c) Reference has also been made to the tariff classi fications under the and the Central Excise Tariff Act, 1975.
Our attention was also invited to the Specification and Glossary prepared for the Bureau of Indian Standards by expert Products Sectional Committees on the subject of Iron and Steel.
Extracts were also furnished 198 from the New Encyclopaedia Brittanica Macropaedia (15th Edn., Vol.21), Webster 's Third New International Dictionary, the Encyclopaedia of Chemical Technology by Kirk Othmer (3rd en., Vol.21) and a book on small scale steel making by R.D. Walker.
We do not, however, propose to discuss these ex tracts and definitions as we do not think they can assist us in coming to nay conclusion on the issue before us.
Basically the argument of counsel proceed on the following lines: Sri Ramachandran, learned counsel appearing for the assessee, contends that, in the steel making industry, the manufacture of ingots, billets, blooms, etc. represents only an intermediate stage at which the iron and steel metal becomes semi finished steel.
The semi finished steel is converted into plates, bars or rods which are described as "finished steels.
According to him, the bars, rods and rounds continue to be iron and steel_ m a finished form.
It is only finished steel that is subsequently used to manufac ture, by various processes such as rolling, cutting, shear ing, forging, hammering and so on into various kinds of products, which can be described as products of iron and steel in contrast with 'iron and steel (metal) ', the item covered under the relevant entry of the schedules.
He also draws our attention to a decision of the Calcutta High Court in Indian Aluminium Co. vs CIT, where, while following the earlier decision in Indian Steel and Wire Products Ltd. vs CIT, (1977)108 I.T.R. 802, the court observed that there is really no divergence in view between the Calcutta and Kerala views and that the real question for consideration in each case is whether the articles in ques tion constitute finished products and represent articles of iron and steel or merely represent the raw material viz. iron and steel (metal) in a different form and shape.
On the other hand, Dr. Gauri Shankar, learned counsel for the Department, submits that iron and steel ceases to be a metal when it comes out of the furnace in the primary steel mills in the form of ingots.
At the best, the next stage at which the ingots become semi finished products in the shape of billets, blooms and slabs may also be said only to convert the raw material into a different form or shape.
But, he says, by no stretch of imagination can the next stage during which the billets, blooms and slabs are heated/and passed through various types of mills enumerated earlier be considered as involving not any manufacture but only a conversion of the raw material into other forms or other shapes.
According to the learned counsel, the expres sion "iron and steel (metal)" only comprehends the iron and steel as it emerges in the form of billets, blooms and slabs from the steel mills and that all subsequent products wheth er in the form of 199 rails, rods (including wire rods), bars, angles, channels, tees, zees, pipes, tubes, sheets, strips, plates and coils turned out by the various other types of mills would consti tute articles made of iron and steel.
He also invited our attention to a clarification by the Central Board of Taxes, in response to a query from the Federation of Indian Cham bers of Commerce and Industry, that "rolling mills making bars and rods are not covered by item 1 of the Fifth Sched ule".
We have considered the arguments addressed by both counsel.
In our opinion, Sri Ramachandran is right in con tending that in interpreting the provisions under considera tion, we would do well to keep in mind the background in which concessions to certain basic industries were intro duced in the Income tax Act.
The process started with the introduction of a rebate for exporters under the Finance Act of 1963 which continued till 1966.
The Budget speech of the Finance Minister vide: (1963) 48 I.T.R. (St.) 34 indicates that the incentive was granted to assessees engaged in the manufacture of any articles in an industry specified in the First Schedule to the Industries (Development & Regulation) Act, 1951.
Item 1 of the said Schedule reads: "1.
Metallurgical Industries: A. Ferrous: (1) Iron and Steel (Metal) (2) Feno alloys (3) Iron and Steel castings and forgings (4) Iron and Steel structurals (5) Iron and Steel pipes (6) Special Steels (7) Other products of iron and steel B. Non ferrous (1) Precious metals including Gold and Silver, and their alloys; (IA) Other non ferrous metals and their alloys; (2) Semi manufactures and manufactures.
Again, in 1964,hen the Finance Act of 1964 decided to grant a rebate in the corporation tax payable by companies in order to encourage development of certain industries which occupy an important place in our economy, the list of indus tries named in the Finance Act was similar to and included many of the items, including items 1 to 3, of the list we are concerned with now.
The reliefs were given to strengthen the reserves and augment the capacity of the corporate sector to develop.
This process was 200 continued under the Finance Act of 1965: Vide, (1965) 55 I.T.R. (St.) 57 and 122 which introduced a higher develop ment rebate for machinery or plant installed for the pur poses of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule.
The Finance Act of 1966 substituted a new concession to these priority industries basic to the commercial development of the community.
This historical background reflects the intention of the legislature to grant progressively certain exemptions, reliefs or conces sions for certain types of industries which were considered important for na tional development / The industry in iron and steel and other metals figures in all these lists_) The only relevance of this background to the issue before us is that it gives an indication that the incentive, concession or relief granted under these provi sions has to be construed in a broad and comprehensive manner so as to cover all manufacturing activities legiti mately pertaining to specified core industry with no limita tion save what may be called for by the wording of a partic ular entry.
So far as items 1 and 2 are concerned, as earli er pointed out, the wording points to a distinction between the metal which is used as the base and other articles manufactured therefrom.
We have earlier pointed out that pig iron and iron scrap are fed into furnaces to produce ingots, billets and blooms.
But both are iron and steel in different form, the latter being referred to as "semi finished steel".
Likewise, we think, the bars, rods, rounds, wife rods and the like constitute the second stage in which one gets only "finished" forms of iron and steel.
Having regard to the nature and weight of the metal, it has to be "finished" to assume these forms before manufacturers of iron and steel articles can take over and proceed to manufacture articles from them by drawing wires or converting them into rails or shaping them into tees, zees, pipes, tubes and the like see CI.T. vs Tensile Steel Ltd., or, again, producing articles of iron like ploughs, shovels, pickaxes, lathes, blowers, surface guiders and drills as in C.I.T. vs Ludhiana Steel Rolling Mills, (1989) 180 I.T.R. 155 (P&H).
Whether the article produced is the raw material or an article made of iron and steel has to be decided on the basis of the nature of the article and not the kind of mill which turns it out.
It is significant that these items do not draw distinction between basic steel mills, integrated steel mills and the various other types of mills that are used in the industry which have been referred to earlier.
The Board 's clarification, referred by Dr. Gaurishankar, that the machinery and plant in "rolling mills" will not be eligible for the higher development rebate would not, there fore, seem to be justified if it intends to draw a distinc tion between the same machinery and plant when used in rolling mills and when used in other mills in the industry.
If machinery and plant installed in steel mills where the process 201 includes not merely the production of ingots, billets and the like but also the production of bars and rods are eligi ble for the higher development rebate, it is difficult to see why the same plant and machinery, when installed in rolling mills which proceed, from the stage of ingots or billets, to manufacture bars and rods should not be eligible for the higher rate of development rebate.
In considering the issue before us, we should not be classifications of stages of manufacture that may be carried away by classifi cation of stages of manufacture that may berelevant forother purposes.
We would like to emphasise, at the cost ofrepeti tion, that what we should examine is not the nature of the mill which yeilds the article but the nature of the article or thing that is manufactured and ask ourselves the question whether such article or thing can be considered as raw material for manufactrure of other articles made of the metal or is it itself an article made of the metal.
On this issue our view is, as we have already stated, that the goods in the present case fall in the former category.
We think Sri Ramachandran is right in pointing out that the mild steel rods, bars or rounds which are manufactured by the assessees here are only finished forms of the metal and not articles made of iron and steel.
They only constitute raw material for putting up articles of iron and steel such as grills or windows by applying to them processes such as cutting or turning.
The rod or the wire rods (with which some of the decisions were concerned) are likewise not products of iron and steel but only certain finished or refined forms of the metal itself.
We do not think much assistance can be derived for the interpretation of the provision before us from the Central Excise & Salt Act or the various classifications statutorily or commercially drawn up for that purpose.
They are more refined and intricate classifications for the purposes of excise duty and cannot be imported into the present context.
As we have mentioned earlier, some guidance as to inter pretation of item 1 to the schedule can be derived from item no.11, which refers to "forgings and castings".
These ex pressions obviously refer to articles obtained from the raw material iron and steel by forging and casting.
The argument in some of the decisions referred to before us that item No. 1 should be interpreted strictly because of the existence of item No. 11 seems to proceed on an erroneous basis.
It would be more appropriate to say that forging and castings are not covered by item 1 being articles made of iron and steel but that since the legislature definitely intended to give relief even in respect of such articles, item 11 and (also item 21) were introduced.
In fact, there is some force in the contention urged on behalf of the assessees that even if MS steel rods, bars and rounds cannot be taken as iron and steel (metal), they would fall under the category of "forg ings and castings" referred to in item 11.
We do not, howev er, wish to express any 202 concluded opinion on this aspect because item No. 11 was not relied upon by the assessee at any earlier stage.
In C.A. No. 1404/79, the assessee, Krishna Copper and Steel Rolling Mills, manufactured iron rods and girders out of scrap metal initially converted into billets.
Before the High Court the argument seems principally to have turned on the question whether an assessee manufacturing these arti cles out of iron scrap would be entitled to the higher development rebate.
The assessee cited a circular of the Board that, under item 2 of the schedule, the higher devel opment rebate would be available to an assessee who manufac tured articles from aluminium scrap [vide, circular no.25 D (XIX 16) dated 10th October, 1966].
The High Court, on this basis, answered the question by saying that the assessee before it was also entitled to the higher development rebate though it produced articles only from iron scrap.
This does not really answer the real question but, for the reasons we have already given, we agree with the conclusion drawn by the High Court.
For the reasons stated above we are of the opinion that the view taken by the High Courts in the present cases does not call for any interference.
The appeals, therefore, fail and are dismissed.
But in the circumstances we make no order regarding costs.
V.P.R. Appeal dismissed.
201 includes not merely the production of ingots, billets and the like but also the production of bars and rods are eligi ble for the higher development rebate, it is difficult to see why the same plant and machinery, when installed in rolling mills which proceed, from the stage of ingots or billets, to manufacture bars and rods should not be eligible for the higher rate of development rebate.
In considering the issue before us, we should not be carried away classi fications of stages of manufacture that may be relevant for other purposes.
We would like to emphasise, at the cost of repetition, that what we should examine is not the nature of the mill which yeilds the article but the nature of the article or thing that is manufactured and ask ourselves the question whether such article or thing can be considered as raw material for manufactrure of other articles made of the metal or is it itself an article made of the metal.
On this issue our view is, as we have already stated, that the goods in the present case fall in the former category.
We think Sri Ramachandran is right in pointing out that the mild steel rods, bars or rounds which are manufactured by the assessees here are only finished forms of the metal and not articles made of iron and steel.
They only constitute raw material for putting up articles of iron and steel such as grills or windows by applying to them processes such as cutting or turning.
The rod or the wire rods (with which some of the decisions were concerned) are likewise not products of iron and steel but only certain finished or refined forms of the metal itself.
We do not think much assistance can be derived for the interpretation of the provision before us from the Central Excise & Salt Act or the various classifications statutorily or commercially drawn up for that purpose.
They are more refined and intricate classifications for the purposes of excise duty and cannot be imported into the present context.
As we have mentioned earlier, some guidance as to inter pretation of item 1 to the schedule can be derived from item No. 11, which refers to "forgings and castings" These expressions obviously refer to articles obtained from the raw material iron and steel by forging and casting.
The argument in some of the decisions referred to before us that item No. 1 should be interpreted strictly because of the existence of item No. 11 seems to proceed on an erroneous basis.
It would be more appropriate to say that forging and castings are not covered by item 1 being articles made of iron and steel but that since the legislature definitely intended to give relief even in respect of such articles, item 11 and (also item 21) were introduced.
In fact, there is some force in the contention urged on behalf of the assessees that even if MS steel rods, bars and rounds cannot be taken as iron and steel (metal), they would fall under the category of "forgings and castings" referred to in item 11.
We do not, however, wish to express any 202 concluded opinion on this aspect because item No. 11 was not relied upon by the assessee at any earlier stage.
In C.A. No. 1404/79, the assessee, Krishna Copper and Steel Rolling Mills, manufactured iron rods and girders out of scrap metal initially converted into billets.
Before the High Court the argument seems principally to have turned on the question whether an assessee manufacturing these arti cles out of iron scrap would be entitled to the higher development rebate.
The assessee cited a circular of the Board that, under item 2 of the schedule, the higher devel opment rebate would be available to an assessee who manufac tured articles from aluminium scrap [vide, circular no.25 D (XIX 16) dated 10 th October, 1966].
The High Court, on this basis, answered the question by saying that the assessee before it was also entitled to the higher development rebate though it produced articles only from iron scrap.
This does not really answer the real question but, for the reasons we have already given, we agree with the conclusion drawn by the High Court.
For the reasons stated above we are of the opinion that the view taken by the High Courts in the present cases does not call for any interference.
The appeals, therefore, fail and are dismissed.
But in the circumstances we make no order regarding costs.
V.P.R. Appeals dismissed.
| IN-Abs | The respondents assessees were engaged in the manufacture of mild steel rods, bars or rounds.
They claimed that as the articles manufactured by them fell under item 1 of the list set out in the Fifth Schedule, they were entitled to a higher rate of development rebate specified in section 33(1) (b) (B) (i) (a) and to relief under section 80 1 of the Income Tax Act, 1961.
The Income Tax Officer rejected the claim of the assessees, whereas the Appellate As sistant Commissioner, the Tribunal and High Court accepted their claim.
Hence the Revenue filed appeals before this Court.
The contentions of the appellant Revenue were that iron and steel ceased to be a metal when it came out of the furnace in the primary steel mills in the form of ingots.
In the next stage the ingots became semi finished products in the shape of billets, blooms and slabs.
It was said to be the stage where the raw materi als were converted into.
In different form or shape; that the expression "iron and steel (metal)" meant the iron and steel as it emerged in the form of billets, blooms and slabs from the steel mill and that all subse quent products whether in the form of rails, rods (including wire rods), bars, angles, channels, tees, sees, pipes, tubes, sheets, strips, plates and coils would constitute articles made of iron and steel, and that rolling mills making bars and rods were not covered by item 1 of the Fifth Schedule.
188 On the other hand, the respondents asses sees contended that in the steel industry the manufacture of ingots, billets, blooms, etc.
represented only an intermediate stage at which the iron and steel metal became semi finished steel.
When the semi finished steel was converted into plates, bars or rods, they became finished steel.
The bars, rods and rounds, which were continued to be iron and steel in a finished form, were used to manu facture the products of iron and steel by various processes, such as, rolling, cutting, shearing, forging, hammering, etc.
and that the products of iron and steel were different from that of iron and steel (metal).
Dismissing the appeals filed by the Revenue, this court, HELD: 1.
In interpreting the provisions in S.33(1)(b)(B)(i)(a), S.80 I of the Income Tax Act, 1961, the Court would do well to keep in mind the background in which concessions to certain basic industries were introduced in the Income Tax Act.
The historical background reflects the intention of the legislature to grant progressively certain exemptions, re liefs and concessions for certain types of industries, which were considered important for national development.
The industry in iron and steel and other metals figured in all the lists.
[199 C, 200 B] 2.
The incentive concession or relief granted under the provisions has to be con strued in a broad and comprehensive manner so as to cover all manufacturing activities legitimately pertaining to the specified core industry with no limitation save what may be called for by the wording of a particular entry.
So far as items 1 and 2 are concerned, the wording points to a distinction between the metal which is used as the base and other articles manufactured therefrom.
Pig iron and iron scrap are fed into furnaces to produce ingots, billets and blooms.
But both are iron and steel in different forms, the latter being referred to as "semi finished steel".
Like wise, the bars, rods, rounds, wire rods and the like constitute the second stage in which one gets only "finished" forms of iron and steel.
Having regard to the nature and weight of the metal, it has to be "finished" to assume these forms before manufacturers of iron and steel articles can take over and proceed to manufacture articles from them by drawing wires or converting them into rails or shaping them into tees, zees, pipes, tubes and the like.
[200 C E] 3.
Whether the article produced is the raw material 01, an article made of iron and steel has to be decided on the basis of the 189 nature of the article and not the kind of mill which turns it out.
It is significant that these items do not draw distinction between basic steel mills, integrated steel mills and the various other types of mills that are used in the industry.
[200 G] 4.
The departmental instructions that machinery and plant in "rolling mills" will not be eligible for the higher development rebate would not seem to be justified if it intends to draw a distinction between the same machinery and plant when used in rolling mills and when used in other mills in the industry.
If machinery and plant installed in steel mills where the process includes not merely the production of ingots, billets and the like but also the production of bars and rods are eligible for the higher development rebate, it is difficult to see why the same, plant and machinery, when installed in rolling mills which proceed, from the stage of ingots or billets, to manufacture bars and rods should not be eligible for the higher rate of devel opment rebate.
[200 G 201 B] 5.
In considering the issue, the court should not be carried away be classifications of stages of manufacture that may be relevant for other purposes.
What the court should examine is not the nature of the mill which yields the article but the nature of the article or thing that is manufactured and ask the question whether such articles or things can be considered as raw material for manufac ture of other articles made of the metal or is it itself an article made of the metal.
[201 B C] 6.
The goods in the present case fail in the former category.
The mild steel rods, bars or rounds which are manufactured by the asses sees are only finished forms of the metal and not articles made of iron and steel.
They only constitute raw material for putting up arti cles of iron and steel such as grills or windows by applying to them processes, such as cutting or turning.
The rod or the wire rods are likewise not products of iron and steel but only certain finished or refined forms of the metal itself.
[201 C D] 7.
Forging and castings are not covered by item 1 being articles made of iron and steel but that since the legislature definite ly intended to give relief even in respect of such articles, item 11 and also item 21 were introduced.
Even if MS steel rods, bars and rounds cannot be taken as iron and steel (metal), they would fail under the category of "forgings and castings" referred to in item 11.
[201 G H] 190 8.
The conclusion drawn by the High Court that the assessee was entitled to the higher development rebate, though, it produced arti cles only from iron scrap, does not call for any interference.
[202 C, D] C.I. T. vs Mittal Steel Re tolling and Allied Industries (P) Ltd., ; CI.
West India Steel Co. Ltd., (Kerala); Addl.
Commissioner of Income Tax vs Trichy Steel Rolling Mills Ltd., ; C.I.T.v.
Krishna Copper Steel Roll ing Mills, & Har yana); CI.T.v.
Ludhiana Steel Rolling Mills, & Haryana) and Singh Engineering Works Pvt. Ltd. vs CI.T., , approved.
Indian Steel and Wire Products Lid vs Commissioner of Income tax, and Commissioner of Income Tax vs Kay Charan Pvt. Ltd., ; over ruled.
State of Madhya Bharat vs Hira Lal, (1966) 17 STC 313 (S.C.) Devi Dass Gopal Krishnan vs State of Punjab, (1967) 20 STC 430 (SC); Hindustan A1uminium Corporation Ltd. vs State of (U.P., (1981) 48 STC 411 (S.C.) State of Tamil Nadu vs Pyarelal Malhotra, (1976) 37 STC 319 (SC); C.I.T.v.
Rashtriya Metal Industries Co. Ltd., ; Indian A1uminium Co. Ltd vs
C.I.T, Cal.
and Cal; Jeewanlal vs CI.T., ; C.I.T vs Fitwell Caps P. Ltd., ; Hindustan Wire Products vs CI.T 1 ; Indian Steel and Wire Products Lid vs C.I.T. ; C.I.T.v.
Tensile Steel Lid, and CI.
Ludhiana Steel Rolling Mills, & H) referred to.
Speci 'fication and Glossary By Expert Products Sectional Committee of Bureau of India Standards, New Encyclopedia Brittanica Macropaedia, 15th Edn. Vol.21; Websters, Third New International Dictionary; Encyclopaedia of Chemical Technology By Kirk Othmer, 3rd.
Vol.21;// Book on Small Scale Steel Making By R.D.Walker, The Budget Speech of the Finance Minister, (1968) 48 ITR [Statutes] 34; (1965) 55 ITR [Statutes] 57 and 122 referred to.
|
ivil Appeal Nos.
10574 10583 of 1983.
From the Judgment and Order dated 7.7.1980 of the Alla habad High Court in I.T.R. No. 948 of 1975.
V.Gourishanker, B.V. Desai, S.K. Aggarwal and Ms. Vinita Gharpade for the Appellants.
S.C. Manchanda, B.B.Ahuja, Manoj Arora and Ms. A. Subha shini (N.P.) for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, CJ.
Radhasoami Satsang, an assessee under the Income Tax Act in these appeals by special leave assails the decision of the Allahabad High Court on refer ence under Section 256 of the Income tax Act.
The following question had been referred by the Tribunal to the High Court: "Whether on the facts and in the circumstances of the case Tribunal is justified in holding that the income derived by the Radha Swami Satsang, a religious institution, is entitled to exemption under sections 11 and 12 of the income Tax Act, 1961 '." ' The ambit and purport of the question would not be properly appreciated unless the background is indicated.
The assessee is the Radhasoami Satsang, Agra.
This sect was founded by Swami Shiv Dayal Singh in 1861.
The tenets of this faith, inter alia, accept the position that God is represented on earth by a human being who is called the Sant Satguru.
The first of such gurus .was the thunder himself and he was popularly known as 'Soamiji Madharaj ' The second Satguru (1889 1898) was Rai 315 Bahadur Salig Ram and he was known as 'Bazoor Maharaj '.
The third sant Satguru was Pandit Brahma Shanker Misra (1898 1907) and was widely known as 'Maharaj Sahib '.
These three Satgurus have been regarded as the real exponents of the creed.
Out of donations and offerings made to the Satgurus, large funds were built up and properties were acquired over the years.
During the time of the third Satguru, in 1902, the members of the creed at a largely attended convention established a Central Council and the right, title and interest of all the properties movable and immovable which had by then been collected were vested in the Council under the directions of Maharaj Sahib.
In June, 1904 the constitution and bye laws of the Central Council of Radhasoami Satsang were drawn up in a formal way and a body by the name 'Radhasoami Satsang Trust ' was set up.
A trust deed was executed by some members of the Central Council in October, 1904.
A set of bye laws were also framed.
On the death of third Satguru which took place in Octo ber 1907, the oread split into two and came to be known as Swami Bagh Sect and the Dayal Bagh Satsangis respectively.
Disputes arose as to the management of the shrines and the administration of the properties which had vested in the trustees under the Trust Deed of 1904.
The Dayal Bagh Sat sangis claimed that all the properties were held in a trust for a public purpose of a charitable and religious nature and prayed for a decree by going to the Civil Court The litigation had started in the form of an application under section 3 of the Charitable and Religious Trusts Act, 1920 but was converted into a regular suit and eventually ended with the decision of the Privy Council in the case of Patel Chhotahhai and Ors.
vs Jnan Chandra Basic and Ors., AIR 1935 Privy Council 97.
The Judicial committee reversed the deci sion of the High Court and held that even if the trust came into existence it was difficult to hold that it was of a public, charitable or religious character as contemplated by the Charitable and Religious Trust Act, 1920.
The question of assessing the income for the first time arose in the assessment year 1937 38.
The Income Tax Officer relied upon the observations of the Privy Council and com pleted assessments for two years being 1937 38 and 1938 39 treating the then Satguru, Sri Madho Prasad Sinha as the assessee.
He was a retired Assistant Accounts Officer and was earning a pension.
His pension as also the income from the institution were tagged together for assessment.
The Appellate Assistant Commissioner confirmed the assessments.
Assessee then filed applications under section 66(2) of the Income tax Act of 1922 for reference.
The Commissioner took the view that the offerings though made to the Satgurus were not used for their personal benefit and held that even though no formal 316 trust had been created by the donors in respect of offer ings, the guru impressed the offerings with trust character at the time of receipt, and treated the offerings as held in trust.
He was, therefore, of the view that such offerings were exempt under section 4(3)(1) of the Income tax Act, 1922 and directed that the offerings be deleted from the assessment for the two years.
He accordingly held that no reference under Section 66(2) was necessary to be made.
an application under section 35 of the Act was later filed for ratification by pointing out that offerings received by the Satgurus consisted of interest income, property income, and income derived from sale of books and photographs etc.
and the same should also be excluded.
On 8.12.1945 the Commis sioner directed deletion thereof.
For the year 1939 40, the income tax Officer did not grant exemption under section 4(3)(1) of the Act but the appeal challenging the assessment was accepted by the Appel late Assistant Commissioner in September, 1947 upholding the assessee 's claim of exemption.
Nothing substantial happened until the assessment year 1963 64.
During this period refund applications of the Satsang were accepted by the department on the basis that the income was exempt and as tax had been deducted at source the same was refundable.
For the first time claim for refund in the years 1964 65, 1965 66 and 1966 67 was not allowed and the assessee was treated as an association of persons and taxed; subsequentiy for the assessment years 1966 67, 1967 68 and 1968 69 and 196970 assessments were also com pleted.
The Income tax Officer did not accept the assessee 's claim of exemption and proceeded to hold that the donations and contributions had been received voluntarily and had been limited to religious use but there was no obligation to do so.
The assessee appealed but the appellate authority upheld the assessments for the years referred to above.
The asses see then appealed to the Tribunal.
The Tribunal examined the matter from various aspects and held: "So far as the Radhasoami sect is concerned its properties were held only for the further ance of the object of the Satsang and this object was to propagate the religion known by the name of Radhasaomi.
This was a purely religious purpose as held by the Privy Council and therefore the objects of the assessee are clearly religious objects.
" While the Tribunal did not accept that the words 'held under trust ' merely meant a consideration of the factual position and that if the income had been applied for reli gious purpose it was unnecessary to find out whether in law a trust had been created or not.
But the Tribunal was of 317 the opinion that the words legal obligation were much wider and the activities of the Satsang could be brought within the purview of that expression.
It finally held that the assessee was entitled to the exemption claimed under section 11.
The High Court did not accept the conclusions of the Tribunal by heavily relying upon the revocability of the trust as clearly specified in the document and accepting the stand of the Revenue that exemption under section 11 was subject to the provisions of ss.60 to 63 of the Act and on the finding that the trust was revocable it upheld liability, Section 11(1) of the Act, as far as relevant, provides: "Subject to the provisions of sections 60 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income: (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and Co) where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of 25% of the income from such property;. " The conditions which have to be satisfied to entitle one for exemption, therefore, are: (a) the property from which the income is derived should be held under trust or other legal obligation.
(b) the property should be so held for charitable or religious purposes which enure for the benefit of the public.
It is well settled that no formal document is necessary to create a trust.
The reference itself accepts the position that the assessee is a religious institution.
There has been some amount of debate in the forums below as to whether Radha soami Satsang is a religion.
This Court in Acharya Jagdish waranand ,Avadhuta & Ors.
vs Commissioner of Police, Calcut ta & Anr.
; , while examining the claim of Anand Marg is to be treated as a separate religion indicat ed: "The words 'religious denomination ' in Article 25 of the Constitution must take their colour from the word 'religions ' and 318 this be so the expression religious denomina tion must also satisfy three conditions: (i) it must be a collection of individu als who have a system of beliefs of doctrines which they regard as conductive to their spiritual well being, that is, a common faith, (ii) common organisation; and (iii) designation by a distinctive name." In that case Anand Marg was held to be a 'religious denomination ' within the Hindu religion.
It is not necessary for us to decide whether Radhasoami Satsang is a denomina tion of the Hindu religion or not as it is sufficient for our purposes that the institution has been held to be reli gious and that aspect is no more in dispute in view of the frame of the question.
The question of assessment to income tax arose only following the decision of the Privy Council in the dispute between the two factions.
The Judicial Committee found that the properties which were the subjectmatter of the suit were acquired with the moneys presented to the Sant Satguru in the form of bhents or other contributions by the followers of the Radhasoami faith.
The Judicial Committee found that it was almost inconceivable that the followers of the faith when making their gifts to the Sant Satguru intended to create a trust within the meaning of the Act 14 of 1920 of which they, the donors and the worshippets, should be the beneficiaries.
The Privy Council further also found that it could not be said that the donors of the gifts were the authors of the alleged public trust.
The question was exam ined keeping the provisions of the 1920 Act in view.
The requirements of section 11 of the Income Tax Act are considerably different from what the Judicial Committee of the Privy Council was required to consider.
We have already pointed out that after 1907 the denomi nation got divided.
The claim of Dayalbagh group for exemp tion under the IncomeTax Act came for consideration before the Allahabad High Court in the case of The Secretary of State for India in Council vs Radha Swami ,Sat Sang, There it was found that the offerings made by the Dayalbagh Satsangis to Sahebji Maharaj and the property which had grown out of them and which admittedly stood in the name of the Sabha and the property which at all material times had stood in the name of the Sabha vested in the Sabha for the benefit of the Satsangis and Sahebji Maharaj had no beneficial or personal interest in that.
What has been found for the Dayalbagh Satsangis on this score is fully applica ble so far as the assessee is concerned, There is no dispute that the properties of the assessee are 319 also recorded in the name of the Sabha (Central Council) and there is no personal interest claimed by the Sant Satguru in such property.
Ever the years the Satguru has never claimed any title over, or beneficial interest in, the properties and they have always been utilized for the purpose of the religious community.
The test applied by the Privy council in the case of A 11 India Spinners ' Association vs Commis sioner of Income Tax.
Bombay is indeed applica ble to the facts of the present case and the result would then be in favour of the assessee.
We would like to point out that even if the trust was revocable, the property was not to go back to the Satguru on revocation.
The constitu tion and the bye laws on record indicate in clause 1(b): "1.
The constitutional powers of the Central Council Radhasoami Satsang . . . . are as below: (b) to collect, preserve and administer the properties movable and immovable that have been or may hereafter be dedicated to Radha soami Dayal or that may be acquired for or presented to the Radhasoami Satsang for the furtherance of the objects of the Satsang.
" This envisages that where the property was given to the Sant Satguru, it was intended for the common purpose of further ing the objects of the Sant Satguru and the Central Council had the authority to manage the property.
Clause 9 of the document stipulated that the properties would vest in the trust and clause 25 provided that the trust shall be revoca ble at the discretion of the Council and the trustees shall hold office at its pleasure.
Upon revocation the property was not to go back to the Satguru and at the most.
in place of the trust, the Central Council would exercise authority.
It is on record that there has been no Satguru long before the period of assessment under consideration.
As a fact, therefore, the Tribunal was justified in holding that the property was subject to a legal liability of being used for the religious or charitable purpose of the Satsang.
This aspect had not been properly highlighted before the High Court.
One of the contentions which the learned senior counsel for the assessee appellant raised at the hearing was that in the absence of any change in the circumstances, the Revenue should have felt bound by the previous decisions and no attempt should have been made to reopen the question.
He relied upon some authorities in support of his stand.
A full Bench of the Madras High Court considered this question in T.M.M Sankaralinga Nadar & Bros. & Ors, vs Commissioner of Income Tax, Madras, After dealing with the con cession the Full Bench expressed the following opinion: 320 "The principle to be deducted from these two cases is that where the question relating to assessment does not vary with the income every year but depends on the nature of the property or any other question on which the rights of the parties to be taxed are based, e.g., whether a certain property is trust property or not, it has nothing to do with the fluctua tions in the income; such questions if decided by a Court on a reference made to it would be res judicata in that the same question cannot be subsequentiy agitated.
" One of the decisions referred to by the Full Bench was the case of Hoystead &Ors.
vs Commissioner of Taxation Speaking for the Judicial Committee Lord Shaw stat ed: "Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be proper apprehension by the Court of the legal result either of the construction of the document or the weight of certain circum stances.
If this were permitted litigation would have no end, except when legal ingenuity is exhausted.
It is a principal of law that this cannot be permitted, and there is abun dant authority reiterating that principle.
Thirdly, the same principle namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed.
In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken.
" These observation were made in a case where taxation was in issue.
This Court in Parashuram Pottery Works Co. Ltd. vs Income Tax Officer, Circle 1, Ward A, Rajkot, at p. 10 stated: "At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversite as it must in other spheres of human activity.
" Assessments are certainly quasi judicial and these observations equally apply.
321 We are aware of the fact that strictly speaking resjudi cata does not apply to income tax proceedings.
Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.
On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter and if there was not change it was in support of the assessee we do not think the question should have been reopened and contrary to what had been decided by the Com missioner of Income Tax in the earlier proceedings, a dif ferent and contradictory stand should have been taken.
We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirma tive, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was enti tled to exemption under sections 11 and 12 of the Income Tax Act of 1961.
Counsel for the Revenue had told us that the facts of this case being very special nothinng should be said in a manner which would have general application.
We are inclined to accept this submission and would like to state in clear terms that the decision is confined to the facts of the case and may not be treated as an authority on aspects which have been decided for general application.
We direct the parties to bear their respective costs.
V.P.R. Appeals allowed.
| IN-Abs | The then Satguru of the appellant Creed was assessed for the assessment years 1937 38, 1938 39 for the first time.
He was a retired Govt.
servant.
His pension as well as the income from the institution were assessed together.
On appeal, the Assistant Commissioner of Income tax confirmed the assessments made by the Income tax Officer.
The Income tax Commissioner under reference made under section 66(2) of the Income tax Act, 1922 held that the offerings made to the assessee Satguru were offerings as held in trust and same were exempted under section 4(3)(1) of the Act.
When an application under Section 35 of the Act was made for ratification, whether the offerings received by the assessee consisted of interest income, property income, and income derived from sale of books and photographs etc.
to be excluded, the Commissioner directed deletion thereof.
For the year 1939 40, though the Income tax Officer did not allow exemption u/s.4(3)(1) of the Act, the Appellate Assistant Commissioner allowed exemption.
Till 1963 64 the appellant was not taxed and its refund applications were accepted by the respondent Revenue.
For the assessment years 1964 65, 1965 66, 1966 67, 1967 68, 1968 69, 1969 70, the assessee appellant was as sessed, treating it to be an association of persons, and held that the donations and contributions received volun tarily had limited religious use.
When the appellant assesses appealed, the appellate authority upheld the assessments.
313 Against the orders of the Appellate authority the asses see appealed before the Income tax Tribunal.
The Tribunal allowing the appeals of the assessee, held that the assessee was entitled to the exemption claimed under Section 11 of the Income tax Act, 1961.
On the question, referred to the High Court by the Tribunal, "Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the income derived by the Radha Swami Satsang, a religious institution, was entitled to exemption under Sections 11 and 12 of the Income Tax Act, 1961?", the High Court answered the question in favour of the Revenuerespondent, holding that the trust deed was revocable and the conditions for exemption under Sections 11 and 12 of the Act were not satisfied.
Allowing the appeals of the assessee, this Court, HELD: 1.01.
Assessments are quasi judicial.
Each assess ment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have al lowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.
[320H, 321 A B] 1.02.
No formal document is necessary to create a trust.
The conditions which have to be satisfied to entitled one for exemption are: (a) the property from which the income is derived should be held under trust or legal obli gation, (b) the property should be so held for charitable or religious purposes which enure for the benefit of the pub lic.
[317 E G] 1.03.
The property was given to the Satguru for the common purpose of furthering the objects of the Sat Guru.
The property was therefore subject to a legal liability of being used for the religious or charitable purpose of the Satsang.
[319 E, F] 1.04.
The Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under Sections 11 and 12 of the Income Tax Act, 1961.
[321 D] Patel Chhotahhai and Ors.
Janan Chandra Bask and Ors., AIR 314 1935 Privy Council 97; Acharya Jagdish Waranand Avadhuta & Ors.
vs Commissioner of Police, Calcutta & Ant., , The Secretary of State for India in Council vs Radha Swami Sat Sang, ; All India Spinners 'Associ ation vs Commissioner of Income Tax, Bombay, ; TM.M. Sankaralinga Nadar & Bros. & Ors.
vs Commissioner of Income tax, Madras, ; Hoystead & Ors.
vs Commis sioner of Taxation, and Parashuram Pottery Works Co. Ltd. vs Income tax Officer, Circle 1, Ward A Rajkot, at p.10, referred to.
|
Criminal Appeal No. 710 of 1991.
From the Judgment and Order dated 29.1. 1991 of the Delhi High Court in Cr.
W.P. No. 9 of 1991.
B.Pajha and Manoj Prasad for the Appellant.
V.C.Mahajan, S.D.Sharma and S.N.Terde for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
Special leave is granted.
The appellant, Havildar Ratan Singh was tried and convicted by Summary Court martial.
He was reduced in rank and sentenced to suffer rigorous imprisonment for one year.
He filed an application under Article 226 of the Constitu tion of India before the Delhi High Court, which was dis missed by the impugned judgment.
372 3.
Although a number of questions were raised in the writ petition and the special leave petition, the ground urged by the learned counsel for the appellant before us is confined to one point.
It has been contended that having regard to the nature of the charge against the appellant, the provisions of section 34 of the (herein after referred to as the Act) are attracted, and in view of section 120 (2) of the Act, trial by summary not permitted.
The learned counsel has placed the relevant provisions of the Act indicating that the appellant would have been enti tled to a qualitatively better right of defence before a court martial other than a summary court martial which was denied to him on a wrong assumption that the case was cov ered by section 36, and not by section 34.
The question which arises in this case, is whether the Summary Court Martial had jurisdiction to try the appellant in the facts as alleged in the present case.
The charge sheet states that when fired upon by a group of terrorist militants during an armed operation against them, the appellant quitted his place without orders from his superior officer.
Section 120 of the Act states that subject to the provisions of sub section (2) of the section a summary court martial may try any offence punisha ble under the Act.
Sub section (2) reads as follows : "(2) When there is no grave reason for immedi ate action and reference can without detriment to discipline be made to the officer empowered to convene a district court martial or on active service a summary general court martial for the trial of the alleged offender, an officer holding a summary court martial shall not try without such reference any offence punishable under any of ' the sections 34, 37 and 69, or any offence against the officer holding the Court.
" The position, thus, is that if the offence is covered by section 34 and immediate action for the specified reasons is not warranted, the summary court martial shall not have jurisdiction to hold the trial.
Section 34 states that any person subject to the Act, who commits any of the offences enumerated thereunder, shall on conviction by court martial, be liable to suffer death or such less punishment as prescribed.
The offences are detailed in 12 clauses and clauses (a) and (h) appear to be relevant in the present context.
They are quoted below: "(a) shamefully abandons or delivers up any garrison, fortress, post, place or guard, committed to his charge, or which it is his duty to defend or uses any means to compel or induce any 373 commanding officer or other person to commit any or the said acts; or ****************************************** (h) in time of action leaves his commanding officer or his post,guard, picquet, patrol or party without being regularly, relived or without leave; or. " 6.
The evidence in the case, included in the paper book prepared by the appellant, indicates that the appellant while engaged in an armed action against a group of mili tants is alleged to have run away when the militants opened fire and he, thus, in a cowardly manner left his post with out permission of his superior officer.
The allegations included in the charge sheet on the basis of which the appellant was tried are also to the same effect.
The appel lant is, therefore, right in his stand that if the prosecu tion case be assumed to be correct (which he denies) he was guilty of a more serious offence under clauses (a) and (h) of section 34 of the Act than under section 36.
In reply it is contended on behalf of the respondents that the case is covered by section 36, and, therefore, the Summary Court Martial was fully authorised to try the appellant under section 120 (1).
There is no dispute that the appellant is governed by the provisions of the Act.
It is also not suggested on behalf of the respondents that there was in existence any grave reason for immediate action so as to justify trial by an officer holding summary court martial.
The Operation in which the appellant was engaged was directed against the militants who were undisputedly included in the expression 'enemy ' within section 3(x).
The impugned order is attempted to be justified solely on the ground that section 36 covers the case.
The argument overlooks the position that it is not the scope of section 36 which can answer the question raised in the present case.
The issue is whether the offence is punishable under section 34 or not.
Section 36 covers a wide range of offences and the scope of section 34 is limited to a smaller area where the offence is more serious attracting more severe punishments.
If the allegations are assumed to be true then the appellant, on the militants opening fire, shamefully abandoned the place committed to his charge and which he was under a duty to defend.
Both clauses (a) and (h) are, therefore, clearly attracted.
The impugned trial by summary court martial and the decision thereby must be held to be without jurisdiction and have to be quashed.
We do not find any merit in the other points men tioned in the writ petition or in the special leave peti tion.
They are finally rejected.
374 9.
During the course of the hearing we drew the pointed attention of the learned counsel for the appellant that if he succeeded on the basis that the Summary Court Martial was without jurisdiction, he (the appellant) may have to be retired and awarded a more severe punishment, The learned counsel, however, decided to press the point even at the risk of a second trial of the.
appellant.
The learned coun sel for the respondents stated that a fresh proceeding may now be barred by the law of Limitation, and in view of the fact that the appellant is guilty of a very serious charge, this Court should decline to exercise its power under Arti cle 136.
In reply the learned counsel for the appellant pointed out that the period of limitation for commencing a fresh proceeding against the appellant shall not expire before 05.02.92 and the apprehension expressed on behalf of the respondents that the appellant, even if guilty, may escape a trial is misconceived.
We hold that the appellant is correct.
Accordingly we set aside the impugned judgment of the High Court as also the conviction and sentence passed against the appellant by the Summary Court Martial, but allow the respondents authorities to proceed to hold a fresh trial of the appellant in accordance with law.
The appeal is accordingly allowed.
T.N.A. Appeal allowed.
| IN-Abs | The appellant, a Havildar, was charge sheeted on the ground that during an armed action against a group of mili tants when the militants opened fire he ran away in a cow ardly manner and left his post without permission of his superior.
The respondent authorities proceeded on the ground that his offence was covered by section 36 of the and accordingly section 120 (1) of the Act was applicable.
Consequently, he was tried by a summary court Martial and was convicted and reduced in rank and imprisoned for one year.
He filed an application under Article 226 before the Delhi High Court which was dismissed.
In appeal to this Court it was contended on behalf of the appellant that having regard to the nature of the charge against him section 34 of the was attracted and in view of section 120(2) of the Act trial by summary Court was not permitted.
Allowing the apeal and setting aside the judgment of the High Court, this Court, HELD: 1.
Under section 120 (2) of the if an offence is covered by section 34 and immediate action for the specified reasons is not warranted, the summary court martial shall not have jurisdiction to hold the trial.
[372 D F] 2.
Section 36 covers a wide range of offences and the scope of 371 section 34 is limited to a smaller area where the offence is more serious attracting more severe punishments.
The opera tion in which the appellant was engaged was directed against the militants who were undisputedly included in the expres sion 'enemy within section 3 (x).
If the allegations are assumed to be true, than the appellant, on the militants ' opening fire shamefully abandoned the place comitted to his charge and which he was under a duty to defend.
Both clauses (a) and (h) of section 34 are clearly attracted.
The appel lant was therefore guilty of a more serious offence under clauses (a) and (h) of section 34 of the Act than under section 36.
1373 D G] It is also not suggested on behalf of the respondents that there was in existence any grave reason for immediate action so as to justify trial by an officer holding summary court martial.
Consequently the impugned, hed trial by Summary Court Martial and the decision thereby must be held to be without jurisdiction and is quashed.
The conviction and sentence passed against the appellant is set aside.
[373 E G] 3.
The respondents authorities can proceed to hold a fresh trial of the appellant in accordance with law.
[374. C]
|
Appeal No. 4541 of 1991.
From the Judgment and Order dated 6.8.1991 of the Punjab and Haryana High Court in C.W.P. No. 2415 of 1991.
Dr. Anand Prakash, Mrs. Veena Birbal and Raj Birbal for the Appellants.
D.R. Sehgal, S.K. Bagga and Mrs. S.K. Bagga for the Respond ents.
The Judgment of the Court was delivered by VERMA, J.
The respondent, Jagjit Singh Mehta, is em ployed at present in the Bank of India as an officer in Junior Management Grade Scale 1 and posted in a Branch Office of the Bank in District Giridih in the State of Bihar.
The respondent was earlier employed in the clerical cadre of the Bank and was posted at Chandigarh.
According to the policy contained in Annexure B read with notice dated March 28, 1988 (Annexure C), on promotion from the clerical cadre to the Officers ' Grade, the respondent had to indicate his preparedness for posting anywhere in India according to the availability of vacancies.
The respondent readily indi cated his preparedness to be posted anywhere in India by Annexure D dated April 19, 1988 when the respondent was posted as a Clerk at Chandigarh prior to his promotion as an Officer.
After getting the promotion as an officer and being posted in Bihar on the above basis, the petitioner filed Civil Writ Petition No. 2415 of 1991 in the High Court of Punjab and Haryana for a direction to the Bank to transfer him from the Bihar Zone to the Chandigarh Zone on the ground that his wife is employed as a Senior Accountant at Chandi garh.
The writ petition has been allowed by a Division Bench (M.R Agnihotri & D.S.Mehra, JJ,) of the High Court by a cryptic order dated 6.8.1991 which reads as under : "After hearing the learned counsel for the parties, we allow this petition and direct the respondents by issuing a writ of mandamus commanding the Bank of India to transfer the peti 495 tioner and post him somewhere near Chandigarh as his wife is posted as a Clerk in the office of the Advocate General, Punjab, Chandigarh.
This shall be done within a period of two months.
No costs.
" The petitioner Bank of India is aggrieved by the above order of the High Court.
Special leave is granted.
In the face of Regulation 47 of the Bank of India (Officers ') Service Regulations, 1979 according to which every officer is liable for transfer to any office or branch of the Bank of India or to any place in India and the clear provision for such a transfer in the policy (Annexure B) read with notice dated March 28, 1988 (Annexure C), it is difficult to sustain the High Court 's order.
However, learned counsel for the respondent placed reliance on para 4 (vi) of a Memorandum dated April 3, 1986 (AnnexureH) of the Government of India containing guidelines for posting of husband and wife at one station which are meant to be fol lowed also by all the Public Sector Undertakings.
Learned counsel urged that according to the statutory provisions contained in the and the Bank of India (Officers ') Service Regulations, 1979 made thereunder, the Bank is bound to follow the guidelines and directions issued by the Cen tral Government in this behalf.
There can be no doubt that ordinarily and as far as practicable the husband and wife who are both employed should be posted at the same station even if their employers be different.
The desirability of such a course is obvious.
However, this does not mean that their place of posting should invariably be one of their choice, even though their preference may be taken into account while making the deci sion in accordance with the administrative needs.
In the case of All India Services, the hardship resulting from the two being posted at different stations may be unavoidable at times particularly when they belong to different services and one of them cannot be transferred to the place of the other 's posting.
While choosing the career and a particular service, the couple have to bear in mind this factor and be prepared to face such a hardship if the administrative needs and transfer policy do not permit the posting of both at one place without sacrifice of the requirements of the adminis tration and needs of other employees.
In such a case the couple have to make their choice at the threshold between career prospects and family life.
After giving preference to the career prospects by accepting such a promotion or any appointment in an All India Service with the incident of transfer to any place in India, subordinating the need of the couple living together at one 496 station, they cannot as of right claim to be relieved of the ordinary incidents of All India Service and avoid transfer to a different place on the ground that the spouses thereby would be posted at different places.
In addition, in the present case, the respondent voluntarily gave an undertaking that he was.
prepared to be posted at any place in India and on that basis got promotion from the clerical cadre to the Officers ' grade and thereafter he seeks to be relieved of that necessary incident of All India Service on the ground that his wife has to remain at Chandigarh.
No doubt the guidelines require the two spouses to be posted at one place as far as practicable, but that does not enable any spouse to claim such a posting as of right if the departmental authorities do not consider it feasible.
The only thing required is that the departmental authorities should consid er this aspect along with the exigencies of administration and enable the two spouses to live together at one station if it is possible without any detriment to the administra tive needs and the claim of other employees.
The High Court was in error in overlooking all the relevant aspects as well as the absence of any legal fight in the respondent to claim the relief which the High Court has granted as a matter of course.
The High Court 's order must, therefore, be set aside.
Consequently, the appeal is allowed, the impugned order of the High Court is set aside and the respondent 's writ petition is dismissed.
No costs.
P. Appeal allowed.
| IN-Abs | Regulation 47 of the Bank of India (Officers ') Service Regulations, 1979 provided that every officer was liable for transfer to any office or branch of the Bank of India or to any place in India.
The respondent was posted as a clerk in the appellant Bank at Chandigarh.
At the time of his promotion to the Junior Management Grade Scale 1, he gave an undertaking for posting anywhere in India, and was consequently posted as Branch Officer in the State of Bihar.
Thereafter, he filed a writ petition in the High Court claiming his transfer to Chandigarh Zone on the ground of his wife being employed at Chandigarh.
The writ petition was allowed.
The Bank filed appeal by special leave to this Court.
It was contended on behalf of the respondent that para 4 (vi) of Memorandum dated 3.4.1986 of the Government of India contained guidelines for posting of husband and wife at one station which were meant to be followed also by all the Public Sector Undertakings, and, according to the provisions of the Banking Compa 493 nies (Acquisition and Transfer of Undertakings) Act 1970 and the Bank of India (Officers ') Service Regulations, 1979 made thereunder, the bank was bound to follow the guidelines and directions issued by the Central Government.
Allowing the appeal of the Bank, this Court, HELD: 1.
Although the guidelines require the two spouses to be posted at one place as far as practicable the desirability of such a course being obvious yet that does not enable any spouse to claim such a posting as of right if the departmental authorities do not consider it feasible; nor does it mean that their place of posting should invaria bly be one of their choice even though their preference may be taken into account while making the decision in accord ance with the administrative needs.
The only thing required is that the departmental authorities should consider the feasibility of a suitable posting along with the exigencies of administration and enable the two spouses to live togeth er at one station if it is possible without any detriment to the administrative needs and the claim of other employees.
[pp 495 E; 496 BC] 2.
After accepting a promotion or any appointment in an All india Service, subordinating the need of the couple living together at one station, they cannot as of right claim to be relieved of the ordinary incidents of the serv ice and avoid transfer to a different place on the ground that the spouses thereby would be posted at different places.
While choosing the career and a particular service the couple have to bear in mind this factor and be prepared to face such a hardship particularly when they belong to different services.
They have to make their choice at the threshhold between career prospects and family life.
[pp 495 F H; 496 A] 3.1 In the instant case, the respondent voluntarily gave an undertaking that he was prepared to be posted at any place in India and on that basis got promotion and thereaf ter sought to be relieved of that necessary incident of an All India Service on the ground that his wife had to remain at Chandigarh.
[p. 496 AB] 3.2 In the face of Regulation 47 of the Bank of India (Officers ') Service Regulations, 1979 according to which every officer is liable for transfer to any office or branch of the Bank of India or to any place in India and the clear provision for such transfer in the policy read with the notice dated March 28, 1988, the High Court 's order cannot be sustained.
[p. The High Court was in error in overlooking all the relevant aspect as well as the absence of any legal right in the respondent to claim the relief which it granted as a matter of course.
[p. 496 CD]
|
Appeal No. 4702 of 1991.
From the Judgment and Order dated 26.8.88 of the Bombay High Court in W.P. No. 2264 of 1984.
T. Andharujina, F.H. Talyarkha, R.F. Nariman, R. Narain, Ashok Sagar and Ms Amrita Mitra for the Appellants.
K.K. Singhvi, B.N. Singhvi and Anil K. Gupta for the Re spondents.
The Judgment of the Court was delivered by 451 V. RAMASWAMI, J.
Leave granted.
The First appellant Tara Engineering and Locomotive Company Limited (hereinafter called the 'Company ') is a. company registered under the Indian Companies Act, 1913 and the second appellant is one of its Directors.
The Company is carrying on business of manufacture and sale of motor vehi cles and spare parts of motor vehicles and excavators.
Their manufacturing units are at Pune and Jamshedpur outside the Thane Municipal Corporation limits.
They have a bonded warehouse within the municipal limits in which they bring and stock motor vehicles parts 'and excavators parts from their own factories at Pune and Jamshedpur.
They also bring in parts manufactured by their ancillaries within India and also parts imported from aboard.
These products or parts are brought in bulk and thereafter taken or sent out from the Municipal limits in smaller packings depending on the re quirements of the customers in various parts of the country.
It is stated that the parts imported or purchased from others and brought in are relatively very small in quantity and the major portion of the activity related to their own factory produced parts.
On and from 1 st October, 1982 with the notification under Section 3 of the Bombay Provincial Municipal Corpora tion Act, 1949, the Thane Municipal Council became a Munici pal Corporation (hereinafter called the Corporation).
Prior to the constitution of the Corporation it was a municipality and were governed by the Thane Municipal Council constituted under the Maharashtra Municipality Act, 1965.
Prior to 1 st October, 1982 the Thane Municipal Council had granted to the Company current account facilities in respect of payment of octroi under the Maharashtra Municipalities Act, 1965 and the Maharashtra Municipalities (Octroi) Rules, 1968 made thereunder.
The Municipal Council had also granted permis sion under Rule 10 (2) to the Company for maintaining a godown or warehouse of their own.
Their is no dispute that even after the coming into existence of the Thane Municipal Corporation the appellants were permitted to have a ware house of their own and keep a current account facility without the requirement of immediate payment of octroi at the Octroi Naka.
In terms of granting those facilities the Company had made as security a cash deposit of Rs. 7 lakhs with the Corporation and had also given a Bank Guarantee for an equivalent amount as agreed to between the Company and the Corporation.
However, there is some dispute as to what were the formalities that were dispensed with in the matter of claiming refund of the octroi when the goods were export ed.
But suffice it to say at this stage that the appellants were permitted to carry out their activities of imports and exports under the current account procedure with a facility of unpacking the bulk, repacking and exporting.
452 During the period 1st January, 1983 to 31st March, 1964 it is stated that the appellants had made 1182 claims for refund.
All these claims were rejected by the letters of the Corporation dated 31.8.1983, 12.1.
1984, 5.4.1984 and 6.4.1984.
They were rejected on the following two grounds: (1) the Company had "sold" the spare parts within the octroi limit (which is co terminus with the Corporation limit) in contravention of Rule 25 (3) (d) of the Maharashtra Munici palities (Octroi) Rules, 1968 (hereinafter called the "Rules"), (2) the procedure prescribed for export and the claim of refund had not been strictly followed.
The non compliance with)the procedure prescribed referred to in the second ground according the Corporation were: (i) Form 4 of the Octroi Rules and the original invoices were not submit ted, or (ii) Forms 11 and 12 filed were incomplete and all the required information were not given or (iii) certificate of the Octroi exit Naka Officer had not been obtained.
The rejection of the claim was either on one or more than one or all the grounds mentioned above.
The appellants filed a writ petition under Article 226 in the High Court of Judicature at Bombay contending that the action of the Municipal Corpo ration in refusing refund is unconstitutional and illegal and for certain other reliefs.
The Division Bench of the High Court which heard the same dismissed the writ petition on the 26th August, 1988.
It is against this judgment that the present appeal has been filed.
It appears that during the hearing of the writ petition the learned counsel appearing for the Corporation did not counter the contention of the Company that the rejection under Rule 25 (3) (d) was not correct and the learned Judges have also recorded the same in the judgment.
But the learned counsel for the respondent before us stated that it is not correct to say that he had conceded any point and that since he could not argue that point in view of the decision of another Division Bench of the same High Court in Khandelwal Trader Akola vs The Akola Municipal Council, AIR 1985 Bombay 218 which was binding on the Bench which heard the writ petition and also in view of certain observations of this Court in Burmah Shell Company vs Belgaum Municipal, [1963] Suppl.
2 SCR 216 and Hiralal Thakorlal Dalai vs Brash Broch Municipality, he did not press the point.
We have therefore, permitted the point to be argued in this appeal.
Before we discuss the points in controversy we may state that in the counter affidavit filed in the writ petition the respondents have admitted that the Company was enjoying the current account facility prior to 1.10.
1982 and the re spondent Corporation had also given the said facility to the Company even after 1st October, 1982 on their making a cash deposit of Rs. 7 Lakhs and furnishing a Bank Guarantee for a like sum as security 453 for grant of that facility.
The respondent had also admitted that the Company had been given permission under Rule 10 (2) to maintain their own godown from 12th December, 1982.
Broadly stated under the current account facility granted, no octroi duty is recoverable in cash from the appellants at the entry octroi naka point.
However, the Company was re quired to submit a statement of goods imported in Form 5 before the 10th of the following month.
The officers of the respondent after scrutiny of the statement so filed deter mine the octroi duty payable thereon and debit the amount in the current account kept and send a demand notice to the company.
The Company is required to pay the amount to the Corporation within 15 days of the determination of duty.
The first submission of Mr. Andharujina, learned counsel for the appellants was that the sales were not for consump tion or use within the octroi limits and that the parts were sold to parties outside the octroi limits and also for consumption or use outside such limits and therefore the rejection of the claims on the ground that the spare parts were sold within the municipal limits and that it amounted to a contravention of Rule 25 (3) (d) of the Rules is ille gal.
Mr. K.K. Singhvi, the learned counsel for the Corpora tion on the other hand contended that the meaning of words "sales therein" in the definition of octroi in the Acts and in Entry 52 of List II could not be limited to sales of the goods for purposes of consumption or use within the munici pal limits.
When an importer wants to export dutiable goods tempo rarily detained by him in his own godown he shall present an intimation cumapplication for written permission in Form 11 to the Superintendent of Octroi to export such goods.
Rule 25 (3) (d) states that no such intimation shall be accepted unless: .LM15 "the exporter and the importer of these goods are one and the same person and such articles have not undergone change of ownership" .LM0
The case of the Corporation was that there was a change in the ownership of the goods since a sale in law had taken place inside the octroi limits though the purchaser was residing and carrying on business outside the octroi limits and under the sale the goods were intended to be and in fact exported for the purpose of consumption and use outside the octroi limits.
Section 127 of the Bombay Provincial Municipal Corporation Act,1949 and the corresponding section 105 of the Maharashtra Municipalities Act,1965 authorises the Muncipality to levy "Octroi".
Both these Acts define 454 octroi as meaning a tax on the entry of goods into the municipal area "for consumption, use or sale therein".
The Maharashtra Municipalities (Octroi) Rules 1968 made under the Maharashtra Municipalities Act, 1965, provides for the levy, collection and refunds of octroi duty on the goods specified in the schedule thereunder and the procedure for the same.
These Rules were in force in Thane Municipality before Thane was declared as "City" under the Bombay Munici pal Corporations Act LIX of 1949.
However these Rules are continued in the Thane Municipal Corporation by virtue of paragraph 5 of Appendix IV to the Act LIX of 1949.
The legislative entry relating to the constitutional power to levy this tax is found in List II Entry 52 of the 7th Schedule to the Constitution which reads: "52.
Taxes on the entry of goods into a local area for consumption, use or sale therein".
The Bombay Municipal Boroughs Act, 1925 which was in force prior to the enactment of the Maharashtra Municipali ties Act, 1965 also contained a similar provision in section 73 enabling the Municipalities covered by that Act to levy "Octroi on animals or goods or both brought within the octroi limits for consumption or use therein".
This provi sion was amended by Amending Act 35 of 1954 by substituting the words "use or sale" for the words "or use" with effect from May 5, 1954.
In other words before 1954 the word "sale" was not included in the provision of octroi on goods which the Municipality was authorised to impose.
After the amend ment the Municipality could levy octroi on goods brought within the octroi limits "for consumption, use or sale therein".
This provision came up for consideration in Burmah Shell case (supra).
Two of the categories of transactions which were considered in this case related to transactions under which (1) goods were sold by the Company through its dealers or by itself and consumed within the octroi limits by persons other than the Company and (2) goods sold by the Company through its dealers or by itself inside the octroi limits to other persons but consumed by them outside the octroi limits.
The Company contended that the tax could not be collected on goods which were merely sold but not con sumed inside the octroi limits.
In connection with this con tention this Court considered the meaning of words "consump tion, use or sale therein" and observed: "It is not the immediate person who brings the goods into a local area who must consume them him self, the act of consumption may be post poned or may be performed by someone else but so long as the goods have been brought into the local 455 area for consumption in that sense, no matter by whom, they satisfy the requirements of the Boroughs Act and octroi is payable". " . .
The goods must be regarded as having been brought in for purposes of consumption when a person brings them either for his own use or consumption, or to put them in the way of others in the area, who are to use and consume".
And concluded holding: "In our opinion, the Company was liable to pay octroi tax on goods brought into local area (a) to be consumed by itself or sold by it to consumers direct and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area irrespective of whether such consumers bought them for use in the area or outside it.
The Company was, however, not liable to Octroi in respect of goods which it brought into the local area and which was re exported".
The ratio is thus not a mere sale inside that attracts octroi but a sale intended for consumption of the goods inside the octroi area though ultimately the person to whom it was sold for consumption does not consume the goods inside but does the same outside the limit.
After consideration of the judgment in Burmah Shell Company 's case (supra) the Gujarat High Court in one of the cases arising for refund of octroi duty paid, took the view that octroi leviable on goods brought within the octroi limits 'for consumption, use or sale therein ' and that the word 'sale ' could not be given the narrow meaning of a sale for consumption to the ultimate consumer within the octroi limits.
Accordingly if the goods were sold within the octroi limits by the importer even if it resulted in export and consumption was also outside the octroi limit, octroi duty paid is not refundable.
This decision came up in appeal before this Court and the decision of this Court is reported in Hiralal Thakorlal Dalai vs Brash Broach Municipality, On facts that case related to a con signment sale and the goods were despatched to destination outside octroi limits for consumption there.
A plea for review of the decision in Burmah Shell Company s case (supra) was also made in this case.
However a Constitution Bench rejected the request for reconsideration and held that the word "sale" in the colloquium of the words "consumption, use or sale therein" means sale for consumption within the octroi limits.
The ratio of these two decisions was consid ered by the Bombay High Court in Khandelwal Traders Akola 's case (supra), which was referred to in the Judgment under appeal.
It was held in this case also 456 that where a dealer imports goods within the octroi limits not for ultimate consumption or sale for consumption within the limits but for the purpose of export and obtain permis sion for export he is not liable to pay octroi on such goods notwithstanding that in the larger sense for purposes of export he sells the goods within the octroi limits, that is to say even where the situs of the sale could be fixed within the octroi limit.
The matter is now put beyond any pale of doubt by the latest decision of this Court in Munic ipal Council, Jodhpur vs M/s. Parekh Automobiles Ltd. & Ors., ; Rule 13 (4) of the Rajasthan Munici pal Octroi Rules, 1962 which was one of the provisions considered in this case provided that "In cases provided for in sub rule (3) (that is who is given the account current facility)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 munic ipal limits as shown by the transport passes: Provided that in computing the octroi duty payable under subsection (4), the goods trans ported 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".
Relying on this provision the municipality in that case contended that if the sale had taken place within the octroi limits though the sale was not for consumption or use within the octroi limits, duty was payable and no refund could be claimed.
The learned Single Judge who heard the matter in the High Court did not permit the importer to raise the question that the sale took place only outside the octroi limits of Jodhpur and proceeded on the footing that the sale of product in question took place within the octroi limits of Jodhpur.
He however accepted the contention of the Indian Oil Corporation (importer) that the sale to the dealer was for the purpose of export and the dealer did export the goods outside the octroi limits and that, therefore, even if the sale was said to have been effected within the octroi limits no octroi was leviable.
Since admittedly the goods had been sold in Jodhpur octroi limits only for their on wards transmission for use and consumption in Dangia was outside the octroi limits he held that no octroi duty was payable.
This view of the learned Single Judge was confirmed on appeal by the Division Bench of the High Court.
On appeal this Court confirmed this view and held that the Indian Oil Corporation (importer) who had the current account facility and gov 457 erned by the terms of rule 13 was entitled to go on paying octroi duty "on to basis of the goods brought by it within the municipality less the goods transported outside the municipality even where the transport outside the municipal ity 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".
In the present case the sales were to person who were carrying on business outside the limits of the Corporation and the goods were also intended to be consumed or used outside such limits and in fact the goods were also export ed.
The ratio of the decisions above referred clearly, therefore, governs this case, even if it were to be assumed that the sale in the general sense took place inside the municipal limits.
However we may state that it was the contention of the learned counsel for the appellant that the sale in fact took place outside the municipal limits and in support of this contention he relied on the following facts among others.
The spare parts were consigned by the Company to out station purchasers.
The goods were transported by the Company them selves across the octroi limits.
The consignment or lorry receipt mentioned the consignee as self.
The bills for collection were sent through Bank and the goods were not to be delivered to the consignee until the payment was made by the consignee through the Bunk.
Right of disposal expressly reserved with the vendor.
On the other hand on behalf of the Corporation it was contended that orders were both received and accepted in Thane, goods were despatched from Thane and challans were also made in the name of the buyers and the property in the goods passed within Thane.
The sale had in fact taken place within municipal area.
In fact he further contended that being a question of fact we are not entitled to go into the same in view of the finding of the High Court.
It is not necessary for us, however, to consider this aspect and we would for the purpose of this case proceed on the assumption that technically the sale in law had taken place inside the municipal limits.
Since the goods were sold by the Company to outside purchasers and the goods under the transactions of sale, were intended to be exported and were in fact exported, for consumption or use outside the municipal limits no octroi duty was leviable and the octroi duty paid on entry into the municipal limits was, therefore, liable to be refunded.
Accordingly the rejection of the refund claims on the ground that Rule 25 (3) (d) had not been strictly complied with is illegal and could not be sustained.
Such of those claims which were rejected only on the grounds of contravetion of 458 Rule 25 (3) (d) shall now be taken up by the respondent and passed for payment.
In the case of impost of octroi the taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area.
Mere physical entry into the octroi limits would not attract levy of octroi.
When the goods are brought in not for consumption within the area but for temporary detention and eventual export, octroi is not leviable.
But in order to ensure, in such circumstances, that the goods are exported and to prevent evasion of octroi on goods consumed inside the octroi limit, Rules provide for deposit of a certain sum of money or the actual octroi duty payable subject to a right to get a refund of the same when the goods are exported.
When the goods in respect of which octroi was paid are exported, the octroi became refundable and that is the very scheme of the ' levy of octroi.
The octroiable event in such a case shall be deemed not have happened.
Right to refund arises because the goods are not consumed inside the area but exported and the tax becomes not leviable.
The rules merely regulate the system on which refunds shall be allowed.
The procedure prescribed and the need to adhere to the procedure shall have to be considered in the light of these legal incidence and nature of octroi duty.
Before we deal with the question whether the Company had not followed any of the procedure prescribed and the right of the Corporation to deny refund of octroi on non compli ance with any of those provisions in the Rules, it is neces sary to broadly set out the different types of procedures prescribed, depending on different purposes of imports and exports, contemplated under the Rules.
This may be broadly classified into five categories, (i) goods imported for Consumption, use or sale in the municipal area, (ii) goods imported not for consumption, use or sale within the munici pality but for immediate export, (iii) goods intended to be temporarily detained within the municipality in the bonded warehouse maintained by the Corporation and eventual export; (iv) goods intended for temporary detention in the private licensed bonded wharehouse of the importer and eventual export; and (v) goods imported by any person, mercantile firm or body which has been permitted by the municipal Corporation to keep an current account.
In the first case, since octroi is attracted on arrival of the dutiable goods at the Octroi Naka the importer pays the amount of octroi assessed by the octroi officer and takes the goods inside the municipal limits.
In the second case, the importer gives a declaration cum application that the goods are not being imported in the municipal limits for consumption, use or sale but are intended for immediate export outside the octroi limits.
He is required to deposit an amount in 459 accordance with the scale fixed under clause (b) of sub rule (1) of Rule (5).
On such deposit being made a receipt is given in the form prescribed by the Entrance Naka Inspector and a written permission cum transit pass issued by the Octroi Officer.
On arrival of the goods at the exit Naka and on surrender of the written permission cum transit pass the deposit amount is refunded.
In the third category of cases, the importer makes an application to the Octroi officer at the Entrance Naka for a written permission to deposit such goods at the bonded warehouse maintained by the Corporation.
The Octroi Officer then makes an entry on the application that the importer is allowed to proceed with the goods to the bonded warehouse.
The Officer in charge of the bonded warehouse will receive the goods and keep them in the bonded warehouse until exported.
When the importer wants to export the goods he is required to apply for a written permission cum export pass in the prescribed form and also deposit an amount equal to the octroi leviable therein.
On such deposit made a written permissioncum export pass is issued.
When the goods are taken out of the municipal limits the Officer Incharge of the Exit Naka endorses the export pass certify ing the export and the refund of the deposit is claimed thereafter producing the certificate issued by the Exit Naka Officer.
In the fourth category, the importer gives a decla ration in Form 4 that the goods are meant for temporary detention with him at his own warehouse for eventual export.
After verification of the particulars furnished in that form with the invoices and other documents produced he is re quired to deposit at the Entry Octroi Naka point itself an amount equal to the amount of full octroi duty thereon as deposit.
A receipt is given by the Octroi Inspector stating that the said amount "on account of deposit" has been recov ered.
When he wants to export the dutiable goods detained with him he presents an intimation cum application in Form 11 for written permission to export the goods.
He is also required to produce the goods at the Central Octroi officer along with the application.
On satisfaction that all the conditions prescribed have been fulfilled and after verifi cation of the goods a written permission cum refund export pass in Form No. 12 is given to the importer.
On presenta tion of these documents the Octroi officer at the Exit Naka gives a certificate that the goods mentioned therein have passed octroi limits and with that the refund application is made and refund obtained.
The instant case falls under the fifth category.
The Company has been permitted by the Municipal Corporation to keep the dutiable goods in a bonded warehouse of their own with a current account facility.
The rules which were relied on by the Respondent and some of which are said to have not been complied with by the Company may be set out: "10.
Maintenance of Bonded Warehouses.
460 (1) x x x (2) A Council may permit any importer to maintain a private Bonded Warehouse for keep ing goods which are imported by such importer for temporary detention and eventual export and grant a licence to such importer for that purpose subject to the conditions and restric tions laid down in such licence.
A fee shall be charged for such licence at the rates specified in the bye laws relating to the grant of such licence." "14.
Declarations to be made by importer, etc. (1) On arrival of any dutiable goods at the Octroi Naka, the Octroi Officer shall call upon the importer or the driver of the Vehicle or conveyance or the person incharge of the pack animal or other persons bringing the goods (a) X X X X (b) X X X X (C) X X X X (d) to make a declaration in Form 4, in respect of the goods intended for temporary detention with himself and eventual export; (e) to make a declaration in Form 5, in respect of the goods imported by, or on behalf of, any person, mercantile firm or body which has been permitted by the Council to keep an account current under Section 142; "15.
Procedure for assessment and recovery of octroi.
(4) On receipt of a declaration in Form 5 under the last preceding rule, the Octroi Officer shall ascertain whether the name of the person, mercantile firm or body on whose behalf the goods are being imported is on the list of persons, firms or bodies allowed to keep an account current, and if so, check the goods with the details entered in the declara tion and fill up the certificate below the declaration and issue a pass in Form 6.
The Octroi Officer shall forward all such declara tions together with a list in duplicate there of to the Central Octroi Officer for further action in accordance with the provisions of Section 142.
"24.Procedure for temporary detention of dutiable goods meant for eventual export, with importer himself.
(1) Where dutiable goods intended for temporary detention within the octroi 461 limits and eventual export are to be detained by the importer at his residence or a Bonded Warehouse licensed under sub role (2) of rule 10 within the octroi limits, he may do so on giving a declaration to the Octroi officer in Form 4, and on payment of an amount equal to the amount of full octroi due thereon as deposit either in cash or in the form of Bank Guarantee at the Entrance Naka.
(2) In case the importer cannot export the goods without breaking bulk or without assem ble and testing in the case of machinery, he shall do the same only with the sanction of the Superintendent of Octroi in the presence of an officer deputed for this purpose by the said Superintendent.
Such goods, if necessary shall be formed into packages, which may be sealed and marked by the Officer so deputed.
"25.Procedure for export of dutiable goods temporarily detained with importer. (1) When the importer wants to export dutiable goods detained with him, he shall present an intima tion cum application for written permission in Form 11 to the Superintendent of Octroi to export such goods, giving necessary details; and produce such goods for verification on any working day during the hours fixed by the Chief Officer at the Central Octroi Office or at any other Branch Office, as may be estab lished by the Council for the purpose.
(2) A separate intimation cum application shall be given by each importer or his own goods.
One such intimation cumapplication shall be sufficient for a single consignment.
When such consignment contains goods of dif ferent descriptions, full details shall be given separately in the intimation cum appli cation.
Not more than one intimation cum application for export can be given by an importer for goods passing through an Exit Naka in a day.
(3) No such intimation cum application shall be accepted unless (a) it is complete in all respects and signed by the importer himself or by a person authorised by him in writing in this behalf; (b) it is supported by the receipt for the deposit paid at the time of import and is accompanied by the original invoice, if any, filed at the time of import; 462 (c) the goods produced for inspection and intended to be exported are, subject to the provisions of sub rule (2) of the last preced ing rule, identical with what they were at the time of import.
(d) the exporter and the importer of these goods are one and the same person and such articles have not undergone change of ownership.
The requirement of clause (c) shall not be applicable in the case of dutiable goods to which sub rule (3) or (4) of the last preceding rule applies.
(4) On receipt of such intimation cum applica tion and on arrival of the goods intended for export, at the Central Octroi Office or Branch Office, the Superintendent of Octroi or any officer authorised by him shall (a) satisfy himself that all the condi tions prescribed above are fulfilled; (b) verify that the goods actually pro duced for inspection are as described in the intimation cum application and in the relevant import invoice, if any, or in the import declaration in Form 4, and seal and mark such goods whenever deemed necessary; and (c) issue a written permission cum refund export pass in Form 12 after obtaining a specimen signature of the importer or his authorised agent on such pass.
(5) The importer accompanied by an escort, if provided by the Council, shall then take the goods beyond the octroi limits through the Exit Naka within the time limit and by the route specified in the pass.
Before crossing the Exit Naka, the impoter shall present the goods to the Octroi Officer at the Exit Naka for inspection, with the pass.
The time limit shall be fixed with due regard to the distance of the Exit Naka from the Central Octroi Office or the Branch office, but in no case it shall exceed 12 hours from the time of issue of the permission cumrefund export pass.
(6) The Octroi Officer at the Exit Naka, on presentation of such goods as well as the pass, shall satisfy himself that (a) the pass as well as the goods are presented within the specified time limit; 463 (b)the seals or marks, if any, are inact; and (c) the goods actually tally with those men tioned in the pass.
On being so satisfied, he shall make relevant entries in the register maintained for the purpose, obtain signature of the importer thereon, sign a certificate as given on the pass, deliver the same to the importer and allow the goods to pass beyond the octroi limits.
Provision for refund of deposit. (1) When any goods for which a deposit has been paid under rule 24 at the time of their import are exported, the amount of deposit recovered shall, subject to the provision of sub rule (2), be refunded.
(2) The refund shall be admissible, if all the conditions below are satisfied. (a) The refund is applied for within one month from the date of e x port.
(b) The goods are exported out of the octroi limits within a period of six months of their import.
(c) The application for refund is supported by a duly certified written permission cum refund export pass.
(d) All the conditions in sub rule (3) of rule 25 are fulfilled.
(e) The amount claimed as refund is with drawn within three months from the date of intimation to the importer to receive the amount.
(f) The goods exported were declared to be intended for temporary detention with the importer and eventual export at the time of import: Provided that the said period of six months shall not apply to goods imported by the Food Corporation of India established under section 3 of the Food Corporation Act, 1964.
Procedure for refund.
(1) The Applica tion for refund of deposit shall be made in Form 13 by the importer himself or by his duly authorised agent in this behalf in writing on any working day during the hours fixed for money transactions by the Council at the Central Octroi Office within one month from the date of the actual export.
If the last day for claiming refund falls on a public holiday such application shall be accepted on the next working day.
464 (2) Such application shall be accompanied by the duly certified relevant written permis sion cure refund export pass and shall contain reference to the connected export intimation cum application already given by the importer.
There shall be a separate application for each written permission cure refund export pass.
(3) If the refund application is in order and satisfies all the conditions specified in the last preceding rule, the amount of the refund shall be correctly determined subject to the limitation prescribed in the next succeeding rule".
Value, weight, etc.
of goods for purposes of refund.
When the refund is claimed in respect of goods on which duty is leviable ad valorem, the value for the purposes of refund shall be the value as per invoice on the strength of which the duty was originally paid together with such cost of carriage and other incidental charges that were then deter mined.
Where the value was determined in the absence of invoice on the basis of market rate prevalent on the day of import, that value only should be considered and not the market price prevalent in the local market on the day of export".
FORM 4 (Rules 14, 24 and 25) Declaration in respect of the dutiable goods imported into the Municipal octroi limits, which are intended for temporary detention with the importer and eventual export.
To The Octroi Officer, Octroi Naka No. . . . .
Municipal Council.
I, . . . . (insert full name and address of the importer) hereby declare that the below mentioned goods are meant for temporary detention with me at . . (specify address at which to be kept) for eventual export outside the octroi limits.
I am willing to pay an amount equal to the amount of full octroi due thereon as deposit either in cash or in the form of Bank Guarantee and may claim refund according to the rules if these goods are exported outside limits within six months from the date of their import.
The below mentioned details are true and according to the original invoice, true copy of which is filed herewith.
The said invoice covers all the goods im ported by me as per Bill of Entry/Railway Receipt/Goods Transport Memo/Air consignment Note No. . .dated . . 465 Sr.
No No.and Description Weight Value Senders Rem No &date descri of the or plus all name& arks of ption of goods goods incidental address import packages charges in full document which are to given seper ately 1 2 3 4 5 6 7 8 Full residential/business address of the importer.
Date . .
Signature of the Importer I have checked the above particulars with the invoice and verified the goods, which are found to be correct.
True copy of the invoice appended is verified and found to be correct.
The weight or quantity or value, together with the incidental charges declared, is correct.
The taxable weight/quantity/value of the goods is . . and the rate of octroi . . Date. .
Inspector/Clerk.
The amount of Rs. . on account of deposit has been recovered under receipt No. . . dated . . . Date . .
Inspector/Clerk. FORM5 (Rules 14 and 15) Declaration in respect of the dutiable goods imported on behalf of person, firm, or body allowed to keep an account current.
To, The Cetroi Officer, Octroi Naka No. . Municipal Council.
I,. . . . (insert the full name and address of the importer) hereby declare that the below mentioned goods are being imported into the Municipal Octroi limits on behalf of . . . (insert the name of persons, firm or body allowed to keep an account current) and that the below mentioned value and weight/quantity of the goods is true and correct and is according to the original invoice, true copy of which is filed herewith.
The said invoice fully covers all the goods imported by me today as per Bill of Entry/Railway Receipt/Goods Transport Memo/Air Consignment Note No. . dated . . , I further undertake to produce the said invoice for your inspection whenever demanded by you within one year from today.
466 To be filled in by the importer To be filled in at the Central Octroi Office 1.Sr.
No. 2.
Bill of Entry 'Railway Receipt ' Goods Transport Memo/ Air Consignment Note.
Number description of packages.
Goods.
Value plus incidental charges which are to be given seperately.
7.Rate of Ovctroi.
Amount of Octroi recoverable.
Date. .Signature of the importer Dues entered in I have checked the above particulars Account Current with the invoice and verified the goods, Date . . which are found to be correct.
True Octroi copy of the invoice appended is Superintendent verified and found to be correct.
The weight or quantity or value, together with the incidental charges declared, is correct.
Issued pass No . dated . Date . . .
Inspector/Clerk FORM6 (Rule 15) Pass for goods imported on behalf of person, firm or body allowed to keep an account current .
Municipal Council:. .Municipal Council Book No. Entrance Naka No. : Book No. En trance Naka No. Counterfoil of pass Pass for goods imported by in account current . (Name of Person, firm or body) Description No. and Description Weight, Description of the quantity of packages goods or value 1 2 3 Dated . . Dated . .
Entrance Naka Inspector/Clerk Entrance Naka Inspector/Clerk 467 Form 11 (Rules 25 and 26) Intimation cum application for written permission for Export of Goods Temporarily detained with the Importer To The Superintendent of Octroi, . .
Municipal Council.
Sir, I. . . . . (insert the full name and address of the importer) hereby declare my intention to export the goods to. . .through
Naka No. . as detailed below.
The certified copy of original invoice/invoices under which these goods were imported are appended herewith.
I have produced the goods for actual verification.
Kindly grant me the permission to carry the goods to the said Naka.
Description Quantity Date of Import Deposit Gross No. of the (Number of Import invoice receipt weight goods bags or & No. of No. and number & cases) entrance date date Naka 1 2 3 4 5 6 7 Value Amount to be Number of Name and How Remarks refunded Refund Export address of exported pass granted the consignee 8 9 10 11 12 13 Date . . .
Signature of Importer Verified the contents and the weight as above and found correct.
Countersigned.
Octroi Officer.
Signature of the Refund Inspector/Clerk.
Receipt No. . 468 FORM Rule 25) Written Permission cum Refund Export Pass Receipt No. . . Date . . . 19 Sl.
Month Name and Name and Description Quantity Gross No. and address of address of of the (number of weight date the impoter the consignee goods bags or cases) 1 2 3 4 5 6 7 Value Deposit How Exist Date & time by Whether Remarks to be exported Naka which the goods goods refunded No. should reach the sealed or Export Naka escort given 8 9 10 11 12 13 14 *Fee for Written Permission Cum Refund Pass Rs . .
Miscellaneous Receipt No. . , dated. . , Signature of the importer Signature of Octroi Officer I hereby certify that the goods mentioned above have passed outside the octroi limits this day the. . of the month. . 19 Time. . . a.m./p.m.
in my presence Railway receipt. . /Vehicle No. .
The seals, if any, thereon were intact when the goods were presented to me for verification.
Date . . .
Signature of the Exist Naka Officer Naka No. . *This fee should be levied in accordance with the bye laws framed under section 338 for granting permission to take the goods from the Central Octroi Office or Branch Office to the Exist Naka.
FORM13 (Rule 29) Application for Refund of Deposit To The Superintendent of Octroi, . .
Municipal Council.
469 Sir, I, . . . the resident of. . hereby apply for refund of deposit as per enclosed Written Permis sion cum Refund Export Pass No. . .dated. . , as the goods mentioned in the pass were exported on. .under my intimation cum application, dated. . , I therefore, request you to grant the refund of Rs. . and oblige.
Enclosure: Date. .
Signature of Importer On a reading of these rules it appears to be that Rules 24, 25 and 28 in terms would apply only to cases failing under category four, stated above.
The declaration in Form 4 referred to in Rule 24 and deposit of the amount equivalent to octroi duty payable at the entry point, production of the goods for verification at the Central Octroi Office are all consistent with its being applicable to a case where dutia ble goods are imported for temporary detention and eventual export by a person having a bonded warehouse of his own contemplated in Rule 14 (1) (d) and not Rule 14 (1) (e).
However, Rules 29 and 30 are general in terms and may be invoked in both the cases falling under Rule 14 (1) (d) and (e).
Sub rule (3) of Rule 29 refers to the compliance of the conditions in Rule 28 and that is how it may be said that the provisions of Rule 28 are attracted to the cases of a person having a bonded warehouse and the facility of account current.
However, the Rules have to be read and applied in such way that they do not conflict with but are consistent with the facility of current account given to the Company.
Form 5 which is applicable to a case falling under Rule 14 (1) (e) does not require the Company (importer) to give a declaration at the time of arrival of the goods at the entry Naka point that the "goods are meant for temporary detention with" the Company at its warehouse "for eventual export outside the octroi limits".
The Company need not also make any deposit with the Naka Inspector at the point of entry.
An amount equivalent to the octroi duty payable in respect of the goods is only entered in the account current after the goods have reached the warehouse and verified by the Octroi Officer.
Form 4is not applicable to the case of the Company which has got a current account facility.
The Compa ny, is, therefore, bound to give a declaration only in Form 5, and need not give a declaration as in Form 4 nor is there any obligation to deposit an amount equivalent to the full octroi duty with the Octroi Inspector at the Entry Naka Point.
Further reference to original invoices/in Forms 4 and 5 is only for the purpose of checking the particulars en tered into in the forms.
The production of an invoice is not, having regard to the 470 purpose of such production, to be insisted blindly.
If the particulars furnished in the form including weight/quantity or value could be established satisfactorily by other docu ments, we have no doubt that will be sufficient compliance with the Rules.
Column 5 of Form 11 also refers to invoice and the date of invoice.
This is again to correlate the goods exported with the goods imported.
If the identity of the goods could be established by evidence other than the production of invoices that should satisfy the Rules.
The invoice as such has no bearing on the liability of the goods for octroi or the right of the Company for refund.
So far as the production of the original invoices are concerned, the learned counsel for the Company pointed out that the goods are brought from their own manufacturing units at Pune and Jamshedpur and it will only be a stock transfer and this requirement of producing original invoice could not be complied with and is not applicable.
Under the current account procedure the invoices, if any and all the other documents are verified when the goods reach the ware house with reference to the description of the goods, weight/quantity, value and other particulars and it is only after verification the octroi duty leviable is determined and amount is debited in the account current and the demand also is issued.
The learned counsel for the appellant also referred to certain documents to show that for every category of arti cle, the Company has given a distinctive number and the goods are easily identifiable and the number of items or quantity imported are all record in the register and com puterised for easy verification.
It is these identifying numbers of the articles that are mentioned in the intima tion cure application for written permission for export.
He also relied on the fact that the Company has no manufactur ing unit within the Thane Municipality.
Similarly, Column 6 of Form II also could not be complied with as it is not applicable to a person who is having current account facili ty.
So far as the value is concerned the learned counsel for the appellants have fairly stated that the respondent was taking 72% of the list price of the articles for determining octroi payable, for which he has no objection.
In fact, he has suggested that since the Company publishes the price list periodically and that which shows the current price at any point of time may be taken as the basis for such valua tion.
The Octroi Exit Naka Officer had refused to give the certificate of export pass on the ground that the particu lars in Columns 5 and 6 of Form 11 could not be verified as the original invoices and the deposit receipts were not produced.
Since these columns could be filled only to the extent possible by a person having an account current facil ity and there is no dispute about the export of the goods mentioned therein the refusal to give the export pass cer tificate.
by the Exit Naka Officer could not be sustained.
471 The next point to be considered is the procedure to be followed when the importer wants to "breaking the hulk" and repack the goods in smaller quantities and also the proce dure relating to filling up Forms 11 and 12 and the refund applications in such circumstances.
Rules 24 (2.) states that for breaking the bulk and repacking in smaller pack ages, sanction of the Superintendent of Octroi is necessary and the "breaking bulk" shall also be done in the presence of an officer deputed for this purpose.
Rule 62 of Chapter VIII of the Schedule to the Bombay Provincial Municipal Corporation Act, 1949 provides that subject to the standing orders not less than 90% of the octroi paid on any goods shall be refunded if such goods are exported beyond the limits of the city within six months of payment: "provided that. (C) in the case of goods which have been broken bulk prior intimation has been given to the officers specified in this behalf in the standing orders and the place or places of storage have been reported to him from time to time".
Paragraph 5 of Appendix IV to this Act which we have noticed earlier states that the rules flamed under the Municipal Act shall "in so far as it is not inconsistent with the provisions of this Act, continue in force".
Rule 62 of Chapter VIII forms part of the Act.
The learned counsel for the appellant, therefore, contended that Rule 62 shall prevail and prior intimation of the intention to 'breaking bulk ' shall be enough and there was no necessity for the Company to get the sanction of the Superintendent of Octroi or break the bulk in the presence of an officer deputed for the purpose as required under sub rule (2) of Rule 24.
In other words according to the learned counsel Rule 24 (2) of the Octroi Rules is inconsistent with Rule 62 of Chapter VIII of the Schedule to the Act and to the extent. _ of inconsistency it shall be deemed to be not applicable.
On the other hand the learned counsel for the respondent con tended that Rule 62 (c) deals with prior intimation and Rule 24 (2) deals with the sanction and breaking of the bulk in the presence of an officer deputed for that purpose and both the rules can stay together and operate and there is no inconsistency.
We are not impressed with the argument that there is an inconsistency between Rule 62 and Rule 24 (2).
The intimation contemplated in Rule 62 imply that the break ing the bulk shall be done with the knowledge of the octroi authorities.
But it Cannot be said that the rules further provide that after intimation the breaking of the bulk shall be done in the presence of the officers and after sanction that would in any case be inconsistent.
Both the rules thus can stand together.
In H.M.M. Limited vs Administrator, ; this Court had occasion to consider the effect of non com pliance with this require 472 ment of a similar provision, on the right to get refund.
Shortly stated the facts in that case were these: The appel lant brought into the municipal limits Horlicks in bulk containers (large steel drums) for being packed in unit containers (glass bottles) at the packing station in Banga lore and thereafter exported outside the municipal limits.
In respect of the milkfood so exported in glass bottles the appellants sought refund of octroi on the ground that there was no consumption, use or sale within the municipal limits and the goods were exported.
Rule 24 of the Octroi Rules that were in force in Bangalore city provided: "24. 0n 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 rate originally charged at the time of import; provided that no such refunds shall, except in the ease 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".
Relying on this provision it was contended by the Munic ipality that breaking the bulk amounted to "use" within the municipal limits attracting levy of octroi and no refund was permissible.
The refund application had also not been made within three months from the date on which octroi was levied.
It was admitted that the appellants had not followed that procedure prescribed in Rule 24.
This Court held that mere transferring of a bulk product in 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 rela tion to levy of octroi.
It was further held that the words "without breaking bulk" is not an expression of art and that meant only transferring the product from the drums by break ing the seal of the drums, to the bottles for the purpose of exporting or for taking them out of the municipal limits, and that would not amount to either use or consumption of the Horlicks powder within the municipal limits attracting the levy of octroi.
The ratio of the judgment clearly is that merely on the ground that the goods are not exported in bulk as originally imported, the levy does not become valid or that the import er who exported the goods loses his right to a refund of the octroi paid.
The goods neither loose their identity nor cease to be identifiable.
Once we reach the conclusion that there is no consumption or use, octroi is not attracted and if any levy has been made and the amount collected, the same becomes legally refundable even when the goods are exported in parts and in smaller packages.
This is particu 473 larly so because in the case of goods not consumed or used within the octroi area but exported there is a constitution al bar for the levy of octroi.
In this connection we may also refer to another decision reported in Municipal Committee, Khurari vs Dhannalal Sethi & Ors., [1969] I SCR 166.
The rules considered in that case also provided that an application for refund was to be made in the prescribed form and that the exporter after filling in the particulars had to present his application at the office appointed for that purpose.
There were other rules which provided an elaborate procedure to be followed at the time of export of the goods.
These rules related to the octroi officers satisfying himself that the goods brought for export agree with those mentioned in the application, presentation of the claim within the prescribed time, iden tifying of the goods exported with those imported and other matters.
This Court held that: "these rules do provide a procedure which an exporter wishing to claim refund has to fol low.
But the question is whether in a case where an exporter has not done so, is he disentitled from claiming the refund.
The real difficulty in the way of the appellant Commit tee is that though the rules lay down a proce dure which such an applicant has to follow, they do not provide at the same time that an applicant for refund who has failed to follow the procedure laid down in r.r. 35 to 39 would be disentitled to claim the refund.
In the absence of such a provision coupled with the categorical language of r. 27 giving a right to an exporter of dutiable goods to claim 7/8th of the duty paid on such goods on their import, it becomes difficult to uphold the denial by the appellant Committee of the right of respondents 1 and 2 such a refund.
We are, therefore, of the opinion that in the present state of the rules, the appeal must fail though for reasons different from those given by the Board of Revenue and the High Court".
It may be pertinent to mention that the Maharashtra Municipalities (Octroi) Rules, 1968 also do not contain any specific provision that an applicant for refund who has failed to follow the procedure would be disentitIed to claim the refund.
It may be noted that the amount collected which is equivalent to the octroi duty payable on the goods, on entry into the octroi limits while in detention in the warehouse is only as a deposit pending export of the goods.
The other aspect is that once octroi is not leviable the deposit made by the importer pending export is in the nature of a trust and refundable in the event of the export of the goods.
Further in a given set of facts, whether the rules have been complied with will have 474 to be tested having regard to the nature of the particular transaction and whether the object of the procedure provided is otherwise fully satisfied.
` Rule 28 also merely states that the refund shall be admissible if all the conditions in sub rule 2 of that Rule are satisfied.
The object of requiring intimation or sanction and presence of an officer when breaking the bulk in the scheme of octroi levy and refund is to ensure that dutiable goods do not escape the assessment and refunds are made only in respect of goods exported.
In other words the whole requirement relates to the identification of the goods.
In that sense if the same is otherwise complied with the right to refund cannot be denied.
These rules cannot be read as enabling the municipality to levy and collect octroi even in cases where the goods have not been imported for consumption or use.
As held by this Court in Kirpal Singh Duggal vs Municipal Board, Ghaziabad, ; the octroi rules are intended to regulate the system on which the refunds shall be allowed and paid.
What are merely matters of procedure which the municipality was entitled to require compliance with in granting refund cannot be treated as condition precedent for the entitlement of the refund itself.
The Constitution prohibits levy of tax except in accordance with law.
When the goods are not imported for consumption or use within the octroi area the municipality ceases to have any constitutional right to levy octroi.
If the goods therefore have merely entered into the octroi limits and passed out of the same no octroi duty is attracted.
The concept of octroi as held by this Court in Burma Shell s case (supra) may include "the bringing in of goods in a local area so that the goods come to a repose there".
It is this concept that is reflected in Rule 28 (2) Co) when it requires evidence that the goods were exported out of the octroi limits within a period of six months of their im ports.
The learned counsel for the appellants Mr. Andharuji na had expressed certain difficulties in satisfying the Corporation that the goods imported were exported within the period of six months as provided in the rules in view of certain peculiar circumstances in this case.
He pointed out the goods received in bulk are small small items and there are about 16000 distinctive types of articles and when the bulks are broken and each of the categories items are mixed up together it becomes difficult for him to individually identify when the goods were received and when they were exported.
However, he was sure that the goods were exported before six months.
When this difficulty was pointed out during the pendency of the appeal, as an interim direction this Court by Order dated 1.5.
1989 directed the parties to proceed on the basis that the goods which came in first had gone out first unless some factors or features indicate otherwise.
This is not equitable principle unknown to law.
Even as early as in 1816 with reference to money paid on account to a creditor, in Clayton 's case (1814) 475 23 All.
E.R. Rep. P. 1, it was held that in the absence of an agreement to the contrary, in the case of current account containing debit and credit entries there is a presumption that the first item on the credit side of the account is intended to be applied in the payment of the first item on the debit side of the account.
This is an equitable princi ple which could be followed in the instant case and it may be presumed that the goods which came in first have gone out first and the six months period could be determined on that basis.
In any case in view of the interim direction given by this Court on May 1,1989 that may be usefully be followed for the future also in this case.
To sum up: Having regard to the nature and incidence of octroi unless the octroiable goods are consumed or used or are meant to reach an ultimate user or consumer in the octroi area no octroi is leviable.
The words 'sale therein in the words "consumption, use or sale therein in the defi nition octroi means sale of octroiable goods to a person for the purpose of consumption or use by such person in the octroi area.
If sale was intended for consumption or use in the octroi area whether the purchaser actually consumed inside or outside octroi area is irrelevant.
Rules 24 to 30 and the forms in the system of levy of octroi are intended to regulate the procedure for collection, identification of dutiable goods and correlation of goods exported with the goods imported for the purpose of refunds of octroi collect ed.
In view of constitutional bar octroi is not leviable if the goods are not brought into the octroi area for purposes of consumption or use in the area but for export and in fact exported by the importer himself or the sale by him occa sions the export.
Compliance with the procedure prescribed in the Rules for filing claims of refunds are not condition precedent for the right or eligibility for refund or the liability to refund but are provisions regarding proof of export of the goods imported and are not meant to be exhaus tive either.
They are to be interpreted and understood in that sense.
The object of the Rules fixing a period of limitation for export however is different.
The export cannot be put in perpetual doubt and the goods may be con sidered to have come to a repose if they were not exported within a particular period provided in the rules.
Applying these principles to the instant case, on facts the rejection of refund applications on the ground that Rule 25 (3) (d) had not been complied with was illegal.
Since the rejection of the claims for refund was merely on the ground that either Form 4 and original invoices were not produced or columns 5 and 6 of Form 11 or the corresponding columns in Form 12 had not been filled with reference to an original invoice or Form 4 or deposit receipt and the refusal to issue export pass certificates on those very grounds which we have stated are untenable the other orders of rejections are also invalid.
If the goods are mixed up and unidentifia ble 476 due to breaking bulk and repacking in smaller and assorted packages before export the principle that the first export was of the goods first imported, subject to any evidence available to the contrary, may be applied and the six months period prescribed for export may be determined accordingly.
When these appeals were pending by way of interim ar rangement this Court by order dated 25.4.1990 directed that in order to obviate the difficulty of identifying the goods at the time of export by reason of the breaking of the)bulk and in order avoid doubts, the respondent Corporation may depute their officer or officers on all working days at the warehouse of the Company to supervise the breaking of the bulk subject to the Company reimbursing the entire monthly payments and other allowances to be paid to the said officer or officers as per bill or pay slips sent by the Corporation to the Company.
We think that this procedure could be con tinued and followed in future also so that while the pur poses of the rules are served the free trade and commerce of the Company which is stated to have a large turnover is also not affected.
The learned counsel for the respondent then contended that the appellants have recovered the amounts paid by them by way of octroi duty from the dealers or the customers to whom they had sold the goods and therefore they are in any case not entitled to get a refund.
The argument was that if refund is ordered it would amount to allowing the appellants to unjustly enrich themselves at the cost of the public to whom the burden had already been passed.
This argument is based on the ground that in the selling price the company had merged the octroi duty originally paid as deposit and if a refund is made the company would be getting an additional amount over and above normal price which they would have charged but for the fact that they were initially asked to deposit octroi.
There is no evidence that any of the arti cles sold by the Company is subject to any price control by the Government or that the Company had charged any octroi separately in the bills, Invoices and the other documents of sale to the outside purchasers produced before us do not also show that any octroi was separately charged and col lected by the Company.
It may be mentioned that in the rejoinder filed by the appellant in the writ petition they have specifically denied that they "have recovered the amount paid by them by way of octroi duty from the dealers to whom they had sold the goods or that the dealers in turn have recovered the octroi duty from the customers".
In view of this the question of unjust enrichment does not arise.
477 This appeal is accordingly allowed on the above terms.
There will 'however be no order as to costs.
T.N.A. Appeal allowed.
| IN-Abs | The appellant company was carrying on business of manu facture and sale of motor vehicles, spare parts of motor vehicles and excavators.
Their manufacturing units were located outside the municipal limits of the respondent corporation.
Pursuant to the permission granted by the Respondent Corporation under Rule 10(2) of 446 the Maharashtra Municipalities (Octroi) Rules, 1968 the appellant company was maintaining a bonded warehouse within the municipal limits of the Respondent Corporation.
The motor vehicles parts and excavators parts brought from the Company 's own factories as well parts imported from abroad were stored in this warehouse.
These products were brought in bulk and thereafter taken or sent out from the Municipal limits in smaller packings depending on the requirements of the customers in various parts of the country.
The appellants were also granted current account facilities without the requirement of immediate payment of octroi at the Octroi Naka.
Accordingly, the appellants were carrying out their activities of imports and exports under the current account procedure with facility of unpacking the bulk, repacking and exporting.
Under the Octroi Rules the octroi becomes refundable when the goods in respect of which octroi was paid are exported out of octroi limits within 6 months of their im port.
During the period 1st January, 1983 to 31st March, 1984 the appellant Company made 1182 claims for refund of octroi which were rejected by the Corporation on the grounds: (1) the Company had "sold" the spare parts within the octroi limits of the Corporation in contravention of Rule 25(3) (d) of the Maharashtra Municipalities (Octroi) Rules, 1968; (2) the procedure prescribed for export and the claim of refund had not been strictly followed.
The appellants filed a writ petition under Article 226 in the High Court of Bombay contending that the action of the Municipal Corporation in refusing refund was unconstitu tional and illegal.
The Division Bench of the High Court dismissed the writ petition.
The Company filed an appeal in this Court against the decision of the High Court.
In appeal to this Court it was contended on behalf of the appellant (i) since the sales were not for consumption or use within the octroi limits and that the parts were sold to parties outside the octroi limits and also for consump tion or use outside such limits the rejection of the claims by the Respondent Corporation on the ground that the sales were within the municipal limits in contravention of rule 25(3) (d) of the Rules is illegal; (ii) Under Rule 62 of Chapter VIII of the Schedule to Bombay Provincial Municipal Corporation Act, 1949, prior intimation of the intention to 'break the bulk ' is enough and there is no necessity for the company to get the sanction 447 of Superintendent of Octroi or break the bulk in the presence of an officer deputed for the purpose as required under sub rule (2) of Rule 24 of the Maharashtra Municipali ties (Octroi) Rules, 1968; Rule 24(2) of the Octroi Rules is inconsistent with Rule 62 and to the extent of inconsistency it shall be deemed to be not applicable.
On behalf of the respondent Corporation it was contended (i) that the meaning of words "sales therein" in the defini tion of octroi in the Acts and in Entry 52 of List II of VII Schedule to the Constitution could not be limited to sales of the goods for purposes of consumption or use within the municipal limits; (ii) there was a change in the ownership of the goods since a sale in law had taken inside the octroi limits though the purchaser was residing and carrying on business outside the octroi limits and under the sale the goods were intended to be and in fact exported for the purpose of consumption and use outside the octroi limits; (iii) that while Rule 62 (c) deals with prior intimation Rule 24(2) deals with the sanction and breaking of the bulk in the presence of an officer deputed for that purpose and both the rules can stay together and operate and there is no inconsistency; (iv) since the appellants have recovered the amounts paid by them by way of octroi duty from their deal ers or customers they are not entitled to refund; ordering of refund would amount to allowing the appellants to unjust ly enrich themselves at the cost of the public to whom the burden had already been passed.
Allowing the appeal, this Court, HELD: 1.
In the case of impost of octroi the taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area.
Mere physical entry into the octroi limits would not attract levy of octroi.
When the goods are brought in not for consumption within the area but for temporary detention and eventual export, octroi is not leviable.
The octroiable event in such a case shall be deemed not to have happened.
This is particularly so because in the case of goods not consumed or used within the octroi area but exported there is a constitutional bar for the levy of octroi.
In view of the constitutional bar, octroi is not leviable if the goods are not brought into the octroi area for purposes of consumption or use in the area but for export and in fact exported by the importer himself or the sale by him occasions the export.
[458 B C, 472 H, 473 A, 475 E] 1.1 Having regard to the nature and incidence of octroi unless the octroiable goods are consumed or used or are meant to reach an 448 ultimate user or consumer in the octroi area no octroi is leviable.
The words 'sale therein ' in the words 'consump tion, use or sale therein ' in the definition octroi means sale of octroiable goods to a person for the purpose of consumption or use by such person in the octroi area.
If sale was intended for consumption or use in the octroi area whether the purchaser actually consumed inside or outside octroi area is irrelevant.
Therefore octroi rules cannot be read as enabling the municipality to levy and collect octroi even in cases where the goods have not been imported for consumption or use.
[475 C, 474 B] Burmah Shell Co. vs Belgaum Municipal, ll963I Suppl.
2 S.C.R. 216; Hira Lal Thakur Lal Dalai vs Brash Broach Munic ipality, ; Municipal Council of Jodhpur vs Parekh Automobiles Ltd. & Ors., ; and H.M.M. Ltd. vs Administrator, ; , relied on.
Khandelwal Traders Akola vs The Akola Municipal Council, AIR 1985 Born.
218, approved.
1.2 Since the goods were sold by the Company to outside purchasers and the goods under the transactions of sale were intended to be exported and were in fact exported, for consumption or use outside the municipal limits no octroi duty was leviable and the octroi duty paid on entry into the municipal limits was, therefore, liable to be refunded.
Accordingly the rejection of the refund claims on the ground that Rule 25(3) (d) had not been strictly complied with is illegal and could not be sustained.
[457 G H] 2.
Once octroi is not leviable the deposit made by the importer pending export is in the nature of a trust and refundable in the event of the export of the goods.
[473 G H] 2.1 Under the octroi scheme, when the goods in respect of which octroi is paid are exported, the octroi becomes refundable.
Right to refund arises because the goods are not consumed inside the area but exported and the tax becomes not leviable.
[458 C] 2.2 If there is no consumption or use, octroi is not attracted and if any levy has been made and the amount collected, the same becomes legally refundable even when the goods are exported in parts and in smaller packages.
[472 H] 3.
The rules merely regulate the system on which refund shall 449 be allowed.
In a given set of facts, whether the rules have been complied with will have to be tested having regard to the nature of the particular transaction and whether the object of the procedure provided is otherwise fully satis fied.
[458 D, 473 H, 474 A] 3.1 The object of requiring intimation or sanction and presence of an officer when breaking the bulk in the scheme of octroi levy and refund is to ensure that dutiable goods do not escape the assessment and refunds are made only in respect of goods exported.
In other words the whole require ment relates to the identification of the goods.
In that sense if the same is otherwise complied with the right to refund cannot be denied.
[474 A B] 3.2 Rules 24 to 30 of the Maharashtra Municipalities (Octroi) Rules, 1968 and the forms in the system of levy of Octroi are intended to regulate the procedure for collection identification of dutiable goods and correlation of goods exported with the goods imported for the purpose of refunds of octroi collected.
[475 D] The rules do not contain any specific provision that an applicant for refund who has failed to follow the procedure would be disentitled to claim the refund.
[473 G] 3.3 Compliance with the procedure prescribed in the Rules for filing claims of refunds are not conditions prece dent for the right or eligibility for refund or the liabili ty to refund but are provisions regarding proof of export of the goods imported and are not meant to be exhaustive ei ther.
They are to be interpreted and understood in that sense.
[475 E F] Municipal Committee Khurari vs Dhannalal Nethi & Ors., ; ; Kirpal Singh Duggal vs Municipal Board, Ghaziabad, ; , applied.
3.4 Since the rejection of the claims for refund was merely on the ground that either form 4 and original in voices were not produced or columns 5 and 6 of Form 11 or the corresponding columns in Form 12 had not been filled with reference to an original invoice or Form 4 or deposit receipt and the refusal to issue export pass certificates on those very grounds are untenable the orders of rejection are invalid.
1475 G H] 4.
The object of the Rules fixing a period of limitation for 450 export however is different.
The export cannot be put in perpetual doubt and the goods may be considered to have come to a repose if they were not exported within a particular period provided in the rules.
[475 F] 4.1 However an equitable principle could be followed in this regard and it may be presumed that the goods which came in first have gone out first.
If the goods are mixed up and unidentifiable due to breaking bulk and repacking in smaller and assorted packages before export the principle that the first export was of the goods first imported, subject to any evidence available to the contrary, may be applied and the six months period prescribed under Rule 28(2) (b) for export may be determined accordingly.
[475 A B, H, 476 A] Clayton 's case; , , applied.
There is no inconsistency between Rule 62 and Rule 24(2).
The intimation contemplated in Rule 62 imply that the breaking the bulk shall be done with the knowledge of the octroi authorities.
But it cannot be said that the rules further provide that after intimation the breaking of the bulk shall be done in the presence of the officers and after sanction that would in any case be inconsistent.
Therefore, both the rules can stand together.
[471 F G] 6.
There in no evidence that any of the articles sold by the Company is subject to any price control by the Gov ernment or that the Company had charged any octroi separate ly in the bills.
Documentary evidence do not also show that any octroi was separately charged and collected by the Company.
Therefore the question of unjust enrichment does not arise.
[476 F H]
|
ence No. 1 of 1991.
(Under Article 143 of the Constitution of India).
G. Ramaswamy, Attorney General, V.R. Reddy, Addl.
Solic itor General, F.S. Nariman, T.R. Andhyarujina, Dr. Y.S. Chitale, S.S. Javali, K. Parasaran, A.K. Ganguli, K.K. Venugopal, A.S. Nambiar, Shanti Bhushan, P.P. Rao, P.P. Muthanna, K. Subramanian, Curiae Joseph, N.N.Gangadeb, Ms. A. Subhashini, Ms. Niranjana Singh, M.Veerappa, Subhash Sharma.
Mohan Katarki, Atul Chitale, K.H. Nobin Singh, Subbanna, A. Subba Rao, G. Umapathy, E.C. Agarwala, P.N. Ramalingam, Smt.
Shante Vasudevan, P. Krishnamurthy, P.K. Manohar, K.V. Viswanathan, Shalid Rizvi, Ashok Mukhoty, Mrs. Sangeeta Garg, Jayant Bhushan, T.T. Kunhikanan, M.D.B. Raju, G. Prabhakar, N. Ganpathi, S.R. Bhat, P. Mahale and P.R. Pamasesh for the appearing parties.
A.K. Sen, Venkataraman and C.S. Vaidyanathan for the Inter vener.
The Report of the Court was delivered by SAWANT, J. On July 27, 1991 the President, under Article 143 of the Constitution, referred to this Court three ques tions for its opinion.
The Reference reads 'as follows.
: "Whereas, in exercise of the powers conferred by Section 4 of the (hereinafter referred to as "the Act").
the Central Government constituted a Water Disputes Tribunal Called "the Cauvery Water Disputes Tribunal" (hereinafter called "the Tribunal") by a notification dated 2 June, 1990, a copy where of is annexed here to, for the adjudi 516 cation of the Water Dispute regarding the Inter State River Cauvery; WHEREAS on 25 June 1991, the Tribunal passed an interim Order (hereinafter referred to as "the Order"), a copy whereof is annexed here to; WHEREAS, differences have arisen with regard to certain aspects of the Order; WHEREAS, on 25 July 1991, the Governor of Karnataka promulgated the Kamataka Cauvery Basin Irrigation Protection Ordinance, 1991 (hereinafter referred to as "the Ordinance"), a copy whereof is annexed hereto; WHEREAS, doubts have been expressed with regard to the constitutional validity of the Ordinance and its provisions; WHEREAS, there is likelihood of the constitu tional validity of the provisions of the Ordinance, and any action taken thereunder, being challenged in Courts of law involving protracted and avoidable litigation; WHEREAS, the said differences and doubts have given rise to a public controversy which may lead to undesirable consequences; AND WHEREAS, in view of what is hereinbefore stated, it appears to me that the following questions of law have arisen and are of such nature and of such public importance that it is expedient to obtain the opinion of the Supreme Court of India thereon; NOW, THEREFORE, in exercise of the powers conferred upon me by clause (1) of Article 143 of the Constitution of India, I, Ramaswamy Venkataraman, President of India, hereby refer the following question to the Supreme Court of India for consideration and report thereon, namely: (1) Whether the Ordinance and the provi sions thereof are in accordance with the provisions of the Constitution; (2) (i) Whether the Order of the Tribunal constitutes a report and a decision within the meaning of section 5 (2) of the Act; and (ii) Whether the Order of the Tribunal is required to be published by the Central Gov ernment in order to make it effective; 517 (3) Whether the Water Disputes Tribunal constituted under the Act is competent to grant any interim relief to the parties to the dispute.
" To appreciate the significance of the questions referred and our answers to them, it is necessary to understand the factual background which has led to the Reference.
The river Cauvery is an inter State river and is one of the major rivers of the Southern Peninsula.
The basin area of the river and its tributaries has substantial spread over within the territories of the two States, namely.
Karnataka and Tamil Nadu, Karnataka being the upper riparian State and Tamil Nadu being the lower riparian State.
The other areas which are the beneficiaries of the river water are the territories comprised in the State of Kerala and in the Union Territory of Pondicherry.
The total length of the river from its head to its outflow into the Bay of Bengal is about 802 kms.
It travels about 381 kms.
in Southern East ernly direction before it reaches the border of Karnataka and Tamil Nadu.
It also constitutes boundary between the said two States to an extent about 64 kms.
and then tra verses a distance of about 357 kms.
in Tamil Nadu before joining the sea.
There were two agreements of 1892 and 1924 for sharing the water of the river between the areas which are predomi nantly today comprised in the State of Karnataka and Tamil Nadu, and which were at the time of the agreements comprised in the then Presidency of Madras on the one hand and the State of Mysore on the other.
The last agreement expired in 1974.
The river presently covers three States of Karnataka, Tamil Nadu and Kerala and the Union Territory of Pondicher ry.
The present State of Tamil Nadu has an area of about 43,868 sq.
of the Cauvery River basin, reducing the basin area which at the time of the agreement was about 49,136 sq.
As against this the basin area of the said river which was about 28,887 sq.
in the State of Mysore has increased to about 34,273 sq.
in the present State of Karnataka.
The contributions made to the flows of the Cauvery River by Karnataka.
Tamil Nadu and Kerala, according to the State of Karnataka is 425 TMC, 252 TMC and 113 TMC respectively together amounting to 790 TMC According to the State of Tamil Nadu, the contributions of the three States respec tively are 392 TMC, 222 TMC and 126 TMC respectively togeth er amounting to 740 TMC.
The Study Team appointed by the Central Government in 1974 worked out the appropriations of the respective States as follows: Karnataka 177 TMC, Tamil Nadu including Pondicherry 489 TMC and Kerala 5 TMC.
518 In 1956 the Parliament enacted the for the purpose of regulation and development of inter State rivers and river valleys find also the Inter State Water Disputes Act, 1956 for adjudication of disputes with regard to the use, distribution or control etc.
of the said waters.
In 1970 Tamil Nadu invoked the provisions of Section 3 of the and requested the Central Government for reference of the dis pute between the two States, viz. Tamil Nadu and Karnataka to a Tribunal under the Act.
The Central Government initiat ed negotiations between the two States.
Simultaneously, Tamil Nadu moved this Court by means of a suit under Article 131 of the Constitution being Suit No.1 of 1971 seeking a direction to the Union Government to constitute a Tribunal and to refer the dispute to it.
In the said suit, Tamil Nadu applied for an interim order to restrain the S;ate of Karna taka from proceeding with and executing the projects men tioned therein.
This Court by its Order of 25th January, 1971 dismissed the application for interim relief.
It appears that the negotiations between the two states which were going on in the meanwhile, resulted in the con stitution of a Fact Finding Committee in June 1972 which was set up to ascertain facts, amongst others as to the avail ability of water resources, the extent of utilisation and the nature of the areas in the respective States within the river basin, and their requirements.
In view of the consti tution of the Committee, Tamil Nadu withdrew its suit.
The Fact Finding Committee submitted its Reports in December, 1972, and August 1973.
A Central Study Team headed by Shri CC.
Patel, then Addl.
Secretary to Government of India, in the Ministry of Irrigation was also set up to examine the question of assessing the savings of water in the existing and planned projects of the three States in the Cauvery basin.
The recommendation of the Study Team on improvement and modernisation of the irrigation system including the strengthening of the works and the lining of channels, integrated operations of the reservoirs within the Cauvery basin, scientific assessment of water requirement in the command area and for monitoring the releases from the reservoirs for an efficient tie up between the rain fall and command, water requirement and release were announced at the Inter State Conference of June 1974.
Further negotiations resulted in what is known as "the 1976 Understanding".
This Understanding envisaged the appor tionment of the surplus water in the ratio of 30:53:17 amongest the States of Tamil Nadu, Karnataka and Kerala respectively.
In the case of savings, the Study Team pro posed the apportionment in the ratio of 87 TMC to Karnataka, 4 TMC to Tamil Nadu and 34 TMC to Kerala.
519 It appears that in spite of the information gathered through the Fact Finding Committee and the Study Team set up by the Union Government, the negotiations were not fruitful.
In 1983, Tamil Nadu Ryots Association presented a petition to this Court under Article 32 of the Constitution being Writ Petition No. 13347 of 1983.
The petition sought issue of a writ of mandamus to the Central Government requiring it to refer the dispute to a Tribunal under the Act.
The peti tion was also accompanied by an application seeking interim relief.
The State of Tamil Nadu supported the Writ Petition.
Notices were issued to the respondents including the Union Government and the State of Karanataka.
The petition re mained pending in this Court for nearly seven years.
No application for interim relief was moved during this period.
Although the inter State meetings continued to be held during this period, nothing worthwhile emerged out of them.
Hence, in June 1986, the State of Tamii Nadu lodged a Letter of Request under Section 3 of the Act with the Central Government for the Constitution of a Tribunal and for refer ence of the water dispute for adjudication to it.
In the said letter, Tamil Nadu primarily made a grievance against the construction of works in the Karnataka area and the appropriaion of water upstream so as to prejudice the inter ests down stream in the State of Tamil Nadu.
It also sought the implementation of the agreements of 1892 and 1924 which had expired in 1974.
At the hearing of the Writ Petition filed by the Tamil Nadu Ryots Association, the Central Government left the matter to the Court.
This Court taking into consideration the course of negotiations and the length of time which had passed, by its judgment dated May 4, 1990 held that the negotiations between the two States had failed and directed the Union Government to constitute a Tribunal under Section 4 of the Act.
In pursuance of the directions given by this Court, the Union Government by its notification dated June 2, 1990, constituted the Cauvery Water Disputes Tribunal and by another Notification of the even date referred to it the water dispute emerging from Tamil Nadu 's Letter of Request dated July 6, 1986.
The Cauvery Water Disputes Tribunal (hereinafter re ferred to as the "Tribunal") commenced its first sitting on 20th July, 1990.
On that day, Tamil Nadu submitted a letter before the Tribunal seeking interim reliefs.
The Tribunal directed Tamil Nadu to submit a proper application.
There upon Tamil Nadu and the Union Territory of Pondicherry submitted two separate applications for interim reliefs being CMP Nos. 4 and 5 of 1990.
520 The interim relief claimed by Tamii Nadu was that Karna taka be directed not to impound or utilise water of Cauvery river beyond the extent impounded or utilised by them as on 31 5 1972.
as agreed to by the Chief Ministers of the basin States and the Union Minister for Irrigation and Powers.
It further sought passing of an order restraining Karnataka from undertaking any new projects, dams, reservoirs, canals and/or from proceeding further with the construction of projects, dams, reservoirs.
canals etc.
in the Cauvery basin.
In its application for interim relief Pondicharry sought a direction from the Tribunal both to Karnataka and Tamil Nadu to release the water already agreed to i.e., 9.355 TMC during the months of September to March.
The Tribunal considered simultaneously both the applica tions for interim reliefs as well as the procedure governing the trial of the main dispute.
It directed the disputant States to file their pleading by way of statements of cases and also required the States of Karnataka and Kerala to submit their replies to the applications for interim reliefs made by Tamil Nadu and Pondicherry.
By September 1990, all the disputant States submitted their first round of plead ings or statements of cases.
By November 1990, Karnataka and Kerala also submitted their replies to the applications for interim reliefs.
The Tribunal gave time to the States to submit their respective counter statements in reply to the Statements of cases filed earlier in the main dispute.
It appears that before the disputant states submitted their counter statements in the main dispute, the Tribunal heard the applications for interim reliefs since Tamil Nadu had, in the meanwhile, filed an application being CMP No.9 of 1990 as an urgent petition to direct Karnataka as an emergent measure to release at least 20 TMC of water as the first instalment, pending final orders on their interim application CMP No.4/ 90.it appears that this application was filed on the ground that the samba crop could not he sustained without additional supplies at Mettur reservoir in the Tamil Nadu State" Besides contesting the application on merits, both Karnataka and Kerala raised a preliminary ' objection to the jurisdiction of the Tribunal to entertain the said application and to grant any interim relief.
The preliminary objection was that the Tribunal constituted under Act, had a limited jurisdiction.
It had no inherent powers as 'an ordinary Civil Court has, and there was no provision of law which authorised or conferred jurisdiction on the Tribunal to grant any interim relief.
The Tribunal heard the parties both on the preliminary objection as well 521 as on merits, and by its Order of January 5, 1991.
among other things, as follows : ".
This Act is a complete code in so far as the reference of a dispute is concerned.
In the circumstances.
in our opinion, the Tribu nal is authorised to decide only the 'water dispute ' or disputes which have been referred to it.
If the Central Government is of the opinion that there is any other matter con nected with or relevant to the 'water dispute ' which h,ks already been referred to the Tribu nal.
it is always open to the Central Govern ment to refer also the said matter as a dis pute to the Tribunal constituted under Section 4 of the Act.
Further, no water dispute can be referred by the Central Government unless the Central Government is of the opinion that the said dispute cannot be settled by negotia tions.
In fact, no water dispute can be adju dicated without its reference to the Tribunal.
The interim reliefs which have been sought for even if the same are connected with or rele vant to the water dispute already referred, cannot be considered because the disputes in respect of the said matters have not been referred by the Central Government to the Tribunal.
Further, neither there is any aver ment in these petitions that the dispute related to interim relief cannot be settled by negotiations and that the Central Government has already formed the opinion that it shall be referred to the tribunal.
In case the petitioners of CMP Nos. 4,5 and 9 of 1990 are aggrieved by the conduct of the State of Karnataka and an emergent situation had ari sen, as claimed.
they could have raised a dispute before the Central Government and in case the Central Government was of the opinion that the said dispute could not be settled by negotiations, the said dispute could also have been referred by the Central Government to the Tribunal.
In case such a dispute had been referred then it would have been open to the Tribunal to decide the said dispute which decision would then be final and binding on the parties.
X X X X X From the letter dated 6.7.
1986, which was the request made on behalf of the State of Tamil Nadu to the Central Government referring the dispute to the Tribunal.
it is clear that the dispute which has been referred to this Tribunal in regard to the executive action taken by the Karnataka State in construct 522 ing Kabini, Hemavathi, Harangi, Swarnavathi and other projects and expanding the ayacuts and the failure of the Karnataka Government to implement the agreements of 1892 and 1924 relating to the use, distribution and the control of Cauvery waters.
No interim dispute in regard to the release of waters by the Karnataka Government from year to year subse quent to the date of the request made by the State of Tamil Nadu was at all referred to the Tribunal.
The Tribunal has been called upon to decide the main water dispute, which, when adjudicated upon, would undoubtedly be binding on the parties.
In view of the above, we are of the opinion that the Tribunal cannot enter tain the prayer for interim relief unless the dispute relating to the same is specifically referred to the Tribunal.
X X X X X X X X X The observations made by Hon 'ble Supreme Court in Union of India vs Paras Lamines (P) Ltd., ; were in relation to the Appellate Tribunal constituted under the .
It was held that the Tribu nal functions is a court within the limits of its jurisdiction.
Its area of jurisdiction is defined but within the bounds of its jurisdic tion it has all the powers expressly and impliedly granted.
The Supreme Court while discussing the extent of the power of the Tribunal in respect of the grant made by a particular Statute held that the Tribunal will have all incidental and ancillary powers for doing of such acts or employing all such means as are reasonably necessary to make the grant effective.
The import of the decision of the Hon 'ble Supreme Court is that the Tribunal will have incidental and ancillary powers while exercising the powers expressly con ferred.
These incidental and ancillary powers must relate to the actual dispute referred and not to any other matter including granting of interim reliefs which are not at all subject matter of reference.
In our opinion what the Supreme Court intended to hold was that the Tribunal has incidental and ancillary powers to pass orders in respect of a reference for adjudication of which it has been constituted.
It has not, however, further laid (sic.) that it has also inciden tal and ancillary powers to grant relief in respect of a dispute which has not at all been referred.
In the instant case, the water dispute which has been referred to us is that which emerges from the letter of the State of 522 Tamil Nadu dated 6th July, 1986.
The Tribunal will have the power to pass such consequential orders as are required to be made while decid ing the said dispute and will also have inci dental and ancillary powers which will make the decision of the reference effective but these powers are to be exercised only to enable it to decide the reference effectively but not to decide disputes not referred in cluding a dispute in regard to grant of inter im relief/interim reliefs.
X X X X X X X X X.
The Second submission raised by the learned counsel for Tamil Nadu namely to the effect that the Tribunal alone could exercise juris diction in respect of a water dispute by virtue of Article 262 of the Constitution of India and in case Tribunal holds otherwise the State of Tamil Nadu will be left with no remedy available to it, it may be stated that since we have taken the view that in case a water dispute really arises and such water dispute could not be resolved by negotiations then it will be open to the Central Government to refer the said dispute to the Tribunal for adjudication, the question of not having a remedy for a wrong does not arise before the Tribunal.
The Central Government if it finds that the dispute is connected with or related to the water dispute already referred to the Tribunal, it is open to it to refer the said dispute also to the Tribunal in regard to the granting of an interim relief.
" In the view that it took, as above, the Tribunal held that it could not entertain the said applications for grant of interim reliefs as they were not maintainable in law, and dismissed the same.
Being aggrieved, the State of Tamil Nadu approached this Hon 'ble Court by means of special leave petitions under Article 136 of the Constitution against the orders passed both in the original application for interim relief being CMP No.4 of 1990 as well as in the application for urgent interim relief being CMP No.9 of 1990.
So did the Union Territory of Pondicherry against the order passed by the Tribunal in its application for interim relief being CMP No.5 of 1990.
These special leave petitions which were later on converted into Civil Appeals Nos.303 04 of 1991 and Civil Appeal No. 2036 of 1991 respectively, were heard together and disposed of by this Court by its judgment dated April 26.1991.
While allowing the appeals this Court held as follows: 524 "Thus, we hold that this Court is the ultimate interpreter of the provisions of the Inter State Water Disputes Act, 1956 and has an authority to decide the limits, powers and the jurisdiction of the Tribunal constituted under the Act.
This Court has not only the power but obligation to decide as to whether the Tribu nal has any jurisdiction or not under the Act, to entertain any interim application till it finally decides the dispute referred to it.
X X X X X X X X X A perusal of the order of reference dated 2.6.90 as already extracted above clearly goes to show that the Central Government had re ferred the water disputes regarding the inter State river Cauvery and the river valley thereof, emerging from letter dated 6th July, 1986 from the Government of Tamilnadu.
Thus all the disputes emerging from letter dated 6th July, 1986 had been referred to the Tribu nal.
The Tribunal committed a serious error in omitting to read the following important paragraph contained in the aforesaid letter dated 6,7.86." This Court then quoted the said paragraph from the said letter of 6.7. 1986 which reads as follows: "REQUEST FOR EXPEDITIOUS ACTION IN REFERRING TIlE DISPUTE TO TRIBUNAL. ' From 1974 75 onwards, the Government of Karna taka has been impounding all the flows in their reservoirs.
Only after their reservoirs are filled up, the surplus flows are let down.
The injury inflicted on this State in the past decade due to the unilateral action of Karna taka and the suffering we had in running around for a few TMC of water every time and crops reached the withering stage has been briefly stated in note (Enclosure XXVIII).
It is patent that the Government of Karnataka have badly violated the inter State agreements and caused irreparable harm to the age old irrigation in this State.
Year after year, the realisation at Mettur is failing fast and thousands of acres in our ayacut in the basin are forced to remain fallow.
The bulk of the existing ayacut in Tamil Nadu concentrated mainly in Thanjavur and Thiruchirappalli districts is already gravely affected in that the cultivation operations are getting long delayed, traditional double crop lands are getting reduced to single crop lands and crops even in the single crop lands are withering and falling for want of adequate wettings 525 at crucial times.
We are convinced that the in ordinate delay in solving the dispute is taken advantage of by the Government of Karnataka in extending their canal systems and their ayacut in the new projects and every day of delay in adding to the injury caused to our existing irrigation.
" The Court then proceeded to observe as fol lows: "The above passage clearly goes to show that the State of Tamilnadu was claiming for an immediate relief as year after year.
the realisation of Mettur was failing fast and thousands of acres in their ayacut in the basin were forced to remain fallow.
It was specifically mentioned that the inordinate delay in solving the dispute is taken advan tage of by the Government of Karnataka in extending their canal systems and their ayacut in the new projects and every day of delay is adding to the injury caused to their existing irrigation.
The Tribunal was thus clearly wrong in holding that the Central Government had not made any reference for granting any interim relief.
We are not concerned, whether the appellants are entitled or not, for any interim relief on merits, but we are clearly of the view that the reliefs prayed by the appellants in their C.M.P. Nos. 4, 5 and 9 of 1990 clearly come within the purview of the dispute referred by the Central Government under Section 5 of the Act.
The Tribunal has not held that it had not incidental and ancil lary powers for granting an interim relief, but it has refused to entertain the C.M.P. Nos.4,5 and 9 on the ground that the reliefs prayed in these applications had not been referred by the Central Government.
In view of the above circumstances we think it is not necessary for us to decide in this case, the larger question whether the Tribunal consti tuted under the Water Disputes Act has any power or not to grant any interim relief.
In the present case the appellants become enti tled to succeed on the basis of the finding recorded by us in their favour that the re liefs prayed by them in their C.M.P. Nos. 4,5 and 9 of 1990 are covered in the reference made by the Central Government.
It may also be noted that at the fag end of the arguments it was submitted before us on behalf of the State of Karnataka that they were agreeable to proceed with the C.M.P.s on merits before the Tribunal on the terms that all party States agreed that all questions arising out of or connected with or relevant to the water dis pute (set out in the respective pleadings of the respective parties), including all 526 applications for interim directions/reliefs by party States be determined by the Tribunal on merits.
However, the above terms were not agreeable to the State of Tamilnadu as such we have decided the appeals on merits.
" In view of its findings as above, this court by the said order directed the Tribunal to decide CMPs Nos. 4, 5 and 9 of 1990 on merits.
In pursuance of these directions, the Tribunal heard the said applications of Tamil Nadu and Pondicherry.
It appears that before the Tribunal, objections were again raised on behalf of the State of Karnataka with regard to the maintainability of the applications filed by Tamil Nadu and Pondicherry for interim reliefs.
The Tribunal did not countenance the said objections holding that the direction given by this Court was binding on it.
The Tribu nal then proceeded to decide the applications on merits and by its order dated June 25, 1991 held as follows: "When we are deliberating whether any emergent order ought to be passed, our prime considera tion ought to be to preserve, as far as possi ble, pending final adjudication the rights of the panics and also to ensure that by unilat eral action of one party, other party is not prejudiced from getting appropriate relief at the time of the passing of the final orders.
We ought to also endeavour to prevent the commission of any act by the panics which might impede the Tribunal from making final orders in conformity with the principles of fair and equitable distribution of the waters of this inter State river.
x x x x x x x x x .
At this stage it would be neither feasible nor reasonable to determine how to satisfy the needs of the each State to the greatest extent possible with a minimum of detriment to others.
We do not also propose at this stage to enter into the question whether the present use of water of the river Cauvery either by the State of Tamil Nadu or the State of Karnataka is the most beneficial use to which the water could be put to.
x x x x x x x x x .
We do not propose to examine at this stage the legality or justifiability of erec tion of these reservoirs, dams, canals, etc.
The said matters may be gone into if found necessary at the appropriate stage.
In this case it would be in accordance with justice to fix the annual releases into Mettur Dam by making average of the same for a number of normal years in the immediate past.
X X X X X X X X X 527 .
We have already mentioned that at the present stage we would be guided by considera tion of balance of convenience and maintenance of the existing utilisation so that rights of the parties may be preserved tilt the final adjudication. ".
The Tribunal then directed the State of Karnataka to release water from its reservoirs in Karnataka so as to ensure that 205 TMC water is available in Tamil Nadu 's Mettur reservoir in a year from June to May. The Tribunal further directed Karnataka to regulate the release of water every year in the manner stated in the order.
The monthly quota of the water was to be released in four equal instal ments every week, and if there was not sufficient water available in any week the deficit was directed to be made good in the subsequent week.
The Tribunal also directed Tamil Nadu to deliver to Pondicherry 6 TMC water for its Karaikal region in a regulated manner.
In addition, the Tribunal directed Karnataka not to increase its area under irrigation by the waters of Cauvery, beyond the existing 11.2 lakh acres.
The Tribunal then observed that its said order would remain operative till the final adjudication of the dispute referred to it.
Thereafter on July 25, 1991 the Governor of Karnataka issued an Ordinance named "the Karnataka ,Cauvery Basin Irrigation Protection Ordinance, 1991" which reads as fol lows: "An Ordinance to provide in the interest of the general public for the protection and preservation of irrigation in irrigable areas of the Cauvery basin in Karnataka dependent on the waters of the Cauvery river and its tribu taries.
Whereas the karnataka Legislative Council is not in Session and the Governor of Karnataka is satisfied that circumstances exists which render it necessary for him to take immediate action for the protection and preservation of irrigation in irrigable areas office Cauvery basin in Karnataka dependent on the water of Cauvery river and its tributaries.
Now, therefore, in exercise of the power conferred under clause (1) of Article 213 of Constitution of India, I, Khurshed Alam Khan.
Governor of Karnataka am pleased to promulgate the following Ordinance, namely: 1.Short title, extent and commencement: (1) This Ordinance may be called the Karnataka Cauvery Basin Irrigation Protection Ordinance, 1991.
528 (2) It extends to the whole of the State of Karnataka.
(3) It shall come into force at once.
Definition: Unless the context other wise requires: (a) "Cauvery basin" me,ms the basin area of the Cauvery river and its tributaries lying within the territory of the State of Karnata ka.
(b) "Irrigable area" means the areas specified in the Schedule.
(c) "Schedule" means the Schedule annexed to this Ordinance.
(d) "Water year" means the year commenc ing with the 1st of June of a Calendar year and ending with the 31st of May of the next Calendar year.
Protection of Irrigation in irrigable area: (1) It shall be the duty of the State Government to protect, preserve and maintain irrigation from the waters of the Cauvery river and its tributaries in the irrigable area under the various projects specified in the Schedule.
(2) For the purpose of giving effect to sub section (1) the State Government may abstract or cause to be abstracted, during every water year, such quantity of water as it may deem requisite.
from the flows of the Cauvery river and its tributaries.
in such manner and during such intervals as the State Government or ,my Officer, not below the rank of an Engineer in Chief designated by it, may deem fit ,red proper.
Overriding effect of the Ordinance: The provisions of this Ordinance.
(,red of ,my Rules and Orders made thereunder), shall have effect not with standing anything contained in any order, report or decision of any Court or Tribunal (whether made before or after the commencement of this Ordinance), save and except a final decision under the provisions of sub section (2) of section 5 read with section 6 of the . 5.
Power to remove difficulties: If any difficulty arises in giving effect to the provisions of this Ordinance, the State Government may, by order, as occasion 529 requires, do anything (not inconsistent with the provisions of this Ordinance) which ap pears to be necessary for purpose of removing the difficulty.
Power to make rules: (1) The State Government may, by Notifi cation in the Official Gazette make rules to carry out the purpose of this Ordinance.
(2) Every rule made under this Ordinance shall be laid as may be after it is made, before each House of the State Legislature while it is in Session for a total period of thirty days which may be comprised in one Session or in two or more Sessions and if before the expiry of the said period, either House of the State Legislature makes any modification in any rule or order directs that any rule or order shall not have effect, and if the modification or direction is agreed to by the other House, such rule or order shall thereafter have effect only in such modified form or be no effect, as the case may be." The Schedule mentioned in the Notification refers to the irrigable areas in Cauvery basin of karnataka under various projects including minor irrigation works.
Hot on the heels of this Ordinance, the State of Karna taka instituted a suit under Article 131 against the State of Tamil Nadu and others for a declaration that the Tribu nal 's order granting interim relief was without jurisdiction and, therefore, null and void etc.
Another development which may be noticed is that the Ordinance has since been replaced by Act No.27 of 1991.
The provisions of the Act are a verbatim reproduction of the provisions of the Ordinance except that in Section 4 of the Act the words "any court or" are omitted and Section 7 is added repealing the Ordinance.
The omission of the above words excludes this court 's order dated April 26, 1991 from the overriding effect of the said provision.
Reference to the Ordinance hereafter will include reference to the Act also unless the context otherwise requires.
It is in the context of these developments that the President has made the Reference which is set out in the beginning.
Before us are arraigned the State of Tamil Nadu and the Union Territory of Pondicherry on the one hand the States of Karnataka and Kerala on 530 the other with the Union of Indian taking no side on the issues arising out of the Reference.
There are also inter veners on both sides.
The contentions of the parties are summarised hereafter.
The contentions also include a plea on both sides not to answer either all or one or the other question raised in the Reference for reasons differently advanced.
These pleas will also be dealt with at their proper places.
Before we deal with the contentions, it is necessary to note certain features of the Reference which are also alluded to in the contentions of the parties.
The Reference is made under Article 143 (1) of the Constitution of India seeking opinion of this Court under its advisory jurisdiction.
As has been stated in the preamble of the Reference and is also not disputed before us, the first two questions are obviously the outcome of the dispute relating to the sharing of waters between Tamil Nadu and Pondicherry on the one hand and Karnataka and Kerala on the other and the developments that took place in the said dispute till the date of Reference.
As has been contended on behalf of Tamil Nadu and Pondicherry, even the third question has a relation to the dispute and the said events, and is not general in nature though it is couched in general terms.
According to them, the question has been posed with an oblique motive of getting over the judgement of this Court dated April 26, 1991 and the consequent order of the Tribu nal dated June 25, 1991.
Hence the said question should not be answered.
Their other contention is that if the question is general in nature, it requires no answer at all.
The contentions of the parties on the questions referred may now be summarised.
With reference to Question 1 the State of Karnataka contends, in the light of the presumption of constitutional validity which ordinarily attaches to a legislation, that the onus lies heavily on the party challenging the same to show that the impugned Ordinance (now Act) is ultra vires the Constitution.
The impugned legislation clearly falls within the competence of the State legislature under Entry 17 as well as Entries 14 and 18 of List II in the Seventh Shedule of the Constitution.
Water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power fall within Entry 17 of List II (hereinafter referred to as 'Entry 17 ') and the State Legislature has every right to legislate on the subject and this legislative power is subject only to Entry 56 of List I (hereinafter referred to as 'Entry 56 ').
That Entry deals with regulation and development of inter State rivers and river valleys 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.
This Entry, it is contended, does not denude the States of the power to 531 legislate under Entry 17, since it merely empowers the Union, if Parliament has by law declared it to be in public interest, that the 'regulation and development of inter State rivers and river valleys should, to the extent the declaration permits, be taken under the control of the Union.
On a plain reading of the said Entry it is evident that barring regulation and development ' of an inter State river, subject to the declaration, the Central Government is not conferred with the power to legislate on water, etc., which is within the exclusive domain of the State legisla tures.
The being the only legislation made by Parliament under Entry 56, and the scope of the declaration in section 2 thereof being limited 'to the extent hereinafter provided ', that is to say provided by that statute, and no River Board having been constituted thus far in respect of and inter State river under the said law, the power to legislate under Entry 17 is not whittled down or restricted.
Thus, contends the State of Karnataka, the merely authorises the Union to set up a River Board with a view to take under its control the regu lation and development of inter State rivers without in any manner restricting or controlling the legislative power under Entry 17.
But in the absence of the constitution of a River Board for Cauvery, it is contended that the State of Karnataka retains full legislative power to make laws as if Entry 17 has remained untouched.
Further, the executive power of the Union under Article 73 cannot extend to any State with respect to matters on which the State alone can legislate in view of the field having been covered by Arti cle 162 of the Constitution.
Since the Act enacted under Article 262 of the Constitution does not attract any Entry in list 1, it is a law essentially meant to provide for the adjudication of a dispute with respect to the use, distribu tion or control of waters of, or in, any inter .State river or river valley and does not, therefore, step on the toe of Entry 17.
What the Ordinance (now Act) seeks to do is to impose by section 3 a duty on the State Government to pro tect, preserve and maintain irrigation from Cauvery waters in the irrigable areas failing within the various projects specified in the Schedule to the said legislation.
The State of Karnataka, therefore, contends that the impugned legisla tion is clearly within the scope of the State 's power to legislate and is, therefore, intra vires the Constitution.
A forteriori, the power to legislate conferred on the State legislature by Entries 14, 17 and 18 of List II, cannot be inhibited by an interim order of the Tribunal since the scheme of the Act envisages only one final report or deci sion of the Tribunal under section 5 (2) which would have to be gazetted under section 6 thereof.
Until a final adjudica tion is made by the Tribunal determining the shares of the respective StaLes in the waters of an inter State river, the States would be free to make optimum use of water within the State and the Tribunal cannot interfere with such use under the guise of an interim order.
Consequently it was open to the 532 Karnataka Legislature to make a law ignoring or overriding the interim order of the Tribunal.
With regard to Question 2 (i) of the Reference, the State of Karnataka contends that the scheme of the Act does not envisage the making of an interim order by the Tribunal.
Section 5 of the Act provides that after a Tribunal has been constituted under section 4, the Central Government shall refer the water dispute and any matter appearing to be connected with, or relevant to, the water dispute to the Tribunal for adjudication.
On such Reference the Tribunal must investigate the matters referred to it and forward a report setting out the facts found by it and giving its decision on the matters referred to it.
If upon considera tion of the decision, the Central Government or any State Government is of opinion that anything contained therein requires explanation or that guidance is needed upon any point not originally referred to the Tribunal, such Govern ment may within three months from to decision again refer the matter for further consideration, and on such reference, the Tribunal may forward a further report giving such expla nation and guidance as it deems fit and thereupon the deci sion of the Tribunal shall be deemed to be modified accord ingly.
Section 6 then enjoins upon the Central Government to publish the decision of the Tribunal in the Official Gazette and on such publication 'the decision shall be final and binding on the parties to the dispute and shall be given effect to by them '.
It is contended by the State of Karnata ka that the scheme of the aforestated provisions clearly envisages that once a water dispute is referred to the Tribunal ' the Tribunal must 'investigate ' the matters re ferred to it and forward a report to the Central Government 'setting out the facts found by it ' and 'giving its deci sion ' on the matters referred to it.
It is this decision which the Central Government must publish in the Official Gazette to make it final and binding on the parties to the dispute.
The State of Karnataka, therefore, contends that the scheme of the Act contemplates only one final report made after full investigation in which findings of fact would be set out along with the Tribunal 's decision on the matters referred to it for adjudication, and does not con template an interim report based on half baked information.
Finality is attached to that report which records findings of facts based on investigation and not an ad hoc:, tenta tive and prima facie view based on no investigation or cursory investigation.
The State of Karnataka, therefore, contends that since the interim order was not preceded by an investigation of the type contemplated by the Act, the said order of 25th June, 1991 could not be described as 'a re port ' or 'a decision ' under section 5(2) of the Act and hence there could be no question of publishing it in the gazette.
It is, therefore, contended that no finality can attach to such an order which is neither a report nor a decision and even if published in the 533 gazette it cannot bind the parties to the dispute and can have no efficacy in law/. On Question 2(ii), it is, there fore, contended that since there was no investigation, no findings on facts, no report and no decision, the Central Government is under no obligation to publish the interim order of the Tribunal.
With reference to Question 3, the State of Karnataka reiterates that the scheme of the Act clearly envisages a final report to be given by the Tribunal on conclusion of the investigation and after the Tribunal has reached firm conclusions on disputed questions of fact raised before it by the contesting parties.
It is only thereafter that it can in its report record its decision which on being gazetted becomes final and binding on the parties.
The words 'any matter appearing to be connected with or relevant to water dispute ' employed in section 5(1) of the Act, do not contem plate reference of an interim relief matter nor can the same empower the Tribunal to make an interim order pendente lite.
The Act has deliberately not conferred any power on the Tribunal to make an interim order for the simple reason that a water dispute has many ramifications, social, economic and political, and involves questions of equitable distribution of water which cannot be done without a full fledged inves tigation of the relevant data material including, statisti cal information.
In the very nature of things, therefore, it is impossible to think that the Act envisaged the making of an interim order.
While conceding that certain kinds of interlocutory orders which are processual in nature can be made by the Tribunal to effectuate the purpose of the Act, namely, adjudication of a water dispute, no interim relief or order can be granted which will affect the existing rights of the parties because that would in effect deprive the concerned State of the power to legislate in respect of water under Entry 7 and/or make executive orders in that behalf under Article 162 of the Constitution.
The jurisdic tion conferred on the Tribunal under the Act to adjudicate upon a water dispute does not extend to grant of interim relief.
The State of Karnataka, therefore, contends that having regard to the purpose, scope and intendment of the Act, the Tribunal constituted thereunder has no power or authority to grant any interim relief which would have the effect of adversely interfering with its existing rights, although while finally adjudicating the dispute it can override any executive or legislative action taken by the State.
Since the allocation of flow waters between the con cerned States is generally based on the principle of 'equi table apportionment ', it is incumbent on the Tribunal to investigate the facts and all relevant materials before deciding on the shares of the concerned States which is not possible at the interim stage and hence the legislature has advisedly not conferred any power on the Tribunal to make an interim order affecting the existing rights of the concerned parties.
The 534 State of Karnataka, therefore, urges that this question deserves to be answered in the negative.
The State of Kerala has in its written submissions of 10th August, 1991 by and large supported the stand taken by the State of Karnataka.
It contends that the provisions of the Act enacted under Article 262 of the Constitution con stitute a complete Code and the Tribunal has been conferred the powers of a civil court under the Civil Procedure Code only in respect of matters enumerated in section 9(1) of the Act.
The power to grant interim relief is conspicuously absent and in the absence of an express provision in this behalf, the Tribunal, which is a creation of the Act, can have no jurisdiction to grant interim relief.
It would be advantageous to state the contention of the State of Kerala in its own words: ". .Tribunal has no jurisdiction or power to make an interim award or grant any interim relief to a party unless the dispute relating to the interim relief has itself been referred to the Tribunal." (Paragraph 1.5) This is further amplified in paragraph 3.3 of its submissions as under.
: "Such a relief can be granted to a party if that forms the subject matter of a separate reference to the Tribunal by the Central Government.
In such a situation, the order of the Tribunal, would constitute a separate report and decision within section 5(2) of the Act which would then be published by the Central Government and would, therefore, be binding on the parties.
" It is, however, the stand of Kerala that no specific refer ence for grant of interim relief w,ks made to the Tribunal and hence the interim order of 25th June, 1991 does not constitute a report and a decision within the meaning of section 5(2) and hence the Central Government is not expect ed to gazette the same.
Unless the same is gazetted finality cannot attach to it nor can it bind the parties.
Therefore, contends the State of Kerala, the Tribunal had no jurisdic tion to grant interim relief which it h,ks granted by its aforesaid interim order.
Hence the said order has no effica cy in law and can be ignored.
On the question of issuance of the Ordinance, the State of Kerala contends, that such a legislation falls within the scope and ambit of Entry 17 and is, therefore, perfectly legal and constitutional and is not in any manner inconsist ent with Entry 56 nor does it trench upon any part of the 535 declaration in section 2 of the or any of the provisions thereof.
Thus according to Kerala, the legis lative competence to pass such a statute vests in the State legislature under Entry 17 and, therefore, the Governor of Karnataka was competent to issue the Ordinance under Article 213 of the Constitution.
However, in the course of his submissions before this Court, Mr. Shanti Bhushan, counsel for the State of Kerala departed from the stand taken in the written submission and contended that the scheme of the Act does not confer any power whatsoever on the Tribunal to make an interim order and, therefore, the only remedy available to a State which apprehends any action by the upper riparian State likely to adversely affect its right, i.e. the rights of its people, is to move the Supreme Court under Article 131 of the Con stitution notwithstanding the provisions of Article 262 and section 11 of the Act.
According to the learned counsel since the scope of Article 262 read with the scheme of the Act does not contemplate a Reference regarding the grant of interim relief to the Tribunal constituted under the Act, the field is left open for a suit to be instituted under Article 131 of the Constitution.
Mr. Shanti Bhushan went so far as to contend that even if the Act had invested power in the Central Government such a provision would have been hit by Article 262 itself as the scope of that Article is limit ed while Article 131 is wider in scope.
Thus according to counsel, this Court 's majority view expressed by Kasliwal, J.in Civil Appeals Nos. 303,304 & 2036 of 1991 which held that there was a reference to the Tribunal for grant of interim relief is not consistent with the true meaning and sope of Article 262 and the provisions of the Act and this Court should not feel bound by it if it agrees with coun sel 's interpretation for to do so would be to render wrong advice to the President.
It is thus manifest that counsel 's submissions are a clear departure from the written submis sion filed by the State on 10th August, 1991.
The State of Tamil Nadu contends that ordinarily a dispute between (i) the Government of India and one or more States or (ii) between the Government of India and any State or States on one side and one or more other States on the other or (iii) between two or more States would be governed by Article 131 of the Constitution and, subject to the provisions of the Constitution, the Supreme Court alone would have jurisdiction if and insofar as the dispute in volves any question (whether of law or fact) on which the existence or extent of a legal right depends.
Article 131 begins with the words 'subject to the provisions of the Constitution ' and hence it must be read subject to Article 262 of the Constitution.
Article 262 enables Parliament to provide by law for the adjudication of any dispute or com plaint with respect to the use, distribution or control of the 536 waters of, or in, any inter State river or river valley.
That law may, notwithstanding anything contained in the Constitution, provide that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any such dispute or complaint as is referred to above.
In exer cise of power conferred by this provision., the Parliament enacted the Act and by section 11 provided as under: "Notwithstanding anything contained in any other law, neither the Supreme Court nor any other court shall have or exercise jurisdic tion in respect of any water dispute which may be referred to a Tribunal under this Act." While Article 262(2) begins with the words 'notwith standing anything in this constitution ', section II begins with the words 'Notwithstanding anything contained in any other law ' which conveys that all courts including the Supreme Court are debarred from exercising jurisdiction in respect of any water dispute which may be referred to the tribunal for adjudication.
It is, therefore, contended that the Tribunal required to perform a purely judicial function which but for Article 262 and section 11 of the Act would have been performed by a Court of law.
An independent high level machinery consisting of a Chairman and two other members nominated by the Chief Justice of India from amongst sitting Judges of the Supreme Court or of a High Court is to constitute the Tribunal for adjudicating the water dispute.
As the Tribunal is invested with the State 's judicial function it has all the trappings of a civil court and it is inconceivable that such a high powered judicial body would not be empowered to make interim orders or grant interim relief, particularly when it is empowered even to override an existing legislation or inter fere with a future legislation.
Since the Tribunal is a substitute for the Supreme Court (but for Article 262 and section 11 of the Act, Article 131 would have applied) it is reasonable to infer that all the powers which the Supreme Court under Article 131 can be exercised by the Tribunal while adjudicating a water dispute and, therefore, the power to grant interim relief inheres in such a Tribunal without the need for an express provision in that behalf.
A Tribunal on which is conferred a jurisdiction to adjudicate as to the prejudicial effect of a future legislation or executive action must of necessity possess the power to make interim orders interdicting a prejudicial act.
The State of Tamil Nadu, therefore, contends that a high powered Tribunal like the present one which is a substitute for this Court must be presumed to have jurisdiction to grant an appropriate inter im relief.
Such an ancillary and incidental power always inheres in a Tribunal which discharges judicial 537 functions.
It is, therefore, contended that Question 3 must be answered in the affirmative.
Without prejudice to the generality of the above submis sion, the State of Tamil Nadu contends that insofar as the question of jurisdiction to grant interim relief concerning the Cauvery water dispute is concerned, the decision of this Court dated 26th April, 1991 in Civil Appeals Nos. 303, 304 and 2036 of 1991 operates as resjudicata and is binding on the contesting parties regardless of the view that this Court may take on the generality of the question referred for decision.
It must be recalled that this Court in its judgment of 26th April, 1991 came to the conclusion that the reference made to the Tribunal included the question of grant of interim relief and this conclusion based on the interpretation of the terms of the reference dated 2nd June, 1990 read with letter dated 6th July, 1991 was clearly binding on the concerned parties and the Tribunal 's interim order on the merits of the matter made in pursuance of this Court 's directive to decide on merits is equally binding and cannot be disturbed in proceedings arising out of a Refer ence under Article 143 (1) of the Constitution.
If the question of grant of interim relief forms part of the Refer ence, the Tribunal is duty bound to decide the same and such decision would constitute a report under Section 5(2) of the Act which the Central Government would be duty bound to publish as required by section 6 of the Act.
It is further contended that in the view of the State of Tamil Nadu a Tribunal constituted under the Act has inherent jurisdiction to grant interim relief as pointed out earlier, whether or not the question regarding grant of interim relief is spe cifically referred, and its decision thereon would consti tute a report under section 5(2) of the Act liable to be published in the official Gazette as required by section 6 thereof.
If there is any ambiguity in the interim order the same can be taken care of under section 5(3) of the Act.
The State of Tamil Nadu, therefore, contends that both parts of Question 2 deserve to be answered in the affirmative.
So far as Question 1 of the Reference is concerned, the State of Tamil Nadu contends that the Karnataka Ordinance (now Act) is ultra vires the Constitution for diverse rea sons.
It is contended that the real object and purpose of the legislation is to unilaterally nullify the Tribunal 's interim order after having failed in the first round of litigation.
It is contended that the State of Karnataka had and has no right to unilaterally decide the quantum of water it will appropriate or the extent to which it will diminish the flow of Cauvery waters to the State of Tamil Nadu and thereby deny to the people of Tamil Nadu their rightful share in the Cauvery waters.
The right to just and reasona ble use of water being a matter for adjudication by the Tribunal, no single State can by the use of 538 its legislative power arrogate upto itself the judicial function of equitable apportionment and decide for itself the quantum of water it will use from the inter State river regardless of the prejudice it would cause to the other State by its unilateral action.
Such a power cannot be read in entry 17 as it will be destructive of the principle that such water disputes are justiciable and must be left for adjudication by an independent and impartial special forum to which it is referred, namely, the Tribunal constituted for resolving the dispute, and not by unilateral executive or legislative interference.
It is, therefore, contended that the object of the legislation not being bona fide, the same cannot be allowed to stand as it has the effect of overruling a judicial order passed by a Tribunal specially appointed to adjudicate on the water dispute between the parties thereto.
On the question of legislative competence, the State of Tamil Nadu contends that the statute is ultra vires the Constitution for the following reasons: (a) the Ordinance (now Act) is ultra vires the Constitution as it seeks to override or neutralise the law enacted by Parliament in exercise of power conferred by Article 262 (and not Article 246 read with the relevant entry in the Seventh Sechedule) of the Consti tution.
A State Legislature can have no power to legislate with regard to a water dispute as it would be incongruous to confer or infer such power in a State legislature to destroy what a judicial body has done under a Central law; (b) the impugned legislation purporting to be under Entry 17 of List II has extra territorial operation, in that, it directly impinges on the rights of the people of Tamil Nadu to the use of Cauvery waters.
(c) the impugned legislation is con trary to the Rule of Law and a power not comprehended even by Article 262 cannot be read into the legislative power of the State for it would pervert the basic concept of justice, and (d) the impugned legislation is violative of the fundamental fights of the inhabitants of Tamil Nadu guranteed by Articles 14 and 21 of the Constitution, in that, the action of Karnataka is wholly arbitrary and in total disregard of the right to life of those inhab itants in Tamil Nadu who survive on Cauvery waters.
539 The State of Tamil Nadu strongly contends that in a civi lised society governed by the Rule of Law, a party to a 'lis ' water dispute cannot be owed to arrogate to itself the fight to decide on the dispute or to nullify an interim order made by a Tribunal in obedience to the decision of the apex court by abusing the legislative power under Entry 17 under which the impugned legislation purports to be.
Without raising any preliminary objection and without prejudice to its afore mentioned contentions, the State of Tamil Nadu contends that the jurisdiction of this Court under Article 143 of the Constitution is discretionary and this Court should refrain from answering a Reference which i in general terms without background facts and is likely to entail a roving inquiry which may ultimately prove academic only.
Secondly, the State of Karnataka has immediately after the interim order instituted a suit, being Original Suit No.1 of 1991, in this Court in which it has prayed for a declaration that the interim order of the Tribunal dated 25th June, 1991 is without jurisdiction, null and void, and for setting aside the said order.
It is contended that while on the one hand the decision of this Court, per Kasliwal, J., has become final and is res judicate between the parties thereto, on the other hand the State of Karnataka is raking up the same question of jurisdiction before this court in a substantive suit with a view to overreaching this Court 's earlier order.
The Presidential Reference in terms refers to disputes and differences having arisen out of the Tribunal 's interim order which, it is said, has given rise to a public controversy likely to result in undesirable consequences.
Such matters, contends the State of Tamil Nadu, can be effectively countered by the concerned Government and do not call for a Presidential Reference.
If there is any doubt or difficulty in the implementation of the impugned order recourse can always be had to section 5(3) of the Act.
In the circumstances it is urged that this Court should refuse to answer the Reference.
The Union Territory of Pondicherry contends that the promulgation of the Ordinance (now Act) is intended to further protract the long standing water dispute which came to be referred to the Tribunal only after this Court issued a mandamus in that behalf and is likely to prejudicially affect the interest of the State as well as the farmers and other inhabitants who utilise the water from river Cauvery.
It is contended that the said legislation is unconstitution al and is a piece of colourable legislation for the follow ing reasons: (a) the power of the State Legislature to enact a law on the subject falling in Entry 17 List II, is subject to the provisions of Entry 56 in List 1, and once Parliament had made a declaration in that behalf in section 2 of the River Boards 540 Act, the State Legislature was not competent to enact the impugned law, (b) once the Central Government had entrusted the Cauvery water dispute to an independent Tribunal under the provisions of the Act, it was not constitutionally permissi ble for Karnataka to enact the impugned law, (c) in the case of flowing water the riparian States have no ownership or proprie tary right therein except in the usufruct thereof and, therefore, the power to legislate therein under Entry 17 of List II can extend to only the usufructurary right subject to the right of a riparian State to get the customary quantity of water, (d) the objective of the impugned legis lation is to set at naught the interim order of the Tribunal and to the extent it seeks to interfere with the exercise of judicial powers it is unconstitutional, (e) the impugned legislation is violative of Article 21 of the Constitution as it is intended to diminish the supply of water to Tamil Nadu and Pondicherry which is also against the spirit of Articles 38 and 39 of the Constitution, and (f) the impugned legislation seeks to eclipse the interim order of the Tribunal constituted under an Act made in virtue of Article 262 of the Constitution and being in conflict with the Central legislation is void for repugnancy.
For the above reasons, Pondicherry contends that the Ordinance (now the Act) is constitutionally invalid.
As regards Question 2 it is contended that the water dispute referred to the Tribunal comprised the issue regard ing the grant of interim relief as held by Kasliwal, J. and hence the interim order made by the Tribunal constitutes a report within the meaning of section 5(2) of the Act and consequently the Central Government is obliged to publish it is required by section 6 of the Act.
Once it is so published it will operate as a decision in rem but even without publi cation it is binding on Karnataka as a decision in personam.
If any explanation or guidance is required it can be had from the Tribunal by virtue of section 5(3) of the Act.
Once the time for seeking explanation or guidance is over the law enjoins on the Central Government the obligation to publish the report under section 6 of 541 the Act.
Both the elements of Question 2 must, contends Pondicherry, be answered in the affirmative.
So far as Question 3 is concerned, it is contended that the Tribunal constituted under the Act, though not a Court, has all the attributes of a Court since it is expected to discharge a judicial function and must, therefore, be pre sumed to have 'incidental and ancilliary powers ' to grant interim relief, if equity so demands.
That is so because the jurisdiction of all courts including this Court is taken away by virtue of section 11 of the Act read with Article 262(2) of the Constitution.
The Tribunal is, therefore, required to discharge the judicial function of adjudicating a water dispute between two or more States and must, there fore, be deemed to possess the inherent power to grant interim relief which inheres in all such judicial bodies.
Absence of an express provision conferring power to grant interim relief does not detract from the view that such power inheres in a Tribunal which is called upon to dis charge an essentially judicial function.
For discharging such a function it is essential that the Tribunal must possess inherent power to pass interim orders from time to time in aid of adjudication.
The Union Territory of Pondi cherry is, therefore, of the view that Question 3 must be answered in the affirmative.
Six intervention applications have been filed by differ ent persons and bodies from Karnataka including the Advocate General of the State in support of the case of Karnataka raising contentions more or less similar to those raised by the State itself.
One intervention application is filed by the Tamil Nadu Society which had preferred the original Writ Petition in which a mandate to constitute a Tribunal under the Act was given.
The contentions raised by the interveners are covered in the written submissions filed by the State of Tamil Nadu and need not be reiterated.
The said intervener has also filed written submissions through counsel Shri Ashok Sen which we shall deal with in the course of this judgment.
Of the three questions which have been referred to this Court under Article 143(1) of the Constitution, there can be no dispute, and indeed there was none, that question 2 arises solely and entirely out of the Tribunal 's order granting interim relief.
The question is whether that order constitutes a report within the meaning of section 5(2) of the Act and is required to be published in the gazette of the Central Government to make it effective.
The first question refers ' to the constitutional validity of the Karnataka Ordinance (now the Act).
Although this question does not specifically refer to the Cauvery water dispute or the interim order passed by the Tribunal, the preamble of the said statute leaves no doubt that it is concerned with the protection and preservation of irrigation in irrigable 542 areas of the Cauvery basin in Karnataka dependent on the waters of the Cauvery river and its tributaries '.
The provi sions of the said law extracted earlier leave no manner of doubt that the State Government has been charged with the duty to abstract or cause to be abstracted, during every water year, such quantity of water as it may deem requisite, from the flows of river Cauvery and its tributaries, 'not withstanding anything contained in any order, report or decision of any. .
Tribunal ', whether made before or after the commencement of the said law, save and except a final decision under section 5(2) read with section 6 of the Act.
There can, therefore, be no doubt that if the provi sions of this special Karnataka enactment become legally effective, the Tribunal 's order dated 25th June, 1991 grant ing interim relief would stand eclipsed.
In that view of the matter Question 1 is clearly intertwined with the Cauvery water dispute referred to the Tribunal and the interim order made by that body.
The third question, it was contended by Tamil Nadu and Pondicherry, though innocent in appearance and apparently general in nature, is in fact likely to nullify the interim order of the Tribunal.
There can be no doubt that this Court 's opinion on Question 3 will certainly have a bearing on the interim order of the Tribunal.
Bearing this in mind we may now proceed to deal with the questions referred to this Court in the light of the submissions made at the Bar. 7.
We will deal with the respective contentions with refer ence to each of the questions.
Question No. I To examine the validity of the contentions advanced on this question it is first necessary to analyse the relevant provisions of the Constitution.
The distribution of legislative powers is provided for in Chapter I of Part XI of the Constitution.
Article 245, inter alia states that subject to the provisions of the Constitution, Parliament may make laws for the whole or any part of the territory of India and the legislature of the State may make laws for the whole or any part of the State.
Article 246 provides, among other things, that subject to clauses (I)and (2) of the said Article, the legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumer ated in the State List in the Seventh Schedule.
Clauses (1) and (2) of the said Article refer to the Parliament 's exclu sive powers to make laws with respect to any of the matters enumerated in the Union List and the power of the Parliament and the legislature of the State to make laws with respect to any of the matters enumerated in the Concurrent List.
Article 248 gives 543 the Parliament exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or the State List.
Entry 56 of the Union List reads as follows: "Regulation and development of inter State rivers and river valleys to the extent to which such regulation and development under the control of the Union is declared by Par liament by law to be expedient in the public interest.
" A reading of this Entry shows that so far as inter State rivers and river valleys are concerned, their regulation and development can be taken over by the Union by a Parliamen tary enactment.
However, that enactment must declare that such regulation and development under the control of the Union is expedient in the public interest.
Entry 17 in the State List reads as follows: "Water, that is to say, water supplies, irri gation and canals, drainage and embankments, water storage and water power subject to the provisions of Entry 56 of List I." An examination of both the Entries shows that the State has competence to legislate with respect to all aspect of water including water flowing through inter State rivers, subject to certain limitations, viz. the control over the regulation and development of the inter State river waters should not have been taken over by the Union and secondly, the State cannot pass legislation with respect to or affect ing any aspect of the waters beyond its territory.
The competence of the State legislature in respect of inter State river waters is, however, denuded by the Parliamentary legislation only to the extent to which the latter legisla tion occupies the field and no more, and only if the Parlia mentary legislation in question declares that the control of the regulation and development of the inter State rivers and river valleys is expedient in the public interest, and not otherwise.
In other words, if a legislation is made which fails to make the said declaration it would not affect the powers of the State to make legislation in respect of inter State river water under Entry 17.
Entry 14 of List II relates, among other things, to agriculture.
In so far as agriculture depends upon water including river water, the State legislature while enacting legislation with regard to agriculture may be competent to provide for the regulation and development of its water resources including water supplies, irrigation and canals, drainage and embankments, water storage and water power which are the subjects men 544 tioned in Entry 17.
However, such a legislation enacted under Entry 14 in so far as it relates to inter State river water and its different uses and the manners of using it, would also be, it is needless to say, subject to the provi sions of Entry 56.
So also Entry 18 of List II which speaks, among other things, of land improvement which may give the State Legislature the powers to enact similar legislation as under Entries 14 and 17 and subject to the same restric tions.
Entry 97 of the Union List is residuary and under it the Union has the power to make legislation in respect of any matter touching inter State river water which is not enumer ated in the State List or the Concurrent List.
Correspond ingly, the State legislature cannot legislate in relation to the said aspects or matters.
Article 131 of the Constitution deals with original jurisdiction of the Supreme Court and states as follows: "131.
Original Jurisdiction of the Supreme Court Subject to the provisions of this Constitution, the Supreme Court shall, to the exclusion of any other court, have original jurisdiction in any dispute (a) between the Government of India and one or more States; or (b) between the Government of India and any State or States on one side and one or more other States on the other; or (c) between two or more States, if and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends: Provided that the said jurisdiction shall not extend to a dispute arising out of any treaty, agreement, covenant, engagement, sanad or other similar instrument which, having been entered into or executed before the commence ment of this Constitution, continues in opera tion after such commencement, or which pro vides that the said jurisdiction shall not extend to such a dispute.
" It is clear from the Article that this Court has origi nal jurisdiction, among other things, in any dispute between two or more States where the 545 dispute involves any question whether of law or fact on which the existence and extent of a legal right depends except those matters which are specifically excluded from the said jurisdiction by the proviso.
However, the Parlia ment has also been given power by Article 262 of the Consti tution to provide by law that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any dispute or complaint with respect to the use, distribu tion or control of the water of, or in, any interState river or river valley.
Section 11 of the Act, namely, the Inter State Water Disputes Act, 1956 has in terms provided for such exclusion of the jurisdiction of the courts.
It reads as follows: "Sec.
11 Notwithstanding anything contained in any other law, neither the Supreme Court nor any other court shall have or exercise jurisdiction in respect of any water dispute which may be referred to a Tribunal under this Act.
" This provision of the Act read with Article 262 thus excludes original cognizance or jurisdiction of the inter State water dispute which may be 'referred to the Tribunal established under the Act, from the purview of any Court including the Supreme Court under Article 13 1. 9.
We may now analyse the provisions of the Karnataka Ordinance in question the text of which is already repro duced.
Its preamble states, that it is issued (i) to provide for the protection and preservation of irrigation in irriga ble areas of the Cauvery basin in Karnataka dependent on the waters of the Cauvery river and its tributaries, and (ii) that the Governor of Karnataka was satisfied that circum stances existed which rendered it necessary for him to take immediate action for the said protection and preservation.
The irrigable areas of which protection and preservation is sought by the Ordinance are mentioned in the Schedule to the Ordinance.
Admittedly the Schedule includes the irrigable area as existing in 1972 during the tenure of the agreement of 1924 between Karnataka and Tamil Nadu as well as the increase in the same since 1972 till the date of the Ordi nance as well as the areas which are committed to be brought under irrigation on account of some of the projects men tioned in Column II of the Schedule.
Clause 3(1) of the Ordinance then makes a declaration of the duty of the State Government to protect, preserve and maintain irrigation from the waters of the Cauvery river and its tributaries in the said irrigable area.
Sub clause (2) of the said clause then gives powers to the State Government to abstract or cause to be abstracted during every water year (which is defined as the year commencing with 1st of June of a calendar year and ending with 31st May of next calendar year), such quantity of water as it may deem requisite, from the flows of the Cauvery river and its tributaries and in such manner and during such intervals as 546 the State Government or any officer not below the rank of an Engineer inChief designated by it may deem fit and proper.
(Emphasis supplied).
This clause, therefore, vests in the State Government or the Officer designated by it, an abso lute power to appropriate any quantity of water from the Cauvery river and its tributaries and in any manner and at any interval as may be deemed fit and proper.
The power given by the clause is unrestricted and uninhibited by any consideration save and except the protection and preserva tion of the irrigable area of the Karnataka State.
Clause 4 is still more absolute in its terms and opera tion inasmuch as it declares that the Ordinance and any rules and orders made thereunder shall have effect notwith standing anything contained in any Order, report or decision of any court or tribunal (whether made before or after the commencement of the Ordinance) save and except a final decision under the provisions of sub Section (2) of Section 5 read with Section 6 of the .
Clause (5) states that when any difficulty arises in giving effect to the provisions of this Ordinance, the State Government may, by order, as occasion requires, do anything which appears to be necessary for the purpose of removing the difficulty, and clause (6) gives power to the State Government to make rules to carry out the purpose of the Ordinance.
Clauses (4), (5) and (6) read together show that the Ordinance, Rules and Order made thereunder will prevail over any order, report or decision of any court including the Supreme Court and, of course, of the Tribunal under the Inter State Water Dispute Act.
The only decision which is excluded from the overriding effect of the Ordinance is the final decision of the Water Disputes Tribunal given under Section 5 (2) read with Section 6 of the . 10.
The object of these provisions of the Ordinance is obvious.
Coming close on the Order dated 25th June, 1991 of the Tribunal and in the context of the stand taken by the State of Karnataka that the Tribunal has no power or juris diction to pass any interim order or grant any interim relief, it is to override the said decision of the Tribunal and its implementation.
The Ordinance has thus the effect of defying and nullifying any interim order of the Tribunal appointed under a law of the Parliament.
This position is not disputed before us on behalf of the State of Karnataka.
The other effect of the Ordinance is to reserve to the State of Karnataka exclusively the right to appropriate as much of the water of river Cauvery and its tributaries as it deems requisite and in a manner and at periods it deems fit and proper, although pending the final adjudication by the Tribunal.
It cannot be disputed that the Act, viz., the Inter State Water Disputes Act, 1956 is not a legislation under Entry 56.
In the first instance Entry 56 547 speaks of regulation and development of inter State rivers and river valleys and does not relate to the disputes be tween the riparian States with regard to the same and adju dication thereof.
Secondly, and even assuming that the expression "regulation and development" would in its width, include resolution of disputes arising therefrom and a provision for adjudicating them, the Act does not make the ' declaration required by Entry 56.
This is obviously not an accidental omission but a deliberate disregard of the Entry since it is not applicable to the subject matter of the legislation.
Thirdly, no Entry in either of the three Lists refers specifically to the adjudication of disputes with regard to inter State river waters.
The reason why none of the Entries in the Seventh Sched ule mention the topic of adjudication of disputes relating to the inter State river waters is not far to seek.
Article 262 of the Constitution specifically provides for such adjudication.
The Article appears under the heading "Dis putes relating to Waters", and reads as follows: "262.
Adjudication of disputes relating to waters of interState rivers or river valleys. ******************************************* (1) Parliament may by law provide for the adjudication of any dispute or complaint with respect to the use, distribution or control of the waters of, or in, any inter State river or river valley.
(2) Notwithstanding anything in this Constitution, Parliament may by law provide that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any such dispute or complaint as is re ferred to in clause (1).
" An analysis of the Article shows that an exclusive power is given to the Parliament to enact a law providing for the adjudication of such disputes.
The disputes or complaints for which adjudication may be provided relate to the "use, distribution or control" of the waters of, or in any inter State river or river valley.
The words "use", "distribution" and "control" are of wide import and may include regulation and development of the said waters.
The provisions clearly indicate the amplitude of the scope of adjudication inasmuch as it would take within its sweep the determination of the extent, and the manner, of the use of the said waters, and the power to give directions in respect of the same.
The language of the Article has, further to be distinguished from that of Entry 56 and Entry 17.
Whereas Article 262 (1) speaks of adjudication of any dispute or complaint and that too with respect to the use, distribution or control of the waters of or 548 in any inter State river or river valleys, Entry 56 speaks of regulation and development of inter State rivers and river valley.
Thus the distinction between Article 262 and Entry 56 is that whereas former speaks of adjudication of disputes with respect to use, distribution or control of the waters ' of any inter State river or river valley, Entry 56 speaks of regulation and development of inter State rivers and river valleys.
(Emphasis supplied).
Entry 17 likewise speaks of water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power subject to the provisions of Entry 56.
It does not speak either of adjudication of disputes or of an inter State river as a whole as indeed it cannot, for a State can only deal with water within its territory.
It is necessary to bear in mind these distinctions between Article 262, Entry 56 and Entry 17 as the arguments and counter arguments on the validity of the Ordinance have a bearing on them.
We have already pointed out another important aspect of Article 262, viz., Clause (2) of the Article provides that notwithstanding any other provision in the Constitution, Parliament may by law exclude the jurisdiction of any court including the Supreme Court in respect of any dispute or complaint for the adjudication of which the provision is made in such law.
We have also noted that Section 11 of the makes such a provision. 13.
The said Act, as its preamble shows, is an Act to pro vide for the "adjudication of disputes relating to waters of inter State rivers and river valleys".
Clause (c) of Section 2 of the Act defines "water dispute" as follows: "2.
In this Act, unless the context otherwise requires, (a). . . . (b). . . (c) "water dispute" means any dispute or difference between two or more State Govern ments with respect to (i) the use, distribution or control of the waters of, or in, any inter State river or river valley; or (ii) the interpretation of the terms of any agreement relating to the use, distribu tion or control of such waters or the imple mentation of such agreement; or (iii) the levy of any water rate in contravention of the prohibition contained in section 7" 549 Section 3 of the Act states that if it appears to the Government of any State that the water dispute with the Government of another State of the nature stated therein, has arisen or is likely to arise, the State Government may request the Central Government to refer the water dispute to a Tribunal for adjudication.
Section 4 of the Act provides for the constitution of a Tribunal when a request is re ceived for referring the dispute to a Tribunal and the Central Government is of the opinion that the water dispute cannot be settled by negotiations.
Section 5 of the Act requires the Tribunal to investigate the matter referred to it and forward to the Central Government the report of its findings and its decision.
The Central Government has then to publish the decision under Section 6 of the Act which decision is final and binding on the parties to the dispute and has to be given effect to by them.
These dominant provi sions, among others, of the Act clearly show that apart from its title, the Act is made by the Parliament pursuant to the provisions of Article 262 of the Constitution specifically for the adjudication of the disputes between the riparian States with.
regard to the use, distribution or control of the waters of the inter State rivers or river valleys.
The Act is not relatable to Entry 56 and, therefore, does not cover either the field occupied by Entry 56 or by Entry 17.
Since the subject of adjudication of the said disputes is taken care of specifically and exclusively by Article 262, by necessary implication the subject stands excluded from the field covered by Entries 56 and 17.
It is not, there fore, premissible either for the Parliament under Entry 56 or for a State legislature under Entry 17 to enact a legis lation providing for adjudication of the said disputes or in any manner affecting or interferring with the adjudication or adjudicatory process of the machinery for adjudication established by law under Article 262.
This is apart from the fact that the State legislature would even otherwise be incompetent to provide for adjudication or to affect in any manner the adjudicatory process or the adjudication made in respect of the inter State river waters beyond its territory or with regard to disputes between itself and another State relating to the use, distribution or control of such waters.
Any such act on its part will be extraterritorial in nature and, therefore, beyond its competence.
Shri Venugopal has in this connection urged that it is Entry 97 of the Union List which deals with the topic of the use, distribution and control of waters of an inter State river.
The use, distribution and control of the waters of such rivers, by itself is not a topic which is covered by Article 262.
It is also, according to him, not a topic covered by Entry 56 which only speaks of regulation and development of inter State rivers and river valleys meaning thereby the entirety of the rivers and river valleys and not the waters at or in a particular place (emphasis supplied).
Further, the regulation and development, according to him, has nothing to do with the 550 use, distribution or allocation of the waters of the inter State river between different riparian States.
That topic should, therefore, be deemed to have been covered by the said residuary Entry 97.
With respect to the learned counsel, it is not possible to accept this interpretation of the Entry 97.
This is so firstly because, according to us, the expression "regulation and development of Inter State rivers and river valleys" in Entry 56 would include the use, distribution and allocation of the waters of the inter State rivers and river valleys between different riparian States.
Otherwise the intention of the Constituent Assembly to provide for the Union to take over the regulation and development under its control makes no sense and serves no purpose.
What is further, the which is admittedly eracted under Entry 56 for the regulation and development of inter State rivers and river valleys does cover the field of the use, distribution and allocation of the waters of the inter State rivers and river valleys.
This shows that the expression "regulation and development" of the inter State rivers and river valleys in Entry 56 has legislatively also been construed to include the use, distribution or allocation of the waters of the inter State rivers and river valleys between riparian States.
We are also of the view that to contain the opera tion of Entry 17 to the waters of an inter State river and river valleys within the boundaries of a State and to deny the competence to the State legislature to interfere with or to affect or to extend to the use, distribution and alloca tion of the waters of such river or river valley beyond its territory, directly or indirectly, it is not necessary to fail back on the residuary Entry 97 as an appropriate decla ration under Entry 56 would suffice.
The very basis of a federal Constitution like ours mandates such interpretation and would not bear an interpretation to the contrary which will destroy the constitutional scheme and the Constitution itself.
Although, therefore, it is possible technically to separate the "regulation and development" of the inter State river and river valley from the "use, distribution and allocation" of its water, it is neither warranted nor neces sary to do so.
The above analysis of the relevant legal provisions dealing with the inter State rivers and river valleys and their waters shows that the Act, viz., the can be enacted and has been enacted only under Article 262 of the Constitution.
It has not been enacted under Entry 56 as it relates to the adjudication of the disputes and with no other aspect either of the inter State river as a whole or of the waters in it.
It will be pertinent at this stage also to note the true legal position about the inter State river water and the rights of the riparian States to the 551 same.
In State of Kansas vs State of Colorado, [206] US 46 the Supreme Court of the United States has in this connec tion observed as follows: "One cardinal rule, underlying all the rela tions of the States to each other, is that of equality of right.
Each State stands on the same level with all the rest.
It can impose its own legislation on no one of the others and is bound to yield its own view to none". " . the action of one State reaches, through the agency of natural laws into the territory of another State, the question of the extent and the limitation of the rights of the two States becomes a matter of justiciable dispute between them . this court is called upon to settle that dispute in such a way as will recognise the equal rights of both and at the same time establish justice between them".
"The dispute is of a justiciable nature to be adjudicated by the Tribunal and is not a matter for legislative jurisdiction of one State. ".
"The right to flowing water is now well set tled to be a right incident to property in the land; it is a right publici juris, of such character that, whilst it is common and equal to all through whose land it runs, and no one can obstruct or divert it, yet as one of the beneficial gifts of Providence, each proprie tor has a right to a just and reasonable use of it, as it passes through his land, and so long as it is not wholly obstructed or divert ed, or no larger appropriation of the water running through it is made than a just and reasonable use, it cannot be said to be wrong ful or injurious to a proprietor lower down".
"The right to the use of the flowing water is publici juris, and common to all the riparian proprietors; it is not an absolute and exclu sive right to all the water flowing past their land so that any obstruction would give a cause of action; but it is a right to the flow and enjoyment of the water subject to a simi lar right in all the proprietors to the rea sonable enjoyment of the same gift of provi dence.
It is therefore only for an abstraction and deprivation of this common benefit or for an unreasonable and unautho rised use of it that an action will lie." 16.
Though the waters of an inter State river pass through the territories of the riparian States such waters cannot be said to be located in any one 522 State.
They are in a state of flow and no State can claim exclusive ownership of such waters so as to deprive the other States of their equitable share.
Hence in respect of such waters, no State can effectively legislate for the use of such waters since its legislative power does not extend beyond its territories.
It is further an acknowledged prin ciple of distribution and allocation of waters between the riparian States that the same has to be done on the basis of the equitable share of each State.
What the equitable share will be will depend upon the facts of each case.
It is against the background of these principles and the provi sions of law we have already discussed that we have to examine the respective contentions of the parties.
The Ordinance is unconstitutional because it affects the jurisdiction of the Tribunal appointed under the Central Act, viz., the which legisla tion has been made under Article 262 of the Constitution.
As has been pointed out above, while analysing the provisions of the Ordinance, its obvious purpose is to nullify the effect of the interim order passed by the Tribunal on 25th June, 1991.
The Ordinance makes no secret of the said fact and the written statement filed and the submissions made on behalf of the State of Karnataka show that since according to the State of Karnataka the Tribunal has no power to pass any interim order or grant any interim relief as it has done by the order of 25th June, 1991, the order is without juris diction and.
therefore, void ab initio.
This being so.
it is not a decision, according to Karnaaka, within the meaning of Section 6 and not binding on it and in order to protect itself against the possible effects of the said order, the Ordinance has been issued.
The State of Karnataka has thus arrogated to itself the power to decide unilaterally whether the Tribunal has jurisdiction to pass the interim order or not and whether the order is binding on it or not.
Secondly, the State has also presumed that till a final order is passed by the Tribunal, the State has the power to appropri ate the waters of the river Cauvery to itself unmindful of and unconcerned with the consequences of such action on the lower riparian States.
Karnataka has thus presumed that it has superior rights over the said waters and it can deal with them in any manner in the process, the State of Karna taka has also presumed that the lower ripar in States have no equitable rights and it is the sole judge as to the share of the other riparian States in the said waters.
What is further, the State of Karnataka has assumed the role of a judge in its own cause.
Thus, apart from the fact that the Ordinance directly nullifies the decision of the Tribunal dated 25th June, 1991.
it also challenges the decision dated 26th April, 1991 of this Court which has ruled that the Tribunal had power to consider the question of granting interim relief since it was specifically referred to it.
The Ordinance further has an extra territorial 553 operation insasmuch as it interferes with the equitable rights of Tamil Nadu and Pondicherry to the waters of the Cauvery river.
To the extent that the Ordinance interferes with the decision of this Court and of the Tribunal appoint ed under the Central legislation, it is clearly unconstitu tional being not only in direct conflict with the provisions of Article 262 of the Constitution under which the said enactment is made but being also in conflict with the judi cial power of the State.
In this connection, we may refer to a decision of this Court in Municipal Corporation of the City of Ahmedabad etc.
vs New Shorock Spg.
& Wvg.
Co., Ltd. etc.
; , The facts in this case were that the High Court as well as this Court had held that property tax collected for certain years by the Ahmedabad Municipal Corporation was illegal.
In order to nullify the effect of the decision, the State Government introduced Section 152A by amendment to the Bombay Provincial Municipal Corporation Act the effect of which was to command the Municipal Corporation to refuse to refund the amount illegally collected despite the orders of this Court and the High Court.
This Court held that the said provision makes a direct in road into the judicial powers of the State.
The legislatures under the Constitution have, within the prescribed limits, power to make laws prospec tively as well as retrospectively.
By exercise of those powers a legislature can remove the basis of a decision rendered by a competent court thereby rendering the decision ineffective.
But no legislature in the country has power to ask the instrumentalities of the State to disobey or disre gard the decisions given by the courts.
Consequently, the provisions of sub section (3) of section 152A were held repugnant to the Constitution and were struck down.
To the same effect is another decision of this court in Madan Mohan Pathak vs Union of India & Ors.
; , In this case a settlement arrived at between the Life Insurance Corporation and its employees had become the basis of a decision of the High Court of Calcutta.
This settlement was sought to be scuttled by the Corporation on the ground that they had received instructions from the Central Government that no payment of bonus should be made by the Corporation to its employees without getting the same cleared by the Government.
The employees, therefore, moved the High Court, and the High Court allowed the petition.
Against that, a Letters Patent Appeal was filed and while it was pending, the Parliament passed the Life Insurance Corporation (Modi fication of Settlement) Act, 1976 the effect of which was to deprive the employees of bonus payable to them in accordance with the terms of the settlement and the decision of the Single Judge of the High Court.
On this amendment of the Act, the Corporation withdrew its appeal and refused to pay the bonus.
The employees having approached this Court chal lenging the constitutional validity of the said 554 legislation, the Court held that it would be unfair to adopt legislative procedure to undo a settlement which had become the basis of a decision of the High Court.
Even if legisla tion can remove the basis of a decision, it has to do it by alteration of general rights of class but not by simply excluding the specific settlement which had been held to be valid and enforceable by a High Court.
The object of the Act was in effect to take away the force of the judgment of the High Court.
The rights under the judgment would be said to arise independently of Article 19 of the Constitution.
Yet another decision of this Court on the point is P. Sambamurthy & Ors.
vs State of Andhra Pradesh & Anr.
, ; In this case what was called in question was the insertion of Article 371 D of the Consti tution.
Clause (5) of the Article provided that the order of the Administrative Tribunal finally disposing of the case would become effective upon its confirmation by the State Government or on the expiry of three months from the date on which the order was made, whichever was earlier.
The proviso to the clause provided that the State Government may by special order made in writing for reasons to be specified therein, modify or annul any order of the Administrative Tribunal before it became effective and in such a case the order of the Tribunal shall have effect only in such modi fied form or be of no effect.
This court held that it is a basic principle of the rule of law that the exercise of power by the executive or any other authority must not only be conditioned by the Constitution but must also be in accordance with law, and the power of judicial review is conferred by the constitution with a view to ensuring that the law is observed and there is compliance with the re quirement of the law on the part of the executive and other authorities.
It is through the power of judicial review conferred on an independent institutional authority such as the High Court that the rule of law is maintained and every organ of the State is kept within the limits of the law.
If the exercise of the power of judicial review can be set at naught by the State Government by overriding the decision given against it.
it would sound the death knell of the rule of law.
The rule of law would be meaningless as it would be open to the State Government to defy the law and yet get away with it.
The proviso to el.
(5) of article 37 I D was therefore, violative of the basic structure doctrine.
The principle which emerges from these authorities is that the legislature can change the basis on which a deci sion is given by the Court and thus change the law in gener al which will affect a class of persons and events at large.
It cannot, however, set aside an individual decision inter parties and affect their rights and liabilities alone.
Such an act on the part 555 of the legislature amounts to exercising the judicial power of the State and to functioning as an appellate court or Tribunal.
The effect of the provisions of section 11 of the present Act, viz., the read with Article 262 of the Constitution is that the entire judicial power of the State and, therefore, of the courts including that of the Supreme Court to adjudicate upon original dispute or complaint with respect to the use, distribution or control of the water of, or in any inter State river or river valleys has been vested in the Tribunal appointed under Section 4 of the said Act.
It is, therefore, not possible to accept the submission that the question of grant of interim relief falls outside the purview of the said provisions and can be agitated under Article 131 of the Constitution.
Hence any executive order or a legislative enactment of a State which interferes with the adjudicatory process and adjudication by such Tribunal is an interference with the judicial power of the State.
In view of the fact that the Ordinance in question seeks directly to nullify the order of the Tribunal passed on 25th June, 1991, it impinges upon the judicial power of the State and is, therefore, ultra vires the Constitution.
Further, admittedly, the effect of the Ordinance is to affect the flow of the waters of the river Cauvery into the territory of Tamil Nadu and pondicherry which are the lower riparian States.
The Ordinance has, therefore, an extra territorial operation.
Hence the Ordinance is on that ac count beyond the legislative competence of the State and is ultra vires the provisions of Article 245 (1) of the Consti tution.
The Ordiance is also against the basic tenets of the rule of law inasmuch as the State of Karnataka by issuing the Ordinance has sought to take law in its own hand and to be above the law.
Such an act is an invitation to lawless ness and anarchy, inasmuch as the Ordinance is a manifesta tion of a desire on the part of the State to be a judge in its own cause and to defy the decisions of the judicial authorities.
The action forebodes evil consequences to the federal structure under the Constitution and opens doors for each State to act in the way it desires disregarding not only the rights of the other States, the orders passed by instrumentalities constituted under an Act of Parliament but also the provisions of the Constitution.
If the power of a State to issue such an Ordinance is upheld it will lead to the break down of the Constitutional mechanism and affect the unity and integrity of the nation.
In view of our findings as above on the unconstitution ality of the Ordinance, it is not necessary for us to deal with the contention advanced 556 on behalf of Tamil Nadu and Pondicherry that the Ordinance is unconstitutional also because it is repugnant to the provisions of the which is admittedly enacted under Entry 56. 19.
We also do not propose to deal with the contentions advanced on behalf of both sides with reference to Articles 19 (1) (g) and 21 of the Constitution.
On behalf of Karnata ka the said Articles are invoked to support the Ordinance contending that the Ordinance has been issued to protect the fundamental rights of its inhabitants guaranteed to them by the said Articles which rights were otherwise been denied by the Tribunals ' order of 25th June, 1991.
As against it, it was contended on behalf of Tamil Nadu that it was the Ordi nance which was designed to deny to its inhabitants the said rights.
Underlying the contentions of both is the presump tion that the Tribunal 's order denies to Karnataka and ensures to Tamil Nadu the equitable share in the river water.
To deal with the said contentions is, therefore, to deal with the factual merits of the said order which it is not for us to examine.
Of the same genre are the contentions advanced on behalf of Karnataka, viz., that they"order creats new rights in favour of Tamil Nadu and leads to inequitable consequences so far as Karnataka is concerned.
For the same reasons, we cannot deal with these contentions either.
Question No. 3: 20.
Question 3 is intimately connected with Question 2.
However, Question 3 itself has to be answered in two parts, viz., whether a Water Disputes Tribunal constituted under the Act is competent to grant any interim relief (i) when no reference for grant of interim relief is made to the Tribu nal, and (ii) when such reference is made to it.
It was contended on behalf of Karnataka and Kerala that the answer to the second part of the question will also depend upon the answer to the first part.
For if the Tribunal has no power to grant interim relief, the Central Government would be incompetent to make a reference for the purpose and the Tribunal in turn will have no jurisdiction to entertain such reference, even if made.
And if the Tribunal has no power to grant interim relief, then the order made by the tribunal will not constitute a report and a decision within the meaning of Section 5 (2) and hence it would not be required to be published by the Central Government under Section 6 of the Act in order to make it effective.
Further if the Tribu nal has no such power to grant interim relief then the order passed by the Tribunal on 25th June, 1991 will be void being without jurisdiction and, therefore, to that extent the Ordinance issued by the State of Karnataka will not be in conflict with the provisions of the Act, viz., the Inter State Water Disputes Act, 1956.
557 21.
This Court by its decision of April 26, 1991 has held, as pointed out above, ,that the Central Government had made a reference to the Tribunal for the :consideration of the claim for interim relief prayed for by the State of Tamil Nadu and hence the Tribunal had jurisdiction to consider the said request being a part of the Reference itself.
Implicit in the said decision is the finding that the subject of interim relief is a matter connected with or relevant to the water dispute within the meaning of Section 5 (1) of the Act.
Hence the Central Government could refer the matter of granting interim relief to the Tribunal for adjudication.
Although this Court by the said decision has kept open the question, viz., whether the Tribunal has incidental, ancil lary, inherent or implied power to grant the interim relief when no reference for grant of such relief is made to it, it has in terms concluded the second part of the question.
We cannot, therefore, countenance a situation whereby Question 3 and for that matter Questions 1 and 2 may be so construed as to invite our opinion on the said decision of this Court.
That would obviously be tantamount to our sitting in appeal on the said decision which it is impermissible for us to do even in adjudicatory jurisdiction.
Nor is it competent for the President to invest us with an appellate jurisdiction over the said.
decision through a Reference under Article 143 of the Constitution.
Shri Nariman, however, contended that the President can refer any question of law under Article 143 and, therefore, also ask this Court to reconsider any of its decisions.
For this purpose, he relied upon the language of clause (1) of Article 143 which is as follows: "143.
Power of president to consult Supreme Court(1) If at any time it appears to the President that a question of law or fact has arisen, or is likely to arise, which is of such a nature and of such public importance that it is expedient to obtain the opinion of the Supreme Court upon it, he may refer the question to that Court for consideration and the Court may, after such hearing as it thinks fit, report to the President its opinion thereon.
" In support of his contention he also referred us to the opinion expressed by this Court in re: The , The Ajmer Merwara (Extension of Laws) act, 1947 and the States (Laws) Act, 1950 ; For the reasons which follow, we are unable to accept this conten tion.
In the first instance, the language of clause (1) of Article 143 far from supporting Shri Nariman 's contention is opposed to it.
The said clause empowers the President to refer for this Court 's opinion a question of law or fact which has arisen or is likely to arise.
When this 558 Court in its adjudicatory jurisdiction pronounces its au thoritative opinion on a question of law it cannot be said that there is any doubt about the question of law of the same is res integra so as to require the President to know what the true position of law on the question is.
The deci sion of this Court on a question of law is binding on all courts and authorities.
Hence under the said clause the, President can refer a question of law only when this Court has not decided it.
Secondly, a decision given by this Court can be reviewed only under Article 137 read with Rule 1 of Order XL of the Supreme Court Rules 1966 and on the condi tions mentioned therein.
When, further, this Court overrules the view of law expressed by it in an earlier case, it does not do so sitting in appeal and exercising an appellate jurisdiction over the earlier decision.
It does so in exer cise of its inherent power and only in exceptional circum stances such as when the earlier decision is per incuriam or is delivered in the absence of relevant or material facts or if it is manifestly wrong and productive of public mischief.
See: The Bengal Immunity Company Ltd. vs The Stale of Bihar & Ors., Under the Constitution such appel late jurisdiction does not vest in this Court; nor can it be vested in it by the President under Article 143.
To accept Shri Nariman 's contention would mean that the advisory jurisdiction under Article 143 is also an appellate juris diction of this Court over its own decision between the same parties and the executive has a power to ask this Court to revise its decision.
If such power is read in Article 143 it would be a serious inroad into the independence of judici ary.
So far as the opinion expressed by this Court in re The (supra) is concerned, as the Reference itself makes clear, what was referred was a doubt expressed by the President on the decision of the Federal Court in Jatindra Nath Gupta vs The Province of Bihar & Ors., which was delivered on 20th May, 1949.
The Federal Court at that time was not the apex court.
Upto 10th Octo ber, 1949, the appeals from its decisions lay to the Privy Council including the appeal from the decision in question.
The decisions of the Federal Court were not binding on the Supreme Court as held in Hari Vishnu Kamath vs Syed Ahmad Ishaque & Ors., ; Hence it was not a case where the President had referred to this Court for its opinion a decision which had become a law of the land.
Hence the case in re The (supra) does not support the contention.
The provisions of clause (2) of Article 374 of the Constitution also do not help Shri Nariman 's contention since the said provisions relate to the transitional period and the "judgments and orders of the Federal Court" referred to therein are obviously the interim judgments and orders in the 559 suits, appeals and proceedings pending in the Federal Court at the commencement of the Constitution and which stood transferred to the Supreme Court thereafter.
This is also the view taken by a Division Bench of Bombay High Court in State of Bombay vs Gajanan Mahadev Badley, AIR [1954] Bombay 351.
This view has been confirmed by this Court in Delhi Judicial Service Association, Tis Hazari Court, Delhi etc.
vs State of Gujrat & Ors. etc.
JT Para graphs 32 to 37 of the judgment deal with this subject specifically.
Both Shri Parasaran and Shri Venugopal requested us not to answer the first part of Question 3 on the ground that the said part of the question is purely theoretical and general in nature, and any answer given would be academic because there will be no occasion to make any further inter im order or grant another interim relief in this Reference.
According to him, the recitals of the order of Reference have bearing only on Questions 1 and 2, and the second part of Question 3.
They have no bearing on the first part of Question 3 and since the Reference has been made in the context of particular facts which have no connection with the theoretical part of Question 3, the same should be returned unanswered as being factually unwarranted.
On behalf of karnataka and Kerala, however as pointed out above, it was urged that we should answer the said part of the question for the reasons stated there.
Shri Shanti Bhushan in this connection relied upon the decision of this Court in A.R. Antulay vs
R.S Nayak & Anr,.
[1988] Suppl.
1 SCR 1.
He pointed out that by the said decision the direc tions given by this Court in its earlier decision were held to be void being without jurisdiction and the same were quashed.
In view of this precedent he submitted that a similar course is open to this Court and the decision dated April 26,1991 given by this Court may also be declared as being without jurisdiction and void.
In A.R. Antulay 's case (supra) two questions were specifically raised, viz., (i) whether the directions given by this Court in R.S. Nayak vs A.R. Antulay, ; , (hereinafter referred to as 'R.S Nayak 's case ') withdrawing the Special Case No.24 of 1982 and Special Case No.3 of 1983 arising out of a com plaint filed by a private individual pending in the court of Special Judge, Greater Bombay and transferring the same to the High Court of Bombay in breach of Section 7 (1) of the Criminal Law Amendment Act, 1952 (which mandates that the offences as in the said case shall be tried by a Special Judge only) thereby denying at least one right of appeal to the appellant, was violative of Articles 14 and 21 of the Constitution and whether such directions were at all valid or legal and, (ii) if such directions were not valid or legal, whether in view of the subsequent orders passed by this 560 Court on 17th of April, 1984 in a writ petition challenging the validity of the order and judgment of this Court in R.S. Nayak 's case whereby this Court had dismissed the writ petition without prejudice to the right of the petitioner 10 approach this Court with an appropriate review petition or to file any other application which he may be entitled in law to file, the appeal filed was sustainable and the grounds of the appeal were justiciable.
The latter question was further explained by stating that the question was whether the directions given in R.S. Navak 's case in a proceedings interparties were binding even if bad in law or violative of Articles 14 and 21 of the Constitution and as such were immune from correction by this Court even though they caused prejudice and did injury.
It may be stated here that the said proceedings had come before this Court by way of a special leave petition against an order passed by the learned Judge of the High Court to whom the said case came to be assigned subsequently in pursuance of the directions given in R.S. Nayak 's case.
By the order passed by the learned judge, as many as 79 charges were framed against the appellant and it was decided not to proceed against other named coconspirators.
In the special leave petition filed to challenge the said order, two questions which we have stated above were raised and leave was granted.
This Court in that case held that (i) the directions given by this Court in R.S. Nayak 's case were violative of the limits of jurisdic tion of this Court since this Court could not confer juris diction on a High Court which was exclusively vested in the Special Judge under the provisions of the criminal Law Amendment Act of 1952; (ii) the said directions deprived the appellant of his fundamental rights guaranteed under Arti cles 14 and 21 of the Constitution since the appellant had been treated differently from other offenders and he was deprived of a right of appeal to the High Court; (iii) the directions were issued without observing the principle of audi alteram partem and (iv) the decision given was per incuriam.
Shri Shanti Bhushan urged that since in that case this Court had quashed its own earlier directions on the ground that the High Court had no jurisdiction to try the offence and this Court could not confer such jurisdiction on it, in the present case also the decision of the Court dated April 26, 1991 may be ignored for having proceeded on the basis that the Tribunal had jurisdiction to pass interim relief when it had no such jurisdiction.
We are afraid that the facts in A.R. Antulay 's case (supra) are peculiar and the decision has to be confined to those special facts.
As this court has pointed out in the said decision, in the first instance, the directions which were given for withdrawing the case from the Special Judge to the High Court were without hearing the appellant.
Those directions deprived the appellant of a right of appeal to the High Court and thus were prejudicial to him.
There was, therefore, a manifest breach of the 561 rule of audi alteram paneto.
Secondly, while giving the impugned directions, the Court had not noticed that under the said Act of 1952, the Special Judge had an exclusive jurisdiction to try the offence in question and this being a legislative provision, this court could not confer the said jurisdiction on the High Court.
The Court also pointed out that to the extent that the case was withdrawn from the Special Judge find sent to the High Court, both Articles 14 and 21 were violated.
The appellant was discriminated against and the appellant 's right of appeal which was an aspect of Article 21 was affected.
It would, thus, appear that not only the directions given by this Court were with out jurisdiction but they were also per incuriam and in breach of the principles of natural justice.
They were further violative of the appellant 's fundamental rights under Articles 14 and 21 of the Constitution.
None of the said defects exists in the decision of this Court dated April 26, 1991.
It cannot be said that this Court had not noticed the relevant provisions of the The Court after perusing the relevant provi sions of the Act which were undoubtedly brought to its notice, has come to the conclusion that the Tribunal had jurisdiction to grant interim relief when the question of granting interim relief formed part of the Reference.
There is further no violation of any of the principles of natural justice or of any provision of the Constitution.
The deci sion also does not transgress the limits of the jurisdiction of this Court.
We are, therefore, of the view that the decision being inter parties operates as res judicata on the said point and it cannot be reopened.
We, however, agree with the contention that it is not necessary to answer the first part of Question 3.
The con text in which all the questions are referred to as and the preamble of the Reference amply bear out that the questions have been raised against the background a particular set of facts.
These facts have no bearing on the first part of Question 3 which is theoretical in nature.
It is also legit imate to conclude that this part of the question was not prompted by the need to have a theoretical answer to compre hend situations in general.
Our answer to the second part of the question should meet the exigencies of the situation.
Question No. 2: 25.
Coming now to Question 2, although the question is split into two parts, they deal with the same aspect of the sub ject inasmuch as the answer to the first part would automat ically answer the second part of the question.
This situa tion, like the first question, relates to the specific order of the Tribunal dated June 25, 1991.
Hence, our opinion will have to be he legal merits of the said order.
562 Sub section (1) of Section 5 expressly empowers the Central Government to refer to the Tribunal not only the main water dispute but any matter appearing to be connected with or relevant to it.
It cannot be disputed that a request for an interim relief whether in the nature of mandatory direction or prohibitory order, whether for the maintenance of status quo or for the grant of urgent relief or to pre vent the final relief being rendered infructuous, would be a matter connected with or relevant to the main dispute.
In fact, this Court, by its said decision of April 26, 1991, has in terms held that the request of the State of Tamil Nadu for granting interim relief had been referred by the Central Government to the Tribunal and directed the Tribunal to consider the request on merits, the same being a part of the Reference.
Hence the order of the Tribunal will be a report and decision within the meaning of Section 5 (2) and would have, therefore, to be published under Section 6 of the Act in order to make it effective.
One of the contentions advanced in this behalf was that the Order of the Tribunal dated June 25, 1991 does not purport to be and does not state to be a report and deci sion.
It only states that it is an order.
Secondly, the said order cannot be report and decision within the meaning of Section 5 (2) of the Act because: (i) the Tribunal can make report only after final adjudication of the dispute and there cannot be adjudication without investigation.
There is no provision for interim investigation and interim finding and report; (ii) the Tribunal could not have made the report because its own showing: (a) pleadings were not complete, parties had not yet placed on record all their documents and papers etc.; (b) there was no investigation of the matters, the investigation could have been done only after disclosure of documents followed by a detailed hearing, the evidence and arguments of the parties and judicial finding in conso nance with natural justice; (c) the assessors appointed to assess on the technical matters conducted their proceedings without consultation with the engineers of the State.
Some times the engineers of Tamil Nadu were called for consulta tion in the absence of engineers of Karnataka.
The summoning of documents and information by the assessors was also casual and did not conform to the principles of natural justice and fair play.
A copy of the advice given by the assessors to the members of the Tribunal was not made avail able to the parties; (d) the Tribunal has stated "at this stage it would not be feasible nor reasonable to determine how to satisfy the needs of each State to the greatest possible extent with the minimum detriment to others".
Such an approach is contrary to the concept of an investigation contemplated by the Act and hence no interim order for interim relief could be made on such investigation not contemplated under the Act before making any order; (ii) it is only the decision which find 563 support from the report of the Tribunal which in turn must be the result of a full and final investigation in full which is required to be published under Section 6 of the Act and not an order such as the one passed by the Tribunal.
The present order is neither a decision nor an adjudication and hence cannot be published.
The contention that since the Order does not say that it is a report and decision and, therefore, it is not so under Section 5(2) of the Act is to say the least facetious.
Either the Order is such a report and decision because of its contents or not so at all.
If the contents do not show that it is such a report, it will not become one because the Order states so.
As is pointed out a little later the con tents of the Order clearly show that it is a report and a decision within the meaning of Section 5(2).
Some of the aforesaid submissions relate to the merits of the Order passed and its consequences rather than to the jurisdiction and the power of the Tribunal to pass the said Order.
While giving our opinion on the present question, we are not concerned with the merits of the order and with the question whether there was sufficient material before the Tribunal, whether the Tribunal had supplied the copies of the advice given by the assessor to the respective parties and whether it had heard them on the same before passing the Order in question.
The limited question we are required to answer is whether the order granting interim relief is a report and a decision within the meaning of Section 5(2) and is required to be published in the official Gazette under Section 6 of the Act.
It is needless to observe in this connection that the scope of the investigation that a Tribu nal or a court makes at the stage of passing an interim order is limited compared to that made before making the final adjudication.
The extent and the nature of the inves tigation and the degree of satisfaction required for grant ing or rejecting the application for interim relief would depend upon the nature of the dispute and the circumstances in each case.
No hard and fast rule can be laid down in this respect.
However, no Tribunal or court is prevented or prohibited from passing interim order on the ground that it does not have at that stage all the material required to take the final decision.
To read such an inhibition in the power of the Tribunal or a court is to deny to it the power to grant interim relief when Reference for such relief is made.
Hence, it will have to be held that the Tribunal constituted under the Act is not prevented from passing an interim order or direction, or granting an interim relief pursuant to the reference merely because at the interim stage it has not carried out a complete investigation which is required to be done before it makes its final report and gives its final decision.
It can pass interim orders on such material as according to it is appropriate to the nature of the interim order.
564 28.
The interim orders passed or reliefs granted by the Tribunal when they are not of purely procedural nature and have to be implemented by the parties to make them effec tive, are deemed to be a report and a decision within the meaning of Sections 5 (2) and 6 of the Act.
The present Order of the Tribunal discusses the material on the basis of which it is made and gives a direction to the State of Karnataka to release water from its reservoirs in Karnataka so as to ensure that 205 TMC of water is available in Tamil Nadu 's Mettur reservoir in a year from June to May. It makes the order effective from 1st July, 1991 and also lays down time table to regulate the release of water from month to month.
It also provides for adjustment of the supply of water during the said period.
It further directs the State of Tamil Nadu to deliver 6 TMC of water for the Karaikal region of the Union Territory of Pondicherry.
In addition, it directs the State of Karnataka not to increase its area under irrigation by the waters of the river Cauvery beyond the existing 11.2 lakh acres.
It further declares that it will remain operative till the final adjudication of the dispute.
Thus the Order is not meant to be merely declarato ry in nature but is meant to be implemented and given effect to by the parties.
Hence, the order in question constitutes a report and a decision within the meaning of Section 5 (2) and is required to be published by the Central Government under Section 6 of the Act in order to be binding on the parties and to make it effective.
The contention that Section 5 (3) of the Act cannot apply to the interim orders as it is only the final decision which is meant to undergo the second reference to the Tribu nal provided for in it has no merit.
If the Tribunal has, as held above, power to make an interim decision when a refer ence for the same is made, that decision will also attract the said provisions.
The Central Government or any State Government after considering even such decision may require an explanation or guidance from the Tribunal as stated in the said provisions and such explanation and guidance may be sought within three months from the date of such decision.
The Tribunal may then reconsider the decision and forward to the Central Government a further report giving such explana tion or guidance as it deems fit.
In such cases it is the interim decision thus reconsidered which has to be published by the Central Government under Section 6 of the Act and becomes binding and effective.
We see, therefore, no reason why the provisions of Section 5(3) should prevent or inca pacitate the Tribunal from passing the interim order.
Once a decision, whether interim or final, is made under Section 5(2) it attracts the provisions both of subSection (3) of that Section as well as the provisions of Section 6 of the Act.
As pointed out earlier, the present Order having been made pursuant to the decision of this Court dated April 26, 1991 in C.As.
Nos.303 04 of 565 1991 on a matter which was part of the Reference as held by this Court in the said decision, cannot but be a report and a decision under Section 5(2) and has to be published under Section 6 of the Act to make it effective and binding on the parties.
This legal position of the said order is not open for doubt.
To question its efficacy under the Act would be tantamount to flouting it.
Before concluding we may add that the question whether the opinion given by this Court on a Presidential Reference under Article 143 of the Constitution such as the present one is binding on all courts was debated before us for a considerable length of time.
We are, however, of the view that we need not record our opinion on the said question firstly, because the question does not form part of the Reference and secondly, any opinion we may express on it would again be advisory in nature.
We will, therefore, leave the matter where it stands.
It has been held adjudicatively that the advisory opinion is entitled to due weight and respect and normally it will be followed.
We feel that the said view which holds the field today may usefully continue to do so till a more opportune time.
Our opinion on the questions referred to us is, there fore, as follows:.
Question No.1.
The Karnataka Cauvery Basin Irrigation Pro tection Ordinance, 1991 passed by the Governor of Karnataka on 25th July, 1991 (now the Act) is beyond the legislative competence of the State and is, therefore, ultra vires the Constitution.
Question No.2.
(i) The Order of the Tribu nal dated June 25, 1991 constitutes report and decision within the meaning of Section 5 (2) of the ; (ii) the said Order is, therefore, required to be published by the Central Gov ernment in the official Gazette under Section 6 of the Act in order to make it effective.
Question No.3.
(i) A Water Disputes Tribu nal constituted under the Act is competent to grant any interim relief to the parties to the dispute when a reference for such relief is made by the Central Government; (ii) whether the tribunal has power to grant interim relief when no reference is made by the Central 566 Government for such relief is a question which does not arise in the facts and circumstances under which the Reference is made.
Hence we do not deem it necessary to answer the same.
| IN-Abs | In pursuance of the directions given by this Court in a Writ Petition filed by the Tamil Nadu Ryots ' Association, the Union Government, by its notification dated June 2, 1990, constituted the Cauvery Water Disputes Tribunal under Section 4 of the for adjudication of the dispute regarding sharing of water of the inter State river Cauvery between the States of Karnata ka, the upper riparian State, Tamil Nadu, the lower riparian State, and Kerala and the Union Territory of Pondicherry.
By another notification of the same date, it also referred the water dispute emerging from the Letter of Request lodged by the State of Tamil Nadu under Section 3 of the Inter State Water Disputes Act with the Central Government on the fail ure of the negotiations between the parties in this regard, for reference of the dispute to a Tribunal for adjudication.
In the Letter of Request the State had made a grievance against construction of works in Karnataka area and the appropriation of water upstream so as to prejudice the interests downstream in the State of Tamil Nadu, and also sought the implementation of the agreements of 1892 and 1924, which had been entered into when most of the areas in these States comprised in the then Presidency of Madras and the then State of Mysore.
The last of the agreements had expired in 1974 and though the understanding of 1976 had been reached, further negotiations in the matter had failed and hence the State of Tamil Nadu had lodged the aforesaid Letter of Request.
Before the Tribunal, the State of Tamil Nadu submitted an application for interim relief praying that State of Karnataka be directed not to impound or utilise water of Cauvery river beyond the extent impounded or utilised by them as on 31.5.1972, as agreed to by the Chief Ministers of the basin States and the concerned Union Minister and an order restraining Karnataka from undertak 499 ing any new projects, dams, reservoirs, canals and/or from proceeding further with the construction of those already commenced in the Cauvery basin.
The Union Territory of Pondicherry also sought a direction both to Karnataka and Tamil Nadu to release the water already agreed to during the months of September to March.
Meanwhile, Tamil Nadu filed an urgent petition to direct Karnataka, as an emergent measure, to release at least 20 TMC of water as the first instalment, pending final orders on their interim application.
Besides contesting the application on merits, both Karnataka and Kerala raised a preliminary objection that the Tribunal constituted under the Act had a limited jurisdic tion, and had no inherent powers as an ordinary Civil Court has, and there was no provision of law which authorised or conferred jurisdiction on the Tribunal to grant any interim relief.
The Tribunal held that since the question of grant ing interim relief was not referred to it, the applications interim relief were not maintainable.
On appeal by the State of Tamil Nadu and the Union Territory of Pondicherry, this Court held that reliefs prayed for in the applications for interim relief and direc tions, were covered in the reference and fell within the purview of the dispute referred to it by the Central Govern ment under Section 5 of the later State Water Disputes Act.
Accordingly, the Court directed the Tribunal to decide the applications for interim relief and directions on merits.
Rejecting the objections once again raised by the State of Karnataka, as regards the maintainability of the applica tions for interim relief, the Tribunal passed an order directing the State of Karnataka, to ensure that 205 TMC water was available in Tamil Nadu 's Mettur reservoir every year.
Tamil Nadu was also directed to deliver to Pondicherry 6 TMC water.
The Tribunal also directed Karnataka not to increase its area under irrigation by the waters of Cauvery, beyond the existing area.
The order was to remain operative till the final adjudication of the dispute referred to it.
The Tribunal 's order thus gave rise to the issuance of the Karnataka Cauvery Basin Irrigation Protection Ordinance, 1991 by the State of Karnataka nullifying the Tribunal 's order.
The ordinance was subsequently replaced by Act No. 27 of 1991.
500 The State of Karnataka also instituted a suit under Article 131 against the State of Tamil Nadu and others for a declaration that the Tribunal 's order granting interim relief was without jurisdiction and, therefore, null and void, etc.
Under these circumstances, the President of India made a Reference to this Court under Article 143(1) of the Consti tution seeking advisory opinion on: (a) whether the Ordi nance and the provisions thereof were in accordance with the provisions of the Constitution, (b) whether the Tribunal 's order constituted a report and a decision within the meaning of Section 5(2) of the , and whether the same was required to be published by the Govern ment of India in order to make it effective, and (c) whether a Water Disputes Tribunal constituted under the Inter State Water Disputes.
Act was competent to grant any relief to the parties to the dispute.
It was contended on behalf of the State of Karnataka that the legislation clearly fell within the competence of the State Legislature under Entry 17 as well as Entries 14 and 18 of List II in the Seventh Schedule of the Constitu tion and the State Legislature had every right to legislate on the subject and this legislative power was subject only to Entry 56 of List I which, however, did not denude the States of the power to legislate under Entry 17, and, in the absence of the constitution of a River Board for Cauvery, as envis aged under Entry 56, the State retained full legisla tive power to make laws as if Entry 17 had remained un touched; that the executive power of the Union under Article 73 could not extend to any State with respect to matters on which the State alone could legislate, in view of the field having been covered by Article 162 of the Constitution; that since the Inter State River Disputes Act enacted under Article 262 of the Constitution did not attract any Entry in List I, it was law essentially meant to provide for the adjudication of a dispute with respect to the use, distribu tion or control of waters of, or in, any inter State river or river valley and did not, therefore, step on the toe of Entry 17, that the Ordinance, which became Act subsequently, only sought to impose by section 3, a duty on the State Government to protect, preserve and maintain irrigation from Cauvery waters in the irrigable areas failing within the various projects specified in the Schedule to the said legislation, and, therefore, the legislation was clearly within the scope of the State 's power to legislate and was intra vires the Constitution.
A fortiori, the power to legislate conferred on the State Legislature by Entries 14, 17 and 18 of List 501 II, could not be inhibited by an interim order of the Tribu nal, since the scheme of the Act envisaged only one final report or decision of the Tribunal under section 5(2) which would have to be gazetted under section 6 thereof, and therefore, it was open to the Karnataka Legislature to make a law ignoring or overriding the interim order of the Tribu nal; that the scheme of the Act did not envisage the making of an interim order by the Tribunal; once a water dispute was referred to the Tribunal, it must 'investigate ' the matters referred to it and forward a report to the Central Government setting out the facts found by it and giving its decision on the matters referred to it, and the Central Government must publish this decision in the official ga zette to make it final and binding on the parties to the dispute, and since the interim order was not preceded by such an investigation, the said order could not be described as 'a decision ' under section 5(2) of the Act, and conse quently, the Central Government was under no obligation to publish the interim order, that the words 'any matter ap pearing to be connected with or relevant to water dispute ' employed in section 5(1) of the Act did not contemplate reference of an interim relief matter, nor could the same empower the Tribunal to make an interim order pendente lite, and, therefore, having regard to the purpose, scope and intendment of the Act, the Tribunal constituted thereunder had no power or authority to grant any interim relief which would have the effect of adversely interfering with its existing rights, although while finally adjudicating the dispute it could override any executive or legislative action taken by the State, and since the allocation of flow of waters between the concerned States was generally based on the principle of 'equitable apportionment ', it was incum bent on the Tribunal to investigate the facts and all rele vant materials before deciding on the shares of the con cerned States which was not possible at the interim stage and hence the legislature had advisedly not conferred any power on the Tribunal to make an interim order affecting the existing rights of the concerned parties, and that the President could refer any question of law under Article 143 and therefore, also ask the Supreme Court to reconsider any of its decisions.
In its written statement, the State of Kerala, by and large, supported the stand of the State of Kerala.
However, subsequently it was submitted that since neither the scheme of the Act conferred any power on the Tribunal to make an interim order nor the scope of Article 262 read with the scheme of Act contemplated making of a Reference in that regard, the only remedy available to a State 502 which apprehended any action by the upper riparian State likely to adversely affect the rights of its people, was to move the Supreme Court under Article 131 of the Constitu tion, notwithstanding the provisions of Article 262 and section 11 of the Act; and accordingly, this Court 's view that there was a Reference to the Tribunal for grant of interim relief was not consistent with the true meaning and scope of Article 262 and the provisions of the Act and this Court should not feel bound by it.
The State of Tamil Nadu contended that ordinarily a dispute between two or more States would be governed by Article 131 of the Constitution and, subject to the provi sions of the Constitution, the Supreme Court alone would have jurisdiction if and in so far as the dispute involved any question whether of law or fact on which the existence or extent of a legal right depended, that the Tribunal was required to perform a purely judicial function which, but for Article 262 and section 11 of the , would have been performed by a court of law, that since the Tribunal was a substitute for the Supreme Court, it was reasonable to infer that all the powers exer cised by the Supreme Court under Article 131 could be exer cised by the Tribunal while adjudicating a water dispute and, therefore, the ancillary and incidental power to grant interim relief inhered in such a Tribunal without the need for an express provision or any specific reference to it in that behalf; that apart, the decision of this Court dated 26th April, 1991 that the reference to the Tribunal included the question of grant of interim relief operated as res judicata and was binding on the contesting parties regard less of the view that this Court might take on the generali ty of the question referred for decision; if the question of granting of interim relief formed part of the Reference, the Tribunal was duty bound to decide the same and even other wise, it had inherent jurisdiction to grant interim relief, whether or not the question regarding grant of interim relief was specifically referred, and therefore, its deci sion would constitute a report under section 5(2) of the Act and was liable to be published in the official Gazette as required by section 6; that if there was any ambiguity in the interim order the same could be taken care of under section 5(3) of the Act; that the Ordinance in question was ultra rites the Constitution for diverse reasons; the real object and purpose was to unilaterally nullify the Tribu nal 's interim order after having failed in the first round of litigation; the State of Karnataka had no right to uni laterally decide the quantum of water it would appropriate or the extent to which it would diminish the flow of Cauvery waters to 503 the State of Tamil Nadu and thereby deny to the people of Tamil Nadu their rightful share in the Cauvery waters; the right to just and reasonable use of water being a matter for adjudication by the Tribunal, no single State could, by the use of its legislative power arrogate unto itself the judi cial function of equitable apportionment and decide for itself the quantum of water it would use from the inter State river regardless of the prejudice it would cause to the other State by its unilateral action; such a power could not be read in Entry 17 as it would be destructive of the principle that such water disputes were justiciable and must be left for adjudication by an independent and impartial special forum to which it was referred, namely, the Tribunal constituted for resolving the dispute, and not by unilateral executive or legislative interference, and, therefore, the object of the legislation not being bona fide, the same could not be allowed to stand as it had the effect of over ruling a judicial order passed by a Tribunal specially appointed to adjudicate on the water dispute between the parties thereto; it sought to override or neutralize the law enacted by Parliament in exercise of power conferred by Article 262 and not Article 246 read with the relevant entry in the Seventh Schedule) of the Constitution; a State Legislature could have no power to legislate with regard to a water dispute as it would be incongruous to confer or infer such power in a State Legislature to destroy what a judicial body has done under a Central law; it had extra territorial operation, in that, it directly impinged on the rights of the people of Tamil Nadu to the use of Cauvery waters; it was also contrary to the Rule of Law, and a power not comprehended even by Article 262 could not be read into the legislative power of the State for it would pervert the basic concept of justice; and was also violative of the fundamental rights of the inhabitants of Tamil Nadu guaran teed by Articles 14 and 21 of the Constitution, in that, the action of Karnataka was wholly arbitrary and in total disre gard of the right to life of those inhabitants in Tamil Nadu who survived on Cauvery waters; it was further contended that in a civilised society governed by the Rule of Law, a party to a 'lis ' water dispute could not be allowed to arrogate to itself the right to decide on the dispute or to nullify an interim order made by a Tribunal in obedience to the decision of the apex court, by abusing the legislative power under Entry 17 under which the legislation purported to be; moreover, the jurisdiction of this Court under Arti cle 143 of the Constitution was discretionary and this Court should refrain from answering a Reference which was in general terms without background facts and was likely to entail a roving inquiry which may ultimately prove academic only; secondly, 504 the State of Karnataka had immediately after the interim order instituted a suit in this Court in which it had prayed for a declaration that the interim order of the Tribunal dated 25th June, 1991 was without jurisdiction, null and void, and for setting aside the said order; while on the one hand, the decision of this Court had become final and was res judicata between the parties thereto, on the other hand, the State of Karnataka was raking up the same question of jurisdiction before this Court in a substantive suit with a view to over reaching this Court 's earlier order; the Presidential Reference in terms referred to disputes and differences having arisen out of the Tribunal 's interim order which was said to have given rise to a public contro versy likely to result in undesirable consequences; such matters could be effectively countered by the concerned Government and did not call for a Presidential Reference; if there was any doubt or difficulty in the implementation of the order in question, recourse could always be had to section 5(3) of the Act and hence, this Court should refuse to answer the Reference.
The Union Territory of Pondicherry, contended that the promulgation of the Ordinance (now Act) was intended to further protract the long standing water dispute which came to be referred to the Tribunal only after this Court issued a mandamus in that behalf and was likely to prejudicially affect the interest of the State as well as the farmers and other inhabitants who utilised the water from river Cauvery, that the said legislation was unconstitutional and was a piece of colourable legislation, that in the case of flowing water the riparian States had no ownership or proprietary right therein except in the usufruct thereof and, therefore, the power to legislate therein under Entry 17 of List II could extend to only the usufructuary right subject to the right of a riparian State to get the customary quantity of water; that the Ordinance was also void for repugnancy, being in conflict with the Central legislation, and also violative of Article 21 of the Constitution as it was in tended to diminish the supply of water to Tamil Nadu and Pondicherry, which was also against the spirit of Articles 38 and 39 of the Constitution,that since the water dispute referred to the Tribunal comprised the issue regarding the grant of interim relief, as held by this Court, the interim order made by the Tribunal constituted a report within the meaning of section 5(2) of the Act and, consequently, the Central Government was obliged to publish it, as required by section 6 of the Act: and when so published it would operate as a decision in rem: but even without publication it was binding, on Karnataka as a decision in personam since the jurisdiction of all courts including 505 the Supreme Court was taken away by virtue Of section 11 of the Act read with Article 262(2) of the Constitution, and the Tribunal had all attributes of a Court; it was required to discharge the judicial function of adjudicating a water dispute between two or more States and must be deemed to possess the inherent incidental and ancillary power to grant interim relief which inhered in all such judicial bodies, and absence of an express provision in that behalf did not detract from the view that such power inhered in a Tribunal.
Six intervention applications were also filed by differ ent persons and bodies from Karnataka, including the Advo cate General of the State in support of the case of Karnata ka.
An intervention application raising the contentions similar to those of State of Tamil Nadu was also filed by the Tamil Nadu Ryots ' Association which had preferred the original Writ Petition on which a mandate to constitute the Tribunal was given.
Answering the Reference, this Court, HELD: 1.1 The Karnataka Cauvery Basin Irrigation Protection Ordinance 1991 promulgated by Governor of Karna taka on 25th July, 1991 (subsequently enacted by the State Legislature as Act No. 27 of 1991) is beyond the legislative competence of the State and, is therefore, ultra vires the Constitution.
[565 E] 1.2 The object of the provisions of the Ordinance is obvious coming close on the Order of the Tribunal and in the context of the stand taken by the State of Karnataka that the Tribunal has no power or jurisdiction to pass any inter im relief, it is to override the said decision of the Tribu nal and its implementation.
The Ordinance has thus the effect of defying and nullifying any interim order of the Tribunal appointed under a law of the Parliament.
The other effect of the Ordinance is to reserve to the State of Karna taka exclusively the right to appropriate as much of the water of river Cauvery and its tributaries as it deems requisite and in a manner and at periods it deems fit and proper, although pending final adjudication by the Tribunal.
[546 F G] 1.3 The Ordinance affects the jurisdiction of the Tribu nal appointed under the Central Act, viz., the inter State Water Disputes Act, which has been made under Article 262 of the Constitution.
506 The State of Karnataka has arrogated to itself the power to decide unilaterally whether the Tribunal has jurisdiction to pass the interim order or not and whether the order is binding on it or not.
The State has presumed that till a final order is passed by the Tribunal, the State has the power to appropriate the waters of the river Cauvery to itself unmindful of and unconcerned with the consequences of such action on the lower riparian States, that it has supe rior rights over the said waters and it can deal with them in any manner, and the lower riparian States have no equita ble rights and that it is the sole judge as to the share of the other riparian States in the said waters.
Moreover, it has assumed the role of a judge in its own cause.
[552 C, F G] 1.4 Apart from the fact that the Ordinance directly nullifies the decision of the Tribunal, it also challenges the decision of this Court, which has ruled that the Tribu nal had power to consider the question of granting interim relief since it was specifically referred to it.
The Ordi nance further has an extra territorial operation inasmuch as it interferes with the equitable rights of Tamil Nadu and Pondicherry to the waters of the Cauvery river.
To the extent that the Ordinance interferes with the decision of this Court and of the Tribunal appointed under the Central legislation, it is clearly unconstitutional being not only in direct conflict with the provisions of Article 262 of the Constitution under which the said enactment is made, but being also in conflict with the judicial power of the State.
1552 H, 553 A] 1.5 The legislature can change the basis on which a decision is given by the Court and thus change the law in general, which will affect a class of persons and events at large but it cannot set aside an individual decision inter parties and affect their rights and liabilities alone.
Such an act on the part of the legislature amounts to exercising the judicial power of the State and to functioning as an appellate court or Tribunal.
[554 H, 555 A] Municipal Corporation of the City of Ahmedabad etc.
vs New Shorock Spg.
& Wvg.
Co. Ltd. etc.
; ; Madan Mohan Pathak vs Union of India & Ors.
; , and P. Sambamurthy & Ors.
vs State of Andhra Pradesh & Anr., ; , referred to.
1.6 Any executive order or a legislative enactment of a State which interferes with the adjudicatory process and adjudication by such Tribunal is an interference with the judicial power of the State.
In view of the fact that the Ordinance in question seeks directly to 507 nullify the order of the Tribunal, it impinges upon the judicial power of the State.
[555 C D] 1.7 Further, admittedly, the effect of the Ordinance is to affect the flow of the waters of the river Cauvery into the territory of Tamil Nadu and Pondicherry which are the lower riparian States.
The Ordinance has, therefore, an extra territorial operation, and is thus beyond the legisla tive competence of the State and is ultra vires the provi sions of Article 245(1) of the Constitution.
[555 E] 1.8 The Ordinance is also against the basic tenets of the rule of law inasmuch as the State of Karnataka by issu ing the Ordinance has sought to take law in its own hand and to be above the law.
Such an act is an invitation to law lessness and anarchy, inasmuch as the Ordinance is a mani festation of a desire on the part of the State to be a judge in its own cause and to defy the decisions of the judicial authorities.
The action forebodes evil consequences to the federal structure under the Constitution and opens doors for each State to act in the way it desires disregarding not only the rights of the other States, the orders passed by instrumentalities constituted under an Act of Parliament but also the provisions of the Constitution.
If the power of a State to issue such an Ordinance is upheld it will lead to the break down of the Constitutional mechanism and affect the unity and integrity of the nation.
[555 F G] 2.1 Under Article 131, this Court has original jurisdic tion, among other things, in any dispute between two or more States where the dispute involves any question whether of law or fact on the existence and extent of which a legal right depends except those matters which are specifically excluded from the said jurisdiction by the proviso.
However, the Parliament has also been given power by Article 262 of the Constitution to provide by law that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any dispute or complaint with respect to the use, distribution or control of the water of, or in, any inter State river or river valley.
Section 11 of the , has in terms provided for such exclusion of the jurisdiction of the Courts.
Thus, Section 11 of the Act read with Article 262 excludes original juris diction of the inter State water dispute which may be re ferred to the Tribunal established under the Act from the purview of any Court including the Supreme Court under Article 131.
1544 H, 545 A B] 2.2 The has been enacted only under Article 262 of the Constitution, and not under Entry 56, 508 as it relates to the adjudication of the disputes and with no other aspect either of the inter State river as a whole or of the waters in it.
[550 G] 2.3 Entry 56 speaks of regulation and development of interState rivers and river valleys and does not relate to the disputes between the riparian States with regard to the same and adjudication thereof.
Even assuming that the ex pression "regulation and development" would in its width, include resolution of disputes arising out therefrom and a provision for adjudicating them, the Act does not make the declaration required under Entry 56.
This is obviously not an accidental omission, but a deliberate disregard of the Entry since it is not applicable to the subject matter of the legislation.
Further no Entry in either of the three Lists refers specifically to the adjudication of disputes with regard to inter State river waters, the reason being that Article 262 of the Constitution specifically provides for such adjudication.
[547 A C] 2.4 An analysis of Article 262 shows that an exclusive power is given to the Parliament to enact a law providing for the adjudication of disputes or complaints relating to "use, distribution or control" of the waters of, or in any inter State river or river valley.
The words "use", "distri bution" and "control" are of wide import and may include regulation and development of the said waters.
The provi sions clearly indicate the amplitude of the scope of adjudi cation, inasmuch as it would take within its sweep the determination of the extent, and the manner, of the use of the said waters, and the power to give directions in respect of the same.
[508 F G] 2.5 The language of the Article has, further to be distinguished from that of Entry 56 and Entry 17.
Whereas Article 262(1) speaks of adjudication of any dispute or complaint and that too with respect to the use, distribution or control of the waters of or in any inter State river or river valley, Entry 56 speaks of regulation and development of inter State rivers and river valleys.
Thus, the distinc tion between Article 262 and Entry 56 is that whereas former speaks of adjudication of disputes with respect to use, distribution or control of the waters of any inter State river or river valley, Entry 56 speaks of regulation and development of inter State rivers and river valleys.
Entry 17 likewise speaks of water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power subject to the provisions of Entry 56.
It does not speak either of adjudication of disputes or of an 509 inter State river as a whole and State can only deal with water within its territory.
[547 H, 548 A C] 2.6 The Inter State Disputes Act, 19S6 is made pursuant to the provisions of Article 262 specifically for adjudica tion of the disputes between the riparian States with regard to the use, distribution or control of the waters of the inter State rivers or river valleys, and is not relatable to Entry 56 and, therefore, does not cover either the field occupied by Entry $6 or by Entry 17.
Since the subject of adjudication of the said disputes is taken care of specifi cally and exclusively by Article 262, by necessary implica tion the subject stands excluded from the field covered by Entries 56 and 17.
It is not, therefore, permissible either for the Parliament under Entry $6 or for a State legislature under Entry 17 to enact a legislation providing for adjudi cation of the said disputes or in any manner affecting or interfering with the adjudication established by law under Article 262.
This is apart from the fact that the State legislature would even otherwise be incompetent to provide for adjudication or to affect in any manner the adjudicatory process or the adjudication made in respect of the inter State river waters beyond its territory or with regard to disputes between itself and another State relating to the use, distribution or control of such waters.
Any such act on its part will be extra territorial in nature and, therefore, beyond its competence.
[549 C F] 2.7 It is not correct to say that it is Entry 97 of the Union List,which deals with the topic of use, distribution and control of the waters of an inter State river.
This is so because the expression "regulation and development of inter State rivers and river valleys" in Entry 56 would include the use, distribution and allocation of the waters of the inter State rivers and river valleys between differ ent riparian States.
Otherwise, the intention of the Con stituent Assembly to provide for the Union to take over the regulation and development under its control makes no sense and serves no purpose.
Further, the , which is admittedly enacted under Entry 56 for the regula tion and development of inter State rivers and river val leys, does cover the field of the use, distribution and allocation of the waters of the inter State rivers and river valleys, indicating that the expression "regulation and development" in Entry 56 has legislatively also been con strued to include the use, distribution or allocation of the waters of the inter State rivers and river valleys between riparian States.
To contain the operation of Entry 17 to the waters of an inter State river and river valleys 510 within the boundaries of a State and to deny the competence to the State legislature to interfere with or to affect or to extend to the use, distribution and allocation of the waters of such river or river valley beyond its territory, directly or indirectly, it is not necessary to fail back on the residuary Entry 97, as an appropriate declaration under Entry 56 would suffice.
The very basis of a federal Consti tution mandates such interpretation and would not bear an interpretation to the contrary which will destroy the con stitutional scheme and the Constitution itself.
Although, therefore, it is possible technically to separate the "regulation and development" of the interState river and river valley from the "use, distribution and allocation" of its waters, it is neither warranted nor necessary to do so.
[549 G, 550, B F] 2.8 Though the waters of an inter State river pass through the territories of the riparian States such waters cannot be said to be located in any one State.
They are in a state of flow and no State can claim exclusive ownership of such waters so as to deprive the other States of their equitable share.
Hence in respect of such waters, no State can effectively legislate for the use of such waters since its legislative power does not extend beyond its territo ries.
It is further an acknowledged principle of distribu tion and allocation of waters between the riparian States that the same has to be done on the basis of the equitable share of each State.
What the equitable share will be will depend upon the facts of each case.
[551 H, 552 A B] 3.1 The order of the Tribunal dated 25th June, 1991 granting interim relief constitutes a report and a decision within the meaning of Section 5(2) of the .
The said order is, therefore, required to be published by the Central Government in the Official Gazette under Section 6 of the Act in order to make it effective.
[565 F G] 3.2 Sub section (1) of Section 5 expressly empowers the Central Government to refer to the Tribunal not only the main water dispute, but any matter appearing to be connected with or relevant to it.
A request for an interim relief, whether in the nature of mandatory direction or prohibitory order, whether for the maintenance of status quo or for the grant of urgent relief or to prevent the final relief being rendered infructuous, would be a matter connected with or relevant to the main dispute.
In fact, this Court, by its decision of April 26, 1991, has in terms held that the request of the State of Tamil Nadu for granting interim relief had been referred by the Central Government to the Tribunal and directed the Tribunal to 511 consider the request on merits, the same being a part of the Reference.
Hence the order of the Tribunal will be a report and decision within the meaning of Section 5(2) and would have, therefore, to be published under Section 6 of the Act in order to make it effective.
[562 A C] 3.3 It is not correct to say that since the Order does not say that it is a report and decision it is not so under Section 5(2) of the Act.
Either the Order is such a report and decision because of its contents or not so at all.
If the contents do not show that it is such a report, it will not become one because the Order states so.
The contents of the order clearly show that it is a report and a decision within the meaning of Section 5(2).
[563 B] 3.4 The scope of the investigation that a Tribunal or a Court makes at the stage of passing an interim order is limited compared to that made before making the final adju dication.
The extent and the nature of the investigation and the degree of satisfaction required for granting or reject ing the application for interim relief would depend upon the nature of the dispute, and the circumstances in each case.
No hard and fast rule can be laid down in this respect.
However, no Tribunal or court is prevented or prohibited from passing interim orders on the ground that it does not have at that stage all the material required to take the final decision.
To read such an inhibition in the power of the Tribunal or a court is to deny to it the power to grant interim relief when Reference for such relief is made.
Hence, the Tribunal constituted under the Act is not pre vented from passing an interim order or direction, or grant ing an interim relief pursuant to the reference merely because at the interim stage it has not carried out a com plete investigation which is required to be done before it makes its final report and gives its final decision.
It can pass interim orders on such material as according to it is appropriate to the nature of the interim order.
[563 E H] 3.5 The interim orders passed or reliefs granted by the Tribunal when they are not of purely procedural nature and have to be implemented by the parties to make them effec tive, are deemed to be a report and a decision within the meaning of Sections 5(2) and 6 of the Act.
[564 A] 3.6 In the instant case, Order of the Tribunal discusses the material on the basis of which it is made and gives a direction to the State of Karnataka to release water from its reservoirs in Karnataka so as to ensure that 205 TMC of water is available in Tamil Nadu 's 512 Mettur reservoir in a year from June to May. It makes the order effective from 1st July, 1991 and also lays down a time table to regulate the release of water from month to month.
It also provides for adjustment of the supply of water during the said period.
It further directs the State of Tamil Nadu to deliver 6 TMC of water for the Karaikal region of the Union Territory of Pondicherry.
In addition, it directs the State of Karnataka not to increase its area under irrigation by the waters of the river Cauvery beyond the existing 11.2 lakh acres.
It further declares that it will remain operative till the final adjudication of the dispute.
Thus, the order is not meant to be merely declara tory in nature but is meant to be implemented and given effect to by the parties.
Hence, the order in question constitutes a report and a decision within the meaning of Section 5(2) and is required to be published by the Central Government under Section 6 of the Act in order to be binding on the parties and to make it effective.
1564 B D] 3.7 It is not correct to say that Section 5(3) of the Act cannot apply to the interim orders as it is only the final decision which is meant to undergo the second refer ence to the Tribunal provided in it.
If the Tribunal has power to make an interim decision when a reference for the same is made, that decision will also attract the said provisions.
The Central Government or any State Government alter considering even such decision may require an explana tion or guidance from the Tribunal as stated in the said provisions and such explanation and guidance may be sought within three months from the date of such decision.
The Tribunal may then reconsider the decision and forward to the Central Government a further report giving such explanation or guidance as it deems fit.
In such cases it is the interim decision thus reconsidered which has to be published by the Central Government under Section 6 of the Act and becomes binding and effective.
Therefore, there is no reason why the provisions of Section 5(3) should prevent or incapacitate the Tribunal from passing the interim order.
Once a deci sion, whether interim or final, is made under Section 5(2) it attracts the provisions both of sub section (3) of that Section as well as the provisions of Section 6 of the Act.
[564 E G] 4.1 A Water Disputes Tribunal constituted under the InterState Water Disputes Act is competent to grant any interim relief to the parties to the dispute when a refer ence is made by the Central Government.
Whether the Tribunal has power to grant relief when no reference is made for such relief is a question which does not 513 arise in the facts and circumstances under which the Refer ence is made.
1565 H, 566 A] 4.2 This Court has held by its order dated 26th April, 1991 that the Central Government had made a reference to the Tribunal for the consideration of the claim for interim relief prayed for by the State of Tamil Nadu and hence the Tribunal had jurisdiction to consider the said request being a part of the Reference itself.
Implicit in the said deci sion is the finding that the subject of interim relief is a matter connected with or relevant to the water dispute within the meaning of Section 5(1) of the Act.
Hence the Central Government could refer the matter of granting inter im relief to the Tribunal for adjudication.
Although this Court has kept open the question, viz., whether the Tribunal has incidental, ancillary.
inherent or implied power to grant the interim relief when no reference for grant of such relief is made to it, it has in terms concluded second part of the question.
[557 A C] 4.3 It is impermissible for this Court to sit in appeal even in adjudicatory jurisdiction, nor is it competent for the President to invest this Court with an appellate juris diction, over the said decision through a Reference under Article 143 of the Constitution.
[557 D] 4.4 It is not correct to say that the question of grant of interim relief falls outside the purview of the provi sions of Section II of the Inter State Water Dispute Act and can be agitated under Article 131 of the Constitution.
The effect of the provisions of Section I 1 of the Act read with Article 262 of the Constitution is that the entire judicial power of the State, and, therefore, of the courts including that of the Supreme Court to adjudicate upon original dis pute or complaint with respect to the use, distribution or control of the water of, or in any inter State river or river valleys has been vested in the Tribunal appointed under Section 4 of the said Act.
1555 B D] 5.
It is not correct to say that the President can refer any question of law under Article 143 and, therefore, also ask this Court to reconsider any of its decisions.
In the first instance, the language Of clause (1) of Article 143 is opposed to such a proposition.
The clause empowers the President to refer or this Court 's opinion a question of law or fact which has arisen or is likely to arise.
When this Court in its adjudicatory jurisdiction pronounces its authoritative opinion on a question of law, it cannot be said that there is any doubt about the question of law or the same is res integra so as to 514 require the President to know what the true position of law on the question is.
The decision of this Court on a question of law is binding on all courts and authorities.
Hence, under the said clause the President can refer a question of law only when this court has not decided it.
Secondly, a decision given by this Court can be reviewed only under article 137 read with Rule I of Order XL of the the Supreme Court Rules 1966 and on the conditions mentioned therein.
When, further, this Court overrules the view of law ex pressed by it in an earlier case, it does not do so sitting in appeal and exercising an appellate jurisdiction over the earlier decision.
It does so in exercise of its inherent power and only in exceptional circumstances such as when the earlier decision is per incuriam or is delivered in the absence of relevant or material facts or if it is manifestly wrong and productive of public mischief.
[557 E H, 558 A C] The , The Ajmer Merwara (Extension of Laws) Act, 1947 and the Part C States (Laws) Act, , distinguished.
The Bengal Immunity Company Ltd. vs The State of Bihar & Ors., , relied on.
Jatindra Nath Gupta vs The Province of Bihar & Ors., ; Hari Vishnu Kamath
Syed Ahmad Ishaque & Ors., ; ; Delhi Judicial Service Association.
Tis Hazari Court, Delhi etc.
vs State of Gujarat & Ors.
, JT State of Bombay vs Gajanan Mahadev Badley, AIR 1954 Bombay 351, referred to.
5.2 Under the Constitution appellate jurisdiction over the earlier decision does not vest in this Court; nor can it be vested in it the President under Article 143.
If it is accepted that the President can ask this Court to reconsider any of its decisions it would mean that the advisory juris diction under Article 143 is also an appellate jurisdiction of this Court over its own decision between the same par ties and the executive has a power to ask this Court to revise its decision.
If such power is read in Article 143 it would be a serious inroad into the independence of judi ciary.
[558 D] 5.3 The facts in A.R.Antulay 's case arc peculiar and the decision therein has to be confined to those special facts.
Further the decision being inter parties operates as res judicata and cannot be reopened.
[560G, 561 E] 515 A.R.Antulay vs K.S. Nayak & Anr., [1988] Suppt.
1 SCR 1 and R. S.Nayak vs
A R. Antulay; , , referred to.
No opinion is expressed on the question whether the opinion given by this Court on a Presidential Reference under Article 143 of the Constitution, such as the present one, is binding on all courts, firstly, because the question does not form part of the Reference, and, secondly, any opinion expressed on it would again be advisory.
However, adjudicatively it has been held by this Court that the advisory opinion is entitled to due weight and respect and normally, it will be followed.
The said view holds the field today and may usefully continue to do so till a more oppor tune time.
[565 C D]
|
ivil Appeal No. 1945 of 1992.
From the Judgment and Order dated 4.1.1991 of th Kerala High Court in C.R.P. No. 1830 of 1990 Mathai M. Paikeday and C.N. Sreekumar for the Appellant.
P.S. Poti and Ms. Malini Poduval for the Respondent.
The Judgment of the Court was delivered by S.C. AGRAWAL, J.
Special leave granted.
This appeal filed by the landlord arises out of a petition filed under Sections 11(3) and 11(4)(ii) of the Kerala Buildings (Lease & Rent Control) Act, 1965 (hereinafter referred to as 'the Act ') for the eviction of the respondent from the building situate in the city of Cochin.
The building in question was let out to the respondent by the father of the appellant on May 1, 1972 and he has been carrying on hotel business on the same.
The said building stands on a portion of 13 cent of land owned by the appellant.
The appellant was employed with Bharat Gold Mines Ltd. and was due to retire on September 30, 1981.
Prior to his retirement, the appellant filed the eviction petition before the Rent Controller, Ernakulam on January 15, 1981 wherein the appellant pleaded that after his retirement from service, he wanted to settle down in Cochin and except the building in question, he has no other house to reside and that the said building was required by him bona fide for his occupation.
It was also pleaded by the appellant that the respondent was using the property in such a manner as to materially and permanently reduce its value, utility and purpose.
The said petition was contested by the respondent on the ground that the building is not suitable for residential purposes inasmuch as it consists of two adjoining sheds and there is no toilet facility in the same and that it is not possible to reside therein.
It was further pleaded that the appellant has a house and plot in the name of his wife within the municipal limits of Cochin Corporation and the same is suitable for the residence of the appellant and his family members and further there is a lot of vacant land on the back of the building and the same is suitable for constructing a house.
The respondent denied that the property was being used in such a way as to reduce its utility.
By his order dated February 20, 74 1989, the Rent Controller dismissed the said petition of the appellant and found that the appellant had failed in proving his bona fide need of the building and he was not entitled to an order of eviction under S.11(3) of the Act and that he has also failed to adduce adequate evidence to prove that the respondent was indulging in an activity which has destroyed the value and utility of the property materially and permanently and he could not seek eviction under Section 11(4)(ii) of the Act.
The said order of the Rent Controller was reversed in appeal by the Appellate Authority by its judgment dated July 18, 1990.
The Appellate Authority agreed with the finding recorded by the Rent Controller that the appellant could not seek the eviction of the respondent under s.11(4)(ii) of the Act but it disagreed with the finding of the Rent Controller that the respondent was not liable to be evicted under S.11(3) of the Act.
The Appellate Authority held that the appellant had succeeded in establishing the bona fide need set up by him.
On revision under S.20 of the Act, the High Court, by its judgment dated January 4, 1991, set aside the finding recorded by the Appellate Authority regarding the bona fide need of the building for his occupation and agreed with the view of the Rent Controller that the appellant had failed to establish that he was entitled to evict the respondent on the ground of bona fide need under s.11(3) of the Act.
Feeling aggrieved by the said decision of the High Court, the appellant has filed this appeal.
As indicated earlier, although the appellant had sought eviction of the respondent under s.11(3) as well as s.11(4)(ii), but the Rent Controller and the Appellate Authority have both found against him on s.11(4)(ii).
The scope of the present appeal is confined to the question whether the respondent is liable to be eviction on the ground of bone fide need of the appellant for his personal occupation under s.11(3) of the Act.
Sub section (3) of s.11 of the Act and the second proviso thereto provide as follows: "(3) A landlord may apply to the Rent Control Court for an order directing the tenant to put the landlord in possession of the building if he bona fide needs the building for his own occupation or for the occupation by any member of his family dependent on him: XXX XXX XXX Provided further that the Rent Control Court shall not give any direction to a tenant to put the landlord in possession, if such 75 tenant is depending for his livelihood mainly on the income derived from any trade or business carried on in such building and there is no other suitable building available in the locality for such person to carry on such trade or business: XXX XXX XXX" At this stage, it may also be mentioned that in exercise of its revisional jurisdiction under s.20 of the Act, the High Court can "call for and examine the records relating to any order passed or proceedings taken under this Act by such authority for the purpose of satisfying itself as to the legality, regularity or propriety of such order of proceeding and may pass such order in reference thereto as it thinks fit".
It is no doubt true that the scope of the revisional jurisdiction conferred under s.20 is wider than that conferred under s.115 CPC.
But at the same time, a revision under s.20 cannot be equated with an appeal.
Moreover, the revision power conferred under s.20 also embraces an order passed by the Appellate Authority.
While considering the provisions conferring revisional power couched in a language similar to that contained in section 20 of the Act, this Court has laid down that the power conferred on the High Court is essentially a power of superintendence and despite the wide language employed, the High Court should not interfere with the findings of fact of the subordinate authority merely because it does not agree with the said findings.
[See : Dattonpant Gopalvarao Devakate vs Vithabrao Maruthirao Janagaval, [1975 Supp.
SCR 67; M/s Sri Raja Lakshmi Dyeing Works & Ors vs Rangaswamy Chettiar, AIR 1980 SC 1253].
The revisional Court must be reluctant to embark upon an independent reassessment of the evidence and to supplant a conclusion of its own, so long as the evidence on record admitted of and supported the one reached by the court below.
[See : Rajbir vs section Chokesiri & Co., ; , at p.37] In the instant case, the Appellate Authority, after considering the evidence on record, has found that the appellant had retired from service and he has no building of his own in the city.
The Appellate Authority has further found that before the building was let out to the respondent the same was being used for residential purposes and the mere fact that it lacks in certain facilities for being used for residential purposes by itself will not indicate that the claim of the appellant is false and from the evidence on record, it would appear that after some modifications and repairs it can be 76 used as a residential building.
In view of the decision of the High Court in Devaky vs Krishnakutty, (1987) 1 Ker.
L.T. 671, the Appellate authority held that the appellant could claim eviction of the building under s.11(3) even if the building in question requires some modifications or alterations provided that he is able to establish the bona fide need set up by him.
The Appellate Authority also held that merely because the appellant was residing comfortably in a building owned by his son would not disentitle him from seeking eviction on the ground that he wants to set up his residence under a roof of his own and that such a desire was quite natural.
The Appellate Authority also observed that the testimony of appellant, as P.W> 1, with regard to his bona fide requirement of the building for his residence could be believed and the mere bald assertion of the respondent, as R.W.1, that there was no bona fide need on the part of the appellant, by itself, was not a sufficient ground to disbelieve the testimony of the appellant.
In the light of the aforesaid finding, the Appellate Authority held that the appellant had succeeded in establishing the bona fide need set up by him.
The High Court, in exercise of its revisional power, has set aside the aforesaid findings recorded by the Appellate Authority for the following reasons: (1) The appellate Authority had erroneously proceeded on the basis that there is no pleading by the respondent that the bona fide requirement set up by the appellant is false; (2) Instead of examining severally the circumstances relied upon by the Rent Controller and to see whether they were sufficient to support the finding of the Rent Controller, the Appellate Authority should have considered the cumulative effect of all the facts and circumstances established in the case on the question of bona fides of the claim made in the petition; and (3) The Appellate Authority had totally omitted to consider whether the respondent tenant was entitled to the benefit of the second proviso to sub section (3) of s.11 of the Act.
On a consideration of the pleadings and evidence the High Court found that the appellant is the owner of 13 cents of land and only a small portion of the said land in occupied by the buildings and the remaining 77 land is lying vacant behind the building and structures sought to be recovered and the appellant can construct a house over it.
The High Court has also found that the appellant is living in reasonable spacious residential accommodation with modern amenities with his son and it is difficult to believe that the claim as put forward by the appellant in the petition is honest in the circumstances of the case.
The High Court further held that the building sought to be recovered is admittedly used for commercial purposes from 1971 onwards and it is a 'L ' shaped structure consisting of two halls and a temporary shed which is being used as the kitchen of the hotel and there is no latrine or bathroom in the building and that in view of the nature, location and structural peculiarities of the buildings, absence of essential amenities like latrine, bathroom and privacy, the very limited space available for occupation and the status of the respondent as a person who retired after a period of 30 years of service as well placed employee of a wellknown company, the assertion of the appellant that he is ready to live in any condition could not be accepted as true and genuine.
The High Court was of the view that the principle laid down in the decision in Devaky vs Krishnakutty (supra) would not help appellant in this case.
The question whether the building is required bona fide by the appellant for his own residence is primarily one of fact and the finding recorded by the Appellate Authority after considering the evidence on record could not be interfered with by the High Court in exercise of the revisional jurisdiction under Section 20 of the Act because it could not be said that the said finding recorded by the Appellate Authority was not supported by the evidence on record.
The said finding was reversed by the High Court on the basis of a reassessment of the said evidence.
We find it difficult to agree with the reasons given the High Court for embarking on this reassessment of evidence.
Although the Appellate Authority has observed that there in no specific pleading by the respondent in the counter that the bona fide requirement set up by the appellant is false but in spite of the said observation the Appellate Authority has examined whether the said claim of the appellant is false and after considering the evidence adduced by both the parties, the Appellate Authority has found that the claim of the appellant is not false.
Similarly, the High Court is not right in holding that in its approach to the question of bona fides of the claim made in the petition the Appellate Authority has not considered the cumulative effect of all the facts and circumstances established in the case.
On a consideration of the various circumstances the Appellate Authority chose 78 of accept the testimony of the appellant, as P.W.1 as against that of the respondent, as R.W.1 and on that basis found that the appellant had succeeded in establishing the bona fide need set up by him.
The consideration which weighed with the High Court in taking a view contrary to that taken by the Appellate Authority do not, in our opinion, justify interference in exercise of revisional jurisdiction.
That the appellant has been living with his son in the house belonging to him (son) cannot lead to the inference that the claim of the appellant that he wants to live in a house of his own is false and not bonafide.
The same is true about the building in question not having the requisite facilities and being not in a fit condition for residence because the appellant can make suitable repairs and alterations in the same to make it fit for residential purposes.
The claim of the landlord that he needs the building bona fide for his personal occupation cannot be negatived on the ground that the building require repair and alterations before the landlord can occupy the same.
In Devaky vs Krishnankutty (supra), it has been observed: :. once the landlord establishes that he bona fide required the building for his occupation or the occupation of any member of his family, he can recover possession of the building from the tenant irrespective of the fact whether he would occupy the same with or without making any alterations." (p.673) We are in agreement with this view which is in consonance with the decision of this Court in Ramniklal Pitambrardas Mehta vs Indradaman Amratlal Sheth, ; In that case, it has been laid down: ".
The mere fact that he intends to make alterations in the house either on account of his sweet will or on account of absolute necessity in view of the condition of the house, does not affect the question of his requiring the house bona fide and reasonably for his occupation, when he has proved his need for occupying the house.
There is no such prohibition either in the language of cl.(g) or in any other provision of the Act to the effect that the landlord must occupy the house for residence without making any alterations in it.
There could not be any logical reason for such a prohibition.
"(p.5) Similarly in sub section (3) of section 11 there is no prohibition that 79 a landlord must occupy the house for residence without making any alterations in it.
The finding recorded by the Appellate Authority, after considering the pleadings and evidence on record, that the appellant has succeeded in establishing that he needs the building bona fide for his own occupation must, therefore, be restored.
The High Court was, however, right in taking the view that before passing a decree for eviction on the ground of bona fide need of the landlord under section 11(3) of the Act, it was necessary for the Appellate Authority to consider whether the tenant was entitled to the benefit of the second proviso to sub section (3) of section 11 of the Act and that the Appellate Authority has omitted to consider the matter from this angle.
The said proviso precludes the passing of an order for eviction of a tenant who is depending for his livelihood mainly from the trade or business carried on in such building and there is no other suitable building available in the locality for him to carry on such trade or business.
After adverting to the second proviso to sub section (3) of section 11, the Rent Controller has observed: ".
The respondent has proved that he is depending upon the income from the business conducted in the petition schedule building for his livelihood.
The petitioner attempted to prove that the respondent is having other hotels elsewhere in the city, but without any success.
Though the respondent has not taken any steps to prove the non availability of other suitable buildings in the locality by summoning the Accommodation Controller, I do not thing that was a fatal lapse on the part of the respondent because he has adduced evidence in that regard through his witnesses.
" The learned Rent Controller has, however, not recorded any definite finding on this question because he had come to the conclusion that the appellant had failed to prove the bona fide need of the buildings.
Since the Appellate Authority had reversed the finding recorded by the Rent Controller on bona fide need of the appellant for the building, it was necessary for the Appellate Authority to have considered the matter in the light of the second proviso to sub section (3) of section 11 and it should have recorded a finding on the question whether the respondent could invoke the protection of the said proviso.
In the circumstances, we are of the view 80 that the matter should be remanded to the Appellate Authority for considering the question whether the respondent can invoke the protection of the second proviso to section 11(3) of the Act.
In the result, the appeal is allowed.
The judgment and order of the Kerala High Court dated January 4, 1991 is set aside.
The order of the Appellate Authority dated July 18, 1990 to the extent it directs the eviction of the respondent under Section 11(3) of the Act is also set aside and the matter is remanded to the Appellate Authority for considering the matter in the light of the second proviso to section 11(3) of the Act.
It is, however, made clear that we are not upsetting the finding recorded by the Appellate Authority that the building is required bona fide by the appellant for his own occupation.
The parties are left to bear their own costs.
V.P.R. Appeal allowed.
| IN-Abs | The appellant 's father let out the disputed building wherein the tenant respondent carried out the hotel business.
The appellant landlord filed an eviction petition on 15.1.81 before the Rent Controller stating that after his retirement from service on 30.9.1981, he wanted to settle down in that town and as he had no other house to reside, the disputed building was required by him bona fide for his occupation; that the respondent tenant was using the property in such a manner as to materially and permanently reduce its value, utility and purpose.
The respondent contended that the building was not suitable for residential purposes; that the appellant had a house and plot in his wife 's name within the town; that there was a lot of vacant land on the back side of the tenanted building, which was suitable for house construction and that the property was not being used in such a way as to reduce its utility.
The trial court dismissed the eviction petition of the landlord, holding that as he failed in proving his bona fide need of the building, the landlord was not entitled to an order of eviction under Section 11(3) of the 71 Kerala Buildings (Lease & Rent Control) Act, 1965 and as the landlord failed to prove that the tenant was using the building in such a way to destroy its value and utility, he was not entitled to an order under section 11(4)(ii) of the Act.
On appeal, the Appellate Authority reversed the order of the Rent Controller.
The High Court in revision set aside the order of the Appellate Authority, against which the present appeal by special leave was filed before this Court by the landlord.
On the question, whether the respondent was liable to be evicted on the ground of bona fide need of the appellant for his personal occupation under section 11(3) of the Act, this Court allowing the landlord 's appeal, HELD:1.1.
The scope of the revisional jurisdiction conferred under section 20 is wider than that conferred under section 115 CPC.
But at the same time, a revision under section 20 cannot be equated with an appeal.
[75 C] 1.2.
The revisional power conferred on the High Court is essentially a power of superintendence and despite the wide language employed, the High Court should not interfere with the findings of fact of the subordinate authority merely because it does not agree with the said findings.
[75 E] Dattonpant Gopalverao Devakate vs Vithabrao Maruthirao Janagaval, [1975] Supp.
SCR 67; M/s. Sri Raja Lakshmi Dyeing Works & Ors.
vs Rangaswamy Chettiar, AIR 1980 SC 1253, followed.
The revisional court must be reluctant to embark upon an independent reassessment of the evidence and to supplant a conclusion of its own,so long as the evidence on record admitted on and supported the one reached by the court below.
[75 F] Rajbir vs section Chokesiri & Co., at p.37, followed.
The question whether the building is required bona fide by the appellant for his own residence is primarily one of fact and the finding recorded by the Appellate Authority after considering the evidence on 72 record could not be interfered with by the High Court in exercise of the revisional jurisdiction under Section 20 of the Act because it could not be said that the said finding recorded by the Appellate authority was not supported by the evidence on record.
[77 E] 2.2.
The fact that the appellant has been living with his son in the house belonging to him (son) cannot head to the inference that the claim of the appellant that he want to live in a house of his own is false and not bona fide.
The same is true about the building in question not having the requisite facilities and being not in a fit condition for residence because the appellant can make suitable repairs and alterations in the same to make it fit for residential purposes.
[78 B C] 2.3.
The claim of the landlord that he needs the building bona fide for his personal occupation cannot be negatived on the ground the the building requires repairs and alterations before the landlord can occupy the same.
[78 D] 2.4.
There is no prohibition that a landlord must occupy the house for residence without making any alterations in it.
[78 H 79A] Devaky vs Krishnankutty, , approved.
Ramniklal Pitambardas Mehta vs Indradaman Amratlal Sheth, ; , followed.
Before passing a decree for eviction on the ground of bona fide need of the landlord under section 11(3) of the Act, it was necessary for the Appellate Authority to consider whether the tenant was entitled to the benefit of the second proviso to sub section (3) of section 11 of the Act which precludes the passing of an order for eviction of a tenant who is depending for his livelihood mainly from the trade or business carried on in such building and there is no other suitable building available in the locality for him to carry on such trade or business.
[79 C] 3.2.
Since the Appellate Authority has omitted to consider the matter from this angle the matter should be remanded to the Appellate Authority for considering the question whether the respondent can invoke the protection of the second proviso to section 11(3) of the Act.
[79 G 80A] 73
|
ivil Appeal No. 2446 of 1991.
From the Judgement and Order dated 11.10.1990 of the Bombay High Court in F.A. No. 649 of 1990.
Mrs. C.M. Chopra for the Appellant.
Respondent in person.
The Judgment of the Court was delivered by KULDIP SINGH, J.
His parents advertised for " homely non medico" bride.
Her parents responded.
Marriage took place on January 24, 1988 at Noida near Delhi.
They hardly lived as husband and wife at Pune for about seven months when on August 16, 1988 the husband filed a petition under Section 13 of the Hindu Marriage Act for dissolution of Marriage on the ground of cruelty.
He alleged "she had a habit of smoking" and "it was found that she was in the habit of drinking and even once came drunk to the applicant 's house and abused everybody".
He further alleged " it was found by the applicant that she was working as a model prior to marriage and he found few pictures of the respondent in bikini and semi nude clothes in magazines".
She vehemently denied the allegations and claimed that the she was a homely, vegetarian, non smoking, teetotaller and faithful house wife.
The Family Court at Pune proceeded ex parte and granted divorce decree by the order dated November 30, 1989.
Wife 's application for setting aside the ex parte decree was dismissed by the Family Court on June 24, 1990.
The High Court by its judgment dated October 10/11, 1990 unheld the findings of the Family Court with the modification that in place of decree for dissolution of marriage it granted a decree for judicial separation.
This appeal by way of special leave is by the wife against the judgments of the courts below.
85 During the pendency of the divorce proceedings before Family Court, Pune, the wife filed a petition, on May 1, 1989, before this Court seeking transfer of the case from the Family Court, Pune to Delhi.
This Court granted ad interim stay of the proceedings before the Family Court, Pune.
The stay remained operative till September 11, 1989 when this Court dismissed the transfer petition and vacated the stay.
Thereafter the husband appeared before the Family Court on September 15, 1989 whereas the appellant wife remained absent.
Notices were sent by registered post to the wife on her address at Noida and also at her Delhi address given by her in the proceedings before this Court.
The notice came back with the remarks "not found".
The Family Court ordered substituted service and a notice was published in the "Times of India" New Delhi of dated October 24.1989 asking the wife to appear before the Family Court on November 16, 1989 or the proceedings would be taken ex parte.
On November 16, 1989 the Family Court ordered ex parte proceedings.
The issues were framed on November 21, 1989, the evidence of the husband was recorded on November 25, 1989 and the judgment was pronounced on November 30, 1989.
The appellant filed an application dated December 18, 1989 for setting aside the ex parte divorce decree wherein she stated that after she was forced to leave her matrimonial home at Pune, she was residing with her parents at Noida.
She further stated that in October/November, 1989 she had gone to reside with her brother at Delhi.
According to her she applied to the Army Authorities claiming maintenance out of her husband 's salary.
Respondent husband is an Army officer.
The Army Authorities sent a letter dated December 14, 1989 to her father wherein it was mentioned that his daughter 's application for maintenance allowance could not be entertained because the husband had already obtained a divorce decree from the court.
A copy of the Family Court Judgment granting divorce decree to the husband was also annexed to the letter.
The appellant claims that for the first time, on or about December 14, 1989, She came to know through her father that the respondent had already been granted an ex parte divorce decree by the Family Court.
The appellant in her application inter alia stated as under: "The applicant submits that the applicant did not receive any notice/letter/summons or communication from this Hon 'ble Court 's office.
Even there was no intimation given by postal 86 authorities and the applicant honestly states that till the receipt of the letter from the Army H.Q. New Delhi, she was not aware of the date of proceeding.
The applicant submits, the applicant was under bona fide belief that she will receive a notice from this Hon 'ble Court.
As such and being far from Pune, either in Noida ( U.P.) or at New Delhi, it was not possible for her to approach this Hon 'ble Court for any enquiry since she was also not permitted to appear through the lawyer. .At any rate and in any event, the applicant also did not come across the public notice published in Times of India, New Delhi on 24th October 1989 as stated in the decree.
The applicant submits, the applicant had every intention to resist the marriage petition filed by the opponent since the same was absolutely false, frivolous and out and out false, and has been resisted by the applicant by filing written statement, preliminary objection including to approach the Supreme Court of India.
The intention of the applicant was clear.
The applicant submits, the applicant was also advised by her Advocate that she will receive a fresh notice in due course of time after the stay was vacated by the Hon 'ble Supreme Court of India from this Hon 'ble Court.
The applicant states, she resides at a far long distance from Pune.
She was also refused any assistance of lawyer.
The applicant has no relation or any representative who can look after her in the present proceeding in Pune.
It was in these circumstances, the applicant was prevented by sufficient cause from appearing in the marriage petition proceeding No.561/89 and as such the said decree is required to be set aside . .
The applicant states, the applicant is unable to maintain herself, she has no source of income . .
The applicant submits because of the passing of ex parte decree, she has been refused maintenance allowance.
The applicant also prays for granting of maintenance allowance pending final disposal of this application." The Family Court dismissed the application for setting aside ex parte divorce decree on the following reasoning: "But where the party itself knows that stay obtained by it has been vacated, there appears no warrant for the proposition that again a notice is required to be given to the said party.
I do 87 not think that such advice was really given to the applicant.
The applicant has not produced any evidence to the effect that she received such advice from a lawyer.
It is her own statement.
It is a self serving statement and can hardly be believed.
I think that if the applicant was really keen and desirous to contest matrimonial petition, she would have at once made enquiries to find out as to when the next date for hearing in this court was fixed after her application for transfer of the case was dismissed by the Supreme Court and the stay obtained by her was vacated.
The order of vacating the stay was passed on 11th September 1989 by the Hon 'ble Supreme Court and the applicant knew fully well about it.
The opponent who had also appeared in the Supreme Court in connection of that matter did appear in this Court on 15.9.1989.
The record of P.A. No. 561/89 shows that opponent applied for issuing of notice to the present applicant.
The notice was issued by registered post on two separate addresses.
One of the address was the one shown by applicant herself in Supreme Court petition and the other address was the one which was admitted to be her address in the matrimonial petition (which was address of her father at Delhi).
Both these notices were sent by registered post in due course.
The court waited till return of this notice.
On both these envelops postal authorities have endorsed that the present applicant was not found on these addresses.
The opponent had, therefore, made application that the applicant was avoiding to take notice and hence substituted service by publishing in Times of India be made.
Accordingly, a notice was published as per order of the Court on opponent 's application.
Thus the contention of the respondent that she had no notice of the further proceeding in marriage petition does not appear convincing.
As stated already in the first instance, there was no necessity for her to wait for receipt of the notice in the circumstances of the present case.
The notices sent to her were obviously evaded, otherwise there was no reason why the applicant was found on either of the addresses which she admits to be the correct addresses.
Even if she was not present, there was no reason why other major members of the family did not accept these notices.
And lastly the publication of the notice 88 in one of the most widely circulated newspaper at Delhi was sufficient notice to the applicant.
" The High Court upheld the reasoning and the conclusions reached by the Family Court and dismissed the appeals filed by the wife.
The respondent appeared before us in person and himself argued his case.
The learned counsel for the appellant raised the following points for our consideration: (a) That the Family Court and the High Court grossly erred in dismissing the application filed by the appellant for setting aside the ex parte proceedings; (b) That the divorce petition was filed hardly seven months after the marriage.
Section 14 of the Hindu Marriage Act provides "it shall not be competent for any court to entertain any petition for dissolution of a marriage by a decree of divorce, unless at the date of the presentation of the petition one year has elapsed since the date of the marriage".
The divorce petition should have been dismissed as not competent in terms of Section 14 of the Hindu Marriage Act; (c) that even on merits the divorce decree is based on no evidence.
The allegations in the divorce petition are wholly vague.
In any case the evidence of Major Ved Prakash being wholly interested and contrary to the record the courts below fell into grave error in accepting serious allegations against the appellant on the basis of his evidence; (d) that the High Court acted illegally in substituting the decree of divorce to that of a decree for judicial separation.
The High Court should have dismissed the divorce petition.
We may take up the Fist Point.
The appellant filed written statement before the Family Court, Pune vehemently denying the allegations made against her by the respondent.
She also raised preliminary objections regarding the maintainability of the divorce petition.
She filed a transfer petition before this Court which was dismissed in September, 1989.
She filed another transfer petition which was dismissed by this Court on April 12,1990 with the following observations: 89 "It is open to the petitioner to move the High Court under Section 24, Code of Civil Procedure for consideration of her prayer that the case be transferred to another Judge.
On the merits of this prayer, we decline to make any observation.
It would appear that the case is now listed before the Family Judge at Pune on 13.4.90.
It will be appropriate that having regard to the apprehension expressed by the petitioner the Court should not proceed with the matter until her prayer for transfer is considered by the High Court.
We accordingly direct the Family Court, Pune to stay further proceeding in the case, a period of 60 days from today to enable the petitioner to approach the High Court.
" It is no doubt correct that the appellant did not approach the High Court for the transfer of the case but the fact remains that she was been seriously contesting the divorce proceedings and it would not be fair to assume that she deliberately choose to abstain from the Family Court and was intentionally avoiding the summons.
The Family Court and the High Court have held that after the dismissal of the transfer petition and vacation of stay by this Court the appellant wife should have, on her own, joined the proceeding before the Family Court.
According to the courts below no notice for appearance was required to be sent to the parties after the stay was vacated.
It is not necessary for us to go into the question as to whether a fresh notice to the parties is necessary where the superior Court vacates the stay order and as a consequence the proceeding recommence before the court below.
We are of the view that in the fact and circumstances of this case the interest of justice required the issue of such a notice.
The admitted facts in this case are as under: (i) While dismissing the transfer petition and vacating the stay order this Court did not fix any date for the appearance of the parties before the Family Court, Pune (ii) The Family Court had permitted the assistance of a lawyer to the appellant wife in the following terms: "As applicant is from Delhi and it would cause hardship, permission is granted 90 for engaging an Advocate for pleading her case only for the purpose of presenting applications or serving notices and noting the orders of the Court.
" (iii) The appellant did not engage a lawyer to represent her before the Family Court, Pune.
(iv) The appellant wife was residing with her parents at Noida (Delhi).
Even the distance between Noida and Pune was a big hassle for the appellant especially when she had no counsel to look after the proceedings before the Family Court, Pune.
We are of the view that in the facts and circumstances of this case she was justified in her assumption that the proceedings before the Family Court would be resumed after fresh notice to the parties.
The applicability of the Rules of natural justice depends upon the facts and circumstances of each case.
We are of the view that in the facts and circumstances of this case she was justified in her assumption that the proceedings before the Family Court would be resumed after fresh notice to the parties.
The applicability of the Rules of natural justice depends upon the facts and circumstances of each case.
We are of the view that in this case fair play and the interest of justice required the issuance of a fresh notice to the parties after the stay order was vacated by this Court.
We do not, therefore, agree with the findings of the Courts below to the contrary.
In any case realising the requirements of natural justice the Family Court, sent two registered notices to the appellant at her Noida address and also at the address given by her in the proceedings before this Court.
Unfortunately, both the notices came back with the endorsements that the appellant could not be found on the given addresses.
There is no material on the record to reach a conclusion that the appellant refused to receive the notices.
There is also nothing on the record to show as to whether the postal authorities made any efforts to deliver the registered letters to any of the appellant 's relations at the given addresses.
The courts below are wholly unjustified in holding that the appellant refused to receive the notices and further that the said notices could have been received by any of her relations on the given addresses.
After the notices sent by registered post were received back, the Family Court did not make any attempt to serve the appellant through the process of the Court.
The appellant was no stranger to the respondent.
She was his wife.
It could not have been difficult for him to find out the address where she was staying.
Under the circumstances, resort to the substitute service by way of publication in the newspaper was not justified.
91 We are, therefore, of the view that there was sufficient cause for the non appearance of the appellant in the matrimonial petition before the Family Court.
The view we have taken on the first point, it is not necessary to deal, with the other points raised by the learned counsel for the appellant.
We, therefore, set aside the order of the Family Court dated June 24, 1990 and allow the appellant 's application dated December 18, 1989 and set aside the ex parte decree passed against the appellant in Marriage petition No. A 561/89.
As a consequence the judgment of the Family Court, Pune dated November 30, 1989 and the judgment of the High Court in First Appeal No. 649/90 dated October 10/11, 1990 are also set aside.
The appellant had asked for transfer of her case from the Principal Judge, Family Court, Pune to some other court and this Court gave liberty to the appellant to move the High Court for the said purpose.
We are satisfied that the reason given by the appellant for such transfer and the apprehensions entertained by her are wholly unjustified.
We ar, however, of the view that the Principal Judge, Family Court Pune, has taken the grievances made by the appellant before this Court rather seriously and has commented adversely about the same.
With a view to do complete justice between the parties we direct that this case be transferred from the file of Principal Judge, Family Court, Pune to the Principal Judge, Family Court, Bombay.
The parties are directed to appear before the Principal Judge, Family Court, Bombay on June 22, 1992.
Before concluding we wish to place on record that we tried to persuade the parties to live together and in the alternative to settle their dispute amicably but with no result.
We allow the appeal in the above terms with no order as to costs.
N.V.K. Appeal allowed.
| IN-Abs | The parties to the appeal were married on January 24, 1988 at Noida near Delhi.
They hardly lived as husband and wife at Pune for about seven months when on August 16, 1988 the husband Respondent filed a petition under Section 13 of the Hindu Marriage Act, 1956 for dissolution of the marriage on the ground of cruelty.
He alleged that the wife had a habit of smoking and drinking and even once came drunk to the house and abused everybody.
The wife vehemently denied the allegations and claimed that she was a homely, vegetarian, non smoking, teetotaler and faithful house wife.
During the pendency of the aforesaid divorce proceeding before the Family Court,Pune, the wife filed a petition, on May 1, 1989, before this Court seeking transfer of the case from the Family Court, Pune to Delhi.
This Court granted ad interim stay of the proceedings which remained operative till September 11, 1989 when the Transfer Petition was dismissed 82 and the stay become vacated.
Thereafter, the husband appeared before the Family Court on September 15, 1989 whereas the wife remained absent.
Notice were sent by registered post to the wife on her address at Noida and also at her Delhi address given in the proceedings before this Court.
The notices having come back with the remarks "not found", the Family Court ordered sub stituted service, and a notice was published in a Delhi daily newspaper asking the wife to appear before the Family Court on November 16, 1989.
The wife not having appeared on the said date the Family Court ordered ex parte proceedings.
The issues were framed on November 21, 1989, evidence of the husband was recorded on November 25,1989 and the judgment was pronounced on November 30, 1989, granting the husband a divorce decree.
The wife filed an application dated December 18, 1989 for setting aside the ex parte divorce decree.
She contended that she was forced to leave the matrimonial home at Pune and was residing with her parents at Noida, and that in October/November, 1989 she had gone to reside with her brother at Delhi, that she applied to the Army Authorities claiming maintenance out of her husband 's salary, and that the Army Authorities sent a letter dated December 14, 1989 to her father informing that the application for maintenance could not be entertained as the husband had already obtained a divorce decree from the Court.
She further contended that for the first time on or about December 14, 1989 she came to know from her father that her husband had been granted an ex parte divorce decree by the Family Court.
The Family Court dismissed the application for setting aside ex parte divorce decree, and the High Court upheld the reasoning and conclusions reached by the Family Court and dismissed the appeals filed by the wife.
In the appeal to this Court by the wife it was contended that: (1) The Family Court and the High Court grossly erred in dismissing the application filed by the appellant for setting aside the ex parte proceedings; (2) the divorce petition should have been dismissed as not competent in terms of Section 14 of the Hindu Marriage Act as the Statutory period of one year had not lapsed since the date of marriage, (3) even on merits the divorce decree is based on no evidence, the allegations in the divorce petition 83 being wholly vague, and (4) the High Court acted illegally in substituting the decree of divorce to that of a decree for judicial separation.
Allowing the Appeal, this court, HELD: 1.
The appellant filed written statement before the Family Court,Pune denying the allegations made against her by the respondent.
She also raised preliminary objections regarding the maintainability of the divorce petition.
Though her transfer petitions before this Court were dismissed in September, 1989 and on April 12, 1990 and that she did not approach the High Court for transfer of her case, the fact remains that she has been seriously contesting the divorce proceedings and it would not be fair to assume that she deliberately chose to abstain from the Family Court, and was intentionally avoiding the summons.
In the facts and circumstances of this case, the appellant was justified in her assumption that the proceedings before the Family Court would be resumed after fresh notice to the parties.
The applicability of the Rules of natural justice depends upon the facts and circumstances of each case.
Fair play and the interest of justice in this case required the issuance of a fresh notice to the parties after the stay order was vacated by this Court.
The Family Court, sent two Registered notice to the appellant at her Noida address and also at the address given by her in the proceedings before this Court.
Unfortunately, both the notices came back with the endorsements that the appellant could not be found on the given addresses.
On the record there is no material to reach a conclusion that the appellant refused to receive the notices, or to show whether the postal authorities made any efforts to deliver the registered letters to any of the appellants ' relations at the given addresses.
The Courts below are therefore wholly unjustified in holding that the appellant refused to receive the notices and further that the said notices could have been received by any of her relations on the given addresses.
After the notices sent by registered post were received back, the Family Court did not make any attempt to serve the appellant through the process of the Court.
The appellant was not stranger to the respondent.
She was his wife.
It could not have been difficult for him to find out the address where she was staying .
Under the circumstances resort to the 84 substitute service by way of publication in the newspaper was not justified.
There was, therefore,sufficient cause for the non appearance of the appellant in the matrimonial petition before the Family Court.
With a view to do complete justice between the parties it is directed that this case be transferred from the file of the Principal Judge, Family Court, Pune to the Principal Judge, Family Court, Bombay, and the parties are directed to appear before the Principal Judge, Family Court Bombay.
|
Appeal No. 239 of 1955.
Appeal from the Judgment and Decree dated the 30th November, 1953, of the former Nagpur High Court in First Appeal No. 118 of 1947, arising out of the Judgment and Decree dated the 12th August, 109 1947, of the Court of the Additional District Judge, Wardha, in Civil Suit No. 9 A of 1946.
M. C. Setalvad, Attorney General for India, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellants.
M. Adhikari, Advocate General for the State of Madhya Pradesh and 1.
N. Shroff, for the respondent.
January 21.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
This is an appeal by the widow, and the minor son of Mangilal, defendant 1, and it has been filed with a certificate by the High Court of Judicature at Nagpur.
It arises out of a suit filed by the respondent Shrimati Lilabai w/o Vrijpalji, for the specific performance of a contract to lease or in the alternative for damages and for a declaration against defendant 2, the daughter of defendant 1 that she has no right, title or interest in the property in suit.
The respondent 's case was that defendant I had executed an instrument (exhibit P 1) in favour of the respondent by which he had contracted to lease to her in perpetuity in occupany right his four khudkasht lands admeasuring 95.19 acres situated in Mouza Mohammadpur in consideration of the debt of Rs. 8,700.
According to the respondent the instrument had provided that, if defendant 1 did not repay to her the said debt on June 1, 1944, the said contract of lease would be operative on and from that date.
Defendant 1 did not repay the loan by the stipulated date and so he became liable to perform and give effect to the said contract of lease on June 1, 1944.
The respondent repeatedly called upon defendant 1 to perform the said contract, but defendant I paid no heed to her demands and so she had to file the present suit for specific performance.
The respondent had been and was still ready and willing to specifically perform the agreement and to accept a deed of lease for the lands in question in lieu of the said debt of Rs. 8,700.
Defendant 1, however, had been guilty of gross and unreasonable delay in performing his part of the con tract and that had caused the respondent the loss of 110 the benefit of the lease and consequent damage.
On these allegations the respondent claimed specific performance of the contract and an amount of Rs. 2,340 as compensation or in the alternative damages amounting to Rs. 11,080.
To this suit Mst.
Durgabai, the daughter of defendant I had been impleaded as defendant 2 on the ground that she was setting up her own title in respect of the lands in suit and a declaration was claimed against her that she had no right, title or interest in the said lands.
Defendant 2 filed a written statement contesting the respondent 's claim for a declaration against her but she did not appear at the trial which proceeded exparte against her.
In the result defend ant 1 was the only contesting defendant in the proceedings.
Several pleas were raised by defendant I against the respondent 's claim.
He denied the receipt of the consideration alleged by her and he pleaded that the document (exhibit P 1) was a bogus, sham and collusive document which had been brought into existence for the purpose of shielding his property from.
his creditors and it was not intended to be acted upon.
It was also urged by him that the said document, if held to be genuine, was an agreement to lease under section 2(7) of the Indian , and since it was not registered it was inadmissible in evidence.
The learned trial judge framed appropriate issues on these pleadings and found against defendant I on all of them.
Accordingly a decree was passed ordering defendant 1 to execute a lease deed in respect of the fields mentioned in the plaint on a proper stamp paper in occupancy right in favour of the respondent and to put her in possession of them.
A decree for the payment of Rs. 2,316 by way of compensation was also passed against him.
The declaration claimed by respondent against defendant 2 was likewise granted.
This decree was challenged by defendant 1 by his appeal before the High Court of Judicature at Nagpur.
Pending the appeal defendant I died and his widow and his minor son came on the record as his 111 legal representatives and prosecuted the said appeal.
The High Court held that the document was supported by consideration, that it was not an agreement to lease under section 2(7) of the Indian and therefore it did not require registration and was admissible in evidence.
In the result the decree passed by the trial court was confirmed and defendant 1 's appeal was dismissed.
The present appellants then applied to the High Court for leave to appeal to this Court and the High Court granted leave because it held that the basic question involved in the decision of the appeal was the legal effect of exhibit P 1 and that the construction of a document of title is generally regarded as a substantial question of law.
It is with this certificate that the present appeal has come before this Court, and it raises two questions for our decision: Is the document (exhibit P 1) an agreement to lease under section 2(7): If not, does it require registration under section 17 of the said Act ? All other issues which arose between the parties in the courts below are concluded by concurrent findings and they have not been raised before us.
Before dealing with these points, we must first consider what the expression " an agreement to lease " means under section 2(7) of the Indian , hereinafter referred to as the Act.
Section 2(7) provides that a lease includes a counterpart, kabuliyat, an undertaking to cultivate and occupy and an agreement to lease.
In Hemanta Kumari Debi vs Midnapur Zamindari Co. Ltd. (1) the Privy Council has held that " an agreement to lease, which a lease is by the sta tute declared to include, must be a document which effects an actual demise and operates as a lease ".
In other words, an agreement between two parties which entitles one of them merely to claim the execution of a lease from the other without creating a present and immediate demise in his favour is not included under section 2, sub section
In Hemanta Kumari Debi 's case (1) a petition setting out the terms of an agreement in compromise of a suit stated as one of the (1) (1919) L. R. 46 1. A. 240.
112 terms that the plaintiff agreed that if she succeeded in another suit which she had brought to recover certain land, other than that to which the compromised suit related, she would grant to the defendants a lease of that land upon specified terms.
The petition was recited in full in the decree made in the compromised suit under section 375 of the Code of Civil Procedure, 1882.
A subsequent suit was brou ght for specific performance of the said agreement and it was resisted on the ground that the agreement in question was an agreement to lease under section 2(7) and since it was not registered it was inadmissible in evidence.
This plea was rejected by the Privy Council on the ground that the document did not effect an actual demise and was outside the provisions of section 2(7).
In coming to the conclusion that the agreement to lease under the said section must be a document which effects an actual demise the Privy Council has expressly 'approved the observations made by Jenkins, C. J., in the case of Panchanan Bose vs Chandra Charan Misra (1) in regard to the construction of section 17 of the Act.
The document with which the Privy Council was concerned was construed by it as " an agreement that, upon the happening of a contingent event at a date which was indeterminate and, having regard to the slow progress of Indian litigation, might be far distant, a lease would be granted "; and it was held that " until the happening of that event, it was impossible to determine whether there would be any lease or not ".
This decision makes it clear that the meaning of the expression " an agreement to lease " " which, in the context where it occurs and in the statute in which it is found, must relate to some document that creates a present and immediate interest in the land ".
Ever since this decision was pronounced by the Privy Council the expression " agreement to lease " has been consistently construed by all the Indian High Courts as an agreement which creates an immediate and a present demise in the property covered by it.
It would be relevant now to refer to the observations (1) Cal.
113 of Jenkins, C. J., in the case of Panchanan Bose (1).
In that case, a solehnama by which no immediate interest in immoveable property was created was held not to amount to a lease within the meaning of cl.
(d) of section 17 of the Act but merely an agreement to create a lease on a future day.
" Such a document ", it was observed, " fell within cl.
(h) of section 17 and as such was admissible in evidence without registration ".
Jenkins, C. J., held that " on a fair reading of the document, no immediate interest was created, there was no present demise, and the document was merely an agreement to create a lease on a future day, the terms of which were to be defined by documents to be thereafter executed ".
" This being so ", said the learned C. J., " I think the appellants I rave rightly contended before us that the document was admissible in evidence as it falls within cl.
(h) of section 17 of the Indian ".
This decision would show that an agreement which creates no immediate or present demise was not deemed to be a lease under section 2(7) and so it was hold to fall within section 17(h) of the Act and this view has been specifically affirmed by the Privy Council in Hemanta Kumari Debi 's case (2).
It is true that in Narayanan Chetty vs Muthiah Servai (3) a Full Beach of the Madras High Court had held that an agreement to execute a sub lease and to get it registered at a future date was a lease within section 3 of the Indian of 1877 (III of 1877) and was compulsorily registrable under el.
(d) of section 17.
Such an agreement to grant a lease which requires registration, it was held, affects immoveable property and cannot be received in evidence in a suit for specific performance of an agreement.
The question which was referred to the Full Bench apparently assumed that the agreement in question required registration and the point on which the decision of the Full Bench was sought for was whether such an agreement can be received in evidence in a suit for specific performance (1) where possession is given in pursuance of an agreement, and (2) where it is not; and the Full Bench (1) Cal. 808.
(2) [1919] L.R. 46 I.A. 240.
(3) Mad.
15 114 answered this question in the negative. " An agreement to lease ", it was observed in the judgment of the Full Bench, " is expressly included in the definition of the lease in the while it cannot be suggested that an agreement to sell falls within any definition of sale ".
It is clear that the question about the construction of the words " agreement to lease " was not specifically argued before the Full Bench, and the main point considered was the effect of the provisions of section 49 of the Act.
In that connection the argument had centred round the effect of the provisions of cl.
(h) of section 17 of the and section 54 of the Transfer of Property Act.
The Full Bench took the view that in enacting section 49 of the Act the Legislature meant to indicate that the instrument should not be received in evidence even where the transaction sought to be proved did not amount to a transfer of interest in immoveable property but only created an.
obligation to transfer the property.
A contract to sell immovable property in writing, though it may affect the property without passing an interest in it, is exempted from registration by clause (h) (now cl. 2 (v)) of section 17 but an agreement in writing to let, falling within cl.
(d) of section 17, is not.
That is why, according to the Full Bench, such an agreement cannot be received in evidence of the transaction which affects the immovable property comprised therein.
Thus this decision does not directly or materially assist us in construing the expression " agreement to lease ".
Besides, the said decision has not been followed by the Madras High Court in Swaminatha Mudaliar vs Ramaswami Mudaliar (1) on the ground that it can no longer be regarded as good law in view of the decision of the Privy Council in Hemanta Kumari Debi 's case(2), and, as we have already pointed out, all the other High Courts in India have consistently followed the said Privy Council decision.
The learned Attorney General has, however, contended before us that the correctness of the decision of the Privy Council in Hemanta Kumari Debi 's case (2) is open to doubt and he has suggested that we (1) Mad. 399.
(2) (1919) L.R. 46 I A. 240.
115 should re examine the point on the merits afresh.
We do not think there is any substance in this contention because, if we may say so with respect, the view taken by the Privy Council in the said case is perfectly right.
Section 17(1) of the Act deals with documents of which registration is compulsory.
It is obvious that the documents falling under cls.
(a), (b), (c) and (e) of sb section
(I ') are all documents which create an immediate and present demise in immovable properties mentioned therein.
The learned Attorney General 's argument is that cl.
(d) which deals with leases does not import any such limitation because it refers to leases of immoveable properties from year to year or any term exceeding one year or reserving a yearly rent; and the Act deliberately gives an inclusive definition of the term 'lease ' in section 2(7).
This argument, however, fails to take into account the relevant provisions of the Transfer ' of Property Act.
Section 4 of the said Act provides that section 54, paragraphs 2 and 3, 59, 107 and 123 shall be read as supplemental to the Indian .
Section 107 is material for our purpose.
Under this section a lease of immoveable property from year to year or for any term exceeding one year or reserving a yearly rent can be made only under a registered instrument.
This section also lays down that where a lease of immoveable property is made by a registered instrument, such instrument, or, where there are more instruments than one, each instrument, shall be executed by both the lessor and the lessee.
It would be noticed that if section 107 has to be read as supplemental to the Act, the definition of the word I lease ' prescribed by section 105 would inevitably become relevant and material; and there is no doubt that under section 105 a lease of immoveable property is a transfer of right to enjoy such property made in the manner specified in the said section.
Therefore, it would not be right to assume that leases mentioned in cl.
(d) of section 17, sub section
(1), would cover cases of documents which do not involve a present and immediate transfer of leasehold rights.
It would thus be reasonable to hold that, like the instruments mentioned in cls.
(a), (b) and (c) of section 17(1), leases also are instruments 116 which transfer leasehold rights in the property immediately and in presenti.
We have already referred to the requirement of section 107 of the Transfer of Property Act that a lease must be executed both by the lessor and the lessee.
It may be pertinent to point out that an instrument signed by the lessor alone which may not be a lease under section 107 may operate as an agreement to lease under section 2(7) of the Act.
The legislative history of the provisions of section 17(2)(v) may perhaps be of some assistance in this connection.
Section 17(h) of Act III of 1877 which ,corresponds to the present section 17(2) (v) did not appear in the earlier Registration Acts of 1864,1866 and 1871.
Its introduction in Act III of 1877 became necessary as a result of the decision of the Privy Council in Fati Chand Sahu vs Lilambar Singh Das (1) in which it was held that an agreement to sell immoveable property for Rs. 22,500 coupled with an acknowledgment of the receipt of Rs. 7,500 and a promise to execute a sale deed on the payment of the balance was compulsorily registrable under section 17 of the Act (2).
Section 17(h) was therefore enacted in 1877 to make it clear that a document which does not itself create an interest in the immoveable property does not require registration even if it expressly contemplates and promises the creation of that interest by a subsequent document; in other words, contracts of sale and purchase of which specific performance would be granted under certain circumstances fall within this provision and would no longer be governed by the said decision of the Privy Council in the case of Fati Chand Sahu vs Lilambar Singh Das (1).
Thus the policy of the Legislature clearly is to exclude from the application of cls.
(b) and (c) of section 17(1) agreements of the said character.
On principle, there is no difference between such agreements of sale or purchase and agreements to lease.
Under both classes of documents no present or immediate demise is made though both of them may lead to a successful claim for a specific performance.
That is why the Privy Council observed in the (1) ; 14 M. L. A. 129.
(2) Act XX of 1866.
117 case of Hemanta Kumari Debi (1) that the context and the scheme of the statute justified the view taken by Jenkins, C. J., in the case of Panchanan Bose (2).
It may also be relevant to bear in mind that the other documents which are included within the word I lease ' by section 2(7) of the Act support the same conclusion.
A counterpart, as it is usually understood, is a writing by which a tenant agrees to.
pay a specified rent for the property let to him and signed by him alone.
It is thus in the nature of a counterpart of a lease and as such it is included within the meaning of the word I lease ' under section 2(7).
Same is the position of a kabuliyat and an undertaking to cultivate or occupy.
In other words, it is clear that all the four instruments which, under the inclusive definition of section 2(7), are treated as leases satisfy the test of immediate and present demise in respect of the immoveable property covered by them.
We must, therefore, hold that the expression " an agreement to lease " covers only such agreements as create a present demise.
Let us now proceed to deal with the question as to whether the document (exhibit P 1) constitutes " an agreement to lease "It purports to be a receipt executed in favour of the respondent by defendant I and bear a four anna revenue stamp.
" I have this day giver to you ", says the document, " the land described below which is owned by me.
Now you have become occupancy tenant of the same.
You may enjoy the same in any way you like from generation to generation.
My estate and heirs or myself shall have absolutely no right thereto.
You shall become the owner of the said land from date 1 6 1944.
1 will have absolutely no right thereto after the said date ".
The the document proceeds to mention the properties and describes them in detail, and it adds " all the above fields are situate at Mouza Mohammadpur, mouz No. 312, tahsil Arvi, district Wardha.
The estat described above has been given to you in lieu of you Rs. 8,700 due to you, subject to the condition that case your amount has not been paid to you on date 1 6 1944, you may fully enjoy the estate describe, (1) (1919) L.R. 46 I.A. 240.
(2) Cal.
118 above in any way you like from generation to generation ".
The question for our decision is: Does this document amount to an agreement to lease under section 2(7) of the Act ? In construing this document it is necessary to remember that it has been executed by laymen without legal assistance, and so it must be liberally construed without recourse to technical considerations.
The heading of the document, though relevant, would not determine its character.
It is true that an agreement would operate as a present demise although its terms may commence at a future date.
Similarly it may amount to a present demise even though parties may contemplate to execute a more formal document in future.
In considering the effect of the document we must enquire whether it contains unqualified and unconditional words of present demise and includes the essential terms of a lease.
Generally if rent is made payable under an agreement from the date of its execution or other specified date, it may be said to create a present demise.
Another relevant test is the intention to deliver possession.
If possession is given under an agreement and other terms of tenancy have been set out, then the agreement can be taken to be an agreement to lease.
As in the construction of other documents, so in the construction of an agreement to lease, regard must be had to all the relevant and material terms; and an attempt must be made to reconcile the relevant terms if possible and not to treat any of them as idle surplusage.
The learned Attorney General contends that this document is not a contingent grant of lease at all.
According to him it evidences a grant of lease subject to a condition and that shows that a present demise is itended by the parties.
He naturally relies upon the opening recitals of the document.
According to him, when the document says that defendant I has given to the respondent the land described below and that the respondent has become occupancy tenant of the same, it amounts to a clear term of present demise.
A similar recital is repeated in the latter part of the document where it is stated that the estate described 119 above has been given to the respondent in lieu of Rs. 8,700 due to her.
In our opinion, it would be unreasonable to construe these recitals by themselves, apart from, the other recitals in the document.
We cannot lose sight of the fact that the document expressly states that the respondent shall become the owner of the land from 1 6 1944 and that defendant I ' would have no title over it after that date.
This recital also is repeated in the latter part of the document; and it makes the intention of the parties clear that it is only if the amount of debt is not rapid by defendant I on the date specified that the agreement was to come into force.
In other words, reading the document as a whole it would be difficult to spell out a present or immediate demise of the occupancy rights in favour of the respondent.
In this connection the fact that the document is described as a receipt may to some extent be relevant.
It is clear that by executing this document the defendant wanted to comply with the respondent 's request for acknowledging the receipt of the amount coupled with the promise that the amount would be repaid on 1 6 1944.
The defendant also wanted to comply with the respondent 's demand that, if the amount was not repaid on the said date, he would convey the occupancy rights in his lands to her.
Besides, it is significant that the document does not refer to the payment of rent and does not contemplate the delivery of possession until 1 6 1944.
If the document had intended to convey immediately the occupancy rights to the respondent it would undoubtedly have referred to the delivery of possession and specified the rate at which, and the date from which. the rent had to be paid to her.
The stamp purchased for the execution of the document also incidentally shows that the document was intended to be a receipt and nothing more.
Under section 2 of the Central Provinces Land Revenue Act, 1917 (C. P. II of 1917) an agricultural year commences on the first day of June and it is from this date that the agreement would have taken effect if defendant I had not repaid the debt by then.
It is clear that the respondent was not intended to be treated as an 120 occupancy tenant between the date of the document and June 1, 1944.
During that period the agreement did not come into operation at all.
In other words, it is on the contingency of defendant 's failure to repay the amount on June 1, 1944, that the agreement was to take effect.
We have carefully considered the material terms of the document and we are satisfied that it was not intended to, and did not, effect an actual or present demise in favour of the respondent.
In our opinion, therefore, the High Court was right in holding that the document was not an agreement to lease under section 2(7) of the Act and so did not require registration.
We would now briefly refer to some of the decisions on which the learned Attorney General relied in support of his construction of the document.
In Purmananddas Jiwandas vs Dharsey Virji (1), the agreement between the parties had expressly provided that the lease in question was to commence from October 1, 1882, though the agreement was executed seven days later, that the rent was to commence from that day and the rent then due was to be paid by the next day.
It is in the light of these specific terms that the Bombay High Court held that the relevant words in the document operated as an actual demise.
None of these conditions is present in the document with which we are concerned.
Similarly in Pool vs Bentley (2), by the instrument in question, Poole had agreed to let unto Bentley, and Bentley had agreed to take, all that piece of land described for the term of 61 years at the yearly rent of pound 120 free and clear of all taxes, the said rent to be paid quarterly, the first quarter 's rent within 15 days after Michaelmas 1807, and that in consideration of the lease, Bentley had agreed within the space of four years to expend and lay out in 5 or more houses of a third rate or class of building 2000 and Poole had agreed to grant a lease or leases of the said land and premises as soon as the said 5 houses were covered in.
In dealing with the construction of this document Lord (1) Bom.
(2) ; ; 121 Ellenborough, C. J., observed that the rule to be collected from the relevant decisions cited before him was that the intention of the parties as described by the words of the instrument must govern the construction and that the intention of the parties to the document before him appeared to be that the tenant, who was to have spent so much capital upon the premises within the first four years of the term, should have a present legal interest in the term which was to be binding upon both parties; though, when certain progress was made in the building, a more formal lease or leases might be executed.
This decision only shows that if the intention is to effect a present demise the fact that a further formal document is contemplated by the parties would not detract from the said intention.
It would, however, be noticed that the document in that case contained a stipulation for the payment of the rent and the tenant was to be let into possession immediately.
This case also does not assist the appellant.
In Satyadhyantirtha Swami vs Raghunath Daji (1) the contract of lease was contained in two documents which showed that the lands were being cultivated by Appaji and Ravji who had signed the first document.
and that they were authorised to continue ' in occupation of the lands on terms mentioned in the first document.
The argument that a part of the agreement would not come into operation till some years later, it was held, did not operate to make the document other than a present demise.
It is difficult to appreciate how this decision can assist us in construing the present document.
In Balram vs Mahadeo (2) the Nagpur High Court was dealing with an instrument which purported to be a receipt and the terms of which seemed to contemplate the execution of a sale deed in respect of the properties covered by it.
Even so, the material clause was that "I it is agreed to give to you both the above fields in occupancy rights ".
It was held that, on a fair and reasonable construction, the document was (1) A.I.R. 1926 Bom.
(2) I.L.R. 16 122 intended to affect a transfer of the occupancy right in presenti and was as such an agreement to lease.
No doubt, as observed by Bose, J., " on a superficial view of the document it would not appear to be an agreement to lease.
But in construing a transaction one has to look beneath the verbiage and ascertain what are the real rights which are being transferred.
When that is done, we consider that this document is an agreement to lease despite the fact that it calls itself a receipt and speaks throughout of a sale ".
It is unnecessary to consider the merits of the conclusion rea ched by the Nagpur High Court in this case.
It would be enough to say that the said decision would not afford any assistance in construing the document before us.
Besides it is obvious that in construing documents, the usefulness of the precedents is usually of a limited character; after all courts have to consider the material and relevant terms of the document with which they are concerned; and it is on a fair and reasonable construction of the said terms that the nature and character of the transaction evidenced by it has to be determined.
In our opinion, the High Court was right in holding that the instrument (exhibit P 1) was not an agreement to lease under section 2(7) of the Act.
The result is the appeal fails and must be dismissed with costs.
Appeal dismissed.
| IN-Abs | A document purporting to be a receipt and bearing a four anna revenue stamp was executed by M in favour of the respondent and recited, inter alia, as follows: " I have this day given 108 to you the land described below which is owned by me.
Now you have become occupancy tenant of the same.
You may enjoy the same in any way you like from generation to generation.
My estate and heirs or myself shall have absolutely no right thereto.
You shall become the owner of the said land from date 1 6 44.
I will have absolutely no right thereto after the said date. .
The estate. has been given to you in lieu of your Rs. 8,700 due to you, subject to the condition that in case your amount has not been paid to you on date 1 6 44, You may fully enjoy the estate in any way you like from generation to generation.
" The respondent instituted a suit against M for the specific performance of a contract to lease alleging that under the document he had contracted to lease to her in perpetuity in occupancy right his lands in consideration of the debt of Rs. 8,7oo and as the amount was not paid within the due date, he was liable to perform and give effect to the said contract.
M contended, inter alia, that the document was an agreement to lease under section 2(7) of the Indian , and that as it was not registered it was inadmissible in evidence.
Held, that an agreement to lease under section 2(7) of the Regis tration Act, 1908, must be a document which effects an actual demise and operates as a lease.
An agreement between two parties which entitles one of them merely to claim the execution of a lease from the other without creating a pre sent and immediate demise in his favour is not an agreement to lease within the meaning of section 2(7) of the Act.
Held, further, that on a construction of the document in question, it was not intended to, and did not, effect an actual or present demise in favour of the respondent and consequently it was not an agreement to leaseunders.
2(7) Of the Act.
Accordingly, the document did not require registration and was admissible in evidence.
Hemanta Kumari Devi vs Midnapuy Zamindari Co., Ltd., (1919) L.R. 46 I.A. 240, relied on.
Panchanan Bose vs Chandya Charan Misra, Cal. 808, approved.
Narayanan Chetty vs Muthia Servai, Mad. 63, Purmananddas jiwandas vs Dharsey Kirji, Bom.
101, Balram vs Mahadeo, I.L.R. and Poole vs Bently, ; ; , distinguished.
|
Civil Appeal Nos.
10803 to 10805 of 1983.
From the Judgment and Order dated 17.12.1980 of the Madras High Court in Tax Cases Nos. 261 of 1974 and 9 & 10 of 1977.
K. Parasaran, G. Umapathy, Mrs. Indu Malini Ananthachari for C.S. Vaidyanathan for the Appellant.
Ranbir Chandra for Ms. A Subhashini for the Respondent.
The Judgment of the Court was delivered by KULDIP SINGH, J.
The question for our consideration in these appeals is whether Gangabai Charities, a trust operating in the city of Madras, is entitled to exemption under Section 11(1)(a) of the Income Tax Act, 1961 (the Act).
Gangabai executed a document dated September 13, 1958 which was described as a deed of trust.
The trust was named as "Ganga Bai Charities".
In the trust deed Ganga Bai gave effect to her desire to construct and provide a building for the benefit of the public to be used for religious, charitable, cultural and social purposes.
She contributed Rs.34,000 to the trust fund.
With that fund a plot of land was purchased and the construction begun.
The fund was augmented by her son Seetha Rama Rao from his own contributions as well as from outside donations.
The building was completed at the cost of about Rs. six lakhs.
Ever since the construction of the building it is being let out as a marriage mandapam to be used by 629 the members of the public as such.
the income derived from letting out the Kalyana Mandapam came to Rs.1.06,392.00 in the year ending March 31, 1963.
For the subsequent years also the income was substantial.
The trust was also running a printing press and sizable income was being earned from the press.
The Income tax Officer took the view that the income earned by the trust was taxable.
The contention of the trust that the income derived from the property was being held wholly for religious and charitable purposes and as such was exempt under Section 11 of the Act, was rejected.
On appeal the Appellate Assistant Commissioner reversed the Income tax Officer and held that the Ganga Bai Charities was a charitable trust and its income was entitled to exemption under Section 11 of the Act.
On further appeal by the department, the tribunal upheld the decision of the Commissioner but remitted the assessment to the Income tax Officer to find out as to what extent in each year the trust income or accumulations were expended for charitable purposes.
The Income Tax Appellate Tribunal referred the following question to the High Court under Section 256(1) of the Act: "Whether is has been rightly held that the income of the trust would be entitled to exemption under Section 11 of the Income Tax Act, 1961?" The High Court by its judgment dated December 17, 1980 answered the question in the negative and against the assessee.
These appeals by way of special leave for against the judgment of the High Court.
Section 11(i)(a) of the Act, to the relevant extent, is reproduced hereunder: 11.
Income from property held for charitable or religious purposes (I) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India. .
The above quoted provisions make it clear that a trust has to satisfy 630 the following conditions in order to claim benefit of Section 11(1)(a) of the Act: (1) The income is derived from property held under the trust.
(2) The trust is wholly for charitable or religious purposes.
(3) The exemption is permissible to the extent to which such income is applied to such purposes in India.
The appellant trust has been created under a deed of trust dated May 30, 1978 and as such we have to look into the contents of the trust deed of find out as to whether the conditions precedent for claiming exemption under section 11(1)(a) of the Act are satisfied.
The tribunal and the High Court have also based their conclusions on the interpretation of the trust deed.
It is not disputed that the appellant trust derived the income from the property held under it but the existence of other conditions necessary to claim exemption under Section 11(1)(a) of the Act have been seriously disputed by the Revenue before us.
We have minutely examined the trust deed and have given our thoughtful consideration to its contents.
The relevant paragraphs of the trust deed from where the purposes of the trust can be spelled out are reproduced hereunder: "WHEREAS the Settler, has long cherished a desire to construct and provide a building in Purasawalkam, Madras for the benefit of the Public to be used by them for religious, charitable and/or cultural and social purposes, to secure religious benefit for herself and satisfy a long felt need of the Public in this part of this city.
" "NOW THIS INDENTURE WITHNESSTH that in pursuance of the premises the settlor above named doth hereby declare that the plot of land above mentioned and more particularly described in the schedule below was purchased by her for Rs.24,000 on 9.9.1957 for the express purpose of constructing a building thereon and dedicating the same for use by the public inter alia for Religious, Charitable and Cultural purposes and doth hereby create an irrevocable Trust of the said property for the purposes aforesaid.
" 631 "The settlor further declares that immediately after such purchase she, the settlor relinquished all her rights thereto and dedicated the said plot of land for the use of the public for the purposes above mentioned and put the said plot of land in the possession of her son Shri K. Seetharam Rao, with a direction to construct a building thereon for the use of the public for religious, charitable, social, cultural and other allied purposes." "That the Trust property , more particularly described in the schedule below shall be used for religious, charitable, social, cultural and other allied purposes". "That the Trustee shall have, as the construction proceeds, power to make any suitable alterations in the plan already submitted by him and sanctioned the Corporation of Madras, in such manner as to him may seem necessary and that the Trustee may after the completion of the building let or allow the said building or such portion of portions of the said building for the use of the public for social cultural, religious educational etc., purposes, free or at such rents and such terms and conditions as he thinks proper in the interests of the Trust; for holding and conducting religious discourses, for running schools for the development of Sanskrit learning free or at such rents and on such terms and conditions as the Trustee things reasonable and proper in the interests of the Trust".
On a careful reading of the above quoted paragraphs of the trustdeed it is not possible to cull out in clear terms a specific charitable/religious object to conclude that the trust was set up wholly for charitable or religious purposes.
The "religious, charitable, cultural and social" purposes referred to in the deed are not avowed as the objectives of the trust itself.
What the founder of the trust intended to convey was that the building to be constructed out of the funds provided by her and supplemented from other sources, must be held for the benefit of the public for being used by them for religious, charitable, cultural or social purposes.
We cannot read the contents of above quoted paragraphs as the objects of the trust, these are only the objects of those who wish to put the trust property to use.
On a careful consideration of the language of the trust deed, we are of the view that the intention of the founder was to provide a building for the benefit 632 of the public to be used by them for religious, charitable and/or cultural and social purposes.
It is no where stated in the trust deed that the trust itself has been created for the purpose of carrying out any of such objectives.
The holding and conducting of religious discourses and the running of schools for the development of Sanskrit have also been mentioned from the point of view of the users of the trust property.
These are some of the purposes for which the public can be permitted to use the property.
The crux of the statutory exemption under Section 11(1)(a) of the Act is not the income earned from property held under the trust but the actual application of the said income for religious and charitable purposes.
It is, therefore, necessary to indicate in the trust deed the broad objectives for which the income derived from the property is to be utilised.
There is no mention in the trust deed as to how the income derived from the trust property is to be utilised.
The public uses the building on payment of rent to the trustees.
What is to be done with the money so collected has not been provided in the trust deed.
There is no mandate in the trust deed that the income derived from the trust property is to be spent on religious or charitable purposes.
We are satisfied that on a proper construction of the trust deed it does not meet the requirements of Section 11(1)(a) of the Act.
We find no infirmity in the judgment of the High Court.
We entirely agree with the reasoning and the conclusions reached therein.
Mr. Prasaran invited our attention to paragraphs 5 and 6 of the special leave petition wherein it is stated that Mr. Justice V. Balasubrahmanyan who delivered the judgment in this case on behalf of the two Judge Bench of the High Court had given opinion in this case as special counsel for the Income tax Department and in the said opinion the Department was advised to go to the High Court by seeking a reference.
It was also opined that the trust was ineligible for the exempltion for the reasons which were given therein.
It is further mentioned inthe special leave petition that the petitioner came to know about this aspect only after the judgment was pronounced on December 17, 1980.
None of the parties brought this aspect to the notice of the learned Judge at the hearing or at any time before or after the conclusion of the hearing.
Mr. Prasaran contends that it would be in the interests of justice if the matter be remanded back to High Court for rehearing.
We are not inclined to agree with the learned counsel.
The 633 tribunal pronounced its order on February 28, 1974 and the High Court decided the reference seven years thereafter.
The opinion must have been given immediately after the tribunal 's order and as such due to lapse of time the learned Judge could not have remembered the `routine opinion ' he gave as a busy lawyer several years ago.
The judgment was delivered by the High Court after hearing detailed arguments from both sides.
All the points raised by the assessee have been dealt with and decided on the basis of judicious reasoning.
In any case we have heard mr. K. Prasaran, learned Senior Advocate for the appellant and have examined the trust deed minutely and carefully.
The view taken by the High Court is the only view which can be taken in this case and we affirm the same.
The appeal is, therefore, dismissed with costs.
We quantify the costs as Rs. 10,000.
V.P.R. Appeals dismissed.
| IN-Abs | A trust namely, "Ganga Bai Charities" was created on 13.9.1958, to construct and provide a building for the benefit of the public to be used for religious, charitable cultural and social purposes.
The founder of the trust contributed Rs. 34,000 to the trust fund.
With that fund a plot of land was purchased and the construction of a building was begun.
The fund was augmented by her son from his own contribution as well as from outside donations.
The building was completed at the cost of about Rs. six lakhs and it was let out as a marriage mandapam to be used by the members of the public.
The income derived from letting out the Kalyana Mandapam came to Rs.1,06,392.00 in the year ending March 31, 1963.
For the subsequent years also the income was substantial.
The trust was also running a printing press and seizable income was being from the press.
Income tax proceedings were initiated against the trust.
The appellant trust contended that the income derived from the property was being held wholly for religious and charitable purposes and as such was exempt under Section 11 of the Income Tax Act.
The Income tax Officer holding that the income earned by the trust was taxable, rejected the contention of the trust.
On appeal the Appellate Assistant Commissioner reversed the Income tax Officer 's order, holding that the trust was a charitable trust and its income was entitled to exemption under Section 11 of Act.
627 On further appeal by the department, the Tribunal upheld that decision of the Commissioner but remitted the assessment to the Income tax Officer to find out as to what extent in each year the trust income or accumulation were expended for charitable purposes.
The Income Tax Appellate Tribunal referred the following question to the High Court under Section 256(1) of the Act: "Whether it had been rightly held that the income of the trust would be entitled to exemption under Section 11 of the Income Tax Act, 1961?" The High Court answered the question in the negative and in favour of the department, against which these appeals were filed by the assessee trust by special leave before this Court.
On the question, whether the Gengabai Charities, a trust was entitled to exemption under Section 11(1)(a) of the Income Tax Act, 1961, this Court dismissing the appeals of the assessee trust, HELD : 1.01.
The crux of the statutory exemption under Section 1(1)(a) of the Income Tax Act, 1961 is not the income earned from property held under the trust but the actual application of the said income for religious and charitable purposes.
It is, therefore, necessary to indicate in the trust deed the broad objectives for which the income derived from the property is to be utilised.
There is no mention in the trust deed as to how the income derived from the trust property is to utilised.
The public uses the building on payment of rent to the trustees.
What is to be done with the money so collected has not been provided in the trust deed.
There is no mandate in the trust deed that the income derived from the trust property is to be spent on religious or charitable purposes.
[632 C D] 1.02.
On a careful reading of the trust deed it is not possible to cull out in clear terms a specific charitable/religious object to conclude that the trust was set up wholly for or religious purposes.
The "religious, charitable, cultural and social" purposes referred to in the deed are not avowed as the objectives of the trust itself.
What the founder of the trust intended to convey was that the building to be constructed out of the funds provided by her and supplemented from other sources, must be heed for the benefit of the public for being used by them for religious, charitable, cultural or social purposes.
[631 F G] 628 1.03.
The intention of the founders was to provide a building for the benefit for the benefit of the public to be used by them for religious, charitable and/or cultural and social purposes.
It is nowhere stated in the trust deed that the trust itself has been created for the purpose of carrying out any of such objectives.
The holding and conducting of religious discourses and the running of schools for the development of Sanskrit have also been mentioned from the point of view of the users of the trust property.
These are some of the purposes for which the public can be permitted to use the property.
[631H 632B] 1.04.
On a proper construction of the trust deed it does not meet the requirements of Section 11(1)(a) of the Act.
[632E]
|
Civil Appeal No. 3047 of 1992.
From the Judgement and Order dated 30.7.1984 of the Patna High Court in Civil Writ Jurisdiction Case No. 373 of 1977.
M.L. Verma and S.K. Sinha for the Appellant.
A.K. Srivastava for the Respondents.
The Judgement of the Court was delivered by SHARMA, J.
The question arising in this case is whether a matter, if it comes within the scope of section 40 of the Bihar and Orissa Co operative Societies Act, 1935 (hereinafter referred to as the Act) has to be excluded from the purview of Section 48 of the Act.
Special leave is granted. 3.
The facts relevant for the decision of this appeal are in a short 894 compass.
The respondent No.1 was Depot Manager under the appellant Marketing Union Limited and during his tenure as such, a shortage of coal was detected.
A claim was accordingly made for the said loss by the appellant and a reference was made to the Assistant Registrar, Co operative Societies respondent No.3, under Section 48 of the Act.
The Assistant Registrar absolved the respondent No.1 from the alleged liability and an appeal was filed by the appellant under Section 48(6) of the Act before the Joint Registrar, Co operative Societies, respondent No.2, who are accepted the appellant 's case, rejected the defence and made an award accordingly.
This was challenged before the Patna High Court by a writ application under Article 226 of the Constitution of India.
The High Court held that since the matter was covered by the provisions of Section 40, Section 48 could not apply.
Consequently the award was held to be illegal.
So far section 40 was concerned, it was pointed out that the claim had to be rejected on the ground of limitation.
Thus without considering the other questions raised by the parties, the High Court allowed the writ petition by the impugned judgement which is under challenge in the present appeal.
It has been contended on behalf of the appellant that the provisions of Section 48 are wide enough to embrace the dispute which has been the subject matter of the present case and they cannot be given a narrow interpretation so as to exclude their application to cases which may also be covered by Section 40.
In reply reliance has been placed on behalf of the respondent No.1 on the decision in Purnea Ministerial Government Officer 's Co operative Society Ltd.v.
Abdul Quddus, (1969) B.L.J.R. Vol.
11 969 which has found favour with the High Court.
Section 40 pertaining to surcharge, provides that if as a result of an audit or inquiry it appears to the Registrar that any person who has taken part in the organisation or management of the society or any past or present officer of the society has either made a payment contrary to law or has been guilty of misappropriation or of having committed similar acts detailed therein, the Registrar may inquire into the matter and make an order requiring him to contribute an appropriate sum by way of compensation to the assets of the society.
The second Proviso to sub section (1) of the said section says that no such order shall be passed in respect of any act or ommission which had occurred more than six years earlier.
The provisions of sub section (1) of Section 48 (omitting the explanations which are not relevant for the present issue) dealing with Disputes are in the 895 following terms: "(1) If any dispute touching the business of a registered society (other than a dispute regarding disciplinary action taken by the society or its managing committee against a paid servant of the society) arises (a) amongst members, past members, persons claiming through members, past members or deceased members, and sureties of members, past members or deceased members, whether such sureties are members or non members; or (b) between a member, past member, persons claiming through a member, past member or deceased member, or sureties of members, past members or deceased members, whether such sureties are members or non members and the society, its managing committee or any officer, agent or servant of the society; or (c) between the society or its managing committee and any past or present officer, agent or servant of the society; or (d) between the society and any other registered society; or (e) between a financing bank authorised under the provisions of sub section (1) of Sec. 16 and a person who is not a member of a registered society; such dispute shall be referred to the Registrar: Provided that no claim against a past member or the estate of a deceased member shall be treated as a dispute if the liability of the past member or of the estate of the deceased member has been extinguished by virtue of Sec. 32 or Sec. 63".
The claim of the appellant against the respondent No.1 is clearly covered by clause (c) of sub section (1) above and, therefore, could have been validly referred to the Registrar under Section 48.
The argument, however, is that since the matter is covered by Section 40, Section 48 should be held to be inapplicable.
The High Court agreed and made the following observations: 896 "It is well known proposition of law that when a matter falls under any specific provision then if must be governed by that provision and not by general provisions (Generalia specialibus non derogant)".
The High Court has in its judgement assumed that whenever a specific remedy is made available in law the other remedy, more general in nature, necessarily gets excluded.
Validity of plural remedies, if available under the law, cannot be doubted.
If any standard book on the subject is examined, it will be found that the debate is directed to the application of the principle of election, where two or more remedies are available to a person.
Even if the two remedies happen to be inconsistent,they continue for the person concerned to choose from, until he elects one of them, commencing an action accordingly.
In the present case there is no such problem as no steps under Section 40 were ever taken by the appellant.
The provisions of Section 48 must, therefore, be held to be available to the appellant for recovery of the loss.
7.Our view that a matter which may attract Section 40 of the Act will continue to be governed by Section 48 also if the necessary conditions are fulfilled, is consistent with the decision of this Court in Prem Jeet Kumar V. Surender Gandotra and others, [1991] Supp. 2 S.C.C. 215, arising under the Delhi Co operative Societies Act, 1972.
The two Acts are similar and Sections 40 and 48 of the Bihar Act and Sections 59 and 60 of the Delhi Act are in pari materia.
The reported judgement followed an earlier decision of this Court in Pentakota Srirakulu vs Co operative Marketing Society Ltd.; , We accordingly hold that the High Court was in error in assuming that the application of provisions of Section 48 of the Bihar Act could not be applied to the present case for the reason that Section 40 was attracted.
So far the question of limitation is concerned it is true that as in the Delhi Act, a period of six years was fixed under the Bihar Act also by second Proviso under Section 40 (1), which reads thus: "Provided further that no order shall be passed under this sub section in respect of any act or omission mentioned in clauses (a), (b), (c) or (d) except within six years of the date on which such act or omission 897 occurred.
" It will be observed that the six years rule of limitation, however, is limited for the purpose of section 40, and cannot govern the reference under section 48.
The relevant provision of section 48 is to be found in the Proviso to section 48(1) which has been quoted above.
For determining its impact on the present case it is necessary to examine the Proviso closely.
Firstly, both the Proviso and section 63 of the Act are concerned only where the claim is against a member.
Even if the Proviso be assumed to govern a dispute between the society and its past or present officer or servant it cannot come to the aid of the present respondent No.1 because he was dismissed from service on 15.10.1966 and he was directed to deposit the disputed amount within 30 days therefrom.
The dispute was referred for adjudication under section 48 on 12.12.1966 and the reference was registered as Award Case No. 25 of 1968 on 03.08.1968.
Thus all these steps were taken within a period of two years.
No reliance, therefore, can be placed on either section 32 or 63.
The case of Putnea Ministerial government Officers ' Co operative Society Ltd. (Supra) is clearly distinguishable.
The respondent there was a member of the Society in question and had taken a loan which was the subject matter of the dispute.
As was pointed out by the High Court the claim had stood barred by limitation and, therefore, it was held that the reference was incompetent in view of the Proviso to section 48(1).
The High Court in the present case was, in the circumstances, not entitled to rely on this decision and its conclusions must be set aside as being erroneous in law.
However, since in the judgement it is stated that several other questions were also raised on behalf of the respondent No.1 (who was the writ petitioner) which remained undecided, the case requires reconsideration by the High Court on the remaining points.
Accordingly the impugned judgement is set aside and the writ petition is remitted to the High Court for fresh decision in accordance with the observations in the present judgement.
The appeal is allowed but in the circumstances without costs.
U.R. Appeal allowed.
| IN-Abs | During the tenure of respondent 1 as Depot Manager of the Bihar State Cooperative marketing Union Ltd., a shortage of coal was detected.
The appellant Cooperative Union made a claim for the loss, and a reference was made to the Assistant Registrar, cooperative societies under section 48 of the Bihar and Orissa Cooperative Societies Act 1935.
section 48(1)(c) deals with disputes between the Society.
and a past or present officer or agent of the Society.
Section 40 provides for investigation by the Registrar where upon an audit or enquiry such officer has been found guilty of misappropriation or similar acts.
The Assistant Registrar in an enquiry under Section 48 absolved respondent 1.
This was reversed by the Joint Registrar and an award made accordingly.
The Patna High Court in a writ application under Article 226 by respondent 1 held that since the matter was covered by Section 40, Section 48 could not apply and set aside the award.
The High Court relied on the maxim generalia specialibus non derogant.
The claim under section 40 was rejected on the ground of limitation under second proviso to Section 40 which prescribe a period of six years.
Allowing the appeal, this Court, HELD : 1.
Validity of plural remedies, if available under the law, cannot be doubted.
Even if the two remedies are inconsistent, they continue for the person concerned to choose from, until he elects one of them, commencing an action accordingly.
A matter which may attract Section 40 will continue to be governed by Section 48 also if the necessary conditions 893 are fulfilled.
In the present case no steps under Section 40 were ever taken by the appellant.
The provisions of Section 48 are available to the appellant for the recovery of the loss.
[896C D] Prem Jeet Kumar vs Surender Gandotra & Ors., [1991] Supp.
2 SCC 215 and Pentakota Srirakulu vs Co operative Marketing Society Ltd., ; , followed.
The claim of the appellant against respondent 1 is clearly covered by Section 48(1)(c) and therefore was validly referred to the Registrar under Section 48.
[895G] 3.
The six year rule of limitation in Proviso under Section 40(1) is limited for the purpose of Section 40, and cannot govern a reference under Section 48.
Even otherwise, on facts the claim is not barred by limitation.
[897B] Purnea Ministerial Government Officers ' Co operative Society Ltd. vs Abdul Quddus, , distinguished.
Matter remitted to the High Court for decision on the remaining issues.
[897F]
|
Civil Appeal Nos.
2593 2599 of 1980.
From the Judgements and Orders dated 23.5.79, 30.5.79, 25.6.79, 26.6.79 and 9.7.1979 of the Kerala High Court in M.F.A. Nos. 69, 76, 80, 81, 83, 89 and 75 of 1977.
A.T.M. Sampath for the Appellant in C.A. No. 2593/80.
V.A. Bobde, O.C. Mathur, Ms. Meera and D.N. Mishra for the Appellant in C.A. No. 2594 99/80.
V.A. Bobde, O.C. Mathur, Ms. Meera and D.N> Mishra for the Respondent in C.A. No. 2593/80.
N.N. Goswamy, V.C. Mahajan, Hemant Sharma and Mrs. Anil Katiyar for the Respondent.
The Judgements of the Court were delivered by SHARMA, J.
The learned counsel for the respondent has, in support of his stand, placed reliance on several decisions of this Court and the High 912 courts in which the notification in identical terms has been construed in the way as is suggested on behalf of the Corporation.
Although Mr. Bobde, learned counsel for the appellant has advanced an argument, which on the face of it, appears to be attractive, I think that in view of the consistent interpretation of the notification which has been followed in the country, the question should not be reopened for fresh consideration.
Accordingly, I agree that all these appeals should be dismissed but without costs.
MOHAN, J. These appeals can be dealt with by a common judgement since the question of law to be decided is one and the same.
It is enough if we note the facts in Civil Appeal No. 2599 of 1980.
The appellant is a company incorporated under the Companies Act.
It has its registered office at Jew Town in Mattancherry.
It is engaged in the business of clearing and forwarding at the Port of Cochin situated in Willingdon Island.
It is authorised to transact its business at the Cochin Custom House under the terms of Section 202 of the Sea Customs Act read with the Rules made thereunder and a licence was issued under the said provisions.
The appellant received a notice dated 3.1.75 enclosing certain notification whereby the Employees State Insurance Act (hereinafter referred to as the Act) was extended to certain classes of establishments specified in the Schedule wherein 20 or more persons are employees or were employed during that period.
The appellant replied that it did not fall under the purview of the said notification.
Therefore, the appellant was not liable to comply with any of the provisions of the Act.
Another letter dated 8.9.75 was received by the appellant calling it upon to furnish certain details.
This was replied to by a letter dated 20.9.75 whereunder the details were furnished.
Thereafter a notice dated 7.11.75 with which were enclosed certain printed forms, was received by the appellant.
The appellant replied on 18.11.75 denying liability to pay any contribution under the Act.
The stand of the appellant was that the company does not come within the notification dated 18.9.74 as the appellant was not a shop and was carrying on business of clearing and forwarding at the Cochin Port.
In reply to the said letter the appellant received a letter dated 9.12.75 stating that the Insurance Inspector who visited the appellant found 20 persons employed in the shop.
It was functioning as shipping, clearing and forwarding agents.
The appellant served the customers.
Therefore, it was a shop within the 913 dictionary meaning of the term and called upon the appellant to submit the returns.
Contending that the appellant does not render any service to customers at its office, it was merely carrying on clearing and forwarding business by processing the documents at Custom House, no service being rendered at the appellant 's office establishment, it was urged that it could not be called a shop within the dictionary meaning.
An application was moved under Section 75 of the Act before the Employees, Insurance Court, Calicut to decide the dispute and to hold that the appellant was not a shop within the purview of the Act and, therefore, the Act itself was inapplicable.
Objections were preferred on behalf of the Regional Director, Employees State Corporation that in view of the notification dated 18.9.74 supplemented by the other notifications dated 2.12.74 and 22.3.75, the appellant 's business would fall within the ambit of the said notifications.
The Government of Kerala issued those notifications with a view to extend benefits to the employees working in other sections of organized labour such as shops and establishments.
The Employees Insurance Court by a judgement dated 29.1.77 in E.I.C. No. 1/76 held that the appellant would be covered with effect from six months after 21.12.74.
In the result, the appellant was brought within the notification.
Against this order, M.F.A. No. 75 of 1977 was preferred to the High Court of Kerala.
A Division Bench by its judgement dated 25.6.79, following its earlier judgement held that the term "shop" as understood in the scheme of the Act is not merely a place where the business of purchase and sale takes place but it is a place where there is commercial activity arising from customer service.
In that sense, the establishment of the appellant has to be understood to fall within the purview of the term "shop".
Accordingly the appeal was dismissed.
Hence, the civil appeals, leave having been granted by an order dated 3.11.80.
Mr. Bobde, learned counsel for the appellants would raise the following submissions.
The Act primarily applies to factories.
Of course, the Act could be extended to other establishments by means of a notification.
In the instant case, a notification dated 16.9.74 catalogues six establishments one of which 914 is shop.
Though "shop" would take within it other establishments like hotels or restaurants yet they have come to be specifically mentioned.
In view of that enumeration of other establishment in contradiction to shops the word "shop" must be held to relate to a place where commercial activity of buying and selling merchandise takes place otherwise the enumeration of other establishment becomes meaningless.
As to what is the meaning of "shop" could be gathered from Wharton 's Law Lexicon 14th Ed. 929 and Words and Phrases Legally Defined 2nd Ed. 73.
The next submission of the learned counsel is in view of the fact that the notification specifically enumerates the other establishments, the intention has been clearly brought out not to give a wider meaning of the term "shop" as otherwise the term "shop" itself would be enough to cover other establishments like hotels, restaurants, cinema etc.
From this point of view, the activity carried on by the appellant merely processing the document at the customs clearing house without rendering any service to the customers at the appellant 's office or establishment cannot be said to fall within the meaning of "shop".
Therefore, the approach of the High Court and the authorities would require to be set aside.
It must be held that the notification has no application to the appellant 's business.
In opposition to this, Mr. Goswamy, learned counsel appearing on behalf of Employees, State Insurance Corporation would submit that the word "shop" is wide in its amplitude.
It means a place where any kind of commercial activity is pursued and where services are rendered to the customers.
In so far as the appellant is carrying on the business of clearing and forwarding and rendering service which are part of carrier 's job certainly it will be a shop.
It caters to the needs of exporters and importers.
It is a systematic commercial activity or an economic activity.
Hence, it would be a shop within the meaning of the notification.
Merely because every establishment may fall within the scope of the term "shop" as enumerated, it does not, in any way, restrict the meaning of the word "shop".
The object of enumeration is to envelop as many establishments as possible without leaving room for any doubt, where, therefore, the word "shop" alone would be enough to cover the activities of the appellant, it is not necessary to further enumerate and specifically bring within the scope of the notification the activities of the appellant.
Regard must be had in 915 this connection that this is a social welfare legislation.
This Court had always taken the view that as far as permissible the endeavour of the Court must to be cover those employees than to deny the benefit of these provisions.
In support of these submissions the cases in Hindu Jea Band Jaipur vs Regional Director, Employees ' State Insurance Corporation, Jaipur etc.
; , and M/s. International Ore & Fertilizers (India) Pvt. Ltd. vs Employees ' State Insurance Corporation; , are cited.
Thus it is submitted that no exception could be taken to the impugned judgement.
Mr. A.T.M. Sampath, learned counsel appearing for the appellant adopts the arguments of Mr. Bobde while the respondent opposes in the same vein.
The Employees State Insurance Act is an Act to provide certain benefits to employees in case of sickness, maternity and employment injury and make provision for certain other matters in relation thereto.
The Act is an outcome of a policy to provide remedy for the widespread evils arising from the consequences of national poverty.
Indeed, it is a piece of social security.
Under Section 1 (4), in the first instance, it is made applicable to all factories.
The Act envisages the extension of benefit to the employees in other establishments or class of establishments , industrial, commercial, agricultural or otherwise.
The extension of benefit is to be done by means of a notification by the appropriate Government.
Thus the benefits conferred by the Act cover a large area of employees than what the Factories Act and the akin legislations intended.
The conclusion is inescapable that it is a welfare legislation.
The endeavour of the Court should be to place a liberal construction so as to promote its objects to which a reference has been made.
In the instant case, the impugned notification runs as follows: "GOVERNMENT OF KERALA No. 22877/E2/73/LBR LABOUR (E) DEPARTMENT TRIVANDRUM, DT.
18.9.74 916 NOTIFICATION S.R.O.
In exercise of the powers conferred by sub section (5) of Section 1 of the (Central Act 84 of 1948), the Government of Kerala, in consultation with the Employees ' State Insurance Corporation and with the approval of the Central Govt.
hereby given notice of its intention to extend the provisions of the said Act to the clauses of the Establishments specified in the Schedule annexed hereto, on or after 29.3.1975.
____________________________________________________________ Description of establishments Areas in which the establis hment are situated ____________________________________________________________ The following establishments 1.
Trivandrum, Navaikulam where on twenty or more persons and Pazhayakunnumel (Kil are employed for wages on any day imanoor) in Trivandrum of the preceding twelve months, District.
namely.
Quilon, Kundara, Chatha nnur, Kottaraka, Punalur an Sast hamcotta in Quilon District.
(i) Hotels; 3.
Alleppey, Kayamkulam and Shertailai in Alleppey District.
(ii) Restaurants; 4.
Kottayam town in kottayam District.
(iii) Shops 5.
Ernakulam and Cochin in Ernakulam District.
(iv)Road Motor Transport 6.
Trichur town in Trichur establishment; (v) Cinema including preview 7.
Palghat town in Palghat theatres; District.
(iv)Newspaper establishments 8.
Kozhikode town in as defined in Section 2 Kozhikode District and (d) of the Working Journalists (Conditions of Service) 9.
Cannanore town, Tellich and Miscellaneous Provisions erry and Baliapatam in Act, 1955 (5 of 1955).
Cannanore District in the State of Kerala.
By order of the Governor, Sd/ U. Mahabala Rao, Secretary to Government" 917 As it could be seen, six kinds of establishments wherein 20 or more employees are or were employed for wages on any day of the preceding 12 would months fall within the scope of the notification.
Item 3 says "shops".
Therefore, the argument is while "shop" could cover the other establishments like hotels or restaurants in view of the specific enumeration the activities of clearing and forwarding carried on by the appellant unless specifically enumerated cannot be brought within the word "shop".
This argument takes us to the meaning of "shop".
Wharton 's Law lexicon 14th Ed.
Page 929: "Shop a place where things are kept for sale, usually in small quantities, to the actual consumers.
By Shops Act, 1912, s.19, "shop" includes any premises where any retail trade or business is carried on: retail trade or business ' includes the business of a barber or hairdresser, but not the sale of programmes, etc., at places of amusement.
" Words and Phrases Legally Defines 2nd Ed. 73: "Shop" includes dwelling house and warehouse, or other place of business, or place where business is transacted.
"Shop" includes any premises, and any vehicle, stall or place other than premises.
on or in which any retail trade or business is carried on " It has also come up for consideration in the rulings of this Court while interpreting a similar notification.
In Hindu Jea Band, Jaipur (supra) it was held thus: "The first contention urged in support of the petition is that since the petitioner was not selling any goods in the place of its business but was only engaged in arranging for musical performances on occasions such as marriages etc.
its business premises cannot be called a "shop".
We do not agree with the narrow construction placed by the petitioner on the expression "shop" which appears in the notification issued under section 1(5) of the Act which is a beneficent legislation.
The word shop has not been defined in the Act.
A shop is no doubt an 918 establishment (other than a factory) to which the Act can be extended under section 1(5) of the Act provided other requirement are satisfied.
In Collins English Dictionary the meaning of the word shop is given thus: "(i) a place esp.
a small building for the retail sale of goods and service and (ii) a place for the performance of a specified type of work; workshop.
" It is obvious from the above meaning that a place where services are sold on retail basis is also a shop.
It is not disputed that the petitioner has been making available on payment of the stipulated price the services of the members of the group of musicians employed by it on wages.
We, therefore, hold that the place where the petitioner has been carrying business is a shop to which the Act is applicable by virtue of the notification referred to above.
The first contention, therefore, fails" Again, in M/s. International Ore & Fertilizers (India) Pvt. Ltd. vs Employees ' State Insurance Corporation ; at 206 the following useful observations are found: "The word "shop" is not defined in the Act or in the notification issued by the State Government.
According to the Shorter Oxford English Dictionary the expression "shop" means "a house or building where goods are made or prepared for sale and sold".
It also means a "place of business" or place where one 's ordinary occupation is carried on".
In ordinary parlance a "shop" is a place where the activities connected with the buying and selling of goods are carried on.
The evidence produced in the case shows that the petitioner is carrying on its business at its business premises in Secunderabad.
At that place the petitioner carries on the commercial activity facilitating the emergence of contracts of sale of goods between its foreign principals and the State Trading Corporation/Minerals and Metals Trading Corporation of India.
It arranges for the unloading of the goods under its supervision and for the survey of the goods despatched by its foreign principals at the ports on behalf of its foreign principals and on the goods being delivered to the Central Government it collects the price payable by the government and remits it to its foreign principals.
All these activities are directed and controlled from its. 919 premises at Secunderabad.
It is thus clear that the activities carried on by the petitioner constitute trading activities although the goods imported from abroad are not actually brought to the said premises and delivered to the purchaser there.
In our opinion it is not actually necessary that the delivery of the goods to the purchaser should take place at the premises in which the business of buying or selling is carried on to constitute the said premises into a "shop".
The delivery of the goods sold to the purchaser is only one aspect of trading activities.
Negotiation of the terms of sale, carrying on of the survey of the goods imported, arranging for the delivery of the goods, sold, collection of the price of the goods sold etc.
are all trading activities.
The premises where the business is carried out by the petitioner is undoubtly a shop as the activities that are carried on there relate only to the sale of goods which are imported to India.
The petitioner acts as the agent of its foreign principals who are the sellers.
The petitioner directs and controls all the activities from the premises in question.
If orders are received at a place which ultimately fructify into sale and the resulting trading activity is directed from there that place comes to be known as a "shop".
In our view the Employees ' Insurance Court placed a very narrow interpretation on the expression "shop" while upholding the contention of the petitioner by confining "shop" to a place where goods are actually stored and delivered pursuant to a sale.
We agree with the decision of the High court that while construing a welfare legislation like the Act and the notification issued thereunder a liberal construction should be placed on their provisions so that the purpose of the legislation may be allowed to be achieved rather than frustrated or stultified.
" In this case, the argument advanced on behalf of the appellant is slightly different, namely, other kinds of establishments which can easily fall within the definition of "shop" have been enumerated.
Hence, a specific enumeration, so as to include the appellant 's business activity, is to be insisted upon.
In our considered view, this argument cannot be accepted.
First of all, merely because other establishments which are akin to shop are enumerated, it does not, in any manner, oblige us to give a narrow meaning to the word "shop" nor does it any way dilute the meaning of 920 "shop".
As rightly contended by the learned counsel for the respondent, the object is to envelope as many establishments as possible without leaving any room for doubt.
That is precisely what the notification intends to do.
The appellant is carrying on stevedoring, clearing and forwarding operations.
Clearing the documents, even it be in the custom house, is the carrier 's job.
It cannot be gainsaid that the appellant is rendering service to cater the needs of exporters and importers and others who want to carry the goods further.
Therefore, it is a shop carrying on a systematic economic or a commercial activity.
This would be enough to bring the appellant without specifically enumerating the specific activities carried on by the appellant.
Merely because shop has been enumerated along with other similar establishment we do not think any further specific enumeration is necessary to cover the appellant.
Thus we reject the contentions raised on behalf of the appellant.
The appeals stand dismissed.
There shall be no order as to costs.
T.N.A. Appeals dismissed.
| IN-Abs | The Government of Kerala issued a Notification dated 18.9.1974 under Section 1 (5) of the extending the provisions of the Act to six kinds of establishments viz. Hotels, Restaurants, Shops, Road Transport Motor Establishments, Cinemas and Newspaper Establishments.
The appellant Company, carrying on the business of clearing and forwarding at the port of Cochin, received notice for payment of its contribution under the Act.
Denying its liability to pay, it filed an application before the Employees ' Insurance Court under Section 75 of the Act, contending that the Notification was not applicable to it because its establishment was not a shop, but the same was dismissed.
On appeal a Division Bench of the High Court held that the establishment of the appellant falls within the purview of the term `shop '.
In appeals to this Court it was contended on behalf of the appellant that (1) though `shop ' would take within it other establishments like hotels or restaurants yet they have come to be specifically mentioned.
In view of that enumeration of other establishment in contradistinction to shops the 910 word `shop ' must be held to relate to a place where commercial activity of buying and selling merchandise takes place otherwise the enumeration of other establishment becomes meaningless; (2) in view of the fact that the notification specifically enumerates the other establishments, the intention has been clearly brought out not to give a wider meaning of the term `shop ' as otherwise the term `shop ' itself would be enough to cover other establishments like hotels, restaurants, cinema etc.
From this point of view, the activity carried on by the appellant merely processing the document at the customs clearing house without rendering any service to the customers at the appellant 's office of establishment cannot be said to fall within the meaning of `shop '.
Dismissing the appeals, this Court HELD: Per Sharma, J.
In view of the consistent interpretation of the notification which has been followed in the country, the question should not be reopened for fresh consideration.
[912 B] Per Mohan, J. (For Himself and Venkatachala, J.) Concurring: 1.
The Employee 's State Insurance Act is an Act to provide certain benefits to employees in case of sickness, maternity and employment injury and makes provision for certain other matters in relation thereto.
Under Section 1(4), in the first instance, it is made applicable to all factories.
But the Act envisages the extension of benefit to the employees in other establishments or class of establishments, industrial commercial, agricultural or otherwise.
The extension of benefit is to be done by means of a notification by the Appropriate Government.
Thus the benefits conferred by the Act cover a large area of employees than what the Factories Act and the akin legislations intended.
The conclusion is inescapable that it is a welfare legislation.
The endeavour of Court should be to place a liberal construction so as to promote its object.
The object is to envelop as many establishments as possible without leaving any room for doubt.
That is precisely what the Notification intends to do.
[915D, E,F,920 A] 2.
The Notification catalogues six establishments one of which is `shop '.
Merely because other establishments which are akin to shop are enumerated, it does not, in any manner, oblige the Court to give a narrow 911 meaning to the word `shop ' nor does it any way dilute the meaning of `shop '.
The appellant is carrying on stevedoring, clearing and forwarding operations.
Clearing the documents, even it be in the custom house, is necessary for the export or import of goods.
These services form part of the carriers job.
It cannot be gainsaid that the appellant is rendering service to cater the needs of exporters and importers and others who want to carry the goods further.
Therefore, it is a shop carrying on a systematic economic or a commercial activity.
This would be enough to bring the appellant without specifically enumerating the specific activities carried on by the appellant.
[913H, 919H, 920A B] Hindu Jea Band, Jaipur.
vs Regional Director Employees ' State Insurance Corporation, Jaipur, ; and M/s International Ore & Fertilizers (India) Pvt. Ltd. vs Employees ' State Insurance Corporation; , , relied on.
Wharton 's Law Lexicon, 14th Edn. 929 and Words and Phrases Legally defined, 2nd Edn. 73, referred to.
|
ivil Appeal No. 3284 of 1992 From the Judgement and Order dated 18.2.1992 of the Delhi High Court in Civil Writ Petition No. 2259 of 1991.
R.K. Garg, K.L. Vohra, Rajeev Sharma and D.K. Garg for the Appellants.
Arun Jaitley, V.B. Saharya, Ashok Bhan and B.K. Prasad for the Respondents.
The Judgement of the Court was delivered by SHARMA,J. Heard the learned counsel for the parties.
Special leave is granted.
The respondents in this appeal have successfully invoked the jurisdiction of the High Court under Article 226 of the Constitution for enforcement of a private right to immovable property against the appellants who are two brothers and who are resisting the claim.
The question is as to whether the writ jurisdiction in the High Court is available for the enforcement of such a right claimed by and against private individuals.
906 3.
The dispute relates to a house property in Delhi.
A suit for eviction of the appellants from the building is pending in the trial court.
According to the case of the respondent No. 1, who is the owner of the property, she had let out the same to one Shri B.K. Pandey who later illegally handed over the possession thereof to the appellant no.1.
According to the further case of the respondent, the portion of the said house property which is subject matter of the present case is beyond the purview of the pending suit.
The occasion for initiating the present proceeding with respect to this portion arose, it is said, on account of the high handedness of the appellants who illegally trespassed beyond the area which is the subject matter of the pending suit, and indulged in several illegal activities.
In other words, the appellants are trespassers and are guilty of mischievous conduct.
However, instead of filing a suit in the civil court or making an appropriate prayer for amendment of her plaint in the pending suit, she through respondent no.2 holding power of attorney, approached the High Court directly by a writ petition under Article 226 for issuance of appropriate direction restraining the appellants from disturbing the lawful possession of the respondents.
The Delhi Administration and the Commissioner of Police, Delhi, were also impleaded as parties with a prayer that appropriate order should be issued against them also and they should be directed not to register any further false and vexatious complaint against them at the instance of the appellants.
It is her case that the appellants have been getting undue police help and are being encouraged to commence frivolous criminal cases against respondent no.1 and her agent.
The appellants denied the allegations of fact made against them and also challenged the maintainability of the writ petition.
Although the fact that a suit between the parties was already pending in the civil court was known to the High Court, it proceeded to pass a short order stating: "There is already a civil suit pending between the parties.
Except the prayer in regard to access to the backyard, no other relief can be granted in this writ petition.
We direct respondents 3 and 4 to remove the grill for access 907 to the backyard in the presence of the police and representatives of the petitioners on Sunday, 23rd February 1922 at 11.00 a.m. so that the access of the petitioner to the servants quarters is not stopped." 6.
Mr. Arun Jaitley, the learned counsel appearing on behalf of respondent No. 1 has supported the impugned judgement on the ground that prayer for issuing a direction against Delhi Administration and Commissioner of Police who were respondent nos.
1 and 2 was also made.
It has to be appreciated that the present appellants were respondent nos.
3 and 4 before the High Court; and the High Court has by the impugned order, considered it fit to allow the prayer of the respondents against them for removal of the grills for access to the backyard.
According to the stand of the landlord respondent, since the police were taking a partisan attitude against her, the filing of a writ petition became necessary.
We are unable to follow this argument.
There is no doubt that the dispute is between two private persons with respect to an immovable property.
Further, a suit covering either directly a portion of the house property which is in dispute in the present case or in any event some other parts of the same property is already pending in the civil court.
The respondent justifies the step of her moving the High Court with a writ petition on the ground of some complaint made by the appellants and the action by the police taken thereon.
We do not agree that on account of this development, the respondent was entitled to maintain a writ petition before the High Court.
It has repeatedly been held by this court as also by various High Courts that a regular suit is the appropriate remedy for settlement of disputes relating to property rights between private persons and that the remedy under Article 226 of the constitution shall not be available except where violation of some statutory duty on the part of a statutory authority is alleged.
And in such a case, the court will issue appropriate direction to the authority concerned.
If the grievance of the respondent is against the initiation of criminal proceedings, and the orders passed and steps taken thereon, she must avail of the remedy under the general law constitutional jurisdiction to be used for deciding disputes, for which remedies, under the general law, civil or criminal, are available.
It is not intended to replace the ordinary remedies by way of a suit or application available to a litigant.
908 The jurisdiction is special and extra ordinary and should not be exercised casually or lightly.
We, therefore, hold that the High Court was in error in issuing the impugned direction against the appellants by their judgement under appeal.
The appeal is accordingly allowed, the impugned judgement is set aside and the writ petition of the respondents filed in the High Court is dismissed.
There will be no order as to costs.
G.N. Appeals allowed.
| IN-Abs | During the pendency of a suit for eviction of the appellants from the property of Respondent No.1, the appellants were alleged to have trespassed beyond the area which was the subject matter of the suit and indulged in several illegal activities.
Thus according to Respondents, the appellants were guilty of mischievous conduct.
The Respondents instead of filing a suit in the Civil Court or making appropriate prayer for amendment of the plaint in the pending suit field a Writ Petition before the High Court for issuance of appropriate direction retraining the appellants from disturbing the lawful possession of the respondents.
The Administration and Commissioner of Police were also impleaded as parties and a direction sought against them not to register any further false and vexatious complaints against the Respondents since undue Police help to the appellants was apprehended.
The High Court gave certain directions to the appellants as regards Respondents ' access to the backyard.
The present appeal by special leave, is against the said orders of the High Court.
On the question whether the Writ jurisdiction of High Court would be available for enforcement of a private right to immovable property claimed by and against private individuals: Allowing the appeals, this Court HELD: 1.
A regular suit is the appropriate remedy for settlement 905 of disputes relating to property rights between private persons and that the remedy under Article 226 of the Constitution shall not be available except where violation of some statutory duty on the part of statutory authority is alleged.
And in such a case, the Court will issue appropriate direction to the authority concerned.
[907 E, F] 2.
If the real grievance of Respondent No.1 is against the initiation of criminal proceeding and the orders passed and steps taken thereon, she must avail of the remedy under the general law including the Criminal Procedure Code.
The High Court cannot allow the constitutional jurisdiction to be used for deciding disputes, for which remedies under the general law, civil or criminal, are available.
It is not intended to replace the ordinary remedies by way of a suit or application available to a litigant.
The jurisdiction is special and extra ordinary and should not be exercised casually or lightly, [907 F H]
|
ition (Civil) No. 677 of 1991.
(Under Article 32 of the Constitution of India) WITH Civil Appeal Nos.400 403 of 1992.
Shanti Bhushan, Somnath Chatterjee, Biswarup Gupta, Bhaskar Gupta, G.L. Sanghi, Arun Jaitley, Dr. Debi Pal, Anil Diwan A.K. Sen, Harish N. Salve, H.S. Prihar, Kuldip section Parihar, Gopal Subramanium, Abhijit Chatterjee, B. Lahiri, J.B. Dadachanji, S.Sukumaran, R.F. Nariman, G.S. Chatterjee, Ms. Sumita Chatterjee, Ms. Mridula Ray, Arun Madan, Ms. Priya Hingorani, Ms. Radha Rangaswamy, C.N. Sreekumar, Rathin Das, Ranjit Ghose, Sushil Kumar Jain, Sudhanshu Atreya and Dr. A.M. Singhvi for the appearing parties.
The Judgment of the Court was delivered by KASLIWAL, J.
Special Leave granted in all the petitions.
This litigation is an upshot of the earlier case Reserve Bank of India vs Peerless General Finance and Investment Company Ltd. and Others, ; decided on January 22,1987.
In 1978 th Prize Chits and Money Circulation Scheme (Banning) Act, 1978 (in short `the Banning Act, was enacted `to ban the promotion or conduct of prize chits or money circulation schemes and for matters connected therewith or incidental `hereto. ' The question which arose in the above case was whether the Endowment Scheme piloted by the Peerless General Finance and Investment Company Ltd., (hereinafter in short `the Peerless ') fell within the definition of `Prize Chits ' within ' the meaning of Sec. 2(e) of the above Banning Act.
By a letter dated July 23, 1979, the Reserve Bank of India pointed out to the Peerless that the schemes conducted by it were covered by the provisions of the Banning Act which had come into force w.e.f. December 12, 1978.
On September 3, 1979 the Peerless filed a writ petition in the Calcutta High Court for a declaration that the Prize Chits Banning Act did not apply to the business carried on by the Peerless.
A similar writ petition was filed questioning a notice issued by the Madhya Pradesh Government on the same lines as that issued by the West Bengal 419 Government.
A learned Single Judge of the High Court dismissed both the writ petitions but appeals preferred by the Peerless under the Letters Patent were allowed by a Division Bench of the Calcutta High Court.
It was declared that the business carried on by the Peerless did not come within the mischief of the Prize Chits Banning Act.
Against the judgment of the Division Bench of the Calcutta High Court, the Reserve Bank of India, the Union of India and the State of West Bengal preferred appeals before this court.
The question considered in the above case was ``Is the endowment scheme of the Peerless Company a Prize Chit within the meaning of Section 2(e) of the Prize Chits and Money Circulation Schemes (Banning) Act? ' ' This court held that section 2(e) does not contemplate a scheme without a prize and, therefore, the Endowment Certificate Scheme of the Peerless Company was outside the Prize Chits Banning Act.
Appeals filed by the Reserve Bank of India, the Union of India and the State of West Bengal were accordingly dismissed.
Chinnappa Reddy,J. observed: ``It is open to them to take such steps as are open to them in law to regulate schemes such as those run by the Peerless Company to prevent exploitation of ignorant subscribers.
Care must also be taken to protect the thousand of employees.
We must also record our dissatisfaction with some of the schemes of the Life Insurance Corporation which appear to us to be even less advantageous to the subscribers than the Peerless Scheme.
We suggest that there should be a complete ban on forfeiture clauses in all savings schemes, including Life Insurance Policies, since these clauses hit hardest the classes of people who need security and protection most.
We have explained this earlier and we do wonder whether the weaker sections of the people are not being made to pay the more affluent sections! Robbing Peter to pay Paul? It was further observed ``We would also like to query what action the Reserve Bank of India and the Union of India are taking or proposing to take against the mushroom growth of finance and investment companies ' ' offering staggeringly high rates of interest to depositors leading us to suspect whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings.
One has only to look at the morning 's newspaper to be greeted by advertisements inviting deposits and offering interest at astronomic rates.
On January 1, 1987 one of the national newspapers published from Hyderabad, where one of us happened to be spend 420 ing the vacation, carried as many as ten advertisements with `banner headlines ' covering the whole of the last page, a quarter of the first page and conspicuous spaces in other pages offering fabulous rates of interest.
At least two of the advertisers offered to double the deposit in 30 months, 2000 for 1000, 10,000 for 5,000, they said.
Another advertiser offered interest ranging between 30 per cent to 38 per cent for periods ranging between six months to five years.
Almost all the advertisers offered extra interest ranging between 3 per cent to 6 per cent if deposits were made during the Christmas Pongal season.
Several of them offered gifts and prizes.
If the Reserve Bank of India considers the Peerless Company with eight hundred crores invested in government securities, fixed deposits with National Banks etc.
unsafe for depositors, one wonders what they have to say about the mushroom non banking campanies which are accepting deposits, promising most unlikely return and what action is proposed to be taken to protect the investors.
It does not require much imagination to realise the adventurous and precarious character of these business.
Urgent action appears to be called for to protect the public.
While on the one hand these schemes encourage two vices affecting public economy, the desire to make quick and easy money and the habit of excessive and wasteful consumer spending, on the other hand the investors who generally belong to the gullible and less affluent classes have no security whatsover.
Action appears imperative. ' ' Khalid, J., another learned Judge aggreeing with the judgment of Chinnappa Reddy, J., further added his short but important concluding paragraph as under : ``I share my brother 's concern about the mushroom growth of financial companies all over the country.
Such companies have proliferated.
The victims of the schemes, that are attractively put forward in public media, are mostly middle class and lower middle class people.
Instances are legion where such needy people have been reduced penniless because of the fraud played by such financial vultures.
It is necessary for the authorities to evlove fool proof schemes to see that fraud is not allowed to be played upon persons who are not conversant with the practice of such financial enterprises who pose themselves as benefactors of people. ' ' Taking note of the weighty observations made by this Court, the 421 Reserve Bank of India in exercise of the powers conferred by Section 45 (J) and 45 (K) of the (hereinafter referred to as the Act) and of all the powers enabling it in this behalf and considering it necessary in the public interest issued certain directions by notification No. DFC.55/DG(O) 87 dated the 15th May, 1987 (hereinafter referred to as the `directions of 1987 ').
The constitutional validity of these directions of 1987 was challenged by Timex Finance and Investment Company Ltd. (hereinafter referred to as `Timex Company ') by filing a writ petition in the Calcutta High Court before the learned Single Judge.
The learned Single Judge granted an interim order in terms of prayers (g) and (h) of the writ petition.
The Reserve Bank of India aggrieved against the interim order filed an appeal before the Division Bench.
A stay petition was also moved on behalf of the Reserve Bank of India for staying the operation of the order dated 7th October, 1988 passed by the learned Single Judge.
After hearing the stay petition for sometime, the Division Bench of the High Court listed the appeal as well as the stay petition for final disposal.
The Division Bench of the High Court disposed of the appeal as well as the writ petition by an order dated March 23, 1990 and arrived to the following and conclusions. "(a) Reserve Bank of India is empowered to issue directions to the residuary non banking companies under the provisions of Section 45J and 45K of the for the interest of thousands of depositors.
(b) However, to the extent such directions are found to be prohibitory or not workable and as such unreasonable must be held to be beyond the powers of the Reserve Bank of India.
(c) The impugned directions providing that they represent irreducible minimum for safeguarding the interest of and for preventing exploitation of small and unwary depositors cannot be implemented without suitable modification.
It is not reasonably practicable to comply strictly with the directions as they stand by the writ petitioners and the similarly situated companies.
The Supreme Court in Peerless case (Supra). .reserved the liberty to the Reserve Bank of India to take such steps as are open to them in law to regulate the schemes such as those granted by the Peerless to prevent exploitation of subscribers and to protect thousands of employees.
The impugned directions without modifications will run counter to the aforesaid directions of the Supreme Court.
(d) The business of savings and investments carried on by the company and similarly situated companies having not been declared unlawful or banned, power of the Reserve Bank of India to regu 422 late such business cannot be permitted to be prohibitory resulting in the ultimate closure of the business carried on by the writ petitioner company and other similarly situated companies.
If the modifications as suggested by us are not implemented and if ultimately the business is closed down and the company goes into liquidation, the hard earned money of thousands of depositors will be lost and the employees would also lose their job.
If even after modifications are made to the impugned directions in terms of this order, any company fails to comply with such directions, the Government may take such steps as are open to them to protect the interests of the thousands of small depositors and numerous employees.
(e) The reasons why the impugned directions cannot be complied with and held to be unworkable and unreasonable are mainly because of the definition of liability assigned in the impugned directions.
The impugned directions, as they stand now, cannot be implemented by the residuary non banking companies without incurring loss irrespective of their net worth.
According to the impugned directions, the liability is the amount of money deposited by the depositions plus the amount of interest whether or not due to them according to the terms of the respective contracts at the given point of time.
In other words, the entire collection with the interest, Bonus, etc.
whether payable or not would be the liability of the Company.
This leaves no fund for working.
If the definition of liability is amended as suggested by us, it will be possible for the companies to generate working capital.
In our view, liability in clause 6 and in other clauses of the impugned directions should be construed to mean total amount of contractual dues of the depositors including interest, premium, bonus or other advantages by whatever name called, accrued on the amount according to the terms of contract.
Section 45J and 45K of the Act do not authorise the Reserve Bank of India to introduce a concept of liability which is contrary to the accepted commercial practice and trading principles.
The impugned directions have failed to make distinction between the actual liability in presenti and a liability de futuro.
Liberty must be reserved to the companies to adopt normal accountancy practice recognised and accepted in the trading circles so long as such accounting practice provides for payment of the liability to the depositors in accordance with the contractual obligations.
However, the Reserve Bank of India may, having regard to the facts and circumstances of each case issue directions regulating the administrative and management expenses and expenditure on com 423 mission and publicity.
In the impugned directions no restriction has been imposed on the expenditure by a residuary non banking company on any of these heads.
In our view, the impugned directions without modifications, instead of suppressing the mischief, will only lead to adverse unworkable and/or impracticable results inasmuch as if the residuary non banking companies cannot comply with such directions in toto, such companies have to go out of existence.
This cannot be the object of the impugned directions.
If the liability in terms of the contractual obligations is provided not only in the accounts but also by suitable investment in terms of Clause 6 of the directions, in our view, all the residuary non banking companies, irrespective of their net worth, will be able to carry on the business.
(f) Every residuary non banking company shall disclose its Books of Accounts and balance sheet the aggregate amount of liability accrued and payable to the depositors in accordance with the terms of the contract.
(g) The directions contained in clause 6 for deposit or investment and the liability shall be read subject to the modification of the designation of the liability as aforesaid.
(h) The directions are prospective.
The period of deposit and the date of return with respect to all certificates issued prior to 15th May 1987 have been excluded from the purview of the directions as per clause 18 (1).
This exemption should include all contractual obligations on those certificates.
(i) All funds prior to the issue of the directions should be allowed to be kept in the manner as was being done by the respective residuary non banking company.
The direction with regard to the investment shall be applicable from the money collected and/or received on and after 15th May 1987.
The companies shall be allowed reasonable time to make good the deficiency in the investment required to be made in terms of the directions after 15th May 1987.
(j) We are not unmindful of the fact that exercise of power by legislature and executive is subject to judicial restraint.
The only check on judicial exercise of power is the self imposed dicipline of judicial restraint.
But although the courts in exercise of judicial power are not competent to direct the enactment of a particular provision of law, if the statutory directions suffer from arbitrariness, the court is competent to issue necessary direction so that the statutory directions may be brought in conformity 424 with law.
As we have held that the Reserve Bank of India has transgressed the statutory power to the extent indicated elsewhere in the judgment, we are of the view that the Reserve Bank of India shall modify the directions and make them reasonable and workable to safeguard the interest of depositors and protect the employees. ' ' The Division Bench also considered an application filed by Favourite Small Investment Company and by order dated 20th December, 1990 directed that the Reserve Bank of India should revoke the prohibitory order and permit Favourite Small Investment Company to accept fresh deposits and carry on new business.
It may be noted that the Peerless filed a petition before the High Court for becoming a party respondent.
The High Court by order dated 31st August, 1990 allowed the said application and further ordered that the cause title and the records proceedings of appeal, memorandum of appeal and the paper book filed be amended accordingly.
The Peerless also moved an application for clarification of the judgment and order dated 23rd March, 1990.
It prayed that suitable provision should be made for a depositor who wants back the money before maturity.
If the depositor intends to get refund of the money invested before the expiry of actual contract period, he should be required to keep the funds for a minimum period in accordance with the contract.
Before maturity he can only take loan but not the principle amount with interest.
The amounts of returns should also be less than 5 per cent to provide for the collection and other expenses of the non banking companies.
The Division Bench of the High Court took the view that the order dated 23rd March, 1990 required clarification as it was not made clear as to whether non residuary banking companies are under an obligation to pay discontinued certificates before the stipulated period in the contract, if so what would be the rate of interest.
The Division Bench by order dated December 24, 1990 clarified its earlier order dated 23rd March, 1990 as under : ``(a) If the contract by and between the company and the depositor provides that no payment on discontinued certificate will be made before the expiry of the term stipulated in the contract, in such cases, if the certificate is discontinued any time before such stipulated term and payment is made to the depositors according to the terms and conditions of the contract, in other words, on the expiry of the term stipulated in the contract, such depositor shall be paid interest at the rate of 8% compound per annum, but in such a case the company will be at liberty to deduct an amount not exceeding 5% from the total return in or to provide for collection and other expenses incurred in connection with these 425 discontinued certificates (b) In cases where certificates are discontinued before or after the stipulated term but the depositors obtain refund only upon maturity of the certificates such refund shall be made to depositors with compound interest at the rate 8 % per annum without any deduction whatsoever.
(c) Since no payment will be made against the discontinued certificates to the depositors in such cases shall be permitted to take loan, if they so intend, against the payment made till discontinuance of such terms and conditions as the company may stipulate.
" The Reserve bank of India aggrieved against all the above orders of the Calcutta High Court has filed appeals against the orders dated 23 rd March, 1990.
31st August, 1990, 20th December, 1990 and 24th December, 1990.
The Peerless General Finance and Investment Company Ltd., has also filed a writ petition No. 677 of 1991 directly before this Court under Article 32 of the Constitution of India.
In view of the fact that the questions raised in the appeals filed by the Reserve Bank of India against the orders of the High Court and in the civil writ petition filed by the Peerless Company are common, the same were heard together and are disposed of by a single order.
Interlocutory applications were also filed on behalf of the employees of the Peerless Company, agents of Peerless Company working in the field, and some of the depositors in the Peerless company.
We have heard them also.
The main controversy centers round paragraphs (6) and (12) of the directions of 1987 and as such the same are reproduced in full.
Paragraph (6) Security for depositors On and from 15th May 1987 (1) Every residuary non banking company shall deposit and keep deposited in fixed deposits with public sector banks or invest and keep invested in unencumbered approved securities (Such securities being valued at their marked value for the time being), or in other investments, which in the opinion of the company are safe, a sum which shall not, at the close of business on 31st December 1987 and thereafter at the end of each half year that is, 30th June and 31st December be less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable: 426 Provided that of the sum so deposited or invested (a) not less than ten percent shall be in fixed deposits with any of the public sector banks.
(b) not less than 70 percent shall be in unapproved securities; (c) not more than 20 percent or ten times the net owned funds of the company, whichever amount is less, shall be in other investments, provided that such investments shall be with the approval of the Board of Directors of the Company.
Explanation : "Net owned funds" shall mean the aggregate of the paid up capital and free reserves as appearing in the latest audited balance sheet of the company as reduced by the amount of accumulated balance of loss, deferred revenue expenditure and other intangible assets, if any, as disclosed in the said balance sheet.
(2) Every residuary non banking company shall entrust to one of the public sector banks designated in that behalf, deposits and securities referred to in clauses (a) and (b) of the proviso to subparagraph (1) to be held by such designated bank for the benefit of the depositors.
Such securities and deposits shall not be withdrawn by the residuary non banking company, or otherwise dealt with, except for repayment to the depositors.
(3) Every residuary non banking company shall furnish to the Reserve Bank within thirty days from the close of business on 31st December 1987 and thereafter at the end of each half year that is as on 30th June and 31st December, a certificate from its auditiors, being members of Institute of Chartered Accountants, to the effect that the amounts deposited in fixed deposits and the investments made are not less than the aggregate amounts of liabilities to the depositors as on 30th June and 31st December of that year.
Explanation : For the purpose of this paragraph, (a) "Aggregate amounts of liabilities" shall mean total amount of deposits received together with interest, premium, bo 427 nus or other advantage by whatever name called accrued on the amount of deposits according to the terms of contract.
(b) "approved securities" means; the securities in which the Trustee is authorised to invest trust money by any law for the time being in force in India and bonds or fixed deposits issued by any corporation established or constitued under any Central or State enactments.
(c) "public sector banks" means, the State Bank of India, the Subsidiary Banks and the corresponding new banks referred to in Section 45(1) of the (2 of 1934).
(d) "unencumbered approved securities" shall include the approved securities lodged by the company with another institution for advances or any other credit arrangements to the extent to which such securities have not been drawn against or availed of.
Paragraph (12) Every residuary non banking company shall disclose as liabilities in its books of accounts and balance sheets the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors.
We would first deal with the legal objections raised on behalf of the Peerless and other companies.
It has been submitted on behalf of the Peerless and other companies that the directions of 1987 are ultra vires of Section 45J and 45K of the Reseve Bank of India Act, 1934.
None of the said sections authorises the Reserve Bank to frame any directions prescribing the manner of investment of deposits received or the method of accountancy to be followed or the manner in which its balance sheet and books of accounts are to be drawn up.
It has been contended that Section 45J has no manner of application in the present case.
Section 45K (3) of the Act on which reliance has been placed on behalf of the Reserve Bank, merely provides that the Reserve Bank may, if it considers necessary in the public interest so to do, give directions to non banking institutions either generally or to any non banking institutions in particular, in respect of any matters relating to or connected with receipts of deposits, including the rate of interest payable on such deposits and the purpose for which deposits will be received.
According so Sec.
45K (4) if any non banking institution fails to comply with any direction given by the bank under sub 428 section (3) the Reserve Bank may prohibit the acceptance of deposits by that non banking institution.
It is thus submitted that on a plain reading of Sec.
45K (3) the Reserve Bank is only competent to frame the directions regarding receipt of deposits and such power of direction does not extend to providing the manner in which deposits can be invested or the manner in which the liabilities are to be disclosed in the balance sheet or books of accounts of the company.
It is further submitted that the power under subs.
(4) is to prohibit acceptance of deposits and as such the permissible field of direction making is limited to receipt of deposits and nothing more.
The Reserve Bank of India in framing the directions of 1987 which is a subordinate piece of legislation has clearly over stepped the bounds of the parent statue of Sec.
45K (3) of the Act.
It is further argued that the Reserve bank cannot contend that paragraphs 6 and 12 of the directions of 1987 are covered within the powers conferred on the Reserve Bank under Sec.
45L (1) (b) of the Act.
It is submitted that the Reserve Bank had at no point of time expressed its intention to invoke its powers under Sec.
45L. Even before the Division Bench of the Calcutta High Court the Reserve Bank did not rely on Sec.
45L as alleged source of its power to issue the impugned directions nor the Reserve Bank referred to Sec.
45L in its pleadings before the High Court.
Wherever the Reserve Bank of India wanted to invoke its power under Sec 45L of the Act, it has expressly mentioned that it was exercising its powers under Sec.
45L. In the case of non banking financial companies (Reserve Bank) directions 1977, or the miscellaneous non banking companies (Reserve Bank) Directions, 1977 it has expressly said that it was invoking its powers under sec.
45L of the Act, whereas in the case of the impugned directions, the Reserve Bank has only referred to sections 45J and 45K of the Act.
The Reserve Bank of India itself in the affidavit filed before the High Court had stated that the directions of 1987 were framed after careful deliberations at the highest level and now it cannot take the stand that the source of its power in framing the impugned directions was exercised under sec 45L of the Act.
It is further contended that in order to invoke the powers under sec 45L of the Act it has to state that the Reserve Bank was satisfied for the purpose of enabling it to regulate the credit system of the country to its advantage and it was necessary to give such institutions directions relating to the conduct of business by financial institution or institutions.
In order to exercise its powers under sec.
45L of the Act, it has to apply its mind for the purpose of arriving at the statutorily required satisfaction.
In fact, such recital is necessary since such satisfaction is a pre conditions for the Reserve Bank to exercise its powers under section 45L of the Act.
On the other hand it has been contended on behalf of the Reserve 429 Bank that the power of the Reserve Bank to regulate deposit acceptance activities of non banking and financial institutions under Chapter IIIB of the Act cannot be disputed.
The Reserve Bank has power to issue the impugned directions under Section 45J, 45K and 45L of the Act.
The pith and substance of Para 6 of the directions of 1987 is to ensure that deposits received from the public are invested in a manner to secure the repayment of the deposits.
A deposit is, by definition, a sum of money received with a corresponding obligation to repay the same.
Thus, the repayment of the deposit is an integral part of the transaction of a receipt of deposit.
It is contended that the expression "receipt of deposit" must be construed liberally, in the light of the nature of the provisions as well as in the light of the wide language used in the provision.
It is also argued that even if the impugned directions of 1987 are not covered under the powers conferred under Sections 45J and 45K of the Act, those are squarely covered by Section 45L of the Act.
It is submitted that various provisions under the Act are enabling in nature and confer overlapping powers.
Even if there is no recital of Sec.
45L, it would not be of much consequence, if such exercise of power can be related to Sec.
45L of the Act.
We have considered the arguments advanced by learned counsel for the parties.
Chapter IIIB laying down provisions relating to non banking institutions receiving deposits and financial institutions was inserted in the , by virtue of Act 55 of 1963 w.e.f. 1.2.1964.
Section 45J, 45K (3) & (4) and 45L 1 (b) relevant for our purpose are given as under : Sec.
45J "The Bank may, if it considers necessary in the public interest so to do, by general or special order, (a) regulate or prohibit the issue by any non banking institution of any prospectus or advertisement soliciting deposits of money from the public; and (b) specify the conditions subject to which any such prospectus or advertisement, if not prohibited, may be issued.
Section 45K (1) . . (2) . . (3) The Bank may, if it considers necessary in the public interest so to do, give direction to non banking institutions either generally or to any 430 non banking institution or group of non banking institutions in particular, in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received.
(4) If any non banking institution fails to comply with any direction given by the Bank under sub section (3), the Bank may prohibit the acceptance of deposits by that non banking institution.
Section 45L (1) If the bank is satisfied that for the purpose of enabling it to regulate the credit system of the country to its advantage it is necessary so to do; it may (a) . . (b) give to such institutions either generally or to any such institution in particular, directions relating to the conduct of business by them or by it as financial institutions or institution.
A combined reading of the above provisions unmistakably goes to show that the Reserve Bank if considers necessary in the public interest so to do can specify the conditions subject to which any prospectus or advertisement soliciting deposits of money from the public may be issued.
It can also give directions to non banking institutions in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received.
This latter power flows from sub section
(3) of Sec.
45K of the Act.
The Bank under this provision can give directions in respect of any matters relating to or connected with the receipt of deposits (emphasis added).
In our view a very wide power is given to the Reserve Bank of India to issue directions in respect of any matters relating to or connected with the receipt of deposits.
It cannot be considered as a power restricted or limited to receipt of deposits as sought to be argued on behalf of the companies that under this power the Reserve Bank would only be competent to stipulate that deposits cannot be received beyond a certain limit or that the receipt of deposits may be linked with the capital of the company.
Such interpretation would be violating the language of Sec.
45K (3) which furnishes a wide power to the Reserve Bank to give any directions in respect of any matters relating to or connected with the receipt of deposits.
The Reserve Bank under this provision is entitled to give directions with regard to the manner in which the deposits are to be invested and also the manner in which such deposits are to be disclosed in the balance sheet or books of accounts of the company.
The word `any ' quali 431 fying matters relating to or connected with the receipt of deposits in the above provision is of great significance and in our view the impugned directions of 1987 are fully covered under Sec.
45K (3) of the Act, which gives power to the Reserve Bank to issue such directions.
As a proposition of law we agree with the contention of the learned counsel for the Reserve Bank that when an authority takes action which is within its competence, it cannot be held to be invalid merely because it purports to to be made under a wrong provision, if it can be shown to be within its power under any other provision.
Learned counsel in this regard has placed reliance on Indian Aluminium Company etc.
vs Kerala State Electricity Board; , In our view as already held above, the Reserve Bank was competent and authorised to issue the impugned directions of 1987, in exercise of powers conferred under Section 45K (3) of the Act.
Having cleared the ground of ultra vires we must now turn to the main challenge posed on behalf on the Peerless and other companies and employees.
Mr. Harish Salve made the leading arguments on behalf of the Reserve Bank of India.
His main thrust of the argument was that the Reserve Bank of India had issued these directions of 1987 in order to carry out observations made by this Court in Peerless case (supra) and in the public interest of safeguarding the money of the depositors in such companies.
The Reserve Bank considered it necessary that the interest of millions of small depositors of rural areas should be made safe and may not be devoured by a mushroom of companies with no stake.
According to Mr. Salve it was not the intention of the Reserve Bank to put any restrictions in the manner or conduct of business to be done by such companies.
But the most important factor weighing in the mind of the Reserve Bank was to safeguard the money of the depositors.
It was not the concern of the Reserve Bank as to how and in what manner these companies would regulate their expenses or would be able to conduct such business for earning more profits.
According to the Reserve Bank of India these companies cannot be allowed to spend a mighty of deposits for meeting their own expenses.
They should find out their own resources for meeting the expenses.
According to the Reserve Bank the rate of interest to be paid by these companies to the depositors has been fixed as 10 per cent per annum.
They could easily invest such amount in bonds issued by public sector corporation and earn interest at the rate of 14 per cent per annum or more and thereby earn a profit of 4 per cent and regulate their expenses within the limits of such profits.
It was submitted that the propensity of the 432 problem has increased manifold in view of the fact that the amount of deposits and investments has gone to staggering heights worth several thousand crores of lower middle class persons living mostly in the rural areas.
A bogey of employment hazards of several thousand regular employees and still a large number of agents working in the field cannot deter the Reserve Bank to lay down some directions which may act harshly and resulting in lessening of profits of such companies.
It was also submitted that according to the affidavit submitted before this Hon 'ble Court on behalf of the Reserve Bank of India it has been stated that prior to 1987 directions, there were 747 such companies which were conducting deposit scheme.
At present they could classify only 392 such companies as required information for classifying of the remaining companies had not been received.
Most of such companies have not designated their banks as it required under paragraph (6) of the directions and in most of such cases amounts invested in bank deposits and approved securities fall much short of deposit liabilities.
The companies operating in these areas also at times become untraceable in that a number of show cause notices issued have been returned as "addressee not known" etc.
In some cases those who have chosen to reply have given evasive replies.
It has been further stated in the affidavit that most of these companies did not comply with the financial discipline sought to be imposed upon them and have avoided and abhorred any scrutiny into their accounts.
It has thus been submitted that to get over these difficulties, the directions of 1987 attempt to provide a steady, stable identificable and monitorable method by which the companies will be able to disclose all their true liabilities and also utilise the money raised from the depositors for investment in safe indentifiable and quantifiable securities instead of investing them in other ventures.
This will ensure complete security to the depositors at all times and will also make the accounts of the companies comprehensible and easy to monitor.
As regards the formula laid down by the High Court it has been submitted that if a variable as against a fixed and definite percentage of investment with respect to amounts collected by way of each instalment is permitted it would be impossible to find out and verify whether the amounts invested are in accordance with the directions at any given point of time when there are thousands of certificates with different and varying maturity periods.
In the circumstances, the formula laid down by the High Court is self defeating and also deprives the depositor of the security envisaged under the directions.
It was also submitted on behalf of the Reserve Bank that it is an admitted position that the business of RNBCs is to collect funds from the public and invest the same in Government securities and bank deposits.
In 433 the application forms and in the advertisement 's issued by these companies it is expressly held out to the public that their moneys are safe with the banks and in Government securities.
It is the very nature of their business which makes it non viable if they are to give fair return to the depositors and private security for the repayment of their money.
The scheme of control as provided in the directions of 1987 might be harsh but the same is in conformity with the assertions held out by these companies to the public at large.
These directions subject the companies to proper discipline by monitoring their actions and such directions cannot be considered as unreasonable.
The reasonableness of the directions when looked at from the point of view of the depositors for whose safeguard they have been issued, is beyond question.
Return provided and the security to be given through proper investment cannot be faulted on any ground.
Thus what seems to be an impossible situation for these companies is not due to the impugned directions but because of the nature of business itself.
The funds are collected at exhorbitant costs and on that account it becomes difficult for the companies to give a fair return to the depositors.
These companies are not genuine investment companies.
If they want to do genuine investment business they can do so by choosing freely their investment, but in that case Reserve Bank of India directions applicable to such companies would permit them to accept deposits not exceeding 25 per cent of paid up capital and reserve.
The directions of 1987 had not imposed any restriction on the right to carry on business but those directions only place a restriction with respect to one of the modes of raising reserves i.e. through public deposits.
It has been further argued that the reasonableness of the directions has not to be looked into from the point of view of the company to whom any such restrictions will be irksome and may therefore be regarded as unreasonable.
The framing of the directions are only regulatory in nature keeping in view the interest of the depositors without unduly jeopardising the interest of the employees.
Keeping this in mind it has been provided that the minimum return would be at 10 per cent, though there are govt.
and public sector bonds which pay interest at a much higher rate.
Even presently bank deposits and other company deposits give return varying between 13 to 15 per cent.
There is no limitation on the quantum of deposits with reference to the overall capital as shown in the case of companies governed by the Companies (Acceptance of Deposits) Rules 1975, Non Banking Financial Companies (Reserve Bank) Directions, 1977.
The linking of deposits with capital as in the case of other regulations is a measure to secure the interest of the depositors namely e.g. Companies (Acceptance of Deposit) Rules, 1975, ensure that the assets 434 are at least three times the deposits received.
In view of the low or total non existent capital of the RNBCs, it was not possible to secure the deposits in this manner.
Instead, it has been provided that the entire liability towards the depositors should be invested and no part of the deposits be utilised for payment of commission etc.
or incurring other expense.
In any event, even if, the directions do not prescribe existence of owners capital as security, it does not imply that it is permissible to use the deposits received to bridge the time gap between income and expenditure.
Merely because the directions do not fix a ceiling on the rate of commissions it does not imply that the Reserve Bank has granted its permission to payment of high commission or incurring of large expenses on management etc.
The RNBCs are free to incur such expenses and organize their business as they desire as long as the depositors are fully secured at all times.
The contention that the business of the RNBCs will close down if the directions of 1987 are to be adhered to is not based on facts and misconceived in law.
A perusal of Directors ' Report of Peerless for the years 1988, 1989 and 1990 clearly go to show that they did not consider the company in any financial difficulty and in fact paid larger dividends even after complying with the impugned directions of 1987.
It has thus been submitted that given a wide latitude in judging the validity of economic legislation on the touch stone of reasonableness, in the absence of patent arbitrariness but having nexus with the public objective sought to be attained, the durations cannot be condemned as being violative of Article 19(1) (g).
The result of the contentions put forward on behalf of RNBCs would be that in the case of endowments repayable after, say 10 years, there will be nothing due and payable in the first nine years and as such there would be no need of investing any sums for the first nine years.
The interpretation placed by the respondent companies upon the judgment of the High Court is that it is now open to them to determine as per their own peculiar estimate, what would be sufficient to meet the liabilities towards the deposits and accordingly such amount would be their "aggregate liability".
According to the Peerless Company if it deposits 75 per cent of the first year 's subscription, it is adequate to cover its liabilities to the depositors.
On the other hand as per Timex Company a deposit of only 50 per cent of the first year 's subscription would be adequate to cover its liabilities to the depositors.
Whereas the Favourite Company contends that investment of 40 per cent of the first year 's subscription will be adequate to cover the liabilities to the depositors.
It has been submitted that according to well accepted accounting practice where any sum is received as a loan or as a deposit it has to be shown as a liability together with accrued interest irrespective of when it is due.
The amount contributed by the depositors being a capital receipt and not a revenue receipt cannot under any circumstances be shown in the 435 balance sheet otherwise then at its full value.
Moreover, being a capital receipt, it cannot be credited to the profit and loss accounts since Part II of Schedule VI to the requires that the amounts to be shown in the profit and loss accounts should be confined to the income and expenditure of the company.
Thus, crediting a part of the first and subsequent year 's deposit instalments to the profit and loss account and not showing them fully as a liability in the balance sheet would be a contravention of the provisions of the .
It has been further submitted on behalf of the Reserve Bank that the question which arises for consideration is whether liability to the depositors can be calculated on an actuarial basis.
It may be noted that actuarial basis is normally adopted (a) in respect of items of income and expenditure, (b) where there is a significant element of uncertainty.
Thus, in so far as the liability arising out of the repayment to the depositors of the amount capitalised by him is considered, the actuarial basis cannot be adopted and this liability must always be stated at its full value.
The principle of actuarial valuation is in opposite for the business of RNBCs.
It has also been submitted that the formula laid down by the High Court about the quantum of investments to be made by RNBCs is incapable of effectively monitoring and hence the provisions made in the directions of 1987 regarding security to depositors would be rendered wholly illusory.
Such impossibility in the monitoring has been demonstrated as follows: (A) These companies do not fix a definite but variable percentage of investment with respect to amounts collected by way of each instalment under the certificates of deposits; e.g. Peerless would invest 75 % of the collections made out of 1st instalment (retaining and taking to P & L A/c, 25 %) and 82 % out of 2nd instalment and so on.
At any given point of time, there will be thousands of deposit certificates with varying maturity and the amounts collected would be an impossibility to find out and verify whether the amounts invested are in accordance, with the proportion fixed by the companies with respect to each instalment.
Regulatory authority would have to depend entirely on these companies for doing its monitoring exercise.
(B) Each company fixes its own proportion of investment with respect to each instalment based on the projected yield from its investment; e.g. Favourite Finance Company claims that it needed to invest only 40 % of the amounts collected by way of 1st instalment claiming that the projected yield from its investment would be 14.8 %.
This would compound the impossibility of monitoring further.
436 It has thus been argued that the formula laid down by the High court is self defeating and depriving altogether benefits of security provisions given to depositors under the directions of 1987.
Mr. Somnat Chatterjee, learned senior counsel appearing on behalf of Peerless Company contended that the Peerless being the largest RNBC in india having an impeccable record of public service decided to give effect to the directions of 1987 as it wanted to avoid any confrontation with Reserve Bank and further not to give an impression of seeking to avoid "regulatory control", tried its best to comply with the said directions w.e.f. 15th May, 1987 till 31st March, 1989.
However, from its working results it appeared bonafide to the Board of Directors of Peerless that it was impossible to carry on its traditional business for any longer period without incurring huge losses.
The company as such decided to approach the High Court for obtaining the benefit of judgment delivered in the Timex case.
The Peerless has only challenged a part of Paragraph 6 of the directions of 1987 and the consequential direction contained in para 12 which shows that Peerless does not wish to remain outside of the regulatory controls of Reserve Bank but challenges only those directions which make the business totally unworkable.
There has been no attempt on the part of Peerless to carry on its business in a manner which may jeopardize the interest of any depositor or which will not protect fully every paisa deposited with Peerless at all points of time.
No real complaint was made by or on behalf of Reserve Bank as to any depositor of Peerless running a risk of loss of any amount or that it has carried on or is carrying on the business in an undesirable manner.
It has been submitted that Peerless should not be made to suffer for the illegality or improprieties, if any committed by any other RNBC and neither Peerless nor its 14 lac field agents, 3 thousand field officers and 4 thousand direct employees should be made to suffer.
The result of following directions of 1987 would be that all the above agents, officers and employees of the Peerless could loose their jobs and their family members will be thrown on the streets.
The Peerless had abolished the provision of forfeiture in all its schemes as early as in 1986 that is even prior to coming into force of the directions of 1987.
The Peerless has been compelled to challenge paragraphs 6 and 12 of the directions of 1987 since enforcement of these provisions would result in complete annihilation of the undertaking of Peerless in the near future.
It was further contended that it is inherent in the business carried on by Peerless and other similar RNBCs that the working capital is generated out of the subscriptions received from the certificate holders.
Such business comprises in collecting subscriptions from depositors either in lumpsum 437 or in instalments and such deposits are paid back with the guaranteed accretions, bonus, interest etc.
in terms of the contract at the end of the stipulated term.
Through this business such companies have rendered great and commendable service to the nation in mobilizing small savings and giving a boost to the movement of capital formation in the country.
Such companies have placed at the disposal of Governmental institutions including public sector banks and other financial institutions huge deposits which could not be collected by the said financial institutions themselves or by anybody in the organised sector.
The method followed by the companies in carrying on the aforesaid business is that a certain portion of the subscriptions received by it is transferred to the profit and loss account shown as income, and the same is used to defray inevitable working capital requirements of the company, namely, payment of agent 's commission, management expenses, staff salaries and other overheads.
However, the balance of the subscriptions (excluding the appropriated part) is transferred to a fund each year and the corpus of the fund is invested in turn in interest bearing investment.
The Peerless company initially used to transfer approximately 95 % of the first year 's subscriptions to the profit and loss account and used to invest the subscriptions received from the second year onwards.
However, at present, Peerless is appropriating 25 % of the first year 's subscription to the profit and loss account and investing the balance 75 % in the manner and mode prescribed by paragraph 6 of the directions of 1987.
It has been contended that the investment is planned in such a manner that at the end of the contractually stipulated maturity period or at any other point of time when any sum of money may become contractually payable to a depositor, an RNBC is always in a position to pay all its conractual dues to the certificate holder.
There is thus no threat to the safety of the depositors money inspite of the aforesaid transfer of a portion of the subscription received to the profit and loss account showing it as income and utilising it for meeting the working capital requirements.
It was pointed out that Peerless had been assessed to income on the basis of above method of accounting and no objection has ever been taken by the revenue authorities or by the auditors of Peerless or even by R.B.I. before the issuance of the directions of 1987.
It was submitted that the Peerless was incorporated in the year 1932 when it used to carry on life insurance business.
It changed over to the present form of business from 1956 and since then it has been carrying on such business with the full knowledge of R.B.I. as well as other concerned authorities.
The R.B.I. never objected to the accounting system followed by the Peerless.
In view of the abolition of the forfeiture clause the alleged risk to the depositors has become totally non existent.
It was further argued that the R.B.I. framed regulatory measures in 1973 such miscellaneous non banking companies (Reserve Bank) Directions, 1973.
438 The Reserve Bank granted exception to Peerless from the provisions of the said Directions of 1973, by an order dated 3rd December, 1973.
The Favourite Small Investments Limited filed a writ petition challenging the refusal of Reserve Bank to grant exemption to them from the provisions of the said 1973 Directions to granting such exemption to Peerless.
In the said writ petition the R.B.I. filed an affidavit justifying the denial of exemption to Favourite Small Investments Ltd. and in the aforesaid affidavit submitted in detail the accounting procedure of Peerless including the fact that Peerless was transferring a portion of the subscriptions to the profit and loss account as income and it also certified that the said method was a permissible business method and by following the said method Peerless would be in a position to pay all contractual dues of the certificate holders at the end of the maturity period.
Thus the said system of accounting which is called an actuarial system of accounting was found satisfactory by the R.B.I. The said affidavit filed in the Favourite 's case has been quoted in the Peerless case in ; , and the said actuarial system of accounting was not held as impermissible or against any recognized method of accounting.
It was also contended on behalf of the Peerless that the interest of depositors is certainly an important consideration but the interest of the depositors is not impaired in any manner whatsoever by the method of accountancy now being followed by Peerless and in fact by all similar companies, namely, appropriation of a part of the subscription to the profit and loss account and meeting the working capital requirements out of the same.
In respect of the above contention certain charts were also produced during the course of arguments and from such charts it was sought to establish that except for the first two years the principal amount paid by a subscriber is always covered by matching investment.
Further, on the date on which a deposit becomes contractually repayable, there is full coverage of such liability.
It was submitted on behalf of All India Peerless Field Officers Association that the said association represents about 14 lac field workers.
These 14 lac persons are engaged by Peerless on the basis of individual contracts of engagements and earn their livelihood solely by collecting business for Peerless.
For collecting such business Peerless pays to them commission at a contractual agreed percentage on the value of business collected.
The said field officers have to meet all expenses for procuring such business such as travelling expenses, boarding, lodging, office and administrative expenses etc.
out of such commission.
Field officers have to undertake long tours and have to travel into remote villages to reach the small depositors.
It has been submitted that if the directions of 1987 are upheld, the undertaking of Peerless will face inevitable closure and almost 439 14 lac field officers will lose their only source of livelihood and will be virtually thrown on the streets.
The field officers and their families will face starvation and extreme penury in case the validity of such directions is upheld.
Thus any restriction which would be prohibitive or which would result in closure of the undertaking of Peerless would be against public interest.
We have heard the arguments of learned counsel for the parties.
It may be made clear at the outset that questions raised in these cases regarding the validity of paragraphs 6 and 12 of the directions of 1987 cannot be determined merely by taking into consideration the working of the financial soundness of the one company alone like Peerles but the matter has to be examined in a broader perspective of all RNBCs.
We have to keep in mind, while deciding the controversies raised in the arguments, such RNBCs which are doing the same kind of business of taking deposits and returning the same to the certificate holders after a gap of 7 to 10 years along with interest, bonus etc.
In the affidavit submitted before this Court on behalf of Reserve Bank of India it has been stated that prior to 1987 directions, there were 747 such companies which were conducting this business under various deposit schemes.
At present they could classify 392 such companies spread over across the entire country.
According to the above affidavit, as on 31st March, 1990 in the eastern zone out of 185 companies, only 35 have filed the annual returns and out of which only 30 have filed the balance sheet.
Similarly, out of 140 companies in the northern zone only 28 have filed annual returns and 32 have filed balance sheet.
A perusal of the returns given by 51 of these companies discloses that 35 companies have a negative net worth (i.e. their losses far exceed their share capital and reserves) which necessarily means that they have not only wiped out the share capital and reserves but their liabilities are far in excess.
Only 16 companies have a positive net worth including Peerless.
It has been further pointed out in the affidavit that apart from Peerless the aggregate capital investment by 15 companies is Rs. 158 lacs only.
As against this, the negative net worth of the 35 companies aggregated to Rs. 3.6 crores.
Despite large accumulated losses (in some cases with meager or nominal capital) these companies apart from Peerless, have realised deposits to the tune of Rs. 86 crores.
Apart from the financial parameters most of these small companies are family concerns.
Most of such companies have not designated their banks as is required under Paragraph 6 of the directions and in most of such cases amounts deposited in banks and approved securities fall much short of deposit liabilities.
It has also been pointed out in the affidavit that the companies operating in these areas also at times become untraceable in that a number of show cause notices issued have been returned as "ad 440 dressee not known" etc.
Thus we have to keep in mind the above mushroom of companies also which have set foot in this sort of business.
It would also be important to note that most of the depositors in such companies belong to the rural areas and who are persons belonging to lower middle class, small agriculturists and small traders, pensioners etc.
These companies advertise their schemes widely in beguiling terms.
Through such advertisements they lure the small savings of the poor ignorant villagers through a special structure of agents, special agents, different kinds of organisers and so on.
The agents commission for the first years subscription is very high and which offers incentive to the agents on securing a fresh business and a disincentive to collect subscriptions of subsequent years.
It is a matter of common experience and knowledge that most rural folk particularly those belonging to the lower strata of society will not pay their subscriptions regularly unless somebody takes the trouble of collecting their subscription with the same enthusiasm as may be shown in enrolling the subscribers in the beginning.
It is no doubt correct that these companies do tap and collect the deposits from such areas where the agents of public sector banks or public sector companies or instrumentalities of the state are unable to reach.
Thus these companies mop up a large amount of money for ultimately investing in the nationalised bank or other Govt.
owned corporations or companies.
However, the Reserve Bank considered the safety of the money of the depositors as the paramount consideration in issuing the direction of 1987.
It cannot be disputed that the interest of the employees as well as the field officers and agents have also to be taken into consideration while deciding the reasonableness of the impugned directions.
It may be further noted that in the Reserve Bank of India vs Peerless Company case (supra) this Court though came to the conclusion that the Endowment Certificate Scheme of the Peerless company was outside the Prize Chit and Money Circulation Schemes (Banning) Act, still it was observed that it would be open to the Reserve Bank to take such steps as are open to them in law to regulate schemes such as those run by the Peerless company to prevent exploitation of ignorant subscribers though care must also be taken to protect the thousands of employees.
The Court expressed grave concern with regard to the mushroom growth of `financial investment companies ' offering staggeringly high rates of interests to depositors leading to the suspicion whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings.
It was clearly pointed out that if the Reserve Bank of India considers the Peerless company with 800 crores invested in Govt.
securities, fixed deposits with national banks etc.
unsafe for depositors one wonders what they have to say about the mushroom of non banking companies which are accepting 441 deposits promising most unlikely returns and as such what action was proposed to be taken by the R.B.I. to protect the investors.
In the above background the Reserve Bank came forward with the impugned directions of 1987.
Before examining the scope and effect of the impugned paragraphs 6 and 12 of the directions of 1987, it is also important to note that Reserve Bank of India which is bankers bank is a creature of Statute.
It had large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bonafides of the Reserve Bank in issuing the impunged directions of 1987.
The Reserve Bank plays an important role in the economy and financial affairs of India and one of its important functions is to regulate the banking system in the country.
It is the duty of the Reserve bank to safeguard the economy and financial stability of the country.
While examining the power conferred by Sec.
58A of the on the Central Govt.
to prescribe the limits upto which, the manner in which and the conditions subject to which deposits may be invited or accepted by non banking companies, this Court in Delhi Cloth and General Mills, etc.
vs Union of India, etc.
; , observed as under: "Mischief was known and the regulatory measure was introduced to remedy the mischief.
The conditions which can be prescribed to effectuate this purpose must a fortiori, to be valid, fairly and reasonably, relate to checkmate the abuse of juggling with the depositors/investors ' hard earned money by the corporate sector and to confer upon them a measure of protection namely availability of liquid assets to meet the obligation of repayment of deposit which is implicit in acceptance of deposit.
Can it be said that the conditions prescribed by the Deposit Rules are so irrelevant or have no reasonable nexus to the objects sought to be achieved as to be arbitrary? The answer is emphatically in the negative.
Even at the cost of repetition, it can be stated with confidence that the rules which prescribed conditions subject to which deposits can be invited and accepted do operate to extend a measure of protection against the notorious abuses of economic power by the corporate sector to the detriment of depositors/investors, a segment of the society which can be appropriately described as weaker in relation to the mighty corporation.
One need not go so far with Ralph Nadar in `America Incorporated ' to establish that political institutions may fail to arrest the control this everwidening power of corporations.
And can one wish away the 442 degree of sickness in private sector companies? To the extent companies develop sickness, in direct proportion the controllers of such companies become healthy.
In a welfare state, it is the constitutional obligation of the state to protect socially and economically weaker segments of the society against the exploitation by corporations.
We therefore, see no merit in the submission that the conditions prescribed bear no relevance to the object or the purpose for which the power was conferred under Sec.
58A on the Central Government.
" The function of the Court is to see that lawful authority is not abused but not to appropriate to itself the task entrusted to that authority.
It is well settled that a public body invested with statutory powers must take care not to exceed or abuse its power.
It must keep within the limits of the authority committed to it.
It must act in good faith and it must act reasonably.
Courts are not to interfere with economic policy which is the function of experts.
It is not the function of the Courts to sit in Judgment over matters of economic policy and it must necessarily be left to the expert bodies.
In such matters even experts can seriously and doubtlessly differ.
Courts cannot be expected to decide them without even the aid of experts.
The main grievance raised on behalf of respondent companies is that if the provisions of paragraphs 6 and 12 of the directions of 1987 are complied with, the companies will be left without any fund to meet their working capital.
It would be impossible to run the business without a working capital and to meet even reasonable expenses incurred for payment of agents commission, management expenses and other overhead expenses.
During the course of hearing the counsel for the companies had relied on some charts to show the unworkability and unreasonableness of the impugned paragraphs 6 and 12 of the directions.
It was also pointed out that the arguments made on behalf of the Reserve Bank overlooked the fact that in case of investments in long term schemes such as Indira Vikas Patra and Kisan Vikas Patra the companies will not be able to utilise its return from such investment before the end of the minimum period for which these schemes operate.
The respondent companies will thus be left without any income during the period of operation of such schemes and cannot meet its working capital requirements.
It has been submitted that the directions of 1987 really amount to prohibition of the business in a commercial sense without reasonable basis and are thus violative of article 19(1) (g) of the Constitution.
In support of the above contention reliance has been placed on Mohammad Yasin vs The Town Area Committee, Jalalabad and another; , ; Premier Auto 443 mobiles Ltd. and anothers vs Union of India; , and on Shree Meenakshi Mills Ltd. vs Union of India ; It has also been contended that it is now well settled by plethora of judicial pronouncements that the restrictions on any business caused by regulations should not be more than what would be necessary in the interest of the general public and such restrictions should not overreach the scope of the objects achieved by the regulations.
The contention on behalf of the Reserve Bank is that the directions have been made in public interest of safeguarding the interest of millions of depositors and the Reserve Bank is not concerned and while doing so it was rightly thought necessary by the Reserve Bank that the companies cannot be permitted to incur the expenses out of the corpus of the depositors money.
The business carried on by the companies to restructure their organization by curtailing its expenses.
If such middlemen or brokers are not able to earn a large profit as was done before the enforcement of the impugned directions, it lies with the companies to continue or not such business when the margin of profit is curtailed.
These companies want to do the business without having any stake of their own.
The companies doing such business cannot be subjected to the scheme of control applied to other financial and non financial companies for the simple reason that they have no capital and their schemes are for a period much longer than three years.
After the decision of the Supreme Court in Peerless case these directions of 1987 were issued after mature consideration with the help and advice of experts.
Paragraph 6 of the impugned directions according to the Reserve Bank lays down provisions for security of depositors.
it prescribes the mode of investment of funds collected by the companies.
It cannot be disputed that while collecting deposits the companies clearly hold out to the members of the public that the moneys so collected by them shall be invested in Government securities or kept deposited with the banks and they also assure the depositors that their moneys are safe and secure.
On the basis of such representations and on the strength of exaggerated and misleading advertisements these companies collect huge amounts of deposits from a large number of small, poor and uninformed depositors and that too in such investment spread over a long period.
The contention on behalf of the Reserve Bank of India is that in the above context these companies carry on their activities wholly with the funds provided by the public by way of deposits and hardly have any capital of their own.
In these circumstances it has been urged on behalf of the Reserve Bank that the provisions made in paragraph 6 of, the impugned directions are abso 444 lutely reasonable and are for ensuring repayment of deposits.
It has been submitted that it is common knowledge that small depositors cannot have recourse to courts for recovering their amounts if the companies do not repay the deposits.
The direction in paragraph 6 enjoins on these companies to deposit in fixed deposits with public sector banks or unencumbered approved securities or in other investments, a sum which shall not, at the close of business on 31st December, 1987 and thereafter at the end of each half year i.e. 30th June and 31st December not less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable.
Thus according to the above provision whole of the aggregate amounts of the liabilities to the depositors whether or not such amounts have become repayable, is required to be deposited or invested.
10 % of such amount is required to be deposited in public sector banks and 70 % in approved securities and 20 % has been allowed to be invested by the company according to its own choice.
In order to understand the rigour of the directions laid down in paragraph `6 ', it would be necessary to understand the scope of other directions as well.
Paragraph 4 of the directions lays down that the deposit shall not be accepted for a period of less than 12 months or more than 120 months i.e. one years from the date of receipt of such deposits.
The normal standard applied to non financial and financial companies is that they cannot accept deposits for a period of more than 36 months (except housing finance company).
Thus the companies before us have been permitted to conduct their schemes extending over to a long period upto 120 months.
This is a special kind of concession provided to the companies of the kind before us.
Paragraph 5 of the directions relates to the minimum rate of return fixed at 10 % per annum for a deposit with a maturity of 10 years.
It is a matter of common knowledge that in the present times even the public sector corporations and banks and other financial and non financial companies pay interest at much more higher rates ranging from 14 to 18 %.
Thus according to the above scheme the respondent companies and the others doing such business can easily earn a profit of 4 to 5 % on their investments.
In case of a request of the depositors for repayment of the deposit before maturity then the amount payable by the company by way of interest etc., shall be 2 % less than what could have been ordinarily paid by the company by way of interest if the deposit had run the full contractual period.
However, the question of repayment before maturity or after how many years will depend entirely on the terms and conditions of the contract of such deposit.
Paragraph 12 of the directions of 1987 enjoins upon the company to disclose as liabilities in its books of accounts and 445 balance sheets the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors.
Under Clause (a) to the explanation to clause 3 of paragraph `6 ' "Aggregate Amounts of Liabilities" shall mean total amount of deposits received together with interest, premium, bonus or other advantage by whatever name called, accrued on the amount of deposits according to the terms of contract.
Thus the company is required to deposit or invest the aggregate amounts of its liabilities having accrued on the amount of deposits according to the terms of contract.
Without going into the figures shown in the various charts, it is clear that if the directions contained in paragraphs 6 and 12 of the directions of 1987 are to be carried out, the companies are not left to utilise any amount out of the deposits as working capital to meet the expenses.
In our view the Reserve Bank is right in taking the stand that if these companies want to do their business, they should invest their own working capital and find such resources elsewhere with which the Reserve Bank has no concern.
If we look at the Annual Report and Accounts of Peerles for the years 1988, 1989 and 1990 it is clear that it had conducted its business following the impugned directions of 1987 and still had earned substantial profits in these years.
It is clear that Peerless is a company having established as back as in 1932 and had substantial funds to invest the entire amount of deposits and had met the expenses out of its accumulated profits of the past years.
This shows that the business can be run and profit can be earned even after complying with the impugned directions of 1987 issued by the Reserve Bank.
It is not the concern of this court to find out as to whether actuarial method of accounting or any other method would be feasible or possible to adopt by the companies while carrying out the conditions contained in paragraphs 6 and 12 of the directions of 1987.
The companies are free to adopt any mode of accounting permissible under the law but it is certain that they will have to follow the entire terms and conditions contained in the impugned directions of 1987 including those contained in paragraphs 6 and 12.
It is not the function of the Court to amend and lay down some other directions and the High Court was totally wrong in doing so.
The function of the Court is not to advise in matters relating to financial and economic policies for which bodies like Reserve Bank are fully competent.
The Court can only strike down some or entire directions issued by the Reserve Bank in case the Court is satisfied that the directions were wholly unreasonable or violative of any provisions of the Constitution or any Statute.
It would be hazardous and risky for the courts to tread an unknown path and should leave such task to the expert bodies.
This court has repeatedly said that matters of economic policy ought to be left to the Government.
While dealing with the validity of an order passed on September 30, 1977 fixing a retail price of mustard oil not 446 exceeding Rs. 10 per kilogram in exercise of powers conferred by Section 3 of the Essential Commodities Act, a bench of 7 Judges of this Court in M/s Prag Ice & Oil Mills and another vs Union of India and Nav Bharat Oil Mills and another vs Union of India ; observed as under: "We have listened to long arguments directed at showing us that producers and sellers of oil in various parts of the country will suffer so that they would give up producing or dealing in mustard oil.
It was urged that this would, quite naturally, have its repercussions on consumers for whom mustard oil will become even more scarce than ever ultimately.
We do not think that it is the function of this Court or of any Court to sit in judgment over such matters of economic policy as must necessarily be left to the Government of the day to decide.
Many of them, as a measure of price fixation must necessarily be, are matters of prediction of ultimate results on which even experits can seriously err and doubtlessly be differ.
Courts can certainly not be expected to decide them without even the aid of experts".
In Shri Sitaram Sugar Company Limited and another vs Union of India & others with U.P. State Sugar Corporation Ltd., and another vs Union of India & Others, ; this Court observed as under: "Judicial review is not concerned with matters of economic policy.
The Court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either.
The Court does not supplant the "feel of expert" by its own views.
When the legislature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonableness.
In all such cases, judicial inquiry is confined to the question whether the findings of fact are reasonably on evidence and whether such findings are consistent with the laws of the land.
In R.K. Garg vs Union of India & others, etc.
; , at p. 690 a Constitution Bench of this Court observed as under: "Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc.
It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, be 447 cause it has to deal with complex problems which do not admit of solution through any doctrinaire or strait jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature.
The Court should feel more inclined to give judicial defence to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved.
Nowhere has this admonition been more felicitously expressed than in Morey vs Doud where Frankfurter, J. said in his Inimitable style: "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 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 experts, 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".
It may also be noted that it is not possible for the Court to determine as to how much percentage of deposit of first instalment should be allowed towards expenses which may consist of commission to agents, office expenses etc.
Even amongst the three companies viz.
Peerless, Timex and Favourite, there is a difference in this regard.
According to the Peerless 25 %, Timex 50 % and Favorite 60 % of the deposits of the first instalment would be necessary for generating the working capital for meeting the genuine expenses.
Thus it would depend from company to company based on various factors such as paid up capital, percentage of commission paid to the agents, rate of interest paid to the depositors, period of maturity for repayment, office expenses and various other factors necessary to mop up working capital out of the depositors money.
We cannot ignore the possibility of persons having no stake of their own starting such business and after collecting huge deposits from the investors belonging to the poor and weaker section of the society residing in rural areas, and to stop such business after a few years and thus devouring the hard earned money of the small investors.
It cannot be lot sight that in such kind of business, the agents always take interest in finding new depositors because they get a high rate of commission out of the first instalment, but they do not have same enthusiasm in respect of deposit of subsequent instalments.
In these circumstances, if the Reserve Bank has issued the 448 directions of 1987 to safeguard the larger interest of the public and small depositors it cannot be said that the directions are so unreasonable as to be declared constitutionally invalid.
It has been vehemently contended before us on behalf of the Peerless employees and field agents that in case the impugned directions are not struck down, the Peerless will have to close down its business and several thousands of employees and their family and several lakhs of field agents would be thrown on the street and left with no employment.
We do not find any force in the above contention.
So far as Peerless is concerned there is no possibility of its closing down such business.
It has already large accumulated funds collected by making profits in the past several years.
Thus it has enough working capital in order to meet the expenses.
We are not impressed with the argument of Mr. Somnath Chatterjee, Learned Senior Advocate for the Peerless that after some years the Peerless will have to close down its business if directions contained in paragraphs 6 and 12 are to be followed.
The working capital is not needed every year as it can be rotated after having invested once.
If the entire amount of the subscribers is deposited or invested in the proportion of 10 % in public sector banks, 70 % in approved securities and 20 % in other investments, such amounts will also start earning interest which can be added and adjusted while depositing or investing the subsequent years of deposits of the subscribers.
In any case it lies with the new entrepreneurs while entering such field of business to make arrangement of their own resources for working capital and for meeting the expenses and they cannot insist in utilising the money of the depositors for this purpose.
So far as the companies already in this field they must have earned profits in the past years which can be utilised as their working capital.
It is important to note that the impugned directions of 1987 have been made applicable from 15th May, 1987 prospectively and not retrospectively.
Thus under these directions the question of depositing the entire amount of subscriptions would only apply to the deposits made after 15th May, 1987.
We may also observe that the impugned directions of 1987 as well as any other directions issued from time to time by the Reserve Bank relating to economic or financial policy are never so sacrosanct that the same cannot be changed.
Even the financial budget for every year depends on the economic and financial policy of the Government existing at the relevant time.
So far as the impugned directions are concerned if it is found in future that the same are not workable or working against the public interest, the Reserve Bank is always free to change its policy and scrap or amend the directions as and when necessary.
We have no doubt 449 that if in times to come the Reserve Bank feels that business of the kind run at present by Peerless and other companies, in terms of the directions of 1987 are not yielding the result as envisaged by the Reserve Bank, it will always be prepared to consider any new proposals which may be conducive both in the interest of the large multitude of the investors as well as the employees of such companies.
Mr. Shanti Bhushan, learned Senior Counsel appearing on behalf of the Reserve Bank made a candid statement on behalf of the Reserve Bank that the Reserve Bank would always be prepared to consider any new proposal which would observe the public interest.
In the result I set aside the orders of the High Court and allow the appeals arising out SLP Nos.
6930 30 A of 1991, 7140 of 1991 and 3676 of 1991 filed by the Reserve Bank of India and dismiss the wirt petition No. 677 of 1991.
No order as to costs.
K.RAMASWAMY, J. While respectfully agreeing with my learned brother since the issues bear far reaching seminal importance, I propose to express my views as well.
This Court in Reserve Bank of India etc.
vs Peerless General Finance and Investment Co. Ltd. & Ors.
; , for short `first Peerless case ' while holding that does not attract "Recurring Deposits Schemes", pointed out that the schemes harshly operate against the poor sections of the society who require security and protection; urgent action appeared to be called for and was imperative to protect the public and emphasized to evolve fool proof scheme to prevent fraud being played upon persons not conversant with practices of the financial enterprises who pose themselves as benefactors of the people.
In pursuance thereof the appellant, Reserve Bank of India, for short `RBI ' issued Residuary Non Banking Companies (Reserve Bank) Directions, 1987 for short `the Directions '.
The short shift with avid eye into the relevant provisions of the 2 of 1934 for short `the Act ' and "the directions" would enable us to come to grips with the scope of the scheme of the directions, its purpose and operation.
Chapter III(B) of the Act deals with the power of RBI to regulate non banking institutions receiving deposits.
Section 45 (1) (bb) defines deposit includes and shall be deemed always to have included "any receipt or money by way of deposit or loan or in any other form but does not include. " exceptions are not relevant and hence are omitted.
Section 45(1) (c) defines `financial institution ' to mean any non banking institution which carries on its business, or part of its business, in any of the following activities; clauses (i) to (v) are omitted, clause (vi) collect 450 ing for any purpose of any scheme or arrangement by whatever name called, monies in lump sum or otherwise by way of subscription. or in any other manner by awarding prizes or gifts. , whether in cash or kind or disbursing monies in any other way to persons from whom monies are collected or to any other persons but does not include. the exclusions are not relevant and hence omitted.
Section 45J empowers that RBI may, if it considers necessary in the public interest so to do, by general or special order, (a) regulate or prohibit the issue by any non banking institution of any prospectus or advertisement soliciting deposits of money from the public; and (b) specify the conditions, subject to which any such prospectus or advertisement, if not prohibited, may be issued.
Section 45K empowers the RBI to collect information from non banking institution as to deposit and to give directions that every non banking institution shall furnish to the Bank, in such form, at such intervals and within such time, such statements, information or particulars relating to or connected with deposits received by the non banking institution, as may be specified by RBI by general or special order including the rates of interest and other terms and conditions on which they are received.
Under sub section (3) thereof the RBI is entitled to issue in the public interest directions to non banking institution in respect of any matter relating to or connected with the receipt of deposits including the rates of interest payable on such deposits and the periods for which deposits may be received.
The use of the adjective `any ' matter relating to or connected with the receipt of deposits is wide and comprehensive to empower the RBI to issue directions in connection therewith or relating to the receipt of deposits.
But exercise of power is hedged with and should be "in the public interest.
" Section 45L provides that if the RBI is satisfied that for the purpose of enabling it "to regulate the credit system of the country to its advantage it is necessary so to do"; it may give to such institutions either generally or to any such institution, in particular, "directions relating to the conduct of business" by them or by it as financial institution or institutions including furnishing of information of particulars "relating to paid up capital, reserves or other liabilities", the "investments" whether "in the Government securities" or "otherwise", the persons to whom, and the purposes and periods for which; finance is provided "the terms and conditions", including "the rates of interest", on which it is provided.
Section 45Q provides that the provisions of this chapter shall have effect "notwithstanding anything inconsistent therewith contained in any other law" for the time being in force or any instrument having effect by virtue of any such law.
The directions became operative from May 15, 1987.
They would apply to every Residuary Non Banking Company for short `R.N.B.C ' 451 which receive any deposit scheme in lump sum or in instalment by way of contribution or subscription or by sale of units of certificates or other instruments or "in any other manner" vide Clause II of the definition.
Clause III(A) defines deposits as defined in s.45(1) (bb) of the Act.
Paragraph 4 regulates receipt of deposits for a period not less than 12 months and not more than 120 months from the first day of the receipt of the deposit.
Paragraph 5 prescribes minimum rate of return of 10 per cent per annum (to be compounded annually) on the amount deposited.
The proviso empowers R.N.B.C. at the request of the depositor to make repayment of the deposit, after the expiry of a period of one year from the date of the deposit but before the expiry of the period the deposit with two per cent reduced rate of interest from 10 % interest.
Paragraph 6, the heart of the directions consists of three sub paragraphs with explanations.
The marginal note expresses "security for depositors".
Sub paragraph (1) thereof provides that on and from May 15, 1987 every R.N.B.C. shall deposit and keep deposited in fixed deposits with public sector banks or invest and keep invested in unencumbered approved securities (such securities being valued at their market value for the time being), or in other investments, which in the opinion of the company are safe, a sum which shall not, at the close of business on 31 st December, 1987 and thereafter at the end of each half year that is, 30th June and 31st December be less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable.
The proviso specifies that the sum so deposited or invested (a) not less than 10 per cent shall be in fixed deposits with any of the public sector banks (b) not less than 70 per cent shall be in approved securities; and (c) not more than 20 per cent or 10 times the net owned funds of the company, whichever amount is less, shall be in other investments.
Provided that such investments shall be with the approval of the Board of Directors of the company, the explanation "Net Owned funds" shall mean the aggregate of the paid up capital and free reserves as appearing in the latest audited balance sheet of the company as reduced by the amount of accumulated balance of loss, deferred revenue expenditure and other intangible assets, if any, as disclosed in the said balance sheet.
Sub paragraph (2) enjoins toe R.N.B.C to entrust to one of the public sector banks designated in that behalf.
Deposits and securities referred to in clauses (a) and (b) of the proviso to sub paragraph (1) to be held by such designated bank is for the benefit of the depositors.
Such securities and deposits shall not be withdrawn by the R.N.B.C. or otherwise dealt with, except for repayment to the depositors.
Sub paragraph (3) obligates it to furnish to the R.B.I. within 30 days from the close of business on 31st December, 1987 and thereafter at the end of each half year i.e., as on 30th June and 31st December, a certificate from its auditors, being member of institute of Chartered Accountants, to the effect 452 that the amounts deposited in fixed deposits and the investment made are not less than "the aggregate amounts of liabilities to the depositors" as on 30th June and 31st December of that year.
Explanation thereto makes explicit what the "aggregate amount of liabilities"; "approved securities"; and "public sector banks" and "unencumbered approved securities" are meant to be the details of which are not necessary for the purpose of this case.
Paragraph 7 abolishes the power of the R.N.B.C. of forfeiture of deposits; paragraph 8 prescribes particulars to be mentioned in the form soliciting deposits; paragraph 9 enjoins issuance of the receipts to the depositors and paragraph 10 obligates to maintain the register with particulars of depositors mentioned therein.
Paragraph II enjoins its Board of Directors to furnish the information in their report as envisaged therein.
Paragraph 12 which is also material for the purpose of this case provides that every R.N.B.C. shall disclose as liabilities in its books of accounts and balance sheets, the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors.
Paragraph 13 enjoins to supply to R.B.I. copies of the balance sheets and accounts together with Directors report.
Paragraph 14 obligates the company to submit returns to the R.B.I. in the manner envisaged thereunder.
R.N.B.C. has to submit balance sheet, returns etc.
to the department of the Financial Companies as per paragraph 15.
Paragraph 16 obligates R.N.B.C. to comply with the requirement of the non banking financial companies and miscellaneous non banking companies (Advertisement) Rules, 1977 etc.
and actual rate of interest etc.
to the depositor.
Paragraph 17 applies to the prospective R.N.B.C. to furnish information in Schedule C. Paragraph 18 accords transitory power and paragraph 19 empowers the R.B.I., if it considers necessary to avoid any hardship or for any other just and sufficient reasons, to grant extensions of time to comply with or exempt, any company or class of companies, from all or any of the provisions of the directions either generally or for any specified period, subject to such conditions as the RBI may impose and paragraph 20 excludes the applicability of paragraph 19 of the Non Banking Financial Companies (Reserve Bank) Directions, 1977.
The High Court declared paragraphs 6 and 12 to be ultra vires of article 19(1)(g) and 14 of the Constitution holding that though the directions do not expressly prohibit the business of receiving any deposit under any scheme or arrangement in lump sum or in instalment by way of contribution or subscription by R.N.B.C. in effect the operation of the directions inhibit the existing business and prohibits the future companies to come into being.
As seen the public purpose of the directions is to secure for the depositors, return of the amounts payable at maturity together with interest, bonus, premium or any other advantage accrued or payable to the 453 depositors.
To achieve that object every R.N.B.C. is enjoined to deposit and keep deposited in fixed deposit and invest and keep invested in unencumbered approved securities a sum which shall not, at the close of each half year, be less than the aggregate amount of the liability to the depositors whether or not such amount has become payable.
The object, thereby, is to prohibit deployment of funds by R.N.B.C. in any other manner which would work detrimental to the interest of the depositors.
The question emerges whether paragraph 6 and 12 are ultra vires of Articles 19(1)(g) and 14 of the Constitution.
Article 19(1)(g) provides fundamental rights to all citizens to carry on any occupation, trade or business.
6 thereof empowers the State to make any law imposing, in the interest of the general public, reasonable restrictions on the exercise of the said rights.
Wherever a statute is challenged as violative of the fundamental rights, its real effect or operation on the fundamental rights is of primary importance.
It is the duty of the court to be watchful to protect the constitutional rights of a citizen as against any encroachment gradually or stealthily thereon.
When a law has imposed restrictions on the fundamental rights, what the court has to examine is the substance of the legislation without being beguiled by the mere appearance of the legislation.
The Legislature cannot disobey the constitutional mandate by employing an indirect method.
The court must consider not merely the purpose of the law but also the means how it is sought to be secured or how it is to be administered.
The object of the legislation is not conclusive as to the validity of the legislation.
This does not mean the constitutionality of the law shall be determined with reference to the manner in which it has actually been administered or operated or probably been administered or operated by those who are charged with its implementation.
The court cannot question the wisdom, the need or desirability of the regulation.
The state can regulate the exercise of the fundamental right to save the public from a substantive evil.
The existence of the evil as well as the means adopted to check it are the matters for the legislative judgment.
But the court is entitled to consider whether the degree and mode of the regulation whether is in excess of the requirement or is imposed in any arbitrary manner.
The court has to see whether the measure adopted is relevant or appropriate to the power exercised by the authority or whether over stepped the limits of social legislation.
Smaller inroads may lead to larger inroads and ultimately result in total prohibition by indirect method.
If it directly transgresses or substantially and inevitably effects the fundamental right, it becomes unconstitutional, but not where the impact is only remotely possibly or incidental.
The court must lift the veil of the form and appearance to discover the true character and the nature of the legislation, and every endeavor should be made to have the efficacy of fundamental right maintained and the legislature is 454 not invested with unbounded power.
The court has, therefore, always to guard against the gradual encroachments and strike down a restriction as soon as it reaches that magnitude of total annihilation of the right.
However, there is presumption of constitutionality of every statute and its validity is not to be determined by artificial standards.
The court has to examine with some strictness the substance of the legislation to find what actually and really the legislature has done.
The court would not be over persuaded by the mere presence of the legislation.
In adjudging the reasonableness of the law, the court will necessarily ask the question whether the measure or scheme is just, fair, reasonable and appropriate or is it unreasonable, unnecessary and arbitrary interferes with the exercise of the right guaranteed in Part III of the Constitution.
Once it is established that the statute is prima facie unconstitutional, the state has to establish that the restrictions imposed are reasonable and the objective test which the court to employ is whether the restriction bears reasonable relation to the authorized purpose or an arbitrary encroachment under the garb of any of the exceptions envisaged in Part III.
The reasonableness is to the necessity to impose restriction; the means adopted to secure that end as well as the procedure to be adopted to that end.
The court has to maintain delicate balance between the public interest envisaged in the impugned provision and the individual 's right; taking into account, the nature of his right said to be infringed; the underlying purpose of the impugned restriction; the extent and urgency of the evil sought to be remedied thereby; the disproportion of the restriction imposed, the prevailing conditions at the time, the surrounding circumstances; the larger public interest which the law seeks to achieve and all other relevant factors germane for the purpose.
All these factors should enter into the zone of consideration to find the reasonableness of the impugned restriction.
The court weighs in each case which of the two conflicting public or private interest demands greater protection and if it finds that the restriction imposed is appropriate, fair and reasonable, it would uphold the restriction.
The court would not uphold a restriction which is not germane to achieve the purpose of the statute or is arbitrary or out of its limits.
This Court in Joseph Kuruvilla Vellukunnel vs Reserve Bank of India & Ors.
,[1962] Suppl.
3 SCR 632, held that the RBI is ``a bankers ' bank and lender of the last resort. ' ' Its objective is to ensure monetary stability in India and to operate regulate the credit system of the country.
It 455 has, therefore, to perform a delicate balance between the need to preserve and maintain the credit structure of the country by strengthening the rule as well as apparent credit worthiness of the banks operating in the country and the interest of the depositors.
In under developed country like ours, where majority population are illiterate and poor and are not conversant with banking operations and in under developed money and capital market with mixed economy, the constitution charges the state to prevent exploitation and so the RBI would play both promotional and regulatory roles.
Thus the R.B.I. occupies place of ``pre eminence ' ' to ensure monetary discipline and to regulate the economy or the credit system of the country as an expert body.
It also advices the Government in public finance and monetary regulations.
The banks or non banking institutions shall have to regulate their operations in accordance with, not only as per the provisions of the Act but also the rules and directions or instructions issued by the RBI in exercise of the power thereunder.
Chapter 3B expressly deals with regulations of deposit and finance received by the R.N.B.Cs.
The directions, therefore, are statutory regulations.
In State of U.P. vs Babu Ram, ; , this Court held that rules made under a statute must be treated, for all purposes of construction or obligations, exactly as if they were in that Act and are to the same effect as if they contained in the Act and are to be judicially noticed for all purposes of construction or obligations.
The statutory rules cannot be described or equated with administrative directions.
In D.V.K. Prasada Rao vs Govt.
of A.P., AIR 1984 AP 75, the same view was laid.
Therefore, the directions are incorporated and become part of the Act itself.
They must be governed by the same principles as the statute itself.
The statutory presumption that the legislature inserted every part thereof for a purpose to and the legislative intention should be given effect to, would be applicable to the impugned directions.
The R.B.I. issued the directions to regulate the operations of the R.N.B.Cs., to safeguard the interest of the depositors.
Payment of interest, bonus, premium or other advantage, in whatever name it may be called is reward for waiting or parting with liquidity.
It is paid because of positive time preference (one rupee today is preferred to one rupee tomorrow)on the part of the depositor.
Therefore, the directions avowed to preserve the right of the depositors to receive back the amount deposited with the contracted rate of interest; it aims to prevent depletion of the deposits collected from the weaker segments of the society and also tends to effect free flow of the business of the R.N.B.Cs.
who would desire to operate in their own way.
The question, therefore, emerges whether the directions in paras 5 and 12 violate articles 14 and 19(1)(g) of the Constitution.
456 The solidarity of political freedom hinges upon socio economic democracy.
The right to development is one of the most important facets of basic human rights.
The right to self interest is inherent in right to life.
Mahatma Gandhiji, the Father of the Nation, said that ``Every human being has a right to live and therefore to find the wherewithal to feed himself, and where necessary, to clothe and house himself ' '.
Article 25 of the Universal Declaration of Human Rights provides that ``everyone has a right to a standard of living adequate for the health and well being of himself and of his family, including food, clothing, housing and medical care. ' ' Right to life includes the right to live with basic human dignity with necessities of life such as nutrition, clothing, food, shelter over the head, facilities for cultural and socio economic well being of every individual.
article 21 protects right to life.
It guarantees and derives therefrom the minimum of the needs of existence including better tomorrow.
Poverty is not always an economic problem alone.
Very often it is a social as well as human problem.
An agriculturist, an industrial worker, the daily wage earner, rickshaw puller and small self employed teacher, artisan, etc.
may have an earning but may be prone to spend his/her entire earnings, apart from on daily necessities of life, on socio religious occasions, fairs, festivals etc.
The urge for better tomorrow and prosperous future; the clamour for freedom from want of any kind and social security, make the vulnerable segments of the society to sacrifice today 's comforts to save for better tomorrow.
The habit of saving has an educative value for thrift.
It endeavors to bring an attitudinal change in life.
It enables individuals to assess future specific needs and to build up a financial provision for the purpose.
The habit of saving becomes a way of life and harnesses the meagre resources to build up better future.
During the days of rising prices, small savings serve as instrument to mop up the extra purchasing power.
In addition to wage a war against poverty, waste, unwise spending, hoarding and other activities, habit of saving also enables family budgeting and postponing expenditure which can be deffered in favour of better utilisation in future.
To strengthen the urge for thrift and streamline the social security, the disadvantaged need freedom from exploitation and Art.46 of the constitution enjoins the State to protect the poor from all forms of exploitation and social injustice.
Investment agencies or commercial banks are intermediaries between savers and investors.
They embark upon deposit mobilisation campaign to mop up the limited resources.
Commercial banks or financial investment agencies, be it public sector or private sector, are vying with one another to scale new heights in deposit growth each year, devising 457 different deposit schemes to suit the individual needs of the depositors or savers.
Mushroom growth of non banking agencies put afloat diverse schemes with alluring offers of staggering high rate of interest and other catchy advantages which would generate suspicion of the bona fides of the offer.
But gullible depositors are lured to make deposits.
It is not uncommon that after collecting fabulous deposits, some unscrupulous people surreptitiously close the company and decamp with the collections keeping the depositors at bay.
Therefore, the need to regulate the deposits/subscriptions, in particular, in private sector became imperative to prevent exploitation or mismanagement as social justice stratagem.
The directions are, therefore, a social control measure over the R.N.B.Cs., in matters connected with the operation of the schemes or incidental thereto.
The direction to investment in the channelised schemes at the given percentage in clauses (a) and (b) of proviso to para 6(1) was intended to deposit or keep deposited the collections in fixed deposit in the public sector banks or invest or keep invested in unencumbered approved securities so as to ensure safety, steady growth and due payment to the subscribers at maturity of the principal amount and the interest, bonus, premium or other advantage accrued thereon.
The amounts deposited shall not be less than the total aggregate amounts of liabilities to the subscribers.
The deposits or securities shall not be withdrawn or otherwise be dealt with except for a repayment to the subscribers.
It should always be shown to be a liability till date of the repayment.
This court in Hatisingh Mfg. Co. Ltd. & Anr.
vs Union of India & Ors.
; , held that freedom to carry on trade or business is not an absolute one.
In the interest of the general public, the law may impose restrictions on the freedom of the citizen to start or carry on his business, whether an impugned provision imposing a fetter on the exercise of the fundamental right guaranteed by article 19(1)(g) amounts to a reasonable restriction imposed in the interest of general public, must be adjudged not in the background of any theoretical standard or pre determinate patterns, but in the light of the nature and the incidence of the right, the interest of the general public sought to be secured by imposing restrictions and the reasonableness of the quality and the extent of the fetters imposed by the directions.
The credit worthiness of R.N.B.Cs.
undoubtedly would be sensitive.
It thrives upon the confidence of the public, on the honesty of its management and its reputation of solvency.
The directions intended to promote ``freedom ' ' and ``facility ' ' which are required to be regulated in the interest of all concerned.
The directions as a part of the scheme of the Act would be protected from the attack.
Vide Latafat Ali Khan & Ors.
vs State of U.P., 458 The R.N.B.C. is required to conduct its business activities in the interest of the depositors or subscribers who are unorganised, ignorant, gullible and ignorant of the banking operations.
If, however, the acts of R.N.B.C. is detrimental to the interest of the depositors, etc.
the R.B.I. has power in Chapter 3B to issue directions and the R.N.B.C. is bound to comply with the directions and non compliance thereof visits with penal action.
Admittedly except Peerless General Insurance, the other companies do not have either paid up capital or reserve fund worth the name.
Peerless was established in the year 1932 and over the years it built up reserve fund.
R.N.B.Cs. are carrying their business by crediting the entire first year 's collections as a capital receipt under actuarial accounting method.
In the affidavit of Sri S.S. Karmic, the Chief Officer of the RBI filed on August 13, 1991, it was stated that prior to the directions, 747 R.N.B.Cs. were doing the business.
As on that date only 392 R.N.B.Cs. were notified to be existing.
Out of them 178 are in West Bengal, 15 in Assam, 26 in Orissa, 6 in Manipur and Meghalaya, 26 in Punjab, 64 in U.P., 22 in Delhi, etc.
As on March 31, 1990 out of 185, 35 R.N.B.Cs.
alone submitted annual returns, and out of them only 30 have filed their balance sheets.
28 R.N.B.Cs.
in the northern region filed their annual returns and 23 filed their balance sheets with incomplete date.
35 of them have negative net worth (loss for exceeding their share capital and reserve).
Apart from Peerless, the aggregate capital investment of 15 companies accounted to Rs. 158 lacs.
The negative net worth of the 35 companies referred to above would aggregate to Rs.3.6 crores.
They raised, apart from Peerless, deposits to the tune of Rs. 86 crores.
Many of them have not even designated their banks as required under para 6 of the direction.
The amount invested in bank deposits and approved securities fell much short of their deposit liabilities.
Verona Commercial Credit and Investment Company, one of the respondents, have accumulated losses to the tune of Rs. 3.8 crores.
As per balance sheet their assets are inadequate to meet the liability.
Favourite Small Scale Investment, one of the respondents as on December 12, 1989, even their provisional balance sheet shows that total liability towards depositors is Rs. 44.62 crores while its investment in banks and Government security is only Rs. 13 crores.
The cash on hand was Rs. 1.74 crores.
Rs.8 crores were shown to be loans and advances.
The accumulated losses are Rs.22.19 crores as against total share capital and reserve of Rs. 20.73 lacs.
It is, thus, clear on its face that while total liabilities are Rs. 49.09 crores, the assets including doubtful loans and advances aggregate to Rs. 26 crores.
An inspection into the affairs of the said company conducted in February, 1990 disclosed that upto the end of 1989 the deposit liabilities including interest would be in the region of 459 over Rs. 132 crores.
The difference between the inspection and the balance sheet would be due to actuarial principle.
It had committed default to pay to its depositors to the tune of Rs. 5.4 crores, which is a gross under estimate.
Sri Somnath Chatterjee, the learned Senior Counsel for the Peerless and adopted by other counsel, contended that paragraphs 6 and 12 are totally unworkable.
Its compliance would jeopardise not only the existing companies but also the very interest of the depositors and large workmen.
No new company would be set up.
The direction given in the first Peerless case was to keep in view the interest of the workmen as well; in effect it was given a go bye.
At least 25% of collections would be left over as working capital of the company, to carry on its business in a manner indicated by the impugned judgment, so that no depositor would lose his money and no workmen would lose his livelihood and it will be in consonance with public interest.
Shri G.L. Sanghi, the learned Senior Counsel for Timex, contended that 50% of collection would be necessary to comply with the impugned directions and another company pleaded for 40%.
Further contention of Shri Chatterji was that the actuarial accounting neither violates any law, nor objected to by the Income tax Department.
Crediting the first year 's subscription in the accounts as capital receipt would generate company 's working capital for its successful business by meeting the expenditure towards establishment, the commission and a part of profits.
Forfeiture clause was already dated before the directions were issued.
Interest at 10% with annual compounding would be reasonable return to the subscribers which is being ensured to the depositors.
The directions issued by the High Court, subject to the above modifications, would subverse the above purpose.
Paras 6 and 12, otherwise, are arbitrary and prohibitive violating their fundamental right to do business assured by articles 19(1)(g) and 14.
Sri Harish Salve resisted the contentions with ability.
Para 12 is myocardium and para 6 ' is the heart of the directions without which the directions would be purified corpse.
On the respondents own showing, for the first two years, by actuarial accounting, the liabilities, as against deposits, are inadequate.
The regulation intends to preserve the corpus of the deposits and the interest payable thereon as on date to be a tangible and unencumbered asset at all times, though not repayable.
Indisputably the depositors/subscribers stand as unsecured creditors.
Undoubtedly every measure cannot be viewed or interpreted in the event of catastrophe overtaking the company.
The catchy and alluring but beguiled terms of offer attract the vulnerable segments of the society to subscribe and keep subscribing the small savings for better tomorrow.
460 But many a time, by the date of maturity, their hopes are belied and aspirations are frustrated or dashed to ground.
They remain to be helpless spectators with all disabilities to recover the amounts.
Pathetic financial position of some of the companies enumerated herein before would amply demonstrate the agony to which the poor subscribers would be subjected to.
The fixed deposits and unencumbered securities as per Clauses (a) and (b) of the proviso to paragraph 6(1) would be 80% of the collections of the year of subscription and Shri Chatterji contends to reduce it to 75% and to allow free play to use the residue in their own way.
The difference is only 5% and others at vagary.
The objects of the direction are to preserve the ability of the R.N.B.C. to pay back to the subscribers/depositors at any given time; safety of the subscribers ' money and his right to unencumbered repayment are thus of paramount public interest and the directions aimed to protect them.
The directions cannot and would not be adjudged to be ultra vires of arbitrary by reason of successful financial management of an individual company.
An over all view of the working system of the scheme is relevant and germane.
The obligation in paragraph 12 of periodical disclosure in the accounts of a company of the deposits together with the interest accrued thereon, whether or not payable but admittedly due as a liability, is to monitor the discipline of the operation of the schemes and any infraction, would be dealt with as per law.
The certificate by a qualified Chartered Accountant is to vouchsafe the correctness and authenticity of accounts and would and should adhere to the statutory compliance.
The settled accounting practice is that a loan or deposit received from a creditor has to be shown as a liability together with accrued interest whether due or deferred.
The actuarial accounting applies to revenues and costs to which the concept of the ``going concern ' ' can be adopted.
Therefore, in providing the costs of the company it can set apart its costs on the basis that liability is created for interest, bonus etc.
payable in foreseeable future.
Undoubtedly the actuarial principle applied by the L.I.C. or the gratuity schemes are linked with life of the assured or the premature death before retirement of an employee, but R.N.B.C. in its contract does not undertake any such risk.
The deposit is a capital receipt but not a revenue receipt and its full value shall be shown in the account books of balance sheet as liability of the company.
It cannot be credited to the profit and loss account.
Para II of Schedule VI of the requires that the amount shown in the profit and loss account should be confined to the income and expenditure of the company.
Para 12 of the directions is, thus, in consonance with the .
Moreover, in its advertisement and the application forms, 461 the R.N.B.C. expressly hold out to the public that their monies are safe with the bank and in the Government securities.
Paragraph 6(1) of the directions only mandates compliance of the promise held out by an R.N.B.C. for repayment at maturity.
Sub para (3) of para 6 keeps the deposits unencumbered and to be utilised by the company only for repayment.
In other words, paragraph 6 only elongates the contract in the public interest to safeguard the interest of the vulnerable sections of the depositors.
The R.B.I. cannot be expected to constantly monitor the working of the R.N.B.C. in its day to day function.
The actuarial basis cannot be adopted by the R.N.B.Cs.
and the liability must always be reflected in its balance sheet at its full value.
Compliance of the direction in para 12, dehors any method of accountancy adopted by a company, intended to discipline its operations.
No one can have fundamental right to do any unregulated business with the subscribers/depositors ' money.
Even the banks or the financial companies are regulated by ceiling on public deposits fixing nexus between deposits and net worth of the company at the ratio of 3:1, i.e. 25% of the capital net worth.
No one would legitimately be expected to get immediate profits or dividend without capital investment.
The effect of the clause (a) and (b) of the provision to paragraph 6(1) of the direction, no doubt, freezes the right to profit for a short time, and fastens an incidental and consequential obligation to mop up paid up capital or investment towards establishment and commission charges to tide over teething trouble.
But that is no ground to say that it is impossible for compliance, nor could it be said that the directions are palpably arbitrary or unreasonable.
Anyone may venture to do business without any stake of his own but is subject to the regulations.
A new company without any paid up capital, no doubt,cannot be expected to come into existence nor would operate its business at initial existence with profits.
Clause (c) of the provision to paragraph 6(1) of the directions gives freedom on leeway to invest or rotate, not more than 20 per cent of collections etc.
in any profitable manner at its choice as a prudent businessman to generate its resources to tide over the teething troubles till it is put on rail to receive succor to its existence, without inhibiting the company 's capacity to mop up small savings, and the directions do not control its operation.
The only rider is the approval of the Board of Directors which is inherent.
Absence of imposition of any limit on quantum of deposit with reference to paid up capital or reserve fund like non banking financial companies, etc.
is a pointer in this regard.
Thus there is a reasonable nexus between the regulation and the public purpose, namely, security to the depositors ' money and the right to repayment without any impediment, which undoubtedly is in the public interest.
462 Looking from operational pragmatism, the restrictions though apparently appears to be harsh in form, in its systematic working, it would inculcate discipline in the business management, subserve public confidence in the ability of the company to honour the contractual liability and assure due repayment at maturity of the amount deposited together with interest, etc, without any impediment.
In other words, the restrictions in paragraph 6 of the directions intended to elongate the twin purposes, viz.habit of thrift among the needy without unduly jeopardising the interest of the employees of the companies and the R.N.B.Cs working system itself in addition to safety and due payment of depositors ' money.
True, as contended by Shri Chatterji that there arises corresponding obligation to pay higher amount of commission to its agents and the commitment should by kept performed and the confidence enthused in the agents.
But it is the look out of the businessman.
The absence of ceiling on the rate of commission would give choice between the company and its agents to a contract in this regard and has freedom to manage its business.
The R.N.B.Cs.
are free to incur such expenses and organize their business as they desire including payment of commission as they think expedient.
But the subscribers/depositors 'liability, under no circumstances would be in jeopardy and the directions were designed to ensure that the interest of the subscribers/depositors is secured at all times, prescribing investment of an equal sum to the total liability to the subscribers/depositors.
Paragraph 12 is only a bridge between the depositors and the promise held out and the contract executed in furtherance thereof as a monitoring myocardium to keep the heart in paragraph 6 functioning without any hiatus.
It is settled law that regulation includes total prohibition in a given case where the mischief to be remedied warrants total prohibition.
Vide Narendra Kumar vs Union of India, ; But the directions do not do that but act as a siphon between the subscriber/depositor and the business itself.
Therefore, they are neither palpably arbitrary nor unjust not unfair.
The mechanism evolved in the directions is fool proof, as directed by this court in first Peerles case, to secure the interest of the depositors, as well is capable to monitor the business management of every R.N.B.C.
It also, thereby, protects interest of the employees/field staff/commission agent etc.
as on permanent basis overcoming initial convulsions.
It was intended, in the best possible manner, to subserve the interest of all without putting any prohibition in the ability of a company to raise the deposit, even the absence of any adequate paid up capital or reserve fund or such pre commitment of the owner, to secure such deposits.
Thus the directions impose only partial control in the public interest of the depositors.
The deposits invested or keep invested qua the com 463 pany always remained its fund till date of payment at maturity or premature withdrawal in terms of the contract.
The effect of the impugned judgment of the Calcutta High Court namely redefinition of the aggregate liabilities as contractual liabilities due and payable would have the effect of requiring the R.N.B.Cs.
to deposit an amount equal to the sum payable only in the year of maturity allowing free play to the R.N.B.Cs.
to use the subscriptions/deposits in its own manner during the entire earlier period, jeopardise the security of the subscribers/depositors and are self defeating.
The sagging mismanagement prefaced hereinabove would be perpetrated and the depositor was always at the mercy of the company with all disabilities, killing the very goose namely the thrust to save for prosperous future or to tide over future needs.
It is well settled that the court is not a Tribunal from the crudities and inequities of complicated experimental economic legislation.
The discretion in evolving an economic measures, rests with the policy makers and not with the judiciary.
Indian social order is beset with social and economic inequalities and of status, and in our socialist secular democratic Republic, inequality is an anathema to social and economic justice.
The constitution of India charges the state to reduce inequalities and ensure decent standard of life and economic equality.
The Act assigns the power to the RBI to regulate monitory system and the experimentation of the economic legislation, can best be left to the executive unless it is found to be unrealistic or manifestly arbitrary.
Even if a law is found wanting on trial, it is better that its defects should be demonstrated and removed than that the law should be aborted by judicial fiat.
Such an assertion of judicial power deflects responsibilities from those on whom a democratic society ultimately rests.
The court has to see whether the scheme, measure or regulation adopted is relevant or appropriate to the power exercised by the authority.
Prejudice to the interest of depositors is a relevant factor.
Mismanagement or inability to pay the accrued liabilities are evils sought to be remedied.
The directions designed to preserve the right of the depositors and the ability of R.N.B.C. to pay back the contracted liability.
It also intended to prevent mismanagement of the deposits collected from vulnerable social segments who have no knowledge of banking operations or credit system and repose unfounded blind faith on the company with fond hope of its ability to pay back the contracted amount.
Thus the directions maintain the thrift for saving and streamline and strengthen the monetary operations of R.N.B.Cs.
The problems of Government are practical and do require rough accommodation.
Illogical it may be and unscientific it may seem to be, left to its working and if need be, can be remedied by the R.B.I. by 464 pragmatic adjustment that may be called for by particular circumstances.
The impugned directions may at first blush seem unjust or arbitrary but when broached in pragmatic perspective the mist is cleared and that the experimental economic measure is manifested to be free from the taints of unconstitutionality.
Para 19 of the directions empowers the RBI to extend time for compliance or to exempt a particular company or a class thereof from all or any of the provisions, either generally or for a specified period subject to such conditions as may be imposed.
Power to exempt would include the power to be exercised from time to time as exigencies warrant.
An individual company or the class thereof has to place necessary and relevant material facts before the R.B.I. of the hardship and the need for relief.
A criticism of arbitrariness or unreasonableness may not be ground to undo what was conceived best in the public interest.
What is best is not always discernible.
The wisdom of any choice may be disputed or condemned.
Mere errors of Government are not subject to judicial review.
The legislative remedy may be ineffective to mitigate the evil or fail to achieve its purpose, but it is the price to be paid for the trial and error inherent in the economic legislative efforts to grapple with obstinate social issues.
It is proper for interference in judicial review, only, when the directions, regulations or restrictions are palpably arbitrary, demonstrably irrelevant or disriminatory.
Exercise of power then can be declared to be void under article 13 of the Constitution.
So long as the exercise of power is broadly within the zone of reasonableness, the court would not substitute its judgment for that of legislature or its agent as to matters within their prudence and power.
The court does not supplement the feel of the experts by its own values.
It is settled law that so long as the power is traceable to the statute mere omission to recite the provision does not denude the power of the legislature or rule making authority to make the regulations, nor considered without authority of law.
Section 114 (h) of the Evidence Act draws a statutory presumption that official acts are regularly performed and reached satisfactorily on consideration of relevant facts.
The absence of reiteration of objective satisfaction in the preamble as of one under s.45L does not denude the powers, the R.B.I. admittedly has under s.45L to justify the actions.
Though s.45L was neither expressly stated nor mentioned in the Preamble of the directions of the required recitation of satisfaction of objective facts to issue the directions from the facts and circumstances it is demonstrated that the R.B.I. had such satisfaction in its consideration of its power under s.45L when the directions were issued .
Even otherwise s.45K (3) itself is sufficient to uphold the directions.
465 The impugned directions are thus within the power of the R.B.I. to provide tardy, stable, identifiable and monitorable method of operations by each R.N.B.C. and its compliance of the directions.
This will ensure security to the depositors at all times and also make the accounts of the company accurate, accountable and easy to monitor the working system of the company itself and continuance of its workmen.
The directions in paragraphs 6 and 12 are just, fair and reasonable not only to the depositors, but in the long run to the very existence of the company and its continued business itself.
Therefore, they are legal, valid and constitutionally permissible.
The Writ Petition is dismissed and the appeals are allowed.
The Writ Petitions filed in the High Court stand dismissed.
No costs in this Court.
G.N. Petition dismissed Appeals allowed.
| IN-Abs | While pronouncing its Judgment in Reserve Bank of India vs Peerless General Finance and Investment Co. Ltd., ; , this Court observed that it would be open to the Reserve Bank of India (RBI) to take such steps as were open to it in law to regulate 407 the savings schemes run by Residuary Non Banking Companies (RNBCs) to prevent exploitation of ignorant investors while at the same time taking care to protect the thousands of employees working in such companies.
This Court also expressed grave concern at the mushroom growth of financial investment companies offering staggering rates of interests to depositors leading to suspicion whether these companies were speculative ventures floated to attract unwary and credulous investors and capture their hard earned savings.
Pursuant to the said observations of this Court and keeping in mind the public interest, the RBI in exercise of its powers under sections 45J and 45K of the , and of all powers enabling it in that behalf, issued certain directions by way of Notification No. DFC 55/DG (O) 87 dated 15.5.1987.
A Writ Petition was filed before the High Court challenging the constitutional validity of the said directions issued by the RBI.
A Single Judge of the High Court passed certain interim orders.
Being aggrieved against the interim orders, the RBI preferred an appeal before the Division Bench.
The Division Bench disposed of the appeal as well as the Writ Petition.
It held that the RBI was empowered to issue directions to the Residuary Non Banking Companies in the interest of depositors; but to the extent such directions were found to be prohibitory or unworkable and as such unreasonable, would be beyond the powers of RBI.
Peerless which became a party respondent, filed an application for clarification of the judgment, as regards payment against discontinued certificates.
The High Court clarified that in such cases the depositors be allowed to take loan against payments made till discontinuance on such terms and conditions as the company may stipulate.
The present appeals were filed by RBI against the orders of the High Court.
A Writ Petition has been filed directly before this Court, challenging the directions as being ultra vires of sections 45J and 45K of the as also violative of the provisions of the constitution.
On behalf of the Writ Petitioners it was contended that since the 1987 directions issued by RBI were in the nature of subordinate legislation, it was clear that RBI overstepped the bounds of the 408 parent statute; that the source of power for issuing the directions as being derived from section 45L was only an after thought; that from the working results it appeared impossible to carry on the traditional business for any longer period without incurring huge losses; that from in the business carried on by Peerless and other similar RNBCs that the working capital is generated out of the subscriptions received from the certificate holders either in lump sum or in instalments and such deposits are paid back with the guaranteed accretions, bonus, interest etc.
in terms of contract at the end of the stipulated term; that the interest of the depositors has not been impaired in any manner whatsoever by the method of accountancy followed by Peerless and all similar companies, namely, appropriation of a part of the subscription to the profit and loss account and meeting the working capital requirements out of the same.
On behalf of the appellant RBI, it was contended that it had the power to issue the said directions, that the said directions were issued in pursuance to this Court 's observations, and in public interest; that the said directions had not imposed any restriction on the right to carry on business but only placed a restriction with respect to one of the modes of raising reserves i.e. through public deposits; that the directions cannot be condemned as being violative of Article 19(1) (g); and that formula laid down by the High Court was self defeating and deprived altogether the benefits of security provisions given to depositors under the 1987 directions.
On behalf of the Peerless Field Officers Association, it was contended that if the directions of 1987 were to be upheld, the undertakings of Peerless would face inevitable closure and almost 14 lac field officers would lose their only source of livelihood.
Allowing the appeals filed by RBI and dismissing the Writ Petition filed by the Finance Companies, this Court, HELD: Per Kasliwal, J 1.1 The Reserve Bank was competent and authorised to issue the impugned directions of 1987, in exercise of powers conferred under Section 45K(3) of the Act.
[431 C] 1.2 A combined reading of Section 45J, 45K and 45L of the unmistakably goes to show that the Reserve Bank if it considers necessary in the public interest so to do, can specify the conditions subject to which any prospectus or advertisement soliciting deposits of money from the public may be 409 issued.
It can also give directions to non banking institutions in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received.
This latter power flows from sub section (3) of Section 45K of the Act.
The Bank under this provision can give directions in respect of any matters relating to or connected with the receipt of deposits.
Thus a very wide power is given to the RBI to issue dirctions in respect of any matters relating to or connected with the receipt of deposits.
It cannot be considered as a power restricted or limited to receipt of deposits only.
Such an interpretation would be violating the language of section 45K (3) which furnishes a wide power to the Reserve Bank to give any directions in respect of any matters relating to or connected with the receipt of deposits.
The Reserve Bank under this provision is entitled to give directions with regard to the manner in which the deposits are to be invested and also the manner in which such deposits are to be disclosed in the balance sheet or books of accounts of the company.
The word `any ' qualifying matters relating to or connected with the receipt of deposits in the above provision is of great significance and directions of 1987 are fully covered under Section 45K (3) of the Act, which gives power to the Reserve Bank to issue such directions.
[430 D H; 431 A] 1.3 When an authority takes action which is within its competence, it cannot be said to be invalid merely because it purports to be made under a wrong provision, if it can be shown to be within its power under any other provision.
[431 B] Indian Aluminium Company etc.
vs Kerala State Electricity Board; , , relied on.
2.1 The function of the Court is to see that lawful authority is not abused but not to attain itself the task entrusted to that authority.
It is well settled that a public body invested with statutory powers must take care not to exceed or abuse its power.
It must keep within the limits of the authority committed to it.
It must act in good faith and it must act reasonably.
Courts are not to interfere with economic policy which is the function of experts.
It is not the function of the Courts to sit in Judgment over matters of economic policy and it must necessarily be left to the expert bodies.
The function of the Court is not to advice in matters relating to financial and economic policies for which bodies like Reserve Bank are fully competent.
It would be hazardous and risky for the Courts to tread an 410 unknown path and should leave such task to the expert bodies.
[442 C D] 2.2 Reserve Bank of India which is banker 's bank is a creature of Statue.
It has large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bonafides of the Reserve Bank in issuing the impugned directions of 1987.
The Reserve Bank plays an important role in the economy and financial affairs of India and one of its important functions is to regulate the banking system in the country.
It is the duty of the Reserve Bank to safeguard the economy and financial stability of the country.
In fact the directions of 1987 were issued by RBI after mature consideration with the help and advice of experts.
[441 B D, 443 D E] Delhi Cloth and General Mills etc.
vs Union of India etc.
; , ; M/s Prag Ice & Oil Mills and Anr.
vs Union of India; , ; Shri Sitaram Sugar Company Limited and Anr.
vs Union of India & Ors.
, ; ; R.K. Garg vs Union of India & Ors. etc.; , , relied on.
The Reserve Bank was right in taking the stand that if the companies want to do their business, they should invest their own working capital and find such resources elsewhere with which the Reserve Bank has no concern.
[445 C] 4.
It is not the concern of this Court to find out as to whether actuaial method of accounting or any other method would be feasible or possible for the companies to adopt while carrying out the conditions contained in paragraphs 6 and 12 of the directions of 1987.
The companies are free to adopt any mode of accounting permissible under the law but it is certain that they will have to follow the entire terms and conditions contained in the directions of 1987 including those contained in paragraphs 6 and 12.
[445 E F] 5.1 It is not possible for the Court to determine as to how much percentage of deposit of first instalment should be allowed towards expenses which may consist of commission to agents, office expenses etc.
It would depend from company to company based on various factors such as paid up capital, percentage of commission paid to the agents, rate of interest paid to the depositors, period of maturity for repayment, office expenses and various other factors necessary to mop up working capital out of the depositors money.
411 One cannot ignore the possibility of persons having no stake of their own starting such business and after collecting huge deposits from the investors belonging to the poor and weaker sections of the society residing in rural areas, and to stop such business after a few years thus devouring the hard earned money of the small investors.
In such kind of business, the agents always take interest in finding new depositors because they get a high rate of commission out of the first instalment, but they do not have same enthusiasm in respect of deposit of subsequent instalments.
In these circumstances if the Reserve Bank has issued the directions of 1987 to safeguard the larger interest of the public and small depositors it cannot be said that the directions are so unreasonable as to be declared constitutionally invalid.
[447 E H, 448 A] 5.2 It cannot be said that the directions of 1987 amount to prohibition of the business in a commercial sense and without reasonable basis.
Nor are the directions violative of Article 19(1) (g) of the Constitution of India.
[442 G H, 443 A B] Mohammad Yasin vs The Town Area Committee, Jalalabad and Anr., ; ; Premier Automobiles Ltd. and Anr vs Union of India, ; ; Shree Meenakshi Mills Ltd. vs Union of India, ; , referred to.
So far as Peerless is concerned there is no possibility of its closing down such business.
It has already large accumulated funds collected by making profits in the past serveral years.
Thus it has enough working capital in order to meet the expenses.
It cannot be said that after some years Peerless will have to close down its business if the directions contained in paragraphs 6 and 12 are to be followed.
The working capital is not needed every year as it can be rotated after having invested once.
If the entire amount of the subscriptions is deposited or invested in the proportion of 10% in public sector banks, 70% in approved securities and 20% in other investments, such amounts will also start earning interest which can be added and adjusted while depositing or investing the subsequent years ' deposits of the subscribers.
In any case it lies with the new entrepreneurs while entering such field of business to make arrangement of their own resources for working capital and for meeting the expenses and they cannot insist in utilising the money of the depositors for this purpose.
So far as the companies already in this field they must have earned profits in the past years which can be utilised as their working capital.
It is important to note that the direc 412 tions of 1987 have been made applicable from 15th May, 1987 prospectively and not retrospectively.
[447 H; 448 C F] 7.
The directions of 1987 as well as any other directions issued from time to time by the Reserve Bank relating to economic or financial policy are never so sacrosanct that the same cannot be changed.
Even the financial budget for every year depends on the economic and financial policy of the Government existing at the relevant time.
So far as the impugned directions are concerned if it is found in future that the same are not workable or working against the public interest, the Reserve Bank is always free to change its policy and scrap or amend the directions as and when necessary.
If at any time, the Reserve Bank feels that the business of the kind run at present by the Peerless and other companies in terms of the directions of 1987 are not yielding the result as envisaged by the Reserve Bank, it will always be prepared to consider any new proposals which may be conductive both in the interest of the large multitude of the investors as well as the employees of such companies.
[448 G H, 449 A B] Per Ramaswamy, J. (Concurring) : 1.
The directions of 1987 issued by RBI are within the power of the RBI to provide tardy, stable, identifiable and monitorable method of operations by each RNBC and its compliance of the directions.
This will ensure security to the depositors at all times and also make the accounts of the company accurate, accountable and easy to monitor the working system of the company itself and continuance of its workmen.
The directions in paragraphs 6 and 12 are just, fair and reasonable not only to the depositors, but in the long run to the every existence of the company and its continued business itself.
Therefore, they are legal, valid and constitutionally permissible.
[464 G H, 465 A] 2.
Section 45K of the empowers the RBI to collect information from non banking institutions as to deposit and to give directions that every non banking institution shall furnish to the Bank, in such form, at such intervals and within such time, such statements, information or particulars relating to or connected with deposits received by the non banking institution, as may be specified by RBI by general or special order including the rates of interest and other terms and conditions on which they are received.
Under sub section (3) thereof the RBI is entitled to issue 413 in the public interest directions to non banking institutions in respect of any matter relating to or connected with the receipt of deposits including the rates of interest payable on such deposits and the periods for which deposits may be received.
The use of the adjective `any ' matter relating to or connected with the receipt of deposits is wide and comprehensive to empower the RBI to issue directions in connection therewith or relating to the receipt of deposits.
But exercise of the power is hedged with and should be `in the public interest '.
[450 C F] 3.1 The State can regulate the exercise of the fundamental right to save the public from a substantive evil.
The existence of the evil as well as the means adopted to check it are the matters for the legislative judgment.
But the court is entitled to consider whether the degree and mode of the regulation is in excess of the requirement or is imposed in an arbitrary manner.
The Court has to see whether the measure adopted is relevant or appropriate to the power exercised by the authority or whether it over stepped the limits of social legislation.
Smaller inroads may lead to larger inroads and ultimately result in total prohibition by indirect method.
If if directly transgresses or substantially and inevitably affects the fundametal right, it becomes unconstitutional, but not where the impact is only remotely possible or incidental.
The Court must life the veil of the form and appearance to discover the true character and the nature of the legislation, and every endeavour should be made to have the efficacy of fundamental right maintained and the legislature is not invested with unbounded power.
The Court has, therefore, always to guard against the gradual encroachments and strike down a restriction as soon as it reaches that magnitude of total annihilation of the right.
[453 F H, 454 A] 3.2 In the interest of the general public, the law may impose restrictions on the freedom of the citizen to start or carry on his business.
Whether an impugned provision imposing a fetter on the exercise of the fundamental right guaranteed by Article 19(1) (g) amounts to a reasonable restriction imposed in the interest of general public, must be adjudged not in the background of any theoretical standard or pre determinate patterns, but in the light of the nature and the incidence of the right, the interest of the general public sought to be secured by imposing restrictions and the reasonableness of the quality and the extent of the fetters imposed by the directions.
The credit worthiness of RNBCs undoubtedly would 414 be sensitive.
It thrives upon the confidence of the public, on the honesty of its management and its reputation of solvency.
The directions intended to promote `freedom ' and facility which are required to be regulated in the interest of all concerned.
[457 E F] Hatisingh Mfg. Co. Ltd. & Anr.
vs Union of India & Ors.
, ; ; Latafat Ali Khan & Ors.
vs State of U.P., [1971] Supp.
SCR 719, relied on.
There is presumption of constitutionality of every statute and its validity is not to be determined by artificial standards.
The court has to examine with some strictness the substance of the legislation to find what actually and really the legislature has done.
The court would not be over persuaded by the mere presence of the legislation.
In adjudging the reasonableness of the law, the court will necessarily ask the question whether the measure or scheme is just, fair, reasonable and appropriate or unreasonable, unnecessary and arbitrarily interferes with the exercise of the right guaranteed in of the Constitution.
The Court has to maintain a delicate balance between the public interest envisaged in the challenged provision and the individual 's right taking into account the nature of his right said to be infringed, the underlying purpose of the restriction, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the restriction imposed, the prevailing condition at the time, the surrounding circumstances, the larger public interest which the law seeks to achieve and all other relevant factors germane for the purpose.
All these factors should enter into the zone of consideration to find the reasonableness of the impugned restriction.
The Court weighs in each case which of the two conflicting public or private interest demands greater protection and if it finds that the restriction imposed is appropriate, fair and reasonable, it would uphold the restriction.
The court would not uphold a restriction which is not germane to achieve the purpose of the statute or is arbitrary or out of its limits.
[454 B C, E G] 5.
The directions are incorporated and became part of the Act itself.
They must be governed by the same principles as the statute itself.
The statutory presumption that the legislature inserted every part thereof for a purpose and the legislative intention should be given affect to, would be applicable to the directions of 1987 as well.
[445 E] 6.1 The RBI issued the directions to regulate the operations 415 of the RNBCs, to safeguard the interest of the depositors.
Payment of interest, bonus, premium or other advantage, in whatever name it may be called is reward for waiting or parting with liquidity.
It is paid because of positive time preference (one rupee today is preferred to one rupee tomorrow) on the part of the depositor.
Therefore, the directions avowed to preserve the right of the depositors to receive back the amount deposited with the contracted rate of interest; it aims to prevent depletion of the deposits collected from the weaker segments of the society and also tends to affect free flow of the business of the RNBCs who would desire to operate in their own way.
[455 F H] 6.2 Mushroom growth of non banking agencies put afloat diverse schemes with alluring offers of staggering high rate of interest and other catchy advantages which would generate suspicion of the bona fides of the offer.
But gullible depositors are lured to make deposits.
It is not uncommon that after collecting fabulous deposits, some unscrupulous people surreptiously close the company and decamp with the collections keeping the depositors at bay.
Therefore, the need to regulate the deposits/subscriptions, in particular in private sector became imperative to prevent exploitation or mismanagement as a social justice strategem.
[457 A B] 6.3 RBI occupies place of `pre eminence ' to ensure monetary discipline and to regulate the economy or the credit system of the country as an expert body.
It also advises the Government in public finance and monetary regulations.
The banks or non banking institutions shall have to regulate their operations in accordance with not only as per the provisions of the Act but also the rules and directions or instuctions issued by the RBI in exercise of the power thereunder.
Chapter 3B of the expressly deals with regulations of deposit and finance received by the RNBCs.
The directions, therefore, are statutory regulations.
[455 B D] Joseph Kuruvilla Vellukunnel vs Reserve Bank of India & Ors., [1962] Suppl.
3 SCR 632; State of U.P. vs Babu Ram, ; ; D.V.K. Prasada Rao vs Govt.
of A.P., AIR 1984 A.P. 75, relied on.
The objects of the direction are to preserve the ability of the RNBC to pay back to subscribers/depostitors at any given 416 time; safety of the subscribers ' money and his right to unencumbered repayment are thus of paramount public interest and the directions aimed to protect them.
The directions cannot and would not be adjudged to be ultra vires or arbitrary by reasons of successful financial management of an individual company.
An overall view of the working system of the scheme is relevant and germane.
[460 C D] 8.
The obligation in paragraph 12 of periodical disclosure in the accounts of a company of the deposits together with the interest securd thereon, whether or not payable, but admittedly due as a liability, is to monitor the discipline of the operation of the schemes and any infraction, would be dealt with as per law.
The certificate by a qualified Chartered Accountant is to vouchsafe the correctness and authenticity of accounts and would and should adhere to the statutory compliance.
[460 D E] 9.
The settled accounting practice is that a loan or deposit received from a creditor has to be shown as a liability together with accrued interest whether due or deferred.
The actuarial accounting applies to revenues and costs to which the concept of the `going concern ' can be adopted.
Therefore, in providing the costs of the company it can set apart its costs on the basis that liability is created for interest, bonus etc.
payable in foreseeable future.
Undoubtedly the actuarial principle applied by the LIC or the gratuity schemes are linked with life of the assured or the premature death before retirement of an employee, but RNBC in its contract does not undertake any such risk.
The deposit or loan is a capital receipt but not a revenue receipt and its full value shall be shown in the account books or balance sheet as liability of the company.
It cannot be credited to the profit and loss account.
of Schedule I of the requires that the amount shown in the profit and loss account should be confined to the income and expenditure of the company.
Para 12 of the directions is, thus, in consonance with the .
Paragraph 6 only elongates the contract in the public interest to safeguard the interest of the vulnerable sections of the depositors.
The RBI cannot be expected to constantly monitor the working of the RNBC in its day to day function.
The actuarial basis cannot be adopted by the RNBCs.
and the liability must always be reflected in its balance sheet at its full value.
Compliance of the direction in para 12, dehors any method of accountancy adopted by a company, intended to discipline its operations.
[460 E H, 461 A C] 417 10.
Regulation includes total prohibition in a given case where the mischief to be remedied warrants total prohibition.
The directions of 1987 are neither palpably arbitrary nor unjust nor unfair.
The mechanism evolved in the directions is fool proof, to secure the interest of the depositors, as well as capable of monitoring the business management of every RNBC.
It also protects the interest of the employees/field staff/commission agents etc.
on permanent basis over coming initial convulsion.
It was included, in the best possible manner, to subserve the interest of all without putting any prohibition in the ability of a company to raise the deposit, even the absence of any adequate paid up capital or reserve fund or such pre commitment of the owner, to secure such deposits.
[462 E G] Narendra Kumar vs Union of India, ; , relied on.
Reserve Bank of India etc.
vs Peerless General Finance and Investment Co. Ltd. & Ors.
; , , referred to.
So long as the power is traceable to the statute, mere omission to recite the provision does not denude the power of the legislature or rule making authority to make the regulations, nor consiered without authority of law.
The asbsence of reiteration of objective satisfaction in the preamble as of one under Section 45L does not denude the powers; the RBI admittedly has the power under Section 45L, to justify the actions.
Though Section 45L was neither expressly stated nor mentioned in the Preamble of the directions of the required recitation or satisfaction of objective facts to issue the directions, from the facts and circumstances it is demonstrated that the RBI, had such satisfaction in its consideration the power under Section 45L, when the directions were issued.
Even otherwise Section 45K (3) itself is sufficient to uphold the directions.
[464 F H] 1.2.
The court has to see whether the scheme, measure or regulation adopted is relevant or appropriate to the power exercised by the authority.
Prejudice to the interest of depositors is a relevant factor.
Mismanagement or inability to pay the accrued liabilities are evils sought to be remedied.
The directions of 1987 designed to preserve the right of the depositors and the ability of RNBC to pay back the contractual liability.
It also intended to prevent mismanagement of the deposits collected from vulnerable social segments who have no knowledge of banking operations or credit system and repose unfounded blind faith on the company with fond hope of its ability to pay back the contracted amount.
Thus the directions maintain 418 the thrift for saving and streamline and strengthen the monetary operations of RNBCs.
[463 E G]
|
N: Criminal Appeal No. 483 of 1980.
From the Judgment and Order dated 6.11.79 of the Andhra Pradesh High Court in Crl.
A. No. 789 of 1979.
T.V.S.R. Krishna Sastry, Vishnu Mathur and V.B. Saharya, Amicus curiee (NP) for the Appellants.
G. Prabhakar for the Respondent.
The Judgment of the Court was delivered by KASLIWAL, J.
Twelve persons were challaned for the murder of Nethala Veeraswamy, a resident and Sarpanch of village Ramaraogudem in Eluru Taluq, West Godavari District (A.P.) in the night of 31.12.1977.
Learned Sessions Judge, West Godavari Division, Eluru tried the case and relying on the evidence of P.Ws. 1,2 and 7 in toto and the evidence of P.W.3 to some extent convicted all the accused persons for the offences charged under Section 302 read with Section 149 I.P.C. and awarded each one of them sentence of imprisonment for life and other minor terms of imprisonment for other offences.
On appeal the High Court set aside the conviction and sentence of seven accused persons, namely, Dasari Bhaskara Rao (A 4), Kali China Krishna (A 5), Namburi Lakshmana (A 8), Namburi Ramulu (A 9), Namburi Prasada Rao (A 10), Mada Govardhana Rao (A 11) and Kali Kamaka Rao (A 12).
The High Court confirmed the conviction of the remaining five accused persons Mullagiri Vajram (A 1), Mada Lakshmandas (A 6) and Gandi Abraham (A 7) under Section 302 read with Section 149 I.P.C. and sentenced them to imprisonment for life.
The High Court further held that as these accused had been sentenced for the main offence under Section 302 read with Section 149 I.P.C. there was no need of separate sentence under Sections 148 and 147 I.P.C.
The five accused A 1, A 2, A 3, A 6 & A 7 have come before this Court in appeal against the order of the High Court by grant of Special Leave.
Mada Lakshmandas (A 6) expired during the pendency of appeal before this Court as such the appeal filed by him was dismissed as having abated by order dated 8.4.1992.
We are now concerned in this appeal with the four accused appellants A 1, A 2, A 3 and A 7.
We have gone through the Judgment of the lower courts and have perused the record and have considered the arguments advanced by learned counsel for the parties.
The High Court has considered the prosecution evidence in detail and has placed reliance on the statements of P.Ws. 1,2,3 and 4 as eye witnesses of the incident.
The High Court has placed implicit reliance on the testimony of P.W.2 and who was a clerk working in the panchayat office of Ramaraogudem and had accompanied the deceased in an autorickshaw and had seen the incident.
We find no infirmity in the statement of P.W.2 and the High Court has rightly placed reliance on his evidence.
Learned counsel for the accused persons submitted that even if the statement of P.W.2 is taken to be correct, no offence is made out so far as accused (A 3) is concerned.
Learned counsel in this regard submitted that P.W.2 in the cross examination has admitted that he did not state the name of A 3 in his statement recorded under Section 164 Cr.
It was also submitted that though P.W. 2 stated that he had given the name of A 3 in his statement recorded at the inquest but the name of A 3 does not find mention in exhibit D 7, the statement of P.W.2 recorded at the inquest.
We see force in the aforesaid contention.
A perusal of the statement of P.W.2 shows that he did not make a mention of the name of A 3 in his statement recorded under Section 164 Cr.
P.C. and also in his statement exhibit D 7 recorded at the inquest.
In view of these circumstances the accused A 3 is also entitled to the benefit of doubt.
It was next contended by learned counsel on behalf of the accused A 2 and A 7 that P.W.2 in the cross examination admitted that after the incident he had gone to police station seven or eight times.
He had gone to the police station as he was asked by the police.
He also admitted that at that time accused persons were in police lock up.
On the basis of the aforesaid statement of P.W.2 it was contended that when P.W.2 had gone to the police station scene or eight times after the incident the possibility of his seeing the accused (A 2) and (A 7) in the police station cannot be ruled out.
It was thus contended that any identification parade held on 25.1.1978 and 26.1.1978 has no value as P.W.2 had already seen the accused persons in the police station.
We find no force in this contention.
Exhibits P 16 and P 17 are the proceedings of identification parade held on 25.1.1978 and 26.1.1978 respectively.
A perusal of these documents shows that P.W.2 Garapati Krishnavatharam had himself stated that he had prior acquaintance with Mullagiri Yesupadam (A 2) and Gandi Abraham (A 7).
The High Court has examined this aspect of the matter and has rightly arrived to the conclusion that P.W.2 in his evidence has stated that he came to know the names of the accused from the children of the deceased and it was not unnatural for a person, who resides in a village for a period of two months and especially when they reside opposite to the residence of the president(deceased) in whose office he was working as a clerk to know the names of the persons residing nearby.
P.W.2 himself admitted at the time of holding the identification parade that he had prior acquaintance with A 2 and A 7.
P.W.2 is a witness of sterling worth and both the trial court and the High Court have placed reliance on his testimony.
He had identified A 1, A 2 and A 7 in the Court.
Their conviction is not based on the identification parade but on the statement of P.W.1 AND P.W.2 made during the trial as eye witness.
It is established beyond any manner of doubt that there were two factions and long standing rivalry in between the two groups in the Village.
The accused persons belonged to the group headed by A 6, A 7 and the deceased was the leader of the other group.
Nethalaveeraswamy the deceased was given merciless beatings and was done to death in the midnight of 31.12.1977.
He was found to have 26 external injuries as recorded in the autopsy of his dead body conducted by the Doctor.
It has also been found established by the learned trial court as well as by the High Court that A 1 inflicted injuries by and axe and A 2 by a spear and A 7 was Court that A 1 inflicted injuries by an axe and A 2 by a spear and A 7 was among the other persons who inflicted injuries by a stick.
It has also come in the evidence of P.W. 19, Inspector of Police that the accused persons had absconded and on 9.1.1978 on information by 5.00 A.M., he along with mediators visited Ramaraogudem and the absconded accused were hiding in the house of A 7.
He surrounded the house with his staff, guarded the house and in that house he found the twelve persons against whom the case was challaned.
It has also been proved by the prosecution that A 7 was the leader of the rival faction against the deceased.
Thus we find that there is no infirmity at all in the reasoning and conclusion arrived at by the High Court so far as accused A 1, A 2 and A 7 are concerned.
In the result we allow the appeal so far as Dasari Bhima Rao (A 3) is concerned and he is acquitted of all the charged levelled against him his bail bonds shall stand discharged.
The appeal filed by Mullagiri Vajram (A 1), Mullagiri Yesupadam (A 2) and Gandi Abraham(A 7) is dismissed.
They shall surrender to their bail bonds and serve out the sentence awarded to them by the High Court.
N.P.V. Appeal disposed of .
| IN-Abs | Twelve persons, including the appellants, were challaned for the murder of Sarpanch of a village.
Relying on the evidence of P.Ws. 1,2 and 7 in toto and that of P.W.3 to some extent, the Sessions Judge convicted all the accused persons for the offences under Section 302 read with Section 149 I.P.C. and awarded sentence of imprisonment for life and other minor terms of imprisonment for other offences.
On appeal, the High Court set aside the conviction and sentence of seven accused persons, namely, A 4, A 5, A 8 to 12 and confirmed the conviction of the remaining five accused persons, A 1, A 6 and A 7 under Section 302 read with Section 149 I.P.C. and sentenced them to imprisonment for life.
These five accused filed an appeal, by special leave, before this Court.
During the pendency of the appeal one of the accused appellants died and as such appeal filed by him was dismissed as having abated.
On behalf of the accused persons it was submitted that even if the statement of P.W. 2 was taken to be correct no offence was made out so far as accused A 3 was concerned, inasmuch as P.W.2 had admitted in the cross examination that he did not state the name of A 3 in his statement recorded under Section 164 Cr.
P.C., and that the name of A 3 was also not found in Exhibit D 7, the statement of P.W.2 recorded at the inquest, and that since P.W.2 had gone to police station seven or eight times after the incident, there was a possibility of his seeing the accused, A 2 and A 7 in the police lock up and hence the identification parades held had no value.
Disposing of the appeal, this Court, HELD: 1.1.
There is no infirmity at all in the reasoning and conclusions arrived at by the High Court so far as accused A 1, A 2 and A 7 are concerned.[24 B] 1.2 It is established beyond any manner of doubt that there were two factions and long standing rivalry in between the two groups in the village.
The accused persons belonged to the group headed by A 6, A 7 and the deceased was the leader of the other group.
The deceased was given merciless beatings and was done to death in the midnight.
He was found to have 26 external injuries as recorded in the autopsy of his dead body conducted by the Doctor.
It has also been found established by the trial court as well as by the High Court that A 1 inflicted injuries by an axe and A 2 by a spear and A 7 was among the other persons who inflicted injuries buy a stick.
It has also come in the evidence of P.W.19, Inspector of Police, that the accused persons had absconded and after a few days of the incident, on information, he, alongwith mediators, visited the village and the absconded accused were hiding in the house of A 7.
He surrounded the house with hes staff, guarded it and found therein, the twelve persons against whom the case was challaned.
It has also been proved by the prosecution that A 7 was the leader of the rival faction against the deceased.
[23 F H, 24 A] 1.3.
The High Court has considered the prosecution evidence in detail and has placed reliance on the statements of P.Ws.1 to 4 as eye witnesses of the incident.
The High Court has placed implicit reliance on the testimony of P.W.2.
a clerk in the deceased 's office, and who had accompanied the deceased in an autorickshaw and seen the incident.
There is no infirmity in the Statement of P.W.2 and the High Court has rightly placed reliance on his evidence.
[22 D,E] 1.4.
P.W.2 himself admitted at the time of holding the identification parade that he had prior acquaintance with A 2 and A 7.
P.W.2 is a witness of sterling worth and both the trial court and the High Court have placed reliance on his testimony.
He had identified A 1, A 2 and A 7 in the Court.
Their conviction is not based on the identification parade but on the statement of P.W.1 and P.W.2 made during the trial as eye witness.
[23 E] 1.5.
A perusal of the statement of P.W.2 shows that he did not make a mention of the name of A 3 in his statement recorded under Section 164 Cr.
and also in his statement, Exhibit D 7, recorded at the inquest.
In the circumstances, the circumstances, the accused A 3 is also entitled to the benefit of doubt.
[22 G] 1.6.
In the result, A 3 is acquitted of all the charges levelled against him, and the conviction and sentence of the other appellants, A 1, A 2 and A 7 are confirmed.
[24 c]
|
Appeal No. 2822 of 1979.
from the Judgment and Order dated 28.9.1978 of the Punjab and Haryana High Court in Civil Revision No. 480 of 1977.
E.C. Agrawala for the Appellants.
Bishambar Lal Khanna and Ms. Geetanjali Mohan for the Respondents.
The Judgment of the Court was delivered by KASLIWAL, J.
This appeal by grant of special leave is directed against the judgment of Punjab & Haryana High Court dated September 28,1978.
The short controversy raised in the present case is regarding the date from which the period of limitation shall commence under Article 137 of the .
According to the facts found established on record, Grubachan Singh respondent was delivered actual possession of 135 Kanals of land and symbolical possession of 62 kanals, 13 marlas on June 13,1963 in execution of decree for pre emption obtained by him.
According to the decree, Gurbachan Singh was only entitle to actual possession was concerned, it was beyond the terms of the decree.
Ladha Singh, father of the appellants having come to know about the said mistake, filed a suit for declaration and for permanent injunction in the year 1965.
The said suit was decreed in favour of Ladha Singh and the said declaratory decree was affirmed in appeal by the Additional District on actual possession of the portion over which symbolical possession was recorded in execution proceedings.
It remains undisputed that the aforesaid judgment given by the Additional District Judge, Karnal dated 12.5.1969 became final.
Gurbachan Singh has now filed a suit for partition in the year 1973 claiming not only 135 kanals on which he had obtained actual physical possession, but also 62 Kanals and 13 marlas on which he had been granted symbolical possession in the execution proceedings in 1963.
After the filing of the suit for partition, the appellants filed an objection petition under Sections 47/152/151 of the code of Civil Procedure Praying that necessary correction may be made in revenue record by restitution of excessive area wrongly delivered to the decree holder.
The respondent decree holder contested the above application.
Apart from the other objections, one the ground raised was that the objection petition was barred by limitation as the same was not filed within three years of the order dated 13.6.1963 under which the symbolical possession was given to the decree holder.
The Learned Sub Judge First Class, Karnal held that the limitation will only start to run when the respondent decree holder tried to interfere in the possession of the petitioners by filing the partition proceedings in the year 1973.
It was also held that the decree holder had already obtained possession of the area measuring 135 Kanals to which he was entitled under the decree and he was not entitled to retain the possession of the excessive area of 62 Kanals, 13 marlas of which only symbolical possession was given to him.
It was thus, held that the possession of the land measuring 62 Kanals, 13 marlas of which symbolical possession was obtained was to be restored in favour of the objector judgment debtor.
Aggrieved against the aforesaid order, the decree holder filed a revision before the High Court.
Learned Single Judge allowed the revision on the ground that the limitation in case of such applications is three years and as the symbolical possession had been delivered on June 13,1963, the present application filed on July 22,1973 was barred by time.
The High Court further held that actual possession of the land was never delivered by the Executing Court and it was only symbolical possession which was delivered.
Thus, for the purpose of restitution, if at all, there was a necessity to move the application, the same could be done within three years from the date of the delivery of the symbolical possession.
The High Court, as such allowed the revision and set aside the order of the Executing Court and dismissed the application filed by the judgment debtor.
3 We have heard Learned Counsel for the parties and have gone through the record.
It is not in dispute that Article 137 of the shall govern the present case.
Article 137 reads as under: table ====== "137.
Any other application for which Three years.
When the no period of limitation is provided right to apply elsewhere in this Division.
accrues.
" table ===== The period of limitation under Article 137 is three years which commences from the date when the right to apply accrues.
The question when such right to apply accrues will depend on the facts and circumstances of each case.
In the present case in execution of the decree for pre emption on 13.6.1963, the delivery of symbolical possession on an area measuring 62 Kanals, 13 marlas was wrongly recorded.
Ladha Singh, father of the appellants continued to remain in possession over the aforesaid land and he also filed declaratory suit challenging the recording of the delivery of symbolical possession in favour of the decree holder.
The Said declaratory suit was decreed in favour of Ladha Singh by the trial court and was affirmed by the Additional District Judge by order dated 12.5.1969.
No in actual possession of the land.
The decree holder now in 1973 filed suit for partition claiming land on the basis of order dated 13.6.1963.
The appellants as such submitted an objection petition under Sections appellants as such submitted an objection petition under Sections 47/152/151 of the Code of Civil Procedure in the Executing Court on 22.71973 for rectifying the mistake and for restitution of the land for which symbolical possession was wrongly recorded.
In the aforesaid admitted facts, we are of the view that the period of limitation under Article 137 would commence when actual threat of dispossession commenced i.e. on taking the proceedings for partition in the 1973.
The High Court in our view was not right in holding that the limitation in the facts and circumstances of the present case would commence from 13.6.1963 and not in 1973.
Even otherwise, it is a case where by mistake excess land beyond the terms of the decree was recorded by way of symbolical possession in favour of the Decree holder even in written arguments submitted before this court.
This error has been rightly corrected by the Executing Court on an objection petition filed under Section 47 of the Code of Civil Procedure read with Section 151.
Apart from that the judgment in the declaratory suit filed by Ladha singh in this regard has also become final and binding on the decree holder.
We, therefore, do not consider it proper in the interest of justice to prolong this litigation by remanding the matter to the High Court as prayed in the alternative on behalf of the respondents.
We find support in the view taken by us on the decision of this Court in Merla Ramanna vs Nallaparaju and others, , in which it was held that an application by a party to the suit to recover possession of properties which had been taken delivery of under a void execution sale would be in time under Article 181 (corresponding Article 137 of the ), if it was filed within three years of dispossession.
In the result, we allow this appeal, set aside the judgment of the High Court dated 28.9.1978 and restore the judgment of the Executing Court dated 19.2.1977.
No order as to costs in the facts and circumstances of the case.
| IN-Abs | In execution of decree for pre emption obtained by the respondent he was delivered actual possession as well as symbolic possession of lands.
According to the decree, the respondent was only entitle to actual possession, and so far as the delivery of symbolic possession was concerned, it was beyond the terms of the decree.
The father of the appellants having come to know about the aforesaid mistake, filed a suit for declaration and for permanent injunction in the year 1965, which was decreed in his favour, and the said declaratory decree was affirmed in appeal by the Additional District Judge on 12.5.1969, but the relief of injunction was denied as he was in actual possession of the portion over which symbolic possession was recorded in execution proceedings.
This order became final.
The respondent in the appeal filed a suit for partition in the year 1973 claiming not only the lands in which he had obtained actual physical possession, but also the lands on which he was granted symbolic possession in the execution proceedings in 1963.
After the filing of the suit for partition, the appellants filed an objection petition under sections 47,151 and 152 of the Code of Civil Procedure praying that necessary correction may be made in revenue record by restitution of excessive area wrongly delivered to the decree holder.
The respondent decree holder contested the application and one of the ground raised was that the objection petition was barred by limitation as the same was that the objection petition was barred by limitation as the same was not filed within three years of the order dated 13.6.1963, under which symbolic possession was given to the decree holder.
The Sub Judge held that the limitation will only start to run when the respondent decree holder tried to interfere in the possession of the petitioners by filing the partition proceedings in the year 1973.
It was also held that the decree holder had already obtained possession of the land to which he was entitled under the decree and he was not entitled to retain the possession of the excessive area of which only symbolic possession was given to him.
Aggrieved by the aforesaid order, the decree holder filed a revision before the High Court, and a Single Judge allowed the revision on the ground that the limitation in case of such applications was three years, and the symbolic possession having been delivered on June 13,1963, the application filed on July 22,1973 was barred by time.
It was further held, that actual possession of the land was never delivered by the Executing Court and it was only symbolical possession which was delivered, and for the purpose of restitution, if at all, there was a necessity to move the application, the same could be done within three years from the date of the delivery of the symbolical possession.
The order of the Executing Court was accordingly set aside, and the application filed by the judgment debtor was dismissed.
In the appeal to this Court, on the question regarding the date from which the period of limitation shall commence under Article 137 of the .
Allowing the appeal, this Court, HELD : The period of limitation under Article 137 is three years which commences from the date when the right to apply accrues.
The question when such right to apply accrues will depend on the facts and circumstances of each case.
[17 E] In the instant case, in execution of the decree for pre emption on 13.6.1963 the delivery of symbolic possession on an area measuring 62 canals, 13 marlas was wrongly recorded.
The father of the appellants continued to remain in possession over the aforesaid land and he also filed a declaratory suit challenging the recording of the delivery of symbolical possession in favour of the decree holder.
The suit was decreed in his favour by the trial court and confirmed by the Additional District Judge by order dated 12.5.1969.
In 1973 the decree holder filed the suit for partition claiming the land on the basis of order dated 13.6.1963.
An objection petition was submitted by the appellants in the Executing Court on 22.7.1973 of rectifying the mistake and for restitution of the land for which symbolical possession was wrongly recorded.
The period of limitation under Article 137 would therefore commence when actual threat of dispossession commenced i.e. on taking the proceedings for partition in the year 1973.
[17 F H, 18 A] The High Court was not right in holding that the limitation would commence from 13.6.1963 and not in 1973.[18 B] This is a case where by mistake excess land beyond the terms of the decree was recorded by way of symbolical possession in execution proceedings.
This fact is not disputed by the decree holder.
This error has been rightly corrected by the Executing Court on an objection petition filed under section 147 of the Code of Civil Procedure read with section 151.
The judgment in the declaratory suit has also become final and binding on the decree holder.
It is not considered proper in the interest of justice to prolong this litigation by remanding the matter to the High Court.
The judgment of the High Court dated 28.9.1978 is therefore set aside and the judgment of the Executing Court dated 19.2.1977 is restored.
[18 C D F] Merla Ramanna vs Nallaparaju and Others,[1995] 2 S.C.R. 938, relied on.
|
Civil Appeal Nos.4255 57 of 1992.
From the Judgment and order dated 15.10.1991,28.11.1991 and 17.12.1991 of Madhya Pradesh Administrative Tribunal, Jabalpur in O.A.Nos.
140 of 1990 and 3024 of 1991 and T.A. No.35 of 1988.
U.N. Bachawat, B.S. Banthia, G. Prakash, L.C. Agrawala, K.K. Chagotra and Indra Makwana for the Appellants.
S.S. Ray, A. Raghuvir, A.K. Sen. Dr. N.M. Ghatate, S.K. Gambhir, Vivek Gambhir, S.K. Jain, A.P. Dhamija, R.B. Misra, N.D.B. Raju, Anand Prasad, S.V. Deshpande and S.K. Agnihotri for the Respondents.
The Judgments of the Court was delivered by KASLIWAL, J. Special leave granted in all the above cases.
All the above appeals are disposed of by a common order, as identical questions of law are involved in these cases.
For the purpose of understanding the controversy raised in all these cases, we are stating the facts of appeal arising out of special leave petition No. 2507 of 1992.
The appellants and the private respondents were Sub Engineers in Public Health Engineering Department of Government of Madhya Pradesh.
They are governed by Madhya Pradesh Public Health Engineering (Gazetted) Service Rules 1980 (hereinafter referred to as `the Rules ').
Under Schedule IV of the Rules, the next higher post for promotion from the post of Sub Engineers in Civil or Mechanical is the post of Assistant Engineers.
The minimum period for Sub Engineer to qualify for promotion to the post of Assistant Engineer is 12 years for diploma holders and 8 years for such Sub Engineers who obtain degree of graduation in the course of service.
Earlier 60 per cent quota for the posts of Assistant Engineers was fixed by direct recruitment and 40 percent by promotion from the Sub Engineers, Draftsman and Head Draftsman.
By and executive order dated 7.2.1989, quota of direct recruitment was reduced to 50 percent and the quota by promotion increased to 50 per cent.
This 50 per cent quota by promotion with which we are concerned in the above cases has been sub divided in the following manner: (i) Diploma holder Sub Engineers completing 12 years of service 35% (ii) Draftsman & Head Draftsman completing 12 years of service 5% (iii) Graduate Sub Engineers completing 8 years of service 10% In the above cases we are now concerned with the third category of cases which deal with the promotion of Graduate Sub Engineers Completing 8 years of service.
The State Government had been applying the principle of counting the seniority of Graduate Sub Engineers from the date of their continuous officiation irrespective of the date on which such diploma holder Sub Engineer acquired degree of graduation in engineering.
On this basis, the Departmental promotion Committee took into consideration 30 Graduate Sub Engineers for promotion to the post of Assistant Engineers.
The D.P.C. by order dated 4.12.1989 prepared a panel of 18 Graduate Sub Engineers found suitable for promotion to the post of Assistant Engineer.
The Government by order dated 6.12.1989 promoted M.B. Joshi and six others as Assistant Engineer who are appellants in appeal arising out of special leave petition No. 2507 of 1992.
The private respondents in this appeal filed application No. 140/90 in Madhya Pradesh Administrative Tribunal, Jabalpur challenging the aforesaid orders dated 4.12.1989 and 6.12.1989.
The contention of these persons before the Tribunal was that the seniority for the purpose of promotion to the post of Assistant Engineers in 10 per cent quota of Graduate Sub Engineers completing 8 years of service ought to have been considered from the date of attaining the Graduate degree of engineering and not from the date of appointment as sub Engineer.
The Tribunal placing reliance on its earlier decision in T.A. No. 771/88 Sanaulla Sunzani vs State of M.P. & 5 others, held that the seniority of diploma holder Sub Engineers acquiring the degrees of graduation in engineering for inclusion in the gradation list of Sub Engineers should be counted from the dates of acquisition of graduation in engineering or of any other equivalent degree and not from the dates of their initial entries as Sub Engineers.
Applying to aforesaid principle laid down in Sanaulla 's case, the Tribunal held that the applicants (private respondents in the appeal) having secured the degrees in engineering prior to respondents 3 to 9 (the appellants in the appeal) will rank higher in the gradation list of Graduate Sub Engineers.
The Tribunal as such allowed the petition filed before them and directed the State Government and Engineer in Chief, Public Health Engineering Department to convene a special D.P.C. to consider applicants for promotion to the post of Assistant Engineers as on 4.12.1989 and if found suitable for promotion, promote them and give them seniority over respondents 3 to 9 within 4 months of the date of receipt of the order.
The short controversy arising in these cases relates to the determination of seniority amongst the diploma holder Sub Engineers who acquired the degree of graduation in engineering during the period service qualifying them for promotion in 8 years to the post of Assistant Engineer.
It is an admitted position that there is no specific rule governing such situation.
Relevant extracts of Schedule IV of the Rules as published in the Madhya Pradesh Gazette dated 27.2.1981 issued in Hindi read as under: Mr. S.S. Ray, learned senior counsel appearing on behalf of the appellants contended that so far as the post of Sub Engineers is concerned, the minimum qualification prescribed is diploma holder.
Initially, in the Public Health Engineering Department till 1980, fresh degree holders used to get job directly as Assistant Engineers and the diploma holders used to be appointed as Sub Engineers.
Thereafter on account of unemployment, the degree holders also started seeking appointments as Sub Engineers.
However, so far as the post of sub Engineer was concerned, the seniority was determined on the basis of the date of appointment on the post of Sub Engineer irrespective of the fact that the person joining such post was a degree holder or a diploma holder.
The scale of pay was similar and the diploma holder and degree holder Sub Engineers stood on the same footing and their gradation list was prepared on the basis of length of service in the cadre of Sub Engineers.
The next higher post for promotion from the post of Sub Engineer is the post of Assistant Engineer.
Every diploma holder sub Engineer became eligible for promotion to the post of Assistant Engineer after having completed 12 years of service.
The Government however, considered it proper to reduce this period of 12 years to 8 years in case of such diploma holder Sub Engineers who obtained a degree of engineering during the continuance of their service as Sub Engineer as a sort of incentive to improve the qualification while continuing in service.
It was thus, submitted by Mr. Ray that it is a well settled principle of service jurisprudence that where the rules are silent, the seniority is always determined on the basis of length of service amongst the employees appointed on a similar post in the same cadre.
It was thus, submitted that obtaining a degree during the continuation of service as Sub Engineer simply accelerated the entitlement to promotion for the post of Assistant Engineer from 12 years to 8 years but it did not in any manner disturb the seniority which was already settled on the basis of length of service on the post of Sub Engineer.
It was submitted that the D.P.C. rightly prepared the panel of selection and the Government took a correct decision in issuing the order dated 6.12.1989.
Mr. Ashok Sen, learned senior counsel appearing on behalf of the respondents contended that it was necessary to obtain the degree of engineering for being qualified for promotion to the post of Assistant Engineer within a period of 8 years instead of 12 years.
It was further argued that the period of 8 years can only be counted from the date when the diploma holder Sub Engineer acquired the degree of engineering and not prior to said date.
Mr. Sen further placed reliance on N. Suresh Nathan & Another vs Union of India & Others, [1992] Supp.1 SCC 584, and submitted that this case clinches the issue raised in these cases and is no longer open for consideration.
We have given our careful consideration to the arguments advanced on behalf of learned counsel for the parties.
We may first deal with N. Suresh Nathan 's case (supra) on which strong reliance is placed by Mr. Ashok Sen.
In this case, the Recruitment Rules for the post of Assistant Engineer in the Public Works Department, Pondicherry, prescribing the educational and other qualifications for appointment by direct recruitment and promotion came for consideration.
For direct recuits, the qualification prescribed was a Degree in Civil Engineering of a recognised University or Diploma in Civil Engineering from a recognised institution with three years, professional experience.
For appointment by promotion of Section Officers now called junior Engineers, the qualification prescribed was as under: "1.
Section Officers possessing a recognised Degree in Civil Engineering or equivalent with three years ' service in the grade failing which Section Officers holding Diploma in Civil Engineering with six years ' service in the grade 50 percent.
Section Officers possessing a recognised Diploma in Civil Engineering with six years ' service in the grade 50 per cent.
" The dispute in the above case was whether a diploma holder Junior Engineer who obtains a degree while in service becomes eligible for appointment as Assistant Engineer by promotion on completion of three Years ' service including therein the period of service prior to obtaining the degree or the three years ' service including therein the period of service prior to obtaining the degree or the three years ' service as a degree holder for this purpose is to be reckoned from the date he obtains the degree.
The Central Administrative Tribunal held that the applicants diploma holders were entitled to be considered for promotion to the post of Assistant Engineer on par with the other degree holder Junior Engineers taking due note of their total length other degree holder junior Engineers taking due note of their total length of service rendered in the grade of Junior Engineers taking due note of their total length of service rendered in the grade of grade of junior of Junior Engineer.
Such a consideration should be alongside other Junior Engineers who might have acquired the necessary degree qualification earlier than the applicants, while holding the post of Junior Engineer.
This Court allowed the appeal and set aside the above order of the Tribunal.
While allowing the appeal, this Court held as under: "In our opinion, this appeal has to be allowed.
There is sufficient material including the admission of respondents diploma holders that the practice followed in the department for a long time was that in the case of diploma holder Junior Engineers who obtained the degree during service, the period of three years ' service in the grade for eligibility for promotion as degree holders commenced from the date of obtaining the degree and the earlier period of service as diploma holders was not counted for this purpose.
This earlier practice was clearly admitted by the respondents diploma holders in para 5 of their application made to the Tribunal at page 115 of the paper book.
This also appears to be the view of the Union Public Service Commission contained in their letter dated December 6, 1968 extracted at pages 99 100 of the paper book in the counter affidavit of respondents 1 to 3.
The real question, therefore, is whether the construction made of this provision in the rules on which the past practice extending over a long period is based is untenable to require upsetting it.
If the past practice is based on one of the possible constructions which can be made of the rules then upsetting the same now would not be appropriate.
It is in this perspective that the question raised has to be determined." This Court then considered the Recruitment Rules applicable in the said case and then held that the entire scheme did indicate that the period of three years ' service in the grade required for degree holders according to Rule 11 as the qualification for promotion in that category must mean three years ' service in the grade as a degree holder, and therefore, that period of three years can commence only from the date of obtaining the degree and not earlier.
It was further held that the service in the grade as a diploma holder prior to obtaining the degree cannot be counted as service in the grade with a degree for the purpose of three years ' service as a degree holder.
This Court then observed: "In our opinion, the contention of the appellants degree holders that the rules must be construed to mean that the three years ' service in the grade of a degree holder for the purpose of Rule 11 is three years from the date of obtaining the degree is quite tenable and commends to us being in conformity with the past practice followed consistently.
It has also been so understood by all concerned till the raising of the present controversy recently by the respondents.
The Tribunal was, therefore, not justified in taking the contrary view and unsettling the settled practice in the department." A perusal of the above observations made by this Court clearly show that the respondents diploma holders in that case had admitted the practice followed in that department for a long time.
It was clearly laid down in the above case that if the past practice is based on one of the possible constructions which can be made of the rules then upsetting the same now would not be appropriate.
It was clearly said "it is in this perspective that the question raised has to be determined.
" It was also observed as already quoted above that the Tribunal was not justified in taking the contrary view and unsettling the settled practice in the department.
That apart the scheme of the rules in N. Suresh Nathan 's case was entirely different from the scheme of the Rules before us.
The rule in that case prescribed for appointment by promotion of Section Officers/Junior Engineers provided that 50 per cent quota shall be from Section Officers possessing a recognised degree in Civil Engineering or equivalent with three years ' service in the grade failing which Section Officers holding Diploma in Civil Engineering with six years ' service in the grade.
The aforesaid rule itself provided in explicit terms that Section Officers possessing a recognised Degree in Civil Engineering was made equivalent with three years ' service in the grade.
Thus, in the scheme of such rules the period of three years ' service was rightly counted from the date of obtaining such degree.
In the cases in hand before us, the scheme of the rules is entirely different.
In the cases before us 50 per cent of the posts of Assistant Engineers has to be filed by direct recruitment of persons having degree of graduation in engineering.
The remaining 50 per cent of the vacant posts are to be filled by promotion from the lower cadre of sub Engineer and Draftsman.
Out of this 50 per cent, 35 per cent quota is fixed for diploma holders who have completed 12 years of service on the post of sub Engineer, 5 percent quota for Draftsman who have completed 12 years of service and the remaining 10 per cent with which we are concerned has been kept for such Sub Engineers who during the continuation of their service obtained a degree of graduation or equivalent in engineering and in that case the period of service is reduced from 12 from 8 years.
The Rules in our case do not contemplate any equivalence of any period of service with the qualification of acquiring degree of graduation in engineering as was provided in express terms in N. Suresh Nathan 's case making three years service in the grade equivalent to degree in engineering.
In our opinion, in the rules applicable in the cases before us clearly provide that the diploma holders having obtained a degree of engineering while continuing in service as sub Engineers shall be eligible for promotion to the post of Assistant Engineer in 8 years of service and quota of 10 per cent posts has been earmarked for such category.
If we accept the contention of Mr. Ashok sen, it would defeat the very scheme and the purpose of giving incentive of adding educational qualification by diploma holders while continuing in service in case the period of 8 years ' is counted from the date of obtaining graduate degree in engineering.
It may be noted that no such argument was raised even from the side of the respondents before the Tribunal.
If such interpretation as now sought to be advanced by Mr. Ashok Sen, learned senior counsel is accepted, no relief could have been granted to the respondent Satish Kumar Pandey.
We would illustrate the above position on admitted facts that Shri Satish Kumar Pandey had joined as Sub Engineer on 23.8.1980, but had acquired the degree of engineering in May, 1987.
In that situation, Mr. Satish Kumar becomes eligible only in May 1995 and he could not be considered as eligible in December 1989 when these Sub Engineers were considered for promotion as Assistant Engineers.
Even othrwise, if this period of 8 years is counted from the date of acquiring degree then this incentive of adding the qualification during the continuation of service and getting the advantage of acceleration in promotion in 8 years would for all practical purposes become nugatory and of no benefit.
It is further important to note that in the cases before us, the Government itself has been adopting the practice and making promotion as contended by the appellants and we are upholding such practice.
In N. Suresh Nathan 's case also this Court had upheld the practice followed by the Government.
It is also well settled principle of service jurisprudence that in the absence of any specific rule, the seniority amongst persons holding similar posts in the same cadre has to be determined on the basis of the length of service and not on any other fortuitous circumstance.
Though, in the cases of special leave petitions filed by Shri Ram Sharan Gupta & Others vs The State of M.P. & Others and Shri N.N. Asthana & Another vs Shri Harish Kumar Ahuja & Others, the parties belonged to the Irrigation Department of the State of Madhya Pradesh and were governed with different set of rules, but the controversy arising in these cases is amply covered with the view taken by us and determined in the manner indicated above.
In these circumstances mentioned above, we are clearly of the view.
that the Tribunal was wrong in determining the seniority from the date of acquiring degree of engineering and it ought to have been determined on the basis of length of service on the post of Sub Engineer and the State the basis of length of service on the post of Sub Engineer and the State Government was right in doing so and there was no infirmity in the orders passed by the Government.
In the result, we allow these appeals, set aside the orders of the Tribunal dated 15.10.1991, 28.11.1991 and 17.9.1991 and 8upheld the orders passed by the Government in all these cases.
In the facts and circumstances of the case, no order as to costs.
Appeals allowed.
| IN-Abs | The appellants and the private respondents were Sub Engineers in Public Health Engineering Department of the Government.
The minimum period for Sub Engineer to qualify for promotion to the post of Assistant Engineer was 12 years for diploma holders and 8 years for such Sub Engineers who obtained the degree of graduation in the course of service.
By an executive order dated 7.2.1989, quota of direct recruitment was reduced to 50 per cent and the quota by promotion from the Sub Engineers, Draftsman, increased to 50 per cent.
The 50 per cent quota by promotion was sub divided.
The promotion quota for category of the Graduate Sub Engineers completing 8 years of service was 10%.
The principle of counting the seniority was from the date of their continuous officiation irrespective of the date on which such diploma holder Sub Engineer acquired degree of graduation in engineering.
The Departmental Promotion Committee considered the cases of 30 Graduate Sub Engineers for promotion to the post of Assistant Engineers and by order dated 4.12.1989 it prepared a panel of 18 Graduate Sub Engineers found suitable for promotion to the post of Assistant Engineer.
On 6.12.1989 the Government promoted one M.B.Joshi and six others as Assistant Engineer, who are appellants in appeal arising out of Special Leave Petition No.2507 of 1992.
The Private respondents in the appeal, filed and application in the State Administrative Tribunal challenging the orders dated 4.12.1989 and 6.12.1989.
They contended that the seniority for the purpose of promotion to the post of Assistant Engineers in 10 per cent quota of Graduate Sub Engineers completing 8 years of service ought to have been considered from the date of attaining the graduate degree of engineering and not from the date of attaining the graduate degree of engineering and not from the date of appointment as Sub Engineer.
The Tribunal allowed the petition placing reliance on its earlier decision in Sanaulla Sunzani V. State of M.P. & Ors., T.A. No. 771/88.
The Tribunal held that the applicants (private respondents in the appeal) having secured the degrees in engineering prior to respondents 3 to 9 ( the appellants in the appeal) would rank higher in the graduation list of Graduate Sub Engineers.
It directed the State Government and Engineer in Chief, Public Health Engineering Department to convene a special D.P.C. to consider the applicants for promotion to the post of Assistant Engineers as on 4.12.1989 and if found suitable for promotion, promote them and give them seniority over respondents 3 to 9.
Identical questions of law were involved in all the appeals (C.A. Nos. 4255 57 of 1992), which were preferred against the judgments of the Tribunals.
The appellants contended that so far as the post of Sub Engineers was concerned, the minimum qualification prescribed was diploma holder and the seniority was determined on the basis of the date of appointment on the post of Sub Engineer irrespective of the fact that the person joining such post was a degree holder or a diploma holder; that the scale of pay was similar and the diploma holder and degree holder Sub Engineers stood on the same footing and their gradation list was prepared on the basis of length of service in the cadre of Sub Engineers that in the service jurisprudence where the rules were silent, the seniority was always determined on the basis of length of service amongst the employees appointed on a similar post in the same cadre; that obtaining a degree during the continuation of service as Sub Engineer simply accelerated the entitlement to promotion for the post of Assistant Engineer from 12 years to 8 years but it did not in any manner disturb the seniority which was already settled on the basis of length of service on the post of Sub Engineer; and that the D.P.C. rightly prepared the panel of selection and the Government took a correct decision in issuing the order dated 6.12.1989.
2 The respondents contended that it was necessary to obtain the degree of engineering for being qualified for promotion to the post of Assistant Engineer within a period of 8 years instead of 12 years; that the period of 8 years to be counted from the date when the diploma holder Sub Engineer acquired the degree of engineering and not prior to said date.
Allowing the appeals, this Court, HELD: 1.1.
It is a well settle principle of service jurisprudence that in the absence of any specific rule, the seniority amongst persons holding similar posts in the same cadre has to be determined on the basis of the length of service and not on any other fortuitous circumstance.[12 B] 1.2.
The Government itself has been adopting the practice and making promotion as contended by the appellants.
Such practice is upheld by the Court.
[12 A] 1.3.
The Rules do not contemplate any equivalence of any period of service with the qualification of acquiring degree of graduation in engineering.
The Rules clearly provide that the diploma holders having obtained a degree of engineering while continuing in service as Sub Engineer shall be eligible for promotion to the post of Assistant Engineer in 8 years of service and quota of 10 per cent posts has been earmarked for such category of persons.
[11 C D] 1.4.
If the period of 8 years is counted from the date of acquiring degree then this incentive of adding the qualification during the continuation of service and getting the advantage of acceleration in promotion in 8 years would for all practical purposes become nugatory and of no benefit.
[11 G H] 1.5.
The Tribunal was wrong in determining the seniority from the date of acquiring degree of engineering and it ought to have been determined on the basis of length of service on the post of Sub Engineer and the State Government was right in doing so and there was no infirmity in the orders passed by the Government.
[12 D E] N. Suresh Nathan & Anr.
vs Union of India & Ors., [1992] Supp.1 SCC 584, explained.
|
ivil Appeal Nos. 2684 90 of 1982 etc.
From the Judgment and order dated 23.12.1981 of the Madras High court in Tax Cases (Revision) Nos.206 210, 586 and 825 of 1979.
M.L. Verma, G.L. Sanghi, S.K. Verma, Manoj Prasad, Ms. Minoti Mukherji, A.K. Srivastava, R. Mohan, T. Raja, R. Nedumaran and K. Ram Kumar for the appearing parties.
The Judgment of the court was delivered by RANGANATHAN, J.
By its judgment dated 23.12.1981, report as Ramco cement Distribution Co.(p) Ltd. vs The State of Tamil Nadu, (1982) 51 S.T.C. 171, The Madras High Court disposed of a batch of 48 sales tax revision cases arising out of the assessments, to local sales Tax(T.N.S.T) as well as Central sales Tax (C.S.T), of Ramco Cement Distribution Co. (p) Ltd. (16 cases).
Madras Cements Ltd. (8 cases), Dalmia Cement Bharat Ltd. (21 cases) and India cement Ltd. (3 cases).
The question at issue were answered partly in favour of Revenue and partly in favour of the assessees.
C.A. Nos. 5306 5336/1985 preferred by the state of Tamil Nadu arise out of 31 of these cases; 9 relating to Ramco Cements, 16 relating to Dalmia cements and 6 relating to Madras Cements.
C.A. No. 2684 to 2690/82 are appeals by Ramco Cements and C.A. No. 4043 4044/1982 are by Madras cements from the same judgment.
C.A. Nos. 315 319/1983 arise out of the other 5 cases relating to Dalmia Cements.
C.A. Nos 280 281/1989 arise out of a judgment of the High Court dated 17.1.1985 which dismissed two revision tax cases pertaining to Dalmia Cements.
One of the question involved in these cases was decided in favour in of the assessee by following the decision in 51 S.T.C. 171.
As the question involved are common, all these appeals are being disposed of by a common judgment.
In doing so, we shall refer to the fact in the appeals pertaining to Ramco Cements.
It is common ground that the facts in other cases are similar and that the decision reached in the case of Ramco Cements will govern the other appeals as well.
Ramco Cement Distribution Co. Ltd. (hereinafter referred to as 'the assessee ') are the selling agents of M/s. Madras Cements Ltd., Rajapalayam, For the assessment year 1969 70 , they were assessed to sales tax on a taxable turn over of Rs. 2,37,66,245 which included an amount of Rs. 29,71,527, representing freight charges.
The assessee claimed exclusion of freight charges in computing the taxable turnover on the ground that freight had been independently charged in the invoice.
It relied on the decision of the supreme court in the case of Hyderabad Asbestos Cements products Ltd. vs state of Andhra Pradesh, (1969) 24 S.T.C. 487.
This contention was rejected by the assessing authority, the appellate authority as well as the Tribunal.
Aggrieved by the above orders the assessee preferred revisions to the High court were enunciated as follows at the commencement of its judgment: (i) Whether the freight charges incurred by a dealer in the despatch of cement to the place of the customer could be deducted from the total turnover of the dealer under the Central sales Tax Act, (ii) Whether the packing charges being the cost of the packing materials used by the dealer in packing cements for being delivered to his customers could be properly excluded from his turnover for the assessment of sales tax; (iii) Whether the excise duty paid on packing materials used by a dealer for packing cement to be sold to his customers can be excluded in his total turnover.
These questions were answered by the High Court as follows: "In tax revision cases arising under the Central sales Tax act, we hold that the freight, packing charges and excise duty on packing materials have to be included in the sale price for the computation of sales tax.
In cases arising under the Tamil Nadu General Sales Tax Act and Tamil Nadu Additional Sales Tax Act, we hold that freight, packing changes and excise duty on packing materials are not liable to be included in the sale price for the computation of the sale price.
The assessees are not liable to pay additional sales tax on freight, packing materials and excise duty on packing materials in those cases arising under the Tamil Nadu Additional sales Tax Act.
" The High court certified the case to be one fit for appeal the Supreme Court and hence these appeals.
Both the asseesses as well as the state urges that, the High court having held that the amounts in question were liable to be included in the turnover for purpose of Central sales Tax, ought to have also held that these amounts were liable to be included in the taxable turnover for purposes of Tamil Nadu Additional sales Tax Act.
On the other hand, on behalf of the assessees it is contended that, even for the purposes of C.S.T., the freight charges, the cost of packing materials and excise duty on the packing materials should have been excluded in the computation of the taxable turnover.
It is thus there are cross appeals before us.
We have heard learned counsel on both sides.
In our opinion, so far as C.S.T is concerned, the issue in the present case is July and directly covered by the decision of this court in Hindustan Sugar mills Limited vs State of Rajasthan, (1979) 43 S.T.C.13.
AS stated earlier, the assessee relied strongly on the decision of this court in Hyderabad Asbestos cement Products Ltd. vs state of Andhra Pradesh, (1969) 24 S.T.C. 487 but this decision has been considered and explained in the Hindustan sugar Mills case.
We do not wish to state the facts or discuss the issues at great length since, in our opinion, they are all facts and issue at great length sine, in our opinion, they are all facts and issues that were under consideration by this Court in Hindustan Sugar Mills Ltd. Learned counsel for the assessee contended that the Cement Control order, the terms of which sales of cement were effected during the relevant period by all cement manufactures, had no relevance to the question presently at issue.
According to them all that the Cement Control order laid down was that cement could not be sold at a price higher than a price fixed by the Cement Control order on terms described "as free on rail (F.O.R.), destination" It did not stand in the way of cement manufacturers with various purchasers that the letter should bear the freight charges.
In view of this, it was submitted that the terms of the cement control order do not alter the principal enunciated by this court in the Hyderabad Asbestos Cement products case.
It was then urged that, in fact, the assessees had entered into contracts with the purchasers which clearly stipulated that the freight will be payable by the letter.
The following terms and conditions of sale were cited before us as an instance of the type of contracts entered into by the assessees: " Condition 2 : Once the consignment is handed over to the carriers and a receipt is obtained, the responsibility of the company ceases.
The company does not accept any liability for any delay, shortage, damage or loss of goods in transit.
Claims should be lodged with the carriers by buyers directly.
Condition 3 : The consignees shall arrange to take delivery against indemnity bond, should the railway receipt or bill of lading not reach them in time.
The company is not liable in any manner whatsoever and is also not responsible for any demurrage or damages that may accrue due to non receipt or late receipt of railway receipt or bill of lading by the consignees.
Condition 4 : Prices shall be charged as ruling on the date of despatch of the goods and the company shall not be responsible for any variation in prices.
The price of the cement supplied to the buyers shall be the current general gross list price charged by the company, free on rail less such discount as may be fixed by the company from time to time.
But the terms and the times of delivery and the payments therefore shall be in the absolute discretion of the company who may vary the same from time to time.
Each despatch shall be a separate contract.
Condition 10 : The condition of any railway receipt shall be binding on the buyer and the date of delivery shall mean the date of the railway receipt and in the case of consignments sold free on rail destination, the railway freight shall be nevertheless payable by the buyers at the destinations.
Condition 11 : The buyer shall further be responsible for any additional freight, should transport by expensive route be undertaken or should the quantity despatched be less than a wagon load.
Condition 12 : In the case of road deliveries, freight will be allowed upto the nearest rail head to the destination or actual transport charges whichever is less or according to the instruction of the control authorities from time to time.
Condition 13 : The buyer shall put up his claim with the Railways direct whenever amounts are collected in excess of the freight indicated in the Railway receipt.
The company will allow freight only at the scheduled wagon load rate basing themselves on these terms and conditions, learned counsel for the assessee contended that this was a case where, despite the terms of the control order, the assessees chose to sell the goods free on rail and that the liability to pay point where the goods were loaded on rail and that the liability to pay freight was entirely that of the purchasers.
It was contended that these contracts were not inconsistent with or repugnant to the terms of the Cement Control Order and that on the same basis as the decision of this court in the Hyderabad Asbestos Cement products Ltd. case, the assesses are entitled to exclude the amounts of freight as not forming the part of the turn over at all.
Interesting as these arguments are, we find that they are merely a repetition of what was urged in the case of Hindustan Sugar Mills Ltd. In that case also the point urged was that the Cement Control order only fixes the maximum price and that there was nothing to prevent the producer opted to sell his cement at price lower than the control price and allow credit to the purchaser where the smaller amount by deducting the freight, the sale price can only be the smaller amount of the bill.
The second argument, based in the terms of the contract between the parties, was also addressed in the Hindustan Sugar Mills case.
There also clauses 5,8 and 11 of the general terms and condition of supply were strongly relied upon on behalf of the assessee.
Under those terms and conditions, it was specifically mentioned that although the price of cement was on the basis of F.O.R. destination railway station, consignments would nevertheless be despatched 'freight to pay ' and credit afforded in the bill for the amount of freight payable and that the purchaser should accordingly arrange to pay railway freight or road transport charges at the destination at the time of taking delivery.
This Court, after referring to the above contention, pointed out that, if the terms and conditions of the contract had stood alone, the assessee might have been entitled to succeed in excluding the freight charges on the principle of Hyderabad asbestos cement Products Ltd. case but that relief could not be given to the assessee in view of the scheme and provisions of the cements control order and their implications.
The terms of the Cement control order have been fully analysed and discussed at pages 33 to 35 of the report.
There is, therefore no difference either on facts or in principal between this case and the Hindustan Sugar Mills Ltd. case.
on the other hand, as pointed out by the learned Judges in that case, the whole purpose of the cement control order was do not find any reason to doubt or dissent from the decision in the Hindustan Sugar Mills Ltd. case.
On the other hand, as pointed out by the learned Judges in that case, the whole purpose of the Cement Control order was cement should be available for sale at all places in the country at a controlled price.
No doubt, the price was described as a maximum beyond which the sale price could not go but the intention, which was also carried out by all the suppliers, was that cement was to be sold at what may be described as a controlled price on terms 'free on rail destination '.
In other words, the producer was entitled to the controlled price irrespective of the amount of freight which might have been incurred in respect of the transaction.
Having regard to the fact that the freight on consignments to places near the factory and consignments to places to places far away from the factories could show a lot of variation, the control order created a machinery by which all freight charges were credited to common account ad any particular cement manufacturer incurring more than a specified amount was entitled to be reimbursed for the excess freight incurred by him.
As the learned Judges pointed out in the earlier decision, the whole control order proceeds on the footing that the freight charges are to be met by the producer and that he was entitled to a cosolidated price irrespective of the freight he may have incurred.
In this view of the matter, the sale price, on the terms of the Central sales Tax Act, could only be the controlled price as fixed by the cement control Order.
We find that the factual position in these cases is also not as described by the learned counsel for the assessee.
The assessee 's arguments in this regard were sought to be highlighted by the production of one of the invoices by which certain goods were despatched by Dalmia cements to Karaikal.
It is interesting to see that this invoice mentions F.O.R. cement price as the controlled price stipulated in the Cement Controlled Order, and this is also what is contemplated by condition 4 set out earlier.
To this is added a central Excise Duty.
Thereafter, the assessee purports to give credit for railway freight and a net price, which is described as net price F.O.R. with a liability on the purchasers to bear the railway freight the invoice need not have contained all the details which it purports to contain including all the above calculations starting with the F.O.R. price at the controlled rate.
In such an event all that the assessee need have done was to invoice the purchasers at the net price F.O.R. Works Siding and despatch the goods under 'freight to pay ' .
It is also interesting to see that the invoice specifically includes a deposit to " cover any levy of sales tax on freight" .
It is clear that the invoice has been drawn up in terms of the control order.
The price charged by the assessee is F.O.R. Central Excise Duty has been added on this footing.
The invoice mentions the amount of railway freight and permits it to be deducted only because the freight will be paid to the Railways by the Purchasers on behalf of the assessee and credit is given therefor in the invoice.
This process is necessary because the amounts of freight for which credit has been given have to be eventually adjusted while settling accounts between the manufacturer of cement and obtaining reimbursement, if any , from the pool account.
The producer will have to satisfy the concerned authorities that, in certain instances, the freight paid is in excess of the freight which a producer can be called upon to pay in terms of para 9 of the Cement Control order.
In our opinion the invoice placed before us only reinforce the factual and legal position outlined by this Court in the Hindustan Sugar Mills Ltd. case in regard to the purpose and effect of the terms of the Cement Control Order.
For the reasons above mentioned, we are of the opinion that the High court was fully justified in applying the decision in Hindustan Sugar Mills Ltd. to the present case and denying the benefit of deduction of freight charges from the controlled price to arrive at the turnover of the assessee for the purpose of the Central sales Tax Act.
Turning now to the appeals filed by the state, the contention, as earlier mentioned, is that the High court should have arrived at the same conclusion on the provisions of the Tamil Nadu General Sales Tax Act and Additional sales Tax Act as it did under the Central Sales Tax Act and that in view of the decision of this Court in the Hindustan Sugar Mills case the relief granted for purpose of the local sales tax is erroneous.
In coming to a different conclusion on the provisions of the local sales Tax Act from that reached in respect of the Central Act, the High Court has relied upon the fact that the local sales tax is charged not on the turnover of the dealer but only on his taxable turnover.
The explanation 'taxable turnover ' has been defined in section 2(p) as follows: "2(p) 'taxable turnover ' means the turnover of which a dealer shall be liable to pay tax as determined after making such deduction from his total turnover and in such manner as may be prescribed .
" The Tamil Nadu General sales Tax Rules, 1959, have prescribed rules for the determination of the taxable turnover.
Rules 6 reads thus: " Rules 6 The tax or taxes under section 3,4 or 5 shall be levied on the taxable turnover of the dealer .
In determining the taxable turnover, the amount specified in the following clause shall, subject to the conditions specified in the following clauses shall, subject to the conditions specified therein, be deducted from the total turnover of a dealer (a) all amounts for goods specified in the Third Schedule to the Act are sold; (b) all amounts for which goos exempted by a Notification under Section 17 are sold or purchased, as the case may be provided that the terms and conditions, if any, for the exemption in the notification are complied with; (c) all amounts falling under the following three heads when specified and charged for by the dealer, separately with out including him in the price of the goods sold (i) freight; (ii)(omitted); (iii) charges for delivery; (cc) all amounts falling under the head charged for packing, that is to say, cost of packing materials and cost of labour.
(i) when charged for by the dealer separately without including such amounts in the price of the goods sold in respect of the goods liable to tax at the hands of the assessee; and (ii) whether or not such amounts are specified and charged for by the dealer separately, in respect of the goods not liable to tax the hands of the assessee".
The High Court has held that since freight is one of the items specified in clause (i) of rule 6(c) and since the assessee have specified and charged for freight separately in their invoices, they ar entitled to the deduction of the freight in the computation of the taxable turnover.
This is the short ground on which the High court has reached, in respect of the local Act, a conclusion different from that reached in respect of the central Act.
We agree with the learned counsel for the state of Tamil Nadu that, in coming to the above conclusion, the High court has over looked the significance of the inclusion of the words "without including them in the price of the goods sold" in clause (c).
These words make it clear it clear that the freight charges are not to be deducted in the computation of the taxable turnover merely because they are specified and charged for separately by the dealer.
A further pre requisite for their deduction is that these charges should not have been included in the price of the goods sold.
This takes us back to the consideration as to whether the price charged for by the assessee includes freight or not, which we have discussed elaborately in respect of the levy of Central sales tax.
once we comp to the conclusion as we have that freight has been included as part of the price sold and that the liability to pay the freight remains with the dealer, though permitted to be set off against the sale price by the purchaser or consumer, it follows that the deduction of the freight as a separate items in the computation of taxable turnover is not permissible.
Rule 6(c) will apply only in cases where the sale price charged does not include the freight charges and the dealer separately collects freight from the consumer without including the same in the sale price.
IN fact this aspect has been made clear in three decisions of this court dealing with similar rules.
In Tungabhadra Industries Ltd. vs Commercial Tax officer, Kurnool, (1960) 11 S.T.C. 827, the dealer claimed deduction of railway freight form the amount of price of the goods sold as stated in the bill on the strength of rule 5(1) (g) of the madras General sales Tax (Turnover and Assessment ) Rules, 1939, which is in precisely the same terms, as rules 6, which is now being considered by us.
The claim was negative by this court.
It observed : "The appellant claimed exemption on a sum of Rs. 3,88, 377 13 3 on the ground that it represented the freight in respect of the ground that it represented the freight in respect of the goods sold by the appellant, asserting that they had been charged for separately.
The assessing officer rejected the claim and this rejection was upheld by the departmental authorities and by the High Court in revision.
It would be seen that in order to claim the benefit of this exemption the freight should (i) have been specified and charged for by the dealer separately, and (ii) the same should not have been included in the price of the goods sold.
The learned Judges of the High Court held that neither of these conditions was satisfied by the bills produced by the appellant.
We consider, the decision of the High Court on this point was correct.
In the specimen bill which the learned counsel for the appellants has placed before us, after setting out the quality sold by weight (23, 760 lb.) the price is specified as 15 annas 9 pies per lb.
and the total amount of the price is determined at Rs. 23,388 12 0.
From this the railway freight of Rs. 1,439 12 0 is deduced and the balance is shown as the sum on which sales tax has been computed.
From the contents of this invoice it would be seen that the appellant has charged a price inclusive of the railway freight and would therefore be outside the terms of rule 5(1) (g) which requires that in order to enable a dealer to claim the deduction it should be charged for separately and not included in the price of goods sold.
The conditions of the rule not having been complied with, the appellant was not entitled to the deduction in respect of freight.
" The same conclusion was reached by this Court in Dyer Meakin Breweries Ltd. vs State of Kerala, (1970) 26 S.T.C. 248.
Here, the appellant company which manufactured liquor at various places in U.P. and Haryana, transported the goods from its breweries and distilleries to its place of business in Ernakulam and sold them there.
When selling liquor to the customers the appellant made out separate bills for ex factory price and for "freight and handling charges".
The appellant claimed that the amount charged for "freight and handling charges" incurred by it in transporating the goods from the breweries and distilleries to the warehouse in Kerala were eligible for deduction under rule 9(f) of the Kerala General Sales Tax Rules, 1963, a rule which is in the same terms as rule 6, with which we are now concerned in the present case.
This claim was negatived by this Court.
The Court obvserved: "It is common ground that the sale of the liquor took place in Ernakulam.
The company arranges to transport liquor for sale from the factories to its warehouse t Ernakulam.
It was not brought for any individual customer.
All the expenditure incurred s prior to the sale and was evidently a component of the price for which the goods were sold.
it is true that separate bills were made out for the price of the goods ex factory and for" freight and handling charges".
But, in our judgment, the Tribunal was right in holding that the exemption under clause (f) of rule 9 applied when the freight and charges for packing and delivery are found to be incidental to the sale and when they are specified and charged for by the dealer separately and expenditure in curred for freight and packing and delivery charges prior to the sale and for transporting the goods from the factories to the warehouse of the company is not admissible under rule 9(f) .
Rule 9(f) seeks to exclude only those charges which are incurred by the dealer either expressly or by necessary implication for and no behalf of the purchaser after the sale when the dealer undertakes to transport the goods and to deliver the same or where the expenditure is incurred as an incident of sale.
It is not intended to exclude forms the taxable turnover any component of the price, expenditure incurred by the dealer which he had to incur before sale and to make the goods available to the intending customer at the place of sale.
" In Johar and sons(p) Ltd. vs Tax officer Ernakulam, (1971) 27 S.T.C.120, The same question arose, again in the context of the Kerala General sales Tax Rules, 1963.
The court followed the decision in Dyer Meakin Breweries Ltd. case.
It was pointed out that the decision in Tungabhadra Industries Ltd. had rested on the facts of the case without going into the interpretation of the relevant rule of the Madras General Sales Tax (Turnover and Assessment ) Rules, 1939.
It was, held that the Dyer Meakin decision would apply to the case before the court.
A number of subsequent decisions has also held to a like effect : C.C.T. vs Ashoka Marketing Ltd.,(1973) 32 S.T.C. 411, State of Mysore vs Panyam Cements and Mineral Industries Ltd. (1974) 33 S.T.C. state of Tamil Nadu vs parry and company (1976) 38 S.T.C. 122, state of Tamil Nadu vs Chettinad Cement Corporation Ltd.,(1976) 38 S.T.C. 519 and Premier Breweries Ltd. vs state of Karnataka, (1984) 56 S.T.C. 14 we are, therefore, of the opinion that High court was in error in trying to distinguish the decision in the Hindustan Sugar Mills case and in excluding freight charges from the taxable turnover for the purpose of the Tamil Nadu Act.
The position in regard to packing charges as well as the excise duty on packing charges is also no different.
As pointed out by this court in the Hindustan Sugar Mills case and in Commissioner of sales Tax vs Rai Bharat Das & Bros., [1988] 71 S.T.C. 277 (SC), packing charges from part of "sale price" because the expression " any sum charged for anything done by the dealer in respect of the goods" used in the definition in section 2(h) of the Central sales Tax Act, 1956, squarely covers such charges, as packing is an integral element of the transaction of sale and packing charges are an integral part of the sale price.
Once this is so, it follows that these charges and the excise duty thereon cannot be excluded from the turnover for purpose of the Central sales Tax Act.
Nor will, for the reasons earlier discussed in relation to freight charges, the assessee be in a position to claim a deduction in respect of these charges by virtue of rule 6(cc) of the sales Tax Rules.
In our view, this position has been correctly set out, applying the decision in the case of Rai Bharat Das and Bros., in state of Tamil Nadu vs Vanniaperumal & co., (1990) 76 S.T.C. 203, Dalmia cement (Bharat) Ltd. vs state of Tamil Nadu, (1991) 81 S.T.C. 327 and Dalmia Cement (Bharat) Ltd. vs state of Tamil Nadu, (1991) 83 S.T.C. 442.
we are, therefore, of the opinion that the packing charges and excise duty thereon cannot also be deducted in computing the taxable turnover for the purpose of the Tamil Nadu Acts.
We, therefore, hold (i) That the freight charges could be included in arriving at the taxable turnover for purposes of C.S.T. and T.N.S.T.; and (ii) that packing charges and excise should be included in arriving at the taxable turnover for purposes of both C.S.T. and T.N.S.T.
The appeals by the state of TAmil Nadu are accordingly allowed and the appeals filed by the assessee ar dismissed.
There will, however, be no order regarding costs.
N.P.V. C.A. Nos.2684 90,4043 44/82 315 19/83 dismissed.
C.A. Nos 5306 36/85 and 280 81/89 allowed.
| IN-Abs | The appellants assessees in the first set of appeals were selling agents of appellants in the second set of appeals.
For the assessment year 1996 70, they were assessed to sales tax on taxable turn over of Rs. 2,37,66,245 which included an amount of Rs. 29,71,527 representing freight charges.
The assessee claimed exclusion of freight charges in computing the taxable turnover on the ground that freight had been independently charged in the invoices.
This was rejected by the assessing authority, the appellate authority as well as Tribunal.
Aggrieved, the assessee preferred revisions to the High court.
The High court held that in cases arising under the Central sales Tax Act, the freight, packing charges and excise duty on packing materials had to be included in the sale price for the computation of sales tax, that in cases arising under the Tamil Nadu General sales Tax Act and Tamil Nadu Additional sales Tax Act, freight, packing charges and excise duty on packing materials were not liable to be included in the sale price for the computation of the sale price, and that the assessees were not liable to pay additional sales tax on freight, packing materials and excise duty on packing materials in the cases arising under the Tamil Nadu Additional sales Tax Act.
Aggrieved, both the as well as well as the state Government filed appeals before this Court.
On behalf of the state it was contended that the High court, having held that the amounts in question were liable to the included in the turnover for purposes of Central sales Tax Act, ought to have also held that these amounts were liable to be included in the taxable turnover for purposes of Tamil Nadu General sales Tax Act and the Tamil Nadu Additional sales Tax Act also, and relief granted for purposes of the local sales tax was erroneous.
On behalf of the assessees, it was contended that, even for the purpose of C.S.T., the freight charges, the cost of packing materials and the excise duty on the packing materials should have been excluded in the computation of the taxable turnover, that the Cement Control order, under the terms of which sales of cement were effected during the relevant period by all cement manufacturers, had no relevance to the question at issue, that all that the cement control order laid down was that Cement could not be sold at a price higher than a price fixed by the cement control order on terms described " as free on rail (F.O.R) , destination ', that the order did not stand in the way of cement manufacturers charging a price less than the ceiling fixed under the order, nor did it preclude individual contracts by the cement manufacturers with various purchasers that the latter should bear the freight charges that the assessees had and that the assessees had entered into contract with the purchasers which clearly stipulated that the freight would be payable by the latter, as per terms and condition of sale, the instant case was one where, despite the terms of the control order, the assessees chose to sell the goos free on rail at the point where the goods were loaded on rail and that the liability to pay freight was entirely that of the purchasers , and that these contracts were not inconsistent with or repugnant to the terms of the cement control order and therefore, the assessees were entitled to exclude the amounts of freight as not forming the part of the turnover at all.
Allowing the appeals of the state and dismissing those of the appellant dealers, this court, HELD: 1.
The freight charges should be included in arriving at the taxable turnover for purposes of Central sales Tax as Tamil Nadu sales Tax Act; and the packing charges and excise duty thereon should also be included in arriving at the tax able turnover or purposes of both central sales Tax and Tamil Nadu sales Tax.
[94 D,E] 2.1 The whole purpose of the cement control order was that cement should be available for sale at all places in the country at a controlled price.
No. doubt, the price was described as a maximum beyond which the sale price could not go but the intention, which was also carried out by all the suppliers, was that cement was to be sold at what may be described as a controlled price on terms 'free ' on rail destination '.
In other words, the producer was entitled to the controlled price irrespective of the amount of freight which might have been incurred in respect of the transaction.
Having regard to the fact that the freight on consignments to places near the factory and consignments places far away from the factories could show a lot of variation the control order created a machinery by which all freight charges were credited to a common account and any particular cement manufacturer incurring more than a specified amount was entitled to the reimbursed for the excess freight incurred by him.
The whole control order proceeds on the footing that the freight charges are to be met by the producer and that he was entitled to a consolidated price irrespective of the freight he may have incurred.
Hence the sale price, on the terms of the Central sales Tax Act, could only be the controlled price as fixed by the Cement control order.
[87 F H; 88 A C] Hindustan Sugar Mills Ltd. vs State of Rajasthan, (1979) 43 S.T.C.13, relied on.
Hyderabad Asbestos Cements products Ltd. vs State of Andhara Pradesh, (1969) 24 S.T.C.487, distinguished.
2.2 The High court was, therefore, fully justified in denying the benefit of deduction of freight charges from the controlled price to arrive at the turnover of the assessee for ter purpose of the central sales Tax Act.
[89 C] 3.1.
In coming to the different conclusion in respect of the local Act, from that reached in respect of the Central Act , viz., that since freight was one of the items specified in clause (i) of Rule 6 (c) of Tamil Nadu General sales Tax Rules, 1959, and since the assessees had specified and charged for freight separately in their invoices, they were entitled to the deduction of the freight in the computation of the taxable turnover, the High court has over looked the significance of the inclusion of the words " without including them in the price of the goods sold" in clause (c) of the Tamil Nadu General Sales Tax Rules.
These words make it clear that the freight charges are not to be deducted in the computation of the taxable turnover merely because they are specified and charged for separately by the dealer.[90 G,H; 91 A] 3.2.
A further pre requisite for their deduction is that these charges should not have been included in the price of the goods sold.
Once it is concluded that freight has been included as part of the price sold and that the liability to pay the freight remains with the dealer, though permitted to be set off against the sale price by the purchaser or consumer, it follows that the deduction of the freight as separate item in the computation of taxable turnover is not permissible.
Rule 6(c) will apply only in cases where the sale price charged does not include the freight charges and the dealer separately collect freight from the consumer without including the same in the sale price.
The High court was, therefore, in error in excluding freight charges from the taxable turnover for the purpose of the Tamil Nadu Act.
[91 A C; 93 F] Tungabhadra Industries Ltd. vs Commercial Tax officer, Kurnool, (1990) 11 S.T.C. 827; Dyer Meakin Breweries Ltd. vs State of Kerala , (1970) 26 S.T.C 248; Johar & sons (p) Ltd. vs sales Tax officer, Ernakulam, (1971) 27 S.T.C.120; C.C.T. V. Ashok Marketing Ltd., (1973) 32 S.T.C.411; State of Mysore vs Panyam cements and Mineral Industries Ltd., (1974)33 S.T.C. 407; State of Tamil Nadu vs Parry and company,(1976) 38 S.T.C.122; State of Tamil Nadu vs Chettinad cement Corporation Ltd., (1976) 38 S.T.C.519 and premier Breweries Ltd. vs state of Karnataka, (1984) 56 S.T.C. 14, relied on.
The position in regard to packing charges as well as the excise duty thereon is also no different.
Packing charges from part of " sale price" because the expression " any sum charged for anything done by the dealer in respect of the goods" used in the definition in Section 2(h) of the central sales Tax Act.
Nor will, the assessee be in a position to claim a deduction in respect of these charges by virtue of Rule 6(c) of the Sales Tax Rules.
Therefore, the packing charges and excise duty thereon cannot also be deducted in computing the taxable turnover for the purpose of the Tamil Nadu Acts.[93 G, H; 94 A C] Hindustan Sugar Mills Ltd. vs State of Rajasthan & ors.
, (1979) 43 S.T.C. 13 and Commissioner of sales Tax vs Rai Bharat Das & Bros.,(1988) 71 S.T.C. 277 (SC), relied on.
State of Tamil Nadu vs Vanniaperumal & Co., (1990) 76 S.T.C.203; Dalmia Cement (Bharat) Ltd. vs State of Tamil Nadu, (1991) 81 S.T.C. 327; Dalmia Cement (Bharat) Ltd. vs State of Tamil Nadu, (1991) 83 S.T.C.442, approved.
|
l Leave petition (c) No. 4748 of 1991.
From the Judgment and Order dated 21.1.91 of the Bombay High Court in W.P. No. 3481 of 1990.
N.B. Shetye, P.M. Pradhan and A.M. khanwilkar for the petitioner.
Dushyant Dave, Beliram Vakil, Abrar Ali, Ajit Yogi, Gajender Lal, Mukul Gupta and Ms. Sonia Khan for the Respondents.
The Judgment of the court was delivered by SAWANT, J.
The petitioner is diploma holder in Engineering and holds the post of Executive Engineer in the respondent Corporation.
Till 1974, the promotion post of the superintending Engineer was available both for diploma holders and degree holders according to merit cum seniority.
This was so according to the practice followed by the Corporation without making any rules or regulation in that behalf.
In 1974, the corporation made regulation by passing a resolution by passing a resolution and continued the same practice.
Admittedly, the regulation were not made under section 64 of the Maharashtra Industrial Development Act, 1961 [hereinafter referred to as the 'Act '] under which the respondent corporation was created.
Thereafter in 1988, the corporation passed a resolution, for the first time,.
making 75 per cent of the posts of superintending engineers available to the executive Engineers holding degrees and 25 per cent to the Executive Engineers who were diploma holders.
This resolution was also admittedly not a regulation made under the said section 64.
But for this resolution, the petitioner who was senior to respondent NO. 2 would have been promoted to the post of Superintending Engineer on 31st October, 1990.
However, since respondent No.2 was a degree holder, he got the said resolution and was promoted to the said post on that date.
It is this promotion which was challenged by the petitioner by a writ petition in the High Court.
The High Court by the impugned judgment dismissed the said petition.
Two contentions were raised before us.
(i) that no classification could be made among the Executive Engineers on the basis of their educational qualification for the purpose of promotion to the post of superintending Engineer, since they belong to the same cadre of Executive Engineers and do the same work.
There was also a common seniority of the Executive Engineers maintained.
hence the classification was discriminatory in nature and violative of Articles 14 and 16 of the Constitution .
(ii) that if at all such a discrimination was permissible, it could be made only be a statutory rule or regulation framed under Section 64 of the said Act.
A mere resolution or an executive instruction could not effect such discrimination.
We find not merit in either of the two contentions.
It is now well settled that for the purpose of promotion, a valid classification can made among the members holding the same post on the basis of their qualification.
In state of Jummu & Kashmir vs Triloki Nath Khosa & Ors., ; , a Constitution Bench of his court has clearly held that such a classification is permissible and does not violate Articles 14 and 16 of the Constitution the Court has observed there that in state of Mysore & Anr.
vs P. Narasing Rao, ; and The Union of India and others vs Dr.(Mrs.) S.B. Kholi; , , it was already held that classification on the basis of educational qualification was permissible.
The Court then referred to Roshan Lal Tandon vs Union of India, ; and distinguished it on the facts by pointing out that it was a case of the direct recruits and promotees integrated into one cadre.
Once they were integrated they lost their birth birth marks, viz. the different sources from which they were recruited.
[Emphasis supplied].
The court pointed out that Roshan Lal 's case [supra] was thus no authority for the proposition that if direct recruits and promotees are integrated into one class they cannot be classified for purposed of promotion on a basis other than that in the case before the them the classified for purpose of promotion on a basis other than that they were drawn from different sources.
The court also pointed out that the very Bench which decided Roshan Lal 's case [supra] held about a fortnight later in Narsingh Rao 's case [supra t] that higher educational qualifications were a relevant consideration for fixing higher pay scale and , therefore, matriculates Tracers could be given a higher scale than non matriculate Tracers thought their duties were identical .
The court, further on the same reasoning distinguished Mervyn Coutindo & Ors.
Collector of Customs Bombay & Ors.,[1966] 3 SCR 600 and S.M. Pandit and others, etc.
vs state of Gujarat and others, AIR 1972 SC 252 by pointing out that both the cases related to the classification made on the basis of the sources of recruitment and not on the basis of educations.
The court then concluded : "We are therefore of the opinion that though persons appointed directly and by promotion were integrated into a common class of Assistant Engineers, they could, for purposes of promotion to the cadre of Executive Engineers, be classified on the basis of educational qualification.
The rule providing that graduates shall be eligible for such promotion to the exclusion of diploma holders does not violate Articles 14 and 16 of the Constitution and must be upheld.
" The reliance placed by Shri Shetye appearing for the petitioner on a later decision of a Bench of two learned judges of this Court in H.C. Sharma and others vs Municipal Corporation of Delhi and others; , 372 is, we are afraid, not justified.
It was a case where no separate quota for promotion to the post of Assistant Engineer was kept for degree holder Junior Engineers and diploma holder Junior Engineers.
The degree holders Junior Engineers had sought a relief that such a quota be kept.
It is while dealing with this relief claimed, that this Court had observed that it could not be don e except by carving out two classes in the same category of junior Engineers.
It may be observed that it was not a case where the classification was already made which was challenged before the Court.
It was case where the writ petitioners wanted such a classification to be made.
It is for the authorities if they so desire, taking into consideration the nature of work, the requisite qualification for the work and the necessity for making such a classification that quotas could be prescribed on the basis of educations.
It is true that the following observation made in that case while dealing with the relief claimed, do support the petitioner: " Prayer No. 4 is to declare the petitioner Graduate Engineers as a separate category amongst Junior Engineers and give them equal quota like the Diploma holder Junior Engineer`s out of the 50% quota for promotion a Assistant Engineers.
This cannot be done except by carving out two classes in the same category of Junior Engineers o the basis merely of their qualification which is not permissible in law though the creation of selection grade in the same category on the basis of merit and on seniority is well known and permissible.
The Junior Engineers do the same kind of work and bear the same responsibility whatever their qualification, whether they are Degree holders or Diploma holders. " However , these observations have been made without noticing the decision in Khosa 's case (supra).
Hence, the observation are per incuriam as regards the next contention, admittedly neither the practice followed till 1988, nor the resolution passed by the respondent Corporation in 1988 nor the resolution passed in accordance with section 64 of the Act.
It is well settled that in the absence of rule or regulation the authority can prescribe service conditions by executive instructions and this is what was done till the year 1988 and is also sought to be done since 1988 by the impugned resolution.
The proposition that in the absence of the rules and regulations, the authority can act by executive instruction finds direct support in Mysore state Road Transport Corporation vs Gopinath Gundachar char, {1968] 1 SCR 767 and vs Balasubramaniam and others vs Tamil Nadu housing Board and others; , In view of the above, the petition stands dismissed.
G.N Petition dismissed.
| IN-Abs | The petitioner, a diploma holders in Engineering, was Executive Engineer in the respondent Corporation.
He would have been promoted as superintending Engineer, but for a Resolution passed in 1988 making 75% of the posts of Superintending Engineers available to Executive Engineers with diploma in Engineering degrees and 25% to Executive Engineers with diploma in Engineering Respondent No.2 who junior to petitioner but had engineering degree was promoted as superintending Engineer.
The petitioner challenged the promotion of Respondent No. 2 before the High court by way of a writ petition.
The High court having dismissed the same, the petitioner preferred the present special Leave petition.
On behalf of the petitioner, it was contended that since there was a common seniority list of Executive Engineers, any classification on the basis of education qualification was discriminatory and violative of Articles 14 and 16 of the Constitution; and that in the absence of any statutory rule or regulation, a mere resolution could not effect such discrimination.
Dismissing the petition, this court, HELD: 1.1.
It is now well settled that for the purpose of promotion, a valid classification can be made among the members holding the same post on the basis of their qualification.
Such a classification is permissible and does not violate Articles 14 and 16 of the Constitution.
[99 A B] 1.2.
It is for the authorities if they so desire, taking into consideration the nature of work, the requisite qualification for the work, and the necessity for making a classification, to prescribe quotas on the basis of educational qualification.
[99 D] State of Jammu & Kashmir vs Triloki Nath Khosa & ors., [1974]1 SCR 771, followed.
H.C. Sharma & ors.
vs municipal corporation of Delhi & ors.
; , , referred to.
In the instant case, admittedly neither the practice followed till 1988, nor the resolution passed by the respondent Corporation in 1988 was a regulation passed in accordance with section 64 of the Act.
However, it is well settled that in the absence of a rule or regulation, the authority can prescribe service conditions by executive instructions and this is what was done till year 1988 and is also sought to be done since 1988 by the resolution under challenge.
[100 A,B] Mysore state Road Transport Corporation vs Gopinath Gundachar char; , and V. Balasubramaniam and others vs Tamil Nadu Housing Board and others, [1987]4 SCC 738, relied on.
|
Appeal No. 88 of 1959.
Appeal by special leave from the judgment and order dated May 6, 1958, of the Industrial Tribunal, Delhi, in 0.
P. No. 54 of 1958.
M.C. Setalvad, Attorney General for India, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant.
Janardan Sharma, for the respondent.
March 10.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal by special leave in an industrial matter.
The appellant is a company carrying on the manufacture of textiles.
The respondent Kushal Bhan was in the employ of the company as a peon.
It appears that the cycle of Ram Chandra, Head Clerk of the Folding Department was stolen on August 24, 1957.
The matter was reported to the police.
Sometime later, the cycle was recovered from the railway station cycle stand at the instance of the respondent who took the police there and picked out 229 the stolen cycle from among 50/60 cycles standing there.
This matter was apparently brought to the notice of the company in October 1957 and thereupon a charge sheet was served on the respondent to the effect that he had stolen the cycle of Ram Chandra, Head Clerk, that it had been recovered at his instance and that a criminal case was pending against him with the police.
He was asked to show cause why he should not be dismissed for misconduct.
The respondent submitted his explanation on October 13, 1957.
As his explanation was unsatisfactory, November 14, 1957, was fixed for enquiry.
The respondent appeared before the enquiry committee but stated that as the case was pending against him, he did not want to produce any defence till the matter was decided by the court.
He further stated that he did not want to take part in the enquiry and was not prepared to give any answers to questions put to him.
When questions were put to him at the enquiry he refused to answer them and eventually he left the place.
The company, however, completed the enquiry and directed the dismissal of the respondent on the ground that the misconduct had been proved against him.
Thereafter an application was made under section 33(2) of the Industrial Disputes Act, No. 14 of 1947, by the company to the tribunal for approval of the action taken against the respondent.
The matter came before the tribunal on May 6, 1958.
In the meantime, the respondent had been acquitted by the criminal court on April 8, 1958, on the ground that the case against him was not free from doubt.
The copy of the judgment of the criminal court was produced before the tribunal and it refused to approve the order of dismissal.
The company thereupon applied for special leave to this Court resulting in the present appeal.
The main contention on behalf of the appellant company is that the company was not bound to wait for the result of the trial in the criminal court and that it could, and did, hold a fair enquiry against the respondent, and if the respondent refused to participate in it and left the place where the enquiry was being held, the company could do no more than to complete it and come to such conclusion as was 230 possible on the evidence before it.
Learned counsel for the respondent, on the other hand, urges that principles of natural justice require that an employer should wait at least for the decision of the criminal trial court before taking disciplinary action, and that inasmuch as the employer did not do so in this case the employee was justified in not taking part in the disciplinary proceedings which dealt with the very same matter which was the subject matter of trial in the criminal court.
It is true that very often employers stay enquiries pending the decision of the criminal trial court& and that is fair; but we cannot say that principles of natural justice require that an employer must wait for the decision at least of the criminal trial court before taking action against an employee.
In Shri Bimal Kanta Mukherjee vs Messrs. Newsman 's Printing Works (1), this was the view taken by the Labour Appellate Tribunal.
We may, however, add that if the case is of a grave nature or involves questions of fact or law, which are not simple, it would be advisable for the employer to await the decision of the trial court, so that the defence of the employee in the criminal case may not be prejudiced.
The present, however, is a case of a very simple nature and so the employer cannot be blamed for the course adopted by him.
In the circumstances, there was in our opinion no failure of natural justice in this case and if the respondent did not choose to take part in the enquiry, no fault can be found with that enquiry.
We are of opinion that this was a case in which the tribunal patently erred in not granting approval under section 33(2) of the Industrial Disputes Act.
Besides it is apparent that in making the order under appeal, the tribunal has completely lost sight of the limits of its jurisdiction under section 33(2).
We therefore allow the appeal and setting aside the order of the tribunal grant approval to the order of the appellant dismissing the respondent.
In the circumstances we pass no order as to costs.
Appeal allowed.
| IN-Abs | The appellant company served a charge sheet on the res pondent who was one of its employees alleging that he had stolen the cycle of the company 's Head Clerk.
A criminal case relating 228 to the theft was pending against him then.
He was asked to show cause why he should not be dismissed for misconduct, and as his explanation was unsatisfactory a certain date was fixed for enquiry.
The respondent appeared before the enquiry committee but refused to participate in the enquiry by answering questions put to him as he did not want to produce any defence till the matter was decided by the Court.
The company,however,after completing the enquiry directed the dismissal of the respondent on the ground that misconduct had been proved against him.
The company thereafter made an application under section 33(2) Of the Industrial Disputes Act to the Industrial Tribunal for approval of the disciplinary action taken against the respondent.
In the meantime the respondent was acquitted by the Criminal Court. 'The judgment of the Criminal Court was produced before the tribunal which refused to approve the order of dismissal of the respondent.
On appeal by the company by special leave : Held, that the principles of natural justice do not require that an employer must wait for the decision of the Criminal Trial Court before taking disciplinary action against an employee.
Shri Bimal Kanta Mukherjee vs Messrs. Newsman 's Printing Works, , approved.
If a case is of a grave nature involving questions of fact and law which are not simple it would be advisable for the employer to await the decision of the Criminal Trial Court but in a simple case like the present the tribunal erred in not granting approval under section 33(2) of the Industrial Disputes Act.
|
Civil Appeal Nos.
4507 and 4508 of 1992.
From the Order dated 20.1.1992 of the Central Administrative Tribunal, Madras in O.A No. 925 of 1900.
K.T.S. Tulsi, Addl.
Solicitor General, Kapil Sibal, C.V.S., Rao, C. Ramesh and Ranjit Kumar for the Appellant.
P.P. Rap, V. Balachandran, R.P. Oberoi and B.S. Gupta for the Respondents.
The Judgment of the Court was delivered by MOHAN J.
Leave granted.
Both these appeals can be dealt with by a common judgment since identical issues are involved.
They are directed against the judgment of the judgment Central Administrative Tribunal, Madras dated 23.1.1992.
S.L.P. No. 7138/92 is preferred by Union of India while S.L.P. No. 6494/92 is filed by the affected party (Dr. M. Khalilullah).
The parties are referred to as mentioned in S.L.P. No. 7138/92.
The facts are as under.
The President of India sanctioned 35 posts in super time grade of Central Health Services in the scale of Rs.5900 200 6700 plus non practising allowance at the normal rates as admissible to other similar posts.
The sanction was upto 29.2.98.
The sanction was conveyed by the Under Secretary to the Government of India, Ministry of Health and Welfare, New Delhi on 26.8.1987.
After the creation of these posts, proposals were sent to the Union Public Service Commission for convening the meetings of the Departmental Promotion Committee for selection of the Candidates for Promotion.
The Union Public Service Commission approved to amend Rule 4(6) of Central Health Service Rules of 1982.
It also approved the method of recruitment, field of selection and principles of seniority to fill up these 35 posts as a one time measure in the absence of notified recruitment rules.
In its communication dated 29.9.88 the Union Public Service Commission besides referring to the above approvals specifically, stated: "These 35 posts may be treated as common posts both at present and in future to be included in the category of the floating posts for the Teaching and Non Teaching sub cadres mentioned in Rule 4(6) of the CHS Rules of 1982.
The eligibility conditions for promotion will be 3 years of regular service as Professor/Specialist Grade I with 17 years of regular service in Group `A '".
In the end, the Commission advised that the basis of eligibility and the eligibility list might be circulated to all concerned, their objections invited and settled before the meeting of Departmental Promotion Committee (Health).
It also requested that the final eligibility list might be sent to the Union Public Service Commission.
On 3.11.88, this decision was conveyed to all the concerned parties stating that it has been decided to fill up the posts by selection method i.e. merit with regard to seniority.
The eligibility conditions for promotion will be 3 years of regular service in Group `A '.
Together with that letter was enclosed the eligibility list of Professors.
On the basis of the Principles stated in the letter, errors/omissions/objections etc.
Were to be intimated to the Ministry within one month.
In the eligibility list include, Dr. P. Rajaram, the first respondent, was assigned rank No. 13 while Dr. Khalilullah, the third respondent was assigned the rank No. 24.
On 20.9.1989 , in accordance with the guidelines dated 10.3.89, the Departmental Promotion committee met for selection of officers for the promotion to the super time grade posts of director professor in the Central Health Service.
It requires to be stated that these posts were extended from time to time.
Each extension was for a period of one year.
Ultimately by an order dated 2.4.1992, it has been extended for a period of one year up to 28.2.1993.
Consequent upon the selection by Union Public Service by an order dated 17.1.1990, the President was pleased to appoint under Rule 4(10) of the Central Health Services Rules, 1982 the officers of Specialist Grade I of the Teaching Specialist sub cadre of the Central Health Service to supertime grade of the Teaching Specialist sub cadre of the Central Health Service.
They were posted as Director Professors on an officiating basis in the pay scale of Rs. 5900 6700 plus non practising allowance @ Rs.950 p.m.
The dates of promotions were indicated against each of the appointee.
As far as Dr. Rajaram, the first respondent is concerned, he was assigned rank No. 14 and the date of promotion was as 1.4.1989 while respondent No. 3, Dr. M. khalilullah was assigned rank No.4 and the date of promotion was as 1.4.1989.
Paragraph 3 of the order specifically states that the above promotions will be personal to the officers concerned and the posts Presently held by them will stand upgraded to the Supertime grade in the scale of Rs.5900 6700 plus non practising allowance @ Rs.950 p.m. in terms of Ministry 's order No. A 11011/5/88 CHS IV, dated 15.3.1989.
This will continue till the upgraded Posts are held by the officers being promoted now.
Aggrieved by the order dated 17.1.1990, the first respondent (Dr. Rajaram) preferred an application No. 925 of 1988 on 6.7.1990.
In that application, he had stated that he was senior to Dr. B.S. Rana, Dr. M. Khalilullah, Dr. K.K. Jain and Dr. D.D.S. Kulapathy.
They should not have been show above him.
The promotion was only on the basis of seniority.
In opposition to this, the respondent in the application who has secured a higher rank urged that the Departmental Promotion Committee had ranked Dr. Rajaram at serial No. 14 on the basis of merit.
The criterion for promotion is only merit.
Before the Tribunal, the scope of Rule 4 sub rule (10), clause (iii) of Central Health Service Rules, 1982 (hereinafter referred to as "the Rules") came up for interpretation.
The Tribunal, in the impugned judgment, accepted the contention of Dr. Rajaram and held that promotion for the post of director/Professor should be made on the basis of seniority.
Consequently, it directed that he be posted above the respondents who had been named in the application.
It is under these circumstances, the present S.L.Ps. have preferred by Union of India as well as by Dr. Khalilullah.
Mr. Kapil Sibal, learned counsel appearing for Dr. M. Khalilullah after taking us through the rules submits that rule 4(10) (i) of the Rules deals with 35 newly created floating common posts in the supertime grade Rs.5900 6700 in the Teaching and Non Teaching specialist sub cadre.
These posts were in addition to the authorised strength of posts in the supertime grade.
The authorised strength of both categories of Teaching and Non Teaching sub cadres is reflected in Schedule II.
Rule 4(10) (ii) stipulates that promotions to these posts are to be made on the basis of common eligibility list to be drawn separately for the Teaching Specialist sub cadre and the Non Teaching Specialist sub cadre.
This has to be without reference to any of the specialities in respective sub cadres.
Rule 4(10)(iii) stipulates that the eligibility list shall be made after the officer concerned has been duly assessed by a Departmental Promotion Committee in regard to the officer 's suitability for holding the post with the condition that the said officer should have completed three years of regular service as Professor (Specialist) Grade I.
This rule does not stipulate the manner in which the suitability of the said officer is to be assessed by the Departmental Promotion Committee.
Schedule IV of the Rules talks of the constitution of the Departmental promotion Committee.
It is clearly stipulated that in each meeting of the Departmental Promotion Committee the Chairman/Member, Union Public service Commission shall chair the Departmental promotion Committee.
The guidelines stipulate that the Departmental Promotion Committees constituted under the respective Service Rules shall judge the suitability of officers for promotion to selection as well as non selection posts.
Here again, the Union Public service commission should be associated with Departmental Promotion Committee in respect of Central Civil Services Posts belonging to grade `A ' where promotion is based on the principle of selection unless it has been decided by the Government of India not to associate the Union Public Service Commission.
The Union Public Service Commission need not be associated in respect of posts belonging to Grade A if the promotion is based not on the Principles of selection but on seniority cum fitness.
Wherever the Union Public Service Commission is associated with Departmental Promotion Committee, the Chairman or a Member of the Commission will preside over the meeting of Departmental Promotion Committee.
When Schedule IV requires that the Departmental Promotion Committee(Services) ought to be Presided over by the Chairman or Member of the Union Public service Commission itself suggests that the said posts ought to be filled in by way of selection rather than on the basis of seniority cum fitness.
Consequently, the word `suitability ' in Rule 4(10) (iii) in the context of nature of posts, its grade, can only mean suitability for the purposes of being selected to the said Post.
This submission is made on the basis that Rule 4(10) is a complete code in itself.
Even if this post falls outside the Schedule ii, the basis of promotion cannot be seniority.
In terms of Rule 3 of the Rules, the Central health service consists of persons appointed to the service under sub rule (5) of Rule 4 and rules 7 & 8.
It is the contention of the appellant that under Rule 4(3), Government of India is entitled to make temporary additions to or reductions in the strength of `duty posts ' in the various grades as deemed that these are posts with designations specified in Part A of Schedule II whether permanent of temporary.
When this definition is read along with Rule 4(1) (ii) and Rule 4(1) (iii), it is clear that temporary additions or reductions in the number of duty posts can take place from time to time.
These 35 floating/common posts were created for the first time on August 26, 1987 and administrative orders have thereafter been issued from time to time extending the creation of the said `duty posts ' without amending Schedule II.
Certainly, these posts were part of authorised strength at the time of initial constitution of the Service.
Rule 8 contemplates that any vacancy arising in any one of the grades referred to in Schedule II shall be filled in, as provided in rule 8(4) (ii).
The difference between Rule 4(10) (iii) and rule 8(4) (ii) is that whereas in the latter the promotion is to be made with reference to a post in the Teaching Specialist sub cadre or the Non Teaching Specialist sub cadre on account of any vacancy occurring therein, in a particular speciality, in the case of the former, notwithstanding the fact that one of the 35 floating/common posts may be held by a particular person of a particular speciality, the said post can go to a person not belonging to that speciality, since the Teaching Specialist sub cadre forms a class by itself which comprises 29 specialities.
It is in this context, therefore, that the said posts could not be included in schedule II, since specialities.
It is, therefore, clear that whereas the word `selection ' used in Rule 8(4) (ii) is with reference to inter se merit of persons belonging to a particular speciality with reference to a vacancy occurring in a speciality but with reference to the inter se merit of candidates based on their confidential reports and assessed by the Departmental Promotion Committee belonging to any of the 29 specialities, who would be considered most suitable to be promoted, since the concept of seniority cum fitness cannot possibly be applied to a common set of posts without reference to any speciality.
Thus, it is submitted that to determine the meaning of suitability, the same yard stick must be adopted.
In any event, these are highly specialised posts.
Hence, it is unthinkable that the promotions to these posts is based on the principle of seniority cum fitness and not on the basis of selection.
The word `suitability ' will have to be interpreted as seniority cum fitness.
Otherwise, it would be liable to struck down as unconstitutional being violative of Articles 14 and 16 of the Constitutions.
Therefore, it is submitted that the Rule must be so interpreted as not to violate the fundamental rights.
The Tribunal had gone wrong in adopting the principle of seniority and its interpretation of rules cannot be sustained.
Learned counsel for Union of India, Shri K.T.S. Tulsi, supporting the arguments of Shri Kapil Sibal, urged that the order creating these posts clearly mentioned that the posts are created in the super time cadre of Central Health service.
Rule 4(10) (ii) and (iii) as amended merely prescribe the procedure for preparation of eligibility list.
This procedure is nowhere prescribed in any other Rule.
This was because of the fact that the 35 posts were created as floating posts.
They did not pertain to any particular super speciality or sub cadre of Professor/Director.
Therefore, criteria for preparation of eligibility list had to be prescribed for determining inter se ranking between the sub cadre.
Merely because Rule 4(10) (iii) contains the word `suitability ', the said Rule does not supersede alter or amend the criteria for selection.
The word `suitability ' will have to be understood in the light of the guidelines of Departmental Promotion Committee.
These 35 posts referred to in Rule 4(10) are an integral part of the cadre.
The said posts were not added to Schedule Ii, forming part of the temporary strength of the cadre.
However, on August 10, 1992, the said posts have been added to Schedule Ii so as to make its intention clear that the promotion is to be governed by all the relevant rules and not by Rule 4 (10) when read in isolation from the remaining Rules.
Thus, it is submitted that the reasoning of the Tribunal is unsupported.
Mr. P.P. Rao, learned counsel on behalf of Dr. P. Raja Ram would urge as under.
The initial argument particularly on behalf of the Union of India was that these floating/common posts of super time grade of teaching Specialist sub cadre formed part of authorised strength of the Central Health Service in terms of Rule 4(10).
This was contested by this respondent that Schedule II has not been amended till date so as to include these posts.
Instead of frankly admitting the mistake, there was a deliberate attempt to justify the inclusion of these 35 posts as part of Schedule II.
This is nothing but misleading the Court.
This alone is enough to dismiss the Special Leave Petition.
Even on merits, Rule 4(10) states that the posts are to be filled up by the method of promotion and on the basis of an eligibility list.
The note also lays down that the eligibility list shall be prepared with regard to the date of completion of the prescribed qualifying years of service in their respective grades, by the officers.
Further clause (iii) of sub Rule (10) adds the requirements of assessment by a Departmental Promotion Committee in regard to the suitability of each officer for holding the post while considering his case for promotion on the basis of common eligibility list.
The words 'his suitability" in the said clause (iii) are very significant.
They postulate assessment of suitability of each candidate in the order in which the names appear in the common eligibility list drawn on the basis of continuous qualifying service rendered by them in the feeder Grade.
The scheme of sub Rule (10) totally rules out selection on the basis of relative merit of all eligible candidates.
The difference between `common Posts ' and `floating posts ' is that while in `common posts ', a Professor on being promoted to one of the `common posts ', a Professor on being promoted to one of the `common posts ' moves to that post and vacates the post of Professor previously held by him, while in floating posts ' the post held by him is upgraded and he continues to work in the same speciality, in the same institution.
The guidelines of the Departmental Promotion Committee are not of any assistance.
Therefore, no argument can be advanced on this basis.
If guidelines were governed, there was no purpose in adding Rule 4(10) (ii) and (iii).
The basic distinction between the selection posts and non selection posts is, whether it is to be filled by a comparative assessment on merit of all eligible candidates or on the basis of continuous length of service.
The guidelines say that there is no need to make comparative assessment of records of the officers but it should categorise the officers as fit or non fit.
It is a clear indication that there is no comparative assessment involved.
The common eligibility list which talks of Rule 4(10) is nothing but a combined seniority list of officers in different specialities drawn with reference to the date of completion of the prescribed qualifying years of service.
It is also incorrect to contend that it is a duty post as defined under Rule 2(e).
Such an expression as 'duty post is absent under Rule 4(10)".
When these posts had been created in order to release stagnation in addition to authorised strength, presence of Chairman of Member of Union Public Service Commission at the Departmental Promotion Committee does not make a non selection post as selection post simply because the guidelines say in the case of non selection posts, Union Public Service Commission need not be associated.
The fact that this respondent did not raise any objection to the letter dated 3.11.1988, will not, in any manner, deprive him of his right if the Rules confer such a right.
lastly, it is submitted that if two views are possible, the view taken by the Tribunal should be upheld.
Thus, no interference is warranted.
We shall now proceed to consider the merits of the above contentions.
35 posts in super time grade of Central Health Service in the scale of Rs.5900 200 6700 plus non practising allowance at the normal rates admissible to similar posts were created.
These posts were to last till 29.2.1988.
Time and again, they were extended.
The Rules which were relevant to appreciate the controversy whether the promotion is on the basis of seniority or on the basis of merit may now be seen.
In exercise of the power conferred under the proviso to Article 309 of the Constitution, the Rules called Central Health Service Rules, 1982 were framed.
Rule 3 speaks of the constitution of Central Health Service.
This service is to consist of persons appointed to the service under the Rules 4(5),7 and 8.
Rule 4 speaks of authorised strength of service.
Sub rule (1) of this Rule states that the authorised strength of duty posts and the deputation posts are as specified in Schedule II.
Under sub rule (3), the Government is empowered to made temporary additions or reductions in the strength of both : (i) the duty posts (ii) deputation posts.
sub rule 6(i) and (ii) may be quoted as follows: (6) (i) "The Controlling Authority shall upgrade five posts in the grade of Specialist Grade I to supertime grade (three posts in the Teaching Specialist Sub cadre as Director Professor and two posts in the Non Teaching Specialist Sub Cadre or Public Health sub cadre as Specialist (Consultant) and twenty five posts in the grade of Specialist Grade II in the non Teaching Specialist Sub cadre or Public Health Sub cadre or Associate Professor in the Teaching Specialist Sub cadre in the grade of Specialist Grade I without altering the combined authorised strength of posts of the respective sub cadre from which these posts are temporarily upgraded.
(6) (ii) The promotions under this sub rule shall be made on the basis of a common eligibility list covering all officers in the respective sub cadres without regard to any specialities.
" It requires to be carefully noted that what is talked of is a common eligibility list.
In other words, this has only reference to eligibility.
This is an aspect which we want to emphasise even in the beginning.
Then, we come to sub rule (10) which was introduced on 30.5.1989 which specifically deals with these 35 newly created floating/common posts in the super time grade of Rs. 5900 6700.
These 35 posts are made up of 20 posts in the Teaching Specialist sub cadre as Director Professor and 15 posts in the Non Teaching Specialist sub cadre as Consultant.
These posts will be in addition to the authorised strength.
It is common ground that these posts were created to release stagnation.
Earlier to this amendment, these posts in the Teaching Specialist Sub cadre were alone open to Professors from all specialities.
They were : (i) Director, G.B. Pant Hospital, New Delhi.
(ii) Dean, Moulana Azad Medical Collage, New Delhi.
(iii) Principal, Lady Harding Medical Collage , New Delhi.
(iv) Director, JIPMER, Pondicherry.
(v) Dean, JIPMER, Pondicherry.
(vi) Deputy Director General (Medical), D.T.E., DGH, New Delhi.
As could be seen, the promotion posts available were very few and were restricted to certain specific specialities.
This led to stagnation.
Therefore, the floating posts (20+15) were created to be filled in the grade of Professor/Specialist Grade I (Rs.4500 5700).
It was in this background Rule 4(10) was introduced.
That lays down : "There shall be 35 newly created floating/common posts in the supertime grade of Rs.5900 6700 (Twenty posts in the teaching specialist sub cadre as Director Professor and fifteen posts in the Non Teaching Specialist sub cadre as Consultant) which will be in addition to the authorised strength of posts in supertime grade of Rs. 5900 6700 in different sub cadres of Central Health Service.
" Further clause (ii) of the above Rule lays down as follows: "The promotions under this sub rule shall be made on the basis of a common eligibility list to be drawn separately for Teaching Specialist sub cadre and Non Teaching Specialist sub cadre covering all officers in the respective sub cadres viz. Teaching and Non Teaching without regard to any specialities".
Here again, it talks of eligibility.
In our opinion, eligibility means interlacing of seniority list of different specialities.
Clause (iii) reads as under : " The appointment against such posts shall be made only if the officer concerned has been duly assessed by a Departmental Promotion Committee in regard to his suitability for holding the post and has been working in the grade of Professor/Specialist Grade I on a regular basis for not less than three years, failing which has been working as a Professor/Specialist Grade I with 17 years of regular service in Group `A ' post".
The note is also made for our purpose that states : "The eligibility list shall be prepared with reference to the date of completion by the officers of the prescribed qualifying years of service in the respective grades.
However, in case of persons who have been appointed on the same date the seniority shall be determined as under : (a) Where the eligible officers were considered by the same D.P.C. the seniority shall be based on the order of merit.
(b) If there is no order of merit, the seniority shall be on the basis of seniority in the feeder grade.
(c) If there is no seniority in the feeder grade or it is not possible to determine the seniority even in the feeder grade, the length of regular service in the feeder grade shall be the guiding factor for determining the seniority.
(d) if length of service in the feeder grade is also the same, regular service in the next lower grade shall be taken into account, failing which date of birth.
" It may be seen that clause (iii) states that the appointment is to be made only if the officer concerned has been duly assessed by a Departmental Promotion Committee in regard to his suitability for holding the Post.
Such a consideration will arise only if the concerned officer has been working in the grade of Professor/Specialist Grade I for a period not less than three years.
The alternative qualification is 17 years of regular service in Group `A ' post and the concerned officer has been working as a Professor or Specialist Grade I.
This clause does not lay down the manner in which the suitability of the officer is to be assessed.
However, It is noteworthy that suitability is to be assessed by a Departmental Promotion Committee.
As to what is stated can be seen, when we look at Rule 2 which contains definitions.
Rule 2(c) says as under : "Departmental Promotion Committee means a group `A ' Departmental Promotion Committee specified in Schedule IV for considering the cases of promotion or confirmation in Group `A ' Posts are of the scale of Rs.2200 4000 and above.
Schedule III defines the method of recruitment, the field of selection for promotion and the minimum qualifying service in the immediate lower grade or lower grades for appointment or promotion of officers to group `A ' duty posts and deputation posts in the Central Health service".
In Note 1 of the said Schedule, it is stated thus : "Promotion to the post of Associate Professor (non functional selection grade), Associate Professor, Specialist Grade II (non functional selection grade), Specialist Grade II (Senior Scale) in non teaching and Public health sub cadres, Chief Medical Officer (non functional selection grade) and Senior Medical Officer will be on non selection basis.
All the remaining posts are selection posts".
When it says all the remaining posts are selection posts, it is obvious that the posts with which we are concerned are selection posts.
Schedule IV lays down the composition of Departmental Promotion Committee.
With regard to the Teaching Specialist sub cadre posts, super time and Specialist Grade I (Professor), the Departmental Promotion Committee shall consist of the following : (i) Chairman.
Chairman/Member, Union Public Service Commission : (ii) Secretary or his nominee, Ministry of Health and Family Welfare ; Member (iii) Director General of Health Services or his nominee : Member.
(iv) One Departmental officer nominated by the Secretary, Ministry of Health and Family Welfare : Member.
When Rule 4 (10) (iii) talks of Departmental Promotion Committee, it is only this Departmental Promotion Committee in accordance with Schedule IV that is thought of.
There guidelines issued under the office memorandum of Government of India dated April 10, 1989.
Under this Office Memorandum, the various instructions have been updated and consolidated.
Under these guidelines, the Departmental Promotion Committee so constituted shall judge the suitability of the officers for promotions to selection posts.
it has already been seen that these are selection posts as per Schedule II of the Rules.
In Paragraph 2.1 with reference to the post in question carrying a scale of Rs.5900 6700 or equivalent.
The minimum status of Officer who should be member of Departmental Promotion Committee is prescribed as Secretary or Additional Secretary to Government of India.
Paragraph 2.2 of the guidelines states as follows : "The Union Public Service Commission (UPSC) should be associated with DPCs in respect of all Central Services/posts belonging to Group `A ' where promotion is based on the principles of selection unless it has been decided by the Government not to associate the UPSC with a Group `A ' DPC.
The UPSC need not be associated in respect of posts belonging to Group `A ', if the promotion is based not on the principles of selection but on seniority cum fitness".
Paragraph 2.4 also stresses the fact that whenever the Union Public Service Commission is associated with the Departmental Promotion Committee the Chairman or a Member of the Commission will preside over the meeting of the Departmental Promotion Committee.
The contention of Mr. P.P. Rao, learned counsel for the respondents that the nature of the post or the method of promotion need not be decided with reference to the guidelines is not correct.
In Rule 4, sub rule (10), clause (iii), to which a reference has already been made, the assessment is required to be done by a Departmental Promotion Committee.
It is for such a Committee that guidelines have been prescribed.
Therefore, we cannot altogether ignore these guidelines.
From the above two paragraphs it is clear that if there is to be an assessment the principle of selection is involved.
On the contrary, if it were merely a seniority cum fitness there is no need to associate the Union Public Service Commission as pointed out in Paragraph 2.3 of the guidelines.
All these lead only to one conclusion that these are selection posts.
Having arrived at this conclusion then the question would be what exactly is the meaning of the word "suitability".
That is dealt with apart from Rule 4, sub rule (10), clause (iii), also under guidelines in Paragraph 6.1.2.
The Departmental Promotion Committee is to devise its own method and procedure for objective assessment of suitability of candidates.
It is noteworthy in paragraph 6.3.1 that the procedure for the preparation of the panel for promotion by the Departmental promotion Committee is delienated.
Clause (ii) is very important and we extract the same: "In respect of all posts which are in the level of Rs.3700 5000 and above, the benchmark grade should be `very good '.
However officers who are graded as `Outstanding ' would rank en bloc senior to those who are graded as `Very Good ' and placed in the select panel according upto the number of vacancies, officers with same grading maintaining their inter se seniority in the feeder post".
(Emphasis supplied) In contradistinction to this when we look at paragraph 7 of the guidelines, which deals with non selection method, that dispenses with the requirement to make a comparative assessment of the records.
In such a case what is required is to categorise the officers as fit or not yet fit for promotion on the basis of the assessment of the record of service.
In so far as we are concerned with selection this paragraph does not have any application whatever.
Thus, therefore, the word "suitability" in Rule 4(10) (iii) having regard to the nature of the post and grade, could only mean suitability for the purposes of being selected to the said post.
(Emphasis supplied) Further, the expression "suitability" in the said clause does not, in any manner, supersede alter or amend the criteria of selection Prescribed in the remaining rules as is applicable to super time grade post.
When the expression "suitability" is construed harmoniously with other rules, the process of selection is inescapable as rightly contended by Mr. K.T.S. Tulsi, learned additional solicitor General.
The argument of Mr. Rao that if these posts are by the method of selection, clauses (ii) and (iii) and a note thereunder are wholly unnecessary in Rule 4(10), overlooks the fact that these clauses deal only with eligibility.
It is a common case between the parties that these 35 floating posts were created by sub rule (10) of the Rule 4 in addition to the authorised strength.
If as per the rule, for the post falling under authorised strength the method of selection is adopted for the authorised strength it must equally apply to the post created in addition to the authorised strength.
Though a good deal of controversy arose during the course of the arguments whether these posts had been included in Schedule II or not, it was vehemently commented upon by Mr. P.P. Rao, learned counsel, that an inaccurate statement was made by Union of India that controversy pales into insignificance because of the Gazette Notification dated 10th of August, 1992 including these 35 newly floating/common posts in Schedule II.
Therefore, if these posts form part of the authorised strength as to what would be the bearing of Rule 8(4)(ii), requires to be considered.
A careful reading of Rule 8(4)(ii) reveals that departmental promotion to higher post in the respective special cadres and specialities within the sub cadre concerned shall be made on the basis of selection on merit.
It implies that, should vacancy arise in a particular speciality, this method is to be adopted.
In contradistinction to this, under rule 4(10)(iii) even though one of the floating or common posts may be held by a particular person of a particular speciality, the said post can go to a person not belonging to that speciality.
The teaching, speciality sub cadre, forms a class within itself since it comprises of 29 specialities.
Thus it follows the word "selection" used in Rule 8(4)(ii) with reference, to inter se merit of persons belonging to a particular speciality with regard to the vacancy occurring in that speciality.
Lastly, we may refer to one important fact.
The first respondent (Dr. Raja Ram) was served with a copy of letter dated 3.11.1988.
That clearly states that the 20 posts of Director Professor of Super time grade are to be filled up by selection method, merit with regard to seniority.
Therefor, the decision of Government of India had been conveyed to the first respondent.
The first respondent when he was put on notice should have immediately voiced his protest.
Of course, the failure to protest would not deprive him of a legitimate right if he is entitled to in law.
However, it is one of the points to be borne in mind.
The Departmental Promotion Committee met on 20th September, 1989 and the minutes have been placed before us.
After examination of the character rolls of the senior most eligible officers the committee assessed the officers as given in Annexure I.
The first respondent, Dr. Raja Ram was rated as "very good" while the rating for the other doctors is as follows : 1.
Dr. B.S. Rana (2nd respondent ) : Outstanding 2.
Dr. M. Khalilullah (3rd respondent ) : Outstanding 3.
Dr. K.K. Jain (4th respondent ) : Outstanding 4.
Dr. D.D.S. Kulapathy (5th respondent ) : Outstanding Where respondents 2 to 5 are rated outstanding, they go `en bloc ' above the first respondent since the first respondent is merely "very good".
This is because of the application of clause II of paragraph 6.3.1 of the guidelines quoted above.
It was on this basis the Departmental Promotion Committee assigned rank No.14 to the first respondent, Dr. Raja Ram.
Pursuant to this, the President of India issued the impugned order of promotion dated 17th of January, 1990.
Paragraph 3 of the order, which we have quoted above, clearly states that the promotions will be personal to the officers concerned and the posts presently held by them will stand upgraded to the super time grade in the scale of Rs.5900 6700 plus non practising allowance at Rs.950 per mensem in terms of the Ministry 's order dated 15.3.89.
Above all these, we cannot lose sight of the fact that for posts of this character in super time grade carrying high salary, promotion could not be accorded merely on the basis of seniority.
In our considered view, it should be on merit.
For the foregoing reasons, we are clearly of the opinion that the Tribunal had erred in merely adopting seniority as the basis of promotion and not merit.
It is needless for us to consider whether these are duty posts since we have taken the view that these posts fall within Schedule II of the Rules.
In the result, we set aside the impugned judgment of the Tribunal and allow these appeals without costs.
The reason why we are not awarding costs in favour of the appellants is because of a specific objection by Mr. P.P. Rao that these posts have not been included in Schedule II by amending the said Schedule.
In respect of this, the Union of India persisted in the argument that they had been included in Schedule II.
Of Course after the Gazette Notification dated 10.9.92 the position may be different.
But that does not mean that the earlier incorrect statements by the Union of India could be overlooked.
Appeals allowed.
| IN-Abs | 35 posts in super time grade of Central Health Services were sanctioned and proposals were sent to the Union Public Service Commission(UPSC) for convening departmental Promotion Committee (DPC) meetings for selection of candidates.
UPSC approved to amend Rule 4(6) of Central Health service Rules of 1982.
It also approved the method recruitment, field of selection and principles of seniority to fill up the 35 posts as one time measure in the absence of notified recruitment rules.
The Commission also stipulated that these 35 posts were to be treated as common posts to be included in the category of floating posts for the teaching and non teaching sub cadres mentioned in Rule 4(6) of Central Health Services Rules, 1982.
The eligibility condition stipulated was three years as Professor failing which 17 years of regular service in Group `A '.
The Communication of UPSC together with the eligibility list of Professors was circulated and errors/objections etc.
were to be intimated to the Ministry within one month.
The DPC met and selected candidates.
Respondent No.1 was assigned 14th rank and Respondent No.3 was assigned 4th rank.
The selected candidates were promoted and appointed.
Respondent No.1 filed an application before the Central Administrative Tribunal claiming that he was senior to respondent No.3 and others doctors and since the promotion was only on the basis of seniority and directed that Respondents arrayed in the application before it.
Being aggrieved by the Tribunal 's order, Union of India preferred the first of the two appeals.
Respondent No.3 in that appeal has preferred the other appeal.
On behalf of the appellants/respondent No.3, it was contended that Rule 4(10)(ii) and (iii) as amended merely prescribed the procedure for preparation of eligibility test; that the procedure has not been prescribed in any other Rule as the posts were created as floating posts: that the posts did not pertain to any particular super speciality or sub cadre if Professor/Director and so the criteria for preparation of eligibility list gad to be prescribed for determining inter se ranking between the sub cadres; that merely because Rule 4(10)(iii) contained the word `suitability ' it did not supersede, alter or amend the criteria for selection and that the word `suitability ' has to be understood in the light of the guidelines of DPC.
Allowing the appeals, this Court, HELD: 1.1.
If there is to be an assessment of merit, the principle of selection is involved.
on the contrary, if it were merely a seniority cum fitness there is no need to associate the Union public Service Commission as pointed out in the guidelines.
All these lead only to one conclusion that these are selection posts.
That is dealt with apart from Rule 4, sub rule (10), clause (iii), and also under paragraph 6.1.2 of the guidelines issued by the Government of India.
According to the guidelines the Departmental Promotion Committee is to devise its own method and procedure for objective assessments of suitability of candidates.
It is note worthy in Paragraph 6.3.1 that the procedure for the preparation of the panel for promotion by the Departmental promotion Committee is delineated.
[51 C,D] 1.2.
Paragraph 7 of the guidelines deals with non selection method and it dispenses with the requirement to make a comparative assessment of the records.
In such a case what is required is to categorise the officers as fit or not yet fit for promotion on the basis of assessment of the record of service.
Therefore, the word "suitability" in Rule 4(10)(iii) having regard to the nature of the post and grade could only mean suitability for the purposes of being selected to the said post.
[51 G, H; 52 A] 2.
It is a common case between the parties that these 35 floating posts were created by sub rule 10 of rule 4 in a addition to the authorised strength.
If as per the rule, for the post falling under authorised strength the method of selection is adopted it must equally apply to the post created in addition to the authorised strength.
A careful reading of Rule 8(4)(ii) reveals that departmental promotion to higher post in the respective special cadres and specialities within the sub cadre concerned shall be made on the basis of selection on merit.
It implies that, should vacancy arise in a particular speciality , this method is to be adopted.
In contradistinction to this, under Rule 4(10)(iii) even though one of the floating or common posts may be held by a particular person of a particular speciality, the said post can go to a person not belonging to that speciality.
Comprises of 29 specialities.
Thus it follows the word "selection" used in Rule 8 (4)(ii) is with reference to inter se merit of persons belonging to a particular speciality with regard to the vacancy occurring in that speciality.[52 D H] 3.
The first respondent was served with a copy of letter dated 3.11.1988 in which the appellant clearly stated that the 20 posts of Director/Professor of super time grade are to be filled by selection method viz. merit with regard to seniority.
Therefore, the decision of Government of India had been conveyed to the first respondent and he should have immediately voiced his protest.
Of course, the failure to protest would not deprive him of a legitimate right if he is entitled to in law.
[53 A,B] 4.
After examination of the character roll of the senior most eligible officers the committee assessed the officers.
The first respondent was rated as "very good" while the rating for respondents 2 to 5 was outstanding".
So they go en bloc above the first respondent since the first respondent is merely "very good".
This is because of the application of clause Ii of paragraph 6.3.1.
of the guidelines.
It was on this basis the Departmental Promotion Committee assigned rank No. 14 to the first respondent.
Pursuant to this the President of India issued the order of promotion dated 17th January, 1990.
Paragraph 3 of the order clearly states that the promotions will be personal to the officers concerned and the posts presently held by them will stand upgraded to the super time grade in the scale in terms of the Ministry 's order dated 15.3.1989.
Hence the Tribunal was in error in merely adopting seniority as the basis of promotion and not merit.
[53 C G]
|
tion (Crl.) No. 1061 of 1982.
(Under Article 37 of Constitution of India) Prem Bhai and Prem Singh, Commnr.
Supreme Court, Justice B.L. Loombha, Chairman, Legal Aid, Advisory Board, U.P., M.K. Ramamurthi, B. Datta, Yogeshwar Prasad, Ms. Chandan Ramamurthi, M.A. Krishnamoorthy, Ms. Rachna Joshi, D.D. Sharma, A.S. Pundir, R.P. Srivastava, S.N. Terdol, Hemant Sharma, Ms. Anil Katiyar, C.V.S. Rao and Ms.
Sangeeta Aggarwal for the appearing parties.
The following Order of the Court was delivered: On the basis of a letter received from Banwasi Seva Ashram operating in Mirzapur District of Uttar Pradesh Writ Petition (Criminal) No. 1061/82 under Article 32 of the Constitution of India was registered.
Meanwhile the National Thermal Power Corporation Limited (NTPC) decided to set up a super thermal plant on part of the lands which were subject matter of the writ petition.
NTPC got itself impleaded as a party in the writ petition and claimed that the completion of the project was a time bound programme and as such the land earmarked for the project be made free from prohibitive directions of this Court in the writ petition.
The writ petition was disposed of by an order dated November 20, 1986.
This Court issued comprehensive directions and appointed a Board of Commissioners to supervise the implementation of the said directions.
This Court has been monitoring the project during all these years in terms of the directions issued on November 20, 1986.
By this order we are finally disposing of the proceedings and the monitoring process so far as the NTPC is concerned.
The directions dated November 20, 1986 relevant for this purpose are as under: "(1) So far as the lands which have already been declared as reserved forest under Section 20 of the Act, the same would not form part of the Writ Petition and any direction made by this Court earlier, now or in future in this case would not relate 860 to the same.
In regard to the lands declared as reserved forest, it is, however, open to the claimants to establish their rights, if any, in any other appropriate proceeding.
We express no opinion about the maintainability of such claim." "(5) The land sought to the acquired for the Rihand Super Thermal Power Project of the NTPC shall be freed from the ban of dispossession.
Such land is said to be about 153 acres for Ash Pipe Line and 1643 acres for Ash Dyke and are located in the villages of Khamariya, Parbatwa, Jheelotola, Dodhar and Jarha.
Possession thereof may be taken,. ., but such possession should be taken in the presence of one of the commissioners who are being appointed by this order and a detailed record of the nature and extent of the land, the name of the person who is being dispossessed and the nature of enjoyment of the land and all other relevant particulars should be kept for appropriate use in future.
Such records shall be duly certified by the Commissioner in whose presence possession is taken and the same should be available for use in all proceedings that may be taken subsequently.
The NTPC has agreed before the Court that it shall strictly follow the policy on "facilities to be given to land oustees" as placed before the Court in the matter of lands which are subjected to acquisition for its purpose.
The same shall be taken as an undertaking to the Court.
" Mr. Datta learned senior advocate appearing for the NTPC has stated that the NTPC has already taken actual/symbolic possession of 1375 acres of land.
In respect of 1004 acres of the said land a notification under Section 4 of the (hereinafter called `the Act ') was issued and the proceedings for declaring the said area as reserved forest were undertaken.
The remaining 371 acres were part of Gaon Sabha land and ownership in the said land vested in the State Government.
According to Mr. Datta this land measuring 1375 acres is under the possession of NTPC and the project construction is in progress.
Mr. Ramamurthy, on the other hand, has contended that the actual possession of whole of the area is not with the NTPC and the Adivasi/land owners are still in possession of their respective holdings.
861 Mr. Datta further states that apart from 1375 acres, mentioned above, the NTPC has yet to obtain possession of 465 acres of land which is reserved forest under Section 20 of the Act.
In view of the directions quoted above the lands which have been declared as reserved forest under the Act are not the subject matter of the writ petition and as such no direction can be issued by this Court in that respect.
In this order, we are concerned with 1004 acres of land which is subject matter of Section 4 Notification under the Act.
We have to ensure that the rights of the oustees are determined in their respective holdings and they are properly rehabilitated and adequately compensated.
According to the summary of rehabilitation package filed on the record by Mr. Datta there are 678 families which have been ousted from the land.
Mr. Ramamurthy, however states that there are more than 1500 families which are likely to be affected by the take over of 1004 acres of land by the NTPC.
We direct that the following measures to rehabilitate the evictees who were in actual physical possession of the lands/houses etc.
be taken by the NTPC in collaboration with the State Government.
The NTPC shall submit a list of the evictees claimants to the District Judge, Sonebharda before April 15, 1992.
Mr. Prem Singh shall also submit the list of the evictees to the District Judge by April 15, 1992.
The District Judge Sonebhadra shall be the authority to finalise the list of the evictees.
One plot of land measuring 60 ' x 40 ' ' to each of the evictee families be distributed for housing purposes through the district administration.
Mr. Datta has informed us that the plots of the said measurements have already been given to 641 families.
We direct that the remaining evictees be also given the plots.
Shifting allowance of Rs. 1500 and in addition a lumpsum rent of Rs. 3000 towards housing be given to each of the evictee families.
Free transportation shall be provided for shifting.
Monthly subsistence allowance equivalent to loss of net income from the acquired land to be determined by the District Judge Sonebhadra subject to a maximum of Rs. 750 for a period of 10 years.
The said 862 payment shall not be linked with employment or any other compensation.
Unskilled and semi skilled posts in the project shall be reserved for the evictees subject to their eligibility and suitability.
7.The NTPC shall give preference to the oustees in employment in class III and IV posts under its administration subject to their suitability and eligibility.
The evictees be offered employment through the contractors employed by the NTPC.
The jobs of contractors under the administration of the NTPC be offered to the evictees.
The shops and other business premises within the NTPC campus be offered to the evictees.
The NTPC shall operate for the benefit of the evictees selfgenerating employment schemes such as carpentary training (free tools to be provided after completion of training), carpet weaving training, sericulture, masonary training, dairy farming, poultry farming and basket weaving training etc.
The NTPC shall provide facilities in the rehabilitative area such as pucca roads, pucca drainage system, hand pumps, wells, portable water supply, primary school, health centre, Panchayat Bhavan, electricity connections, bank and Sulabh Sauchalaya complex etc. 13.
The NTPC shall also provide hospitals, schools, adult education classes and sports centres for the evictees.
The Deputy Commissioner Sonebhadra shall supervise and ensure that the above rehabilitation measures directed by us are fully complied with by the NTPC and other authorities.
As regards compensation in respect of lands, crops etc.
Mr. Datta states that crop compensation at Rs. 850 per acre per year has been paid to the oustees.
He states that a sum of Rs. 16,44,529.68 paise has been paid to the oustees in this respect.
He further states that Rs. 1 crore and Rs. 507500 have further been deposited by the NTPC with the State 863 Government on March 13, 1991 and January 20, 1992 respectively.
According to him out of the said amount, Rs. 48,35,649.17 paise have so far been paid to the oustees as land compensation at the rate of Rs. 10,000 per acre.
It is not disputed that Rs. 850 per acre per year for the crops and Rs. 10,000 per acre for the land has been determined as provisional compensation.
We direct that the provisional compensation at the above rates be paid to the oustees, if not already paid, within 8 weeks from today.
In this respect we further issue the following directions: (a) The District Judge, Sonebhadra shall be authority to determine the compensation in respect of land, crop, house and any other legitimate claim based on existing rights of the oustees.
(b) Mr. Prem Singh, Commissioner along with the Project Officer of the NTPC and Sarpanch of the area concerned shall verify the extent of the property of the oustees who have been or are likely to be evicted from the actual physical possession of the lands/houses etc.
It has been stated before us that such verification can be done within a period of two months.
We direct that the verification be completed before April 15, 1992.
The rights determined by Mr. Prem Singh and party shall be subject to the final approval of District Judge, Sonebhadra.
(c) The District Judge, Sonebhadra shall issue notices to all the claimants before May 15, 1992 asking them to file their respective claims for compensation.
The evictees, may also on their own, whether they have received provisional compensation or not prefer their claims for compensation to the District Judge Sonebhadra before August 1, 1992.
(d) The District Judge Sonebhadra shall finally decide all the compensation claims expeditiously preferably before March 31, 1993.
The orders passed by the District Judge in each case shall be treated as the orders under Section 17 of the Act as amended by the Uttar Pradesh Act 25 of 1965.
(e) Any party, not satisfied with the order of the District Judge, may have recourse to any remedy available under law.
With the above directions we finally close the proceedings in respect of the lands in possession of the NTPC.
R.P. Petition disposed of.
| IN-Abs | This Court, by its order dated 20.11.1986, while disposing of Writ Petition (Crl.) No. 1061 of 1982, gave comprehensive directions for rehabilitation of Adivasis/landholders affected by the Rihand Super Thermal Power Project to be set up by the National Thermal Power Corporation Limited (NTPC), and appointed a Board of Commissioners to supervise the implementation of the said directions.
Since then this Court was monitoring the project.
Disposing of the proceedings and the monitoring process so far as the NTPC was concerned, this Court, HELD: In order to ensure that the rights of the oustees are determined in their respective holdings and they are properly and adequately compensated, the NTPC shall take, in collaboration with the State Government, the following measures to rehabilitate the evictees who were in actual physical possession of the lands/houses etc.
: (i) The NTPC shall submit a list of the evictees claimants to the District Judge, Sonebhadra who shall be the final authority to finalise the list.
(ii) One plot of land measuring 60 ' x 40 ' to each of the evictee families be distributed for housing purposes through the district administration.
(iii) Shifting allowance of Rs. 1500 and in addition a lumpsum rent of Rs. 3000 towards housing be given to each of the evictee families.
858 (iv) Free transportation shall be provided for shifting.
(v) Monthly subsistence allowance equivalent to loss of net income from the acquired land to be determined by the District Judge Sonebhadra subject to a maximum of Rs. 750 for a period of 10 years.
The said payment shall not be linked with employment or any other compensation.
(vi) Unskilled and semi skilled posts in the project shall be reserved for the evictees.
(vii) The NTPC shall give preference to the oustees in employment in class III and IV posts under its establishment.
(viii) The evictees be offered employment through the contractors employed by the NTPC.
(ix) Jobs of contractors under the administration of the NTPC be offered to the evictees.
(x) The shops and other business premises within the NTPC campus be offered to the evictees.
(xi) The NTPC shall operate for the benefit of the evictees selfgenerating employment schemes such as carpentry training (free tools to be provided after completion of training) carpet weaving training, sericulture, masonary training, dairy farming, poultry farming and basket weaving training etc.
(xii) The NTPC shall provide facilities in the rehabilitative area such as pucca roads, pucca drainage system, handpumps, wells, portable water supply, primary school, adult education classes, health centre, Panchayat Bhavan, sports centres, electricity connections, bank and sulabh Sauchalaya complex etc.
The Deputy Commissioner Sonebhadra shall supervise and ensure that the rehabilitation measures are fully complied with.
(xiii) As regards compensation for crops and land, the provisional compensation at the rate of Rs. 850 per acre per year for crops and Rs. 10,000 per acre for the land be paid to the oustees.
[pp.861B H; 862A H; 863A B] 859 The District Judge Sonebhadra shall be the authority to determine the compensation.
The orders passed by the District Judge shall be treated as orders under section 17 of the Indian Forest Act, as amended by U.P. Act 25 of 1965.
[p.863B,F]
|
Special Leave Petition (C) No. 4325 of 1992.
From the Judgment and Order dated 6.3.1992 of the Punjab and Haryana High Court in Civil Revision No. 2830 of 1991.
Dr. A.M. Singhvi and Ms. Kirti Misra for the Appellant.
D.V. Sehgal, S.M. Sarin, P.N. Puri, Ranbir Singh Yadav and G.K. Bansal for the Respondent.
The Judgment of the Court was delivered by S.C. AGRAWAL, J.
This petition for special leave to appeal arises out of proceedings for eviction initiated by the respondent (landlord) against the petitioner (tenant) under section 13A of the East Punjab Urban Rent Restriction Act, 1949 (hereinafter referred to as `the Act '), as amended by Act No. 2 of 1985.
The proceedings relate to a residential house in Chandigarh which was let out to the petitioner by the respondent.
The respondent was initially employed as Accounts Officer with the Finance Department of the Government of Haryana.
In 1969, he went on deputation with the Haryana Agricultural University (hereinafter referred to as `the University ').
His services were transferred to the University by the Government of Haryana with effect from November 1, 1975, and while he was employed on the post of Comptroller in the University he retired from service with effect from February 28, 1991.
Claiming to be a `specified landlord ' within the meaning of section 2(hh) of the Act, the respondent moved a petition seeking eviction of the petitioner under section 13A of the Act before the Rent Controller, Chandigarh.
The said petition was dismissed by the Rent Controller by order dated August 5, 1991 on the view that the respondent did not fall within the ambit of the definition of `specified landlord ' since he had failed to show that he was holding or has held an appointment in a public service or post in connection with the affairs of the Union or of the State.
The respondent filed a revision petition before the High Court under section 18 A(8) of the Act which was allowed by the High Court by judgment dated March 6, 1992.
The High Court held that the respondent, at the time of his retirement from the post of Comptroller in the University, was holding an appointment in connection with the affairs of the State and hence he is a specified landlord within the meaning of section 2(hh) of the Act.
The High Court further found that the respondent had fully satisfied the conditions as contained in section 13 A of the Act and he was entitled to recover the possession of the premises in dispute from the petitioner.
Allowing the revision, the High Court set aside the order of the Rent Controller and accepted the petition filed by the respondent under section 13 A of the Act for ejectment of the petitioner.
The High Court further directed as under: "However, the respondent is allowed one month 's time to vacate the premises provided he pays the entire arrears of rent within 15 days from today, and also files an undertaking with the Court of the Rent Controller to the effect that he shall hand over the vacant possession of the premises on the expiry of aforesaid period.
" On March 16, 1992, the petitioner moved a petition in the high Court under section 151 CPC seeking three months, time to vacate the house and for waiving the requirement of filing of an undertaking.
The said petition was rejected by the High Court by order dated March 18, 1992.
Thereafter, the petitioner submitted an undertaking dated March 20, 1992 before the Rent Controller wherein the petitioner after referring to the direction contained in the order of the High Court dated March 6, 1992 gave the following undertaking: "That the respondent hereby gives undertaking that he will vacate the premises and shall handover the vacant possession of the premises on the expiry of one month from 6.3.92 as per the order of Hon 'ble High Court, subject to his rights for filing SLP in the Hon 'ble Supreme Court against the order of eviction.
The respondent has already sent draft for the rent for the month of March 1992 to the petitioner and he is not in arrears of rent.
" On March 21, 1992, the petitioner filed the special leave petition under Article 136 of the Constitution in this Court.
On the said petition the following order was passed on March 26, 1992: "To come up in normal course.
In the meantime, no dispossession to be effected.
" On April 9, 1992, an order was passed in the following terms: "Issue notice returnable within two weeks.
In the meantime, stay of eviction to continue." .
In response to the said notice, the respondent filed a counter affidavit on April 18, 1992 wherein an objection has been raised that in view of the undertaking given by him the petitioner cannot invoke the jurisdiction of this Court under Article 136 of the Constitution.
Shri D.V. Sehgal, the learned senior counsel appearing for the respondent, has submitted that in view of his having taken the benefit of direction contained in the order of the High Court allowing him one month 's time to vacate the premises on his filing an undertaking that he shall hand over vacant possession of the premises on the expiry of aforesaid period and his having submitted a written undertaking in accordance with the said direction, the petitioner is precluded from assailing the judgment of the High Court by invoking the jurisdiction of this Court under Article 136 of the Constitution.
Shri Sehgal has urged that the fact that the petitioner has qualified his undertaking by using the words "subject to his rights for filing SLP in the Hon 'ble Supreme Court against the order of eviction" would not alter the position.
In support of his aforesaid submission Shri Sehgal has placed reliance on the decisions of this Court in Thacker Hariram Motiram vs Balkrishan Chatbrabhu Thacker & Ors., [1989] Supp.
2 SCC 655; Vidhi Shanker vs Heera Lal, [1987] Supp.
SCC 200 and Ramchandra Jai Ram Randive vs Chandanmal Rupchand & Ors., [1987] Supp.
SCC 254.
Dr. A.M. Singhvi, the learned counsel appearing for the petitioner, has, however, laid stress on the fact that the undertaking had to be given by the petitioner in the peculiar circumstances arising on account of this Court being closed due to vacations from March 16, 1992 to March 20, 1992.
Dr. Singhvi has submitted that the petitioner has not taken any undue advantage by giving the undertaking inasmuch as before giving the under taking, he had moved an application for extension of time before the High Court wherein he had clearly indicated that he intended to file a special leave petition in this Court against the order of the High Court dated March 6, 1992 and this was also expressly stated in the undertaking filed in the Court wherein it is mentioned that the undertaking was subjected to his right to file the special leave petition in this Court against the order of eviction.
Dr. Singhvi has urged that in view of the aforesaid facts and circumstances the decisions on which reliance has been placed by Shri Sehgal would have no application to the present case.
In view of the judgment of the High Court allowing the petition for eviction filed by the respondent, the petitioner was liable to be evicted from the premises forthwith.
Under the direclions given by the High Court, the petitioner could continue in occupation of the premises for a period of one month on his (i) paying the entire arrears of rent within 15 days from the date of the judgment; and (ii) filing an undertaking with the court of Rent Controller to the effect that he shall hand over the vacant possession of the premises on the expiry of the period of one month.
The petitioner made an effort to obtain extension of time for vacating the premises without furnishing the undertaking and he filed a petition for the purpose before the High Court.
The said petition was, however, dismissed by the High Court.
Having failed in his attempt to obtain extension of time for vacating the premises without furnishing an undertaking the petitioner had two options open to him, (i) to avail the protection from eviction from the premises for 3a period of one month by tiling an undertaking as directed, or (ii) not to avail the said protection and run the risk of immediate eviction.
The petitioner chose the first option.
In order to avail the protection from eviction from the premises for a period of one month he filed the requisite undertaking in the court of the Rent Controller within the period of 15 days prescribed under the directions of the High Court.
The statement in the undertaking that it was subject to the rights of the petitioner to file special leave petition in this Court against the order of eviction, does not, in our view, have any effect on the legal consequences flowing as a result of the filing of the undertaking by the petitioner.
By furnishing the said undertaking the petitioner elected to avail the protection from eviction from the premises and he enjoyed the said protection till the passing of the order by this Court on March 26, 1992, staying dispossession of the petitioner.
Having elected to avail the protection from eviction under the order dated March 6, 1992 passed by the High Court, by filing the requisite undertaking, the petitioner cannot be permitted to assail the said order.
Law does not permit a person to both approbate and reprobate.
This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that "a person cannot say at one time that a transaction is valid any thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage".
[See: Verschures Creameries Ltd. vs Hull and Netherlands Steamship Co. Ltd., (1921) 2 R.B. 608, at p.612, Scrutton, L.J].
According to Halsbury 's Laws of England, 4th Edn.
,Vol. 16, "after taking an advantage under an order (for example for the payment of costs) a party may be precluded from saying that it is invalid and asking to set it aside".
(para 1508).
In Thacker Hariram Motiram vs Balkrishan Chatbrabhu Thacker & Ors.(supra), this Court was dealing with a similar situation.
The High (Court, while deciding the second appeal in an eviction matter gave the appellant (tenant) one year 's time subject to his giving an undertaking within a period of three weeks stating that vacant possession would be handed over within the aforesaid time.
The appellant gave an undertaking in accordance with the said terms wherein he undertook that he would vacate and give vacant possession of the suit premises by December 31, 1985, i.e., to say after one year if "by that time no stay order from the Supreme Court is received as I intend to file an appeal in the Supreme Court".
It was held that in view of the said undertaking the petitioner could not invoke the jurisdiction of this Court under Article 136 of the Constitution and he should abide by the terms of the undertaking, and it was observed "This undertaking filed by the appellant in our opinion is in clear variation with the oral undertaking given to the learned Judge which induced him to give one year 's time.
a We do not wish to encourage this kind of practice for obtaining time from the court on one plea of filing the undertaking and taking the different stand, in applications under Article 136 of the Constitution." (p.655) Similarly in Vidhi Shanker vs Heera Lal (supra) and Ramchandra Jai Ram Randive vs Chandanmal Rupchand & Ors.
(supra), this Court declined to exercise its discretion under Article 136 of the Constitution in cases where the petitioner had given an undertaking in the High Court and had obtained time to vacate the premises on the basis of such undertaking.
We are, therefore, of the opinion that the petitioner, having given an undertaking in pursuance to the directions given by the High Court in the Judgment dated March 6, 1992, and having availed the protection from eviction on the basis of the said undertaking, cannot be permitted to invoke the jurisdiction of this Court under Article 136 of the Constitution and assail the said judgment of the High Court.
In that view of the matter, we do not consider it necessary to deal with the submissions urged by Dr. Singhvi that the respondent, being an employee of the University at the time of his retirement, was not a 'specified landlord ' under section 2(hh) of the Act.
The special leave petition is, accordingly, dismissed but without any orders as to costs.
V.P.R. Petition dismissed.
| IN-Abs | A residential house was let out to the petitioner by the respondent.
The respondent was initially employed as Accounts Officer with the Finance Department of the Government.
In 1969, he went on deputation with the Haryana Agricultural University.
While he was employed on the post of Comptroller in the University he retired from service with effect from February 28, 1991.
Claiming to be a "specified landlord" within the meaning of Section 2(hh) of the East Punjab Urban Rent Restriction Act, 1949, the respondent moved a petition seeking eviction of the petitioner under section 13A of the Act before the Rent Controller.
The petition was dismissed by the Rent Controller on the view that the respondent did not fall within the ambit of the definition of "specified landlord", since he failed to show that he was holding or had held an appointment in a public service or post in connection with the affairs of the Union or of the State.
The respondent filed a revision petition before the High Court under section 18 A(8) of the Act, which was allowed by the High Court on March, 1992.
The High Court held that the respondent, at the time of his retirement from the post of Comptroller in the University, was holding an appointment in connection with the affairs of the State and hence he was a specified landlord within the meaning of section 2(hh) of the Act and that the respondent had fully satisfied the conditions as contained in section 13 A of the Act and he was entitled to recover the possession of the premises in dispute from the petitioner.
The High Court allowed one month 's time for the petitioner to vacate the premises subject to his paying the entire arrears of rent within 15 days from the date of the order and filing an undertaking that he would hand over the vacant possession of the premises on the expiry of the aforesaid period.
On March 16, 1992, the petitioner moved a petition in the High Court under section 151 CPC seeking three months ' time to vacate the house and for waiving the requirement of filing of an undertaking.
The High Court rejected the petition.
Thereafter, the petitioner submitted an undertaking dated March 20, 1992 before the Rent Controller wherein the petitioner referred to the direction contained in the order of the High Court dated March 6, 1992.
On March 21, 1992, the petitioner filed the special leave petition under Article 136 of the Constitution in this Court and succeeded to get an order staying dispossession on March 26, 1992.
In response to the notice issued on the Special Leave Petition, the respondent filed a counter affidavit raising an objection that in view of the undertaking given by the petitioner, the jurisdiction of this Court under Article 136 of the Constitution could not be invoked.
The respondent landlord submitted that in view of petitioner tenant 's having taken the benefit of direction contained to the order of the High Court allowing him one month 's time to vacate the premises on his filing an undertaking that vacant possession of the premises would be handed over on the expiry of the period and his having submitted a written undertaking in accordance with the direction, the petitioner was precluded from assailing the judgment of the High Court by invoking the jurisdiction of this Court under Article 136 of the Constitution.
The petitioner tenant submitted that he did not take any undue advantage by giving the undertaking; that prior to the undertaking, he had moved an application for extension of time before the High Court wherein he had clearly indicated that he intended to file a special leave petition in this Court against the order of the High Court dated March 6, 1992 and that it was also expressly stated in the undertaking filed in the Court wherein it is mentioned that the undertaking was subject to his right to file the special leave petition in this Court against the order of eviction.
Dismissing the special leave petition, this Court, HELD: 1.01 Law does not permit a person to both approbate and reprobate.
This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument.
[263 F] 1.02 The petitioner, having given an undertaking in pursuance to the directions given by the High Court in the judgment dated March 6, 1992 and having availed the protection from eviction on the basis of the said undertaking, cannot be permitted to invoke the jurisdiction of this Court under Article 136 of the Constitution and assail the said judgment of the High Court.
[264 H] 1.03 The statement in the undertaking, that it was subject to the rights of the petitioner to file special leave petition in this Court against the order of eviction, does not have any effect on the legal consequencew flowing as a result of the filing of the undertaking by the petitioner.
[263 D] Verschures Creameries Ltd. vs Hull and Netherlands Steamship Co. E Ltd., at p. 612; Thacker Hariram Motiram vs Balkrishan Chatbrabhu Thacker & Ors., [1989] Supp.
2 SCC 655 and Vidhi Shanker vs Heera Lal 1987 Supp.
SCC 200; Ramchandra Jai Ram Randive vs Chandanmal Rupshand & Ors., [1987] Supp.
SCC 254, referred to.
Halsbuly 's Laws of England, 4th Edn.
16, para 1508, referred to.
|
Civil Appeal No 3244 of 1988.
From the Judgement and Order dated 8.7.1988 of the Karnataka High Court in W.A. No.560 of 1983.
K.N. Bhat S.K. Kulkarni and Ms. Kiran Suri for the Appellant S.N Bhat M.Veerappa and K.H Nobin Singh for the respondents.
The Judgment of the Court was delivered by N.P. SINGH, J.
This appeal has been filed against an order passed by the High Court, on a writ application filed by the petitioner respondent (hereinafter referred to as "the respondent") quashing the order of termination of the service of the respondent.
The respondent was appointed as a Lecturer in Surgical Oncology on 3rd July, 1981.
He was to be on probation for a period of one year from the date of his appointment which period could have been extended at the discretion of the competent authority.
One of the conditions provided is as follows : "Failure to complete the period of probation to the satisfaction of the competent authority will render you liable to be discharged from service.
" Before the expiry of one year, the impugned order of termination was issued on 30th January, 1982 saying: "In accordance with the decision of the Governing Council at its meeting held on 28th January, 1982 the services of Dr. Pandurang Godwalkar, Lecturer in Surgical Oncology (on probation), Kidwai Memorial Institute of Oncology, Bangalore are terminated with effect from the afternoon of 30 January, 1982, as per Rule 4 of the Conditions of Service Rules (Annexure 2 Chapter I) of the Institute.
He is paid one month 's salary in lieu of one month 's notice required as per rules." Although the order under challenge was order of termination simpliciter, the validity thereof was questioned by the respondent on the ground that an order of dismissal had been passed in the garb of an order of termination.
According to the respondent, some complaints had been made against him to the Director of the Institute who instead of initiating a departmental proceeding on basis of charges levelled against the respondent, put up the matter before the Governing Council of the Institute for termination of the service of the respondent during the period of probation.
The learned Judge in view of the assertions made on behalf of the respondent directed the institute to produce the original records including certain documents and papers which had been marked as confidential.
From the note of the Director it appeared that complaints had been made in respect of performance of the duties by the respondent.
In that note it was also mentioned that the respondent was unsympathetic towards the patients.
It had also brought to the notice of the Governing Council that the respondent had attempted to obtain the signatures.
of some of the patients on the petitions stating that he was a good doctor.
On one occasion it was reported that the respondent had taken away a girl on his scooter and brought her back late in the night.
The said girl was an attendant to a patient in the hospital.
The learned Judge came to the conclusion that as the service of the petitioner had been terminated because of the complaints made against him it really amounted to his removal for the misconduct alleged in the note of the Director.
According to the learned Judge the Institute should have initiated a departmental proceeding in respect of the alleged charges and only after due enquiry any action should have been taken.
There is no dispute that the service of the respondent had been terminated during the period of probation The appointment of the respondent was with a clear condition that failure to complete the period of probation to the satisfaction of the competent authority shall render him liable to be discharged from the service.
Relevant part of Rule 4 of the Conditions of Service Rules is as follows : "4. TERMlNATION : 1.
All appointments shall be terminable on a notice in writing either by the appointing authority or the employee without assigning any reason as set below : a) During the period . one month of probation.
b) After completion of the period 1 of probation. months.
c) The notice referred to in rule (1) above shall not be necessary if in lieu thereof an amount equal to the pay and allowance for the period of notice is paid. . . . " Generally in connection with an order of termination, a question is raised before the court as to what is the motive behind the termination of the service of the employee concerned whether the reason mentioned in the order of termination has to be accepted on its face value or the background in which such order of termination simpliciter has been passed should be examined to find out as to whether an officer on probation or holding a temporary appointment has been, in fact, dismissed from the service without initiating any departmental enquiry.
If an employee who is on probation or holding an appointment on temporary basis is removed from the service with stigma because of some specific charge, then a plea cannot be taken that as his service was temporary or his appointment was on probation, there was no requirement of holding any enquiry, affording such an employee an opportunity to show that the charge levelled against him is either not true or it is without any basis.
But whenever the service of an employee is terminated during the period of probation or while his appointment is on temporary basis, by an order of termination simpliciter alter some preliminary enquiry it cannot he held that as some enquiry had been made against him before the issuance of order of the termination it really amounted to his removal from service on a charge as such penal in nature When an appointment is made on probation, it presupposes that the conduct, performance, ability and the capacity of the employee concerned have to be watched and examined during the period of probation.
He is to be confirmed after the expiry of probation only when his service during the period of probation is found to be satisfactory and he is considered suitable for the post against which he has been appointed.
The principle of tearing of the veil for finding out the real nature of the order shall be applicable only in a case where the Court is satisfied that there is a direct nexus between the charge so levelled and the action taken.
If the decision is taken, to terminate the service of an employee during the period of probation, after taking into consideration the overall performance and some action or inaction on the part of such employee then it cannot be said that it amounts to his removal from service as punishment.
It need not be said that the appointing authority at the stage of confirmation or while examining the question as to whether the service of such employee be terminated during the continuance of the period of probation is entitled to look into any complaint made in respect of such employee while discharging his duties for purpose of making assessment of the performance of such employee.
Even it such employee while questioning the validity of an order of termination simpliciter brings on the record that some preliminary enquiry or examination of some allegations had been made that will not vitiate the order of termination.
Reference in this connection may be made to the case of Oil and Natural Gas Commission vs Dr. Mohd. section Iskender Ali; , where it was pointed out that a temporary employee is appointed on probation for a particular period only in order to test whether his conduct is good and satisfactory so that he may be retained" .
It was also said that even if misconduct negligence inefficiency may be the motive or the influencing factor which induced the employer to terminate the service of the employee which such employe admittedly had under the terms of the appointment such termination cannot be held to be penalty or punishment.
Same view has been reiterated in connection with appointment on temporary or ad hoc basis in the cases of Ravindra Kumar Misra vs U.P. State Handloom Corpn.
Ltd, ; State of Uttar Pradesh vs Kaushal Kishore Shukla, ; and Triveni Shankar Saxena vs State of U.P., Judgements Today On behalf of the respondent reliance was placed on the case of Anoop Jaiswal vs Government of India, ; In that case the service of the appellant had been terminated during the period of probation.
On the materials on record it was held by this Court that the order of termination really amounted to punishment because the real foundation of the action against the appellant was the act of misconduct on June 22, 1981.
The aforesaid judgment is of no help to who respondent because in that case a clear finding was recorded by this Court that the service of the appellant had been terminated because of a particular misconduct alleged against him which had never been enquired into.
So far the facts of the present case are concerned the Governing Council examined the different reports in respect of the respondent during the period of probation and considered the question as to whether he should be allowed to continue in the service of the Institute.
The decision appears to have been taken by the Governing Council on the total and overall assessment of the performance of the respondent, in terms of the condition of the appointment and Rule aforesaid.
Accordingly the appeal is allowed and the judgment of the High Court is set aside.
However, in the circumstances of the case, there will be no order as to costs.
G.N Appeal allowed.
| IN-Abs | The respondent was appointed as a Lecturer in the appellant Institute and was put on probation for one year.
During the probation period his services were terminated.
The respondent challenged the same before the High Court by way of a Writ Petition contending that actually order of dismissal has been passed in the garb of an order of termination; and that the Director of the institute instead of initiating a departmental proceeding on the basis of some charges levelled against him, placed the matter before the governing council of the Institute termination of his services.
The High Court gave its finding that since the service of the petitioner had been terminated because of the complaints made against him, it really amounted to his removal for alleged misconduct and so the institute should have initiated a departmental proceeding and only after due enquiry any action should have been taken.
Being aggrieved by the High Courts order, the appellant Institute has preferred the present appeal.
Allowing the appeal, this Court, HELD: 1.1.
When an appointment is made on probation, it pre supposes that the conduct, performance, ability and the capacity of the employee concerned have to be watched and examined during the period of probation.
He is to be confirmed after the expiry of probation only when his service during the period of probation is found to be satisfactory and he is considered suitable for the post against which he has been appointed.
The principle of tearing of the veil for finding out the real nature of the order shall be applicable only in a case where the Court is satisfied that there is a direct nexus between the charge so levelled and the action taken.
If the decision is taken to terminate the service of an employee during the period of probation, after taking into consideration the overall performance and some action or inaction on the part of such employee then it cannot be said that it amounts to his removal from service as punishment.
The appointing authority at the stage of confirmation or while examining the question as to whether the service of such employee be terminated during the continuance of the period of probation, is entitled to look into any complaint made in respect of such employee while discharging his duties for purpose of making assessment of the performance of such employee.
[254 E H; 255 A] 1.2.
Even if such employee while questioning the validity of an order of termination simpliciter brings on the record that some preliminary inquiry or examination of some allegations had been made, that will not vitiate the order of termination.
[255 B] Oil and Natural Gas Commission vs Dr. Mohd section Iskender Ali ; ; Ravindra Kumar Misra vs U.P. State Handloom Corpn.
Ltd., [1987] suppl.
SCC 739; State of Uttar Pradesh vs Kaushal Kishore Shukla, ; and Triveni Shankar Saxena vs State of U.P., J.T. 1992 (1) S.C. 37, relied on.
Anoop Jaiswal vs Government of India, ; distinguished.
|
N: Criminal Appeal No. 183 of 1993.
From the Judgment and order dated 11.5.1992 of the Allahabad High Court in Criminal Appeal No. 1791 of the 1979.
Bahar U. Bargi and Anis Suhrawardy for the Appellant.
The following Order of the Court was delivered: The petitioner was convicted by the Special Judge, Mathura under Section 5(2) of the Prevention of Corruption Act and was sentenced to two years rigorous imprisonment and a fine of Rs. 200.
He filed an appeal before the Allahabad High Court which was dismissed for default of the appearance Or the petitioner and his counsel, when the appeal was called out for preliminary hearing.
An application for restoration of the appeal made thereafter has also dismissed by the order which has been challenged before this Court in the present special leave petition.
The question which arises in this case is whether an appeal filed under Section 374 of the Criminal Procedure Code by an accused against his conviction and sentence could be dismissed for the default of the appellant in prosecuting the appeal either in person or through counsel.
Notice was issued in the special leave petition indicating that the matter would be finally disposed of at the notice stage itself.
The office report indicates that notice has been served, but there is no appearance on behalf of the respondent State.
Special leave is granted.
The High Court in its order dated 14th November, 1990 dismissing the appeal for non prosecution, relied upon the observations of this Court in Ram Naresh Yadav and others vs State of Bihar, AIR 1987 SC 1500 to the following effect: "The court can dismiss the appeal for non prosecution and enforce discipline or refer the matter to the Bar Council with this end in view.
But the matter can be disposed of on merits only after hearing the appellant or his counsel.
The learned counsel for the appellant has contended that the appeal could not have been dismissed for default on the ground of absence of the appellant or his counsel to appear and press the appeal.
The argument appears to be well founded.
As enjoined by Section 382 of the Code of Criminal Procedure, the appeal has to be filed in the form of a petition.
Section 384 (omitting sub sections (3) and (4) which are not relevant in the present context) quoted below deals with summary disposal of appeal: "384.
Summary dismissal of appeal: (1) If upon examining the petition of appeal and copy of the judgment received under Sec. 382 or Sec.
383, the Appellate Court considers that there is no sufficient ground for interfering, it may dismiss the appeal summarily: Provided that (a) no appeal presented under Sec. 382 shall be dismissed unless the appellant or his pleader has had a reasonable opportunity of being heard in support of the same; (b) no appeal presented under Sec.
383 shall be dismissed except after giving the appellant a reasonable opportunity of being heard in support of the same, unless the Appellate Court considers that the appeal is frivolous or that the production of the accused in custody before the Court would involve such inconvenience as would be disproportionate in the circumstances of the case; (c) no appeal presented under Sec. 383 shall be dismissed summarily until the period allowed for preferring such appeal has expired.
(2) Before dismissing an appeal under this section, the Court may call for the record of the case.
It will be seen that the very opening words of the Section require the Appellate Court to examine the petition of appeal and copy of the impugned judgment in considering whether there is any sufficient ground for interfering with the same.
Sub section (2) provides that the Court may call for the records of the case even at the preliminary stage.
It is, thus clear, that the duty of the appellate court to examine the petition of appeal and the judgment under challenge and to consider the merits of the case before dismissing the appeal summarily is not dependent on the appellant or his counsel appearing before the Court to press the appeal.
As soon as a petition of appeal is presented under Section 382 or 383 it becomes the duty of the appellate court to consider the same on merits, even in the absence of the appellant and his counsel before dismissing the same summarily.
In a case where the appellant has been sentenced to imprisonment and he is not in custody when the appeal is taken up for preliminary hearing, the Appellate Court can require him to surrender, and if the appellant fails to obey the direction, other considerations may arise, which may render the appeal liable to be dismissed without consideration of the merits, but that is altogether a different matter with which we are not concerned in the present case.
Here, the appellant 's advocate was not present to argue the appeal when the case was called out and in the restoration application filed subsequently, attempt was made to explain the default, which, of course, did not succeed.
The question is, whether in the circumstances, the High Court could have dismissed the appeal for default, and if not, whether the prayer for restoration should have been allowed.
As is manifest from the provisions of Criminal Procedure Code, referred to above, the High Court should have either examined the appellant 's petition of appeal and the judgment under challenge, itself or appointed a counsel to assist the Court, but could not have proceeded to dismissed the same on the ground that the Advocate for the appellant was not present.
The position of a criminal appeal is not the same as in a civil appeal governed by the Civil Procedure Code.
comparison of the provisions of Section 384 with those of Order 41, Rules 11 and 17 of the Civil Procedure Code clearly brings out the difference.
Rule 17, Order 41 of Civil Procedure Code in express terms provides that an appeal may be dismissed on the ground of absence of the appellate when the appeal is called out, and Rule 19 provides for its restoration on the appellant offering sufficient cause for his non appearance.
In the case of a criminal appeal the corresponding provisions are not to be found in the Code of Criminal Procedure.
On the other hand the Code in express terms requires the matter to be considered on merits.
Thus a criminal appeal cannot be dismissed for non prosecution, and this is the reason as to why the Criminal Procedure does not contain any special provision like Order 41, Rule 19.
The law was correctly laid down in Shyam Deo Pandey & Ors.
v State of Bihar, a case governed by the old Criminal Procedure Code.
The position in this regard remains the same under the new Code.
Even earlier, the High Courts were following this very principle is clear from the observations Emperor vs Balumal Hotchand and Others, 39 Criminal law Journal 890 and Ramesh Nanu vs State of Gujarat, 17 Gujarat Law Reporter 350.
in Emperor vs Balumal Hotchand and others, it was observed thus: That the law requires that before an Appellate Court dismisses and appeal summarily, it shall read a copy of the judgment, and then, if there is no sufficient ground for interfering, it may dismiss the appeal summarily.
it was emphasized that the dismissal of the appeal shall depend on the exercise by the judgment, and not upon the failure of the accused to press his appeal.
In view of the clear language of the Code of Criminal Procedure and the other reasons mentioned above we are constrained to hold that the observations of this Court in AIR 1987 Supreme Court page 1500 relied Upon by the High Court in the case before us, cannot be treated as having laid down the law correctly.
The High Court was, therefore, not right in dismissing the appeal on the ground of non appearance of the appellant or his counsel and it should have, therefore, allowed the prayer of restoration of the criminal appeal under its inherent power.
In the result, the present appeal is allowed, the orders of the High Court are set aside, the Criminal Appeal No. 1791 of 1979 before the High Court is restored and the matter is remitted to the High Court for consideration and decision on merits in accordance with law.
T.N.A Appeal allowed.
| IN-Abs | The appellant was convicted under Section 5(2) of the Prevention of Corruption Act and was sentenced to two years rigorous imprisonment and a fine of Rs. 200.
He filed an appeal under Section 374 of the Criminal Procedure Code before the Allahabad High Court which was dismissed for default of the appearance of the appellant and his counsel.
An application for restoration of the appeal made thereafter was also dismissed.
In appeal to this Court it was contended on behalf of the appellant that the appeal could not have been dismissed for default on the ground of absence of the appellant or his counsel to appear and press the appeal.
Allowing the appeal and setting aside the orders of the High Court, this Court, HELD: 1.
The High Court was not right in dismissing the appeal on the ground of non appearance of the appellant or his counsel and it should have allowed the prayer of restoration of the criminal appeal under its inherent power.
[310 C] 2.
Under Section 384 of the Criminal Procedure Code it is the duty of the appellant court to examine the petition of appeal and the judgment under challenge and to consider the merits of the case before dismissing the appeal summarily.
The said duty is not dependent on the appellant or his counsel appearing before the Court to press the appeal.
As soon as a petition of appeal is presented under Section 382 or 383 it becomes the duty of the appellate court to consider the same on merits, even in the absence of the appellant and his counsel before dismissing the same summarily.
Therefore, the High Court should have either examined the appellant 's petition of appeal and the judgment under challenge, itself or appointed a counsel to assist the Court, but could not have proceeded to dismiss the same on the ground that the advocate for the appellant was not present.[308 H; 309 A, C] 3.
The position of a criminal appeal is not be same as that of a civil appeal.
A comparison of the provisions of Section 384 of Criminal Procedure Code with those of Order 41, Rules 11 and 17 of the Civil Procedure Code clearly brings out the difference.
Rule 17, Order 41 of Civil Procedure Code in express terms provides that an appeal may be dismissed on the ground of absence of the appellant when the appeal is called out, and Rule 19 provides for its restoration on the appellant offering sufficient cause for his non appearance.
However, in the case of a criminal appeal the corresponding provisions are not to be found in the Code of Criminal Procedure.
On the other hand the Code in express terms requires the matter to be considered on merits.
Thus a criminal appeal cannot be dismissed for non prosecution.
[309 D, E] Ram Naresh Yadav & Ors vs State of Bihar, A.I.R. 1987 S.C. 1500, dissented form.
Shyam Deo Pandey & Ors.
vs state of Bihar, [1971 Suppl.
S.C.R. 133, relied on.
Emperor vs Balumal Hotchand and Ors., and Ramesh Nanu vs State of Gujarat, 17 Gujarat Law Reporter 350, referred to.
|
N: Criminal Appeal No. 646 of 1992.
From the Judgment and Order dated 3.4.92 of the Gujarat High Court in Crl.
A. No. 161 of 1992.
T.U.Mehta, N.N. Keshwani, Ashok D. Shah, R.N. Keshwani and S.K. Gupta for the Appellant.
Anip Sachthey and Badri Nath for the Respondent.
The Judgment of the Court was delivered by YOGESHWAR DAYAL, J.
On 4th September, 1992 this Court had directed issue of notice on the Special Leave Petition as well as on application for bail returnable in four weeks and it was indicated that the matter will be heard and finally decided on that date.
However, there is no appearance on behalf of the State today.
Leave granted.
The matter is being disposed of.
This is an appeal by Special Leave against the judgment of the Division Bench of the Gujarat High Court dated 3rd April, 1992.
Four accused persons were tried by Special Judge, Ahmedabad.
Out of the said four accused only one of the accused person, namely accused No. 2, a Food Inspector has been convicted of offences punishable under Section 161 of the Indian Penal Code and Sections 5(1) (d) and 5(2) of the Prevention of Corruption Act, 1947.
The three other accused were acquitted by the learned Special Judge.
The State tiled the appeal against the acquittal of the three acquitted accused whereas accused No. 2 filed an appeal against his conviction and sentence.
The High Court dismissed the appeal of the State against the acquittal of accused No.1, 3 and 4 and at the same time dismissed the appeal of accused No. 2.
Accused No. 2 has come up to this Court by way of a Special Leave Petition against the aforesaid decision of the Division Bench.
The prosecution case is that the complainant Mohanlal Chhatramal Samnani is running a shop and inter alia dealing in Kimam opposite Maninagar Railway Station, Ahmedabad.
On 7th January, 1984, the Chief Inspector in the Health Department (accused No.1) and accused No. 2 (appellant herein) and accused No. 4, who were working under him as Food Inspectors, had approached the complainant at his shop and stated that they had been inspecting the food articles for adulteration and took a bottle of Kimam and opened it for sample and the complainant told them that it may be taken in sealed condition but they refused to do so and stated that the sample would not be passed and the complainant would be put to difficulties.
This was stated by accused No. 1 who further stated that the complainant should be practical.
The complainant enquired as to what was meant by being practical and the accused No. 2 (appellant) replied that "being practical" means "money".
The complainant then enquired as to the amount and he was told Rs. 5,000.00.
The complainant was not willing to make such payment.
However, he was pressurised.
The complainant stated that he did not have that much money and, therefore, he was asked to pay whatever the amount he could pay immediately and the complainant opened his `galla ' and gave Rs. 600.00 to accused No. 1.
The next day, on 8th January, 1984, accused No. 4 had come to his shop and enquired whether the money had been arranged but the complainant replied that it could not be done.
However, under pressure he gave Rs. 500.00 to accused No. 4 and asked for more time for making arrangement for more amount.
Thereafter, after about 15 days accused Nos. 2 & 4 had come to his shop demanding illegal gratification and the complainant requested for four days time.
After four days again the accused Nos. 2 & 4 came to his shop and the complainant again stated that the money could not be arranged and he may be given two days time.
After great difficulties, on complainant making a promise that he would pay the amount with 100% certainty, and on this final promise, accused Nos. 2 & 4 asked the complainant to keep the money ready on 30th January, 1984 at 3.00 p.m.
On 30th January, 1984 the complainant approached the office of the Anti Corruption Bureau and gave his complainant.
Two Panchas were called by the A.C.B.
In the presence of those two Panchas, the numbers of 40 currency notes of Rs. 100.00 each were noted done in two batchs of 20 each.
Each of these currency notes was treated with anthracene powder and a demonstration was made and shown to thc complainant and the Panchas.
One bundle of Rs. 2000.00 was to be given to accused No. I and another bundle was to be given to accused Nos. 2 & 4.
Panch No. 1 was to remain with the complainant and Panch No. 2 was to remain with the raiding party.
After making this preliminary panchnama raided party went to Maninagar and the complainant and Panch No. 1 went to the shop at about 6.30 p.m. and the others waited outside a little away.
After about an hour accused No. 2 came to the shop and the complainant asked accused No. 2 to come and sit but the accused No. 2 replied that he was in a hurry and asked the complainant to come with him where another Inspector was waiting near the Post Office.
Therefore, the complainant went with accused No. 2 and Panch No. 1 followed them.
Accused No. 3 and Jinto (absconding accused) were waiting and accused No. 2 introduced them to the complainant and asked the complainant as to what he had done about the money which was earlier talked about.
The complainant replied that he had brought the money.
The accused No. 2 demanded the same and the complainant took out the bundle of currency notes from one of his pockets and gave it to accused No. 2 who accepted it by his right hand and asked the complainant as to how much it was and the complainant replied that it was Rs. 2,000.00 and accused No. 2 asked as to for how many persons it was and the complainant replied that it was for three persons.
The accused No. 2 asked accused No. 3 to count the same and while Modi, accused No.3, was counting the same, the complainant gave the signal and the raiding party which had followed them immediately came there alongwith Panch No. 2.
All of them wont to the shop of the complainant where Modi was asked to give currency notes to the Panchas and exercise of ultra violet Iamp was undertaken and in the ordinary light, hands of each of the three Food Inspectors did not indicate any light change.
Thereafter, under ultra violet light, hands of all were seen and the hands of Panch No. 2 and the members of the raiding party did not show any change on their hands.
The hands of accused No.2 (appellant) were seen in the ultra violet light and the four fingers and thumb of the right hand showed the light blue colour and white sparkle.
So also was the position with regard to the right hand fingers and thumb of Jinto and his clothes, namely the right hand pocket of the pant, so also the fingers and thumb of both the hands of accused No.3, Modi, and the left hand pocket and the woollen cap of Modi showed white sparkle and the light blue colour.
The numbers of currency notes were compared with the numbers which were recorded in the preliminary panchnama and they were found to tally.
The currency notes also showed the anthracene powder in the ultra violet light.
The complainant 's hands were also seen and they also showed the anthracene powder in ultra violet light so also both his inside pockets of the coat.
Thereafter, the complainant and the Panchas went to the residence of accused No.1.
The complainant alongwith Panch No.1 went to the first floor of the flat of accused No.1.
Accused No.1 opened the door and asked these people to come inside and made them sit.
The complainant offered money to accused No.1.
He, however, refused to accept the same and, therefore, they came Out and no raid was made.
As stated earlier all the accused were tried by the learned Special Judge and accused Nos. 1, 3, & 4 were acquitted and ultimately the appeal of the State against their acquittal was dismissed by the High Court.
The High Court dismissed the appeal of accused No.2 also after noticing (i) that the Panchas did not recognize any of the accused persons; (ii) that there is no corroboration to what had happened in the meetings preceding the raid on 30th January, 1984; (iii) that the evidence of the complainant was disinterested and did not require any corroboration; and (iv) that the hands of accused No.2 were seen in ultra violet light and four fingers and thumb of the right hand showed the light blue colour and white sparkle.
The High Court had acquitted accused Nos. 3 & 4 in spite of the fact that their fingers have also showed light blue colour and white sparkle in ultra violet light but the High Court was not prepared to rely on that circumstance alone with the uncorroborated testimony of the complainant.
Since according to the High Court no demand had been made by accused Nos. 3 and 4 from the complainant for any bribe.
It will be noticed that not only the two Panchas could not recognize any of the accused persons but there is no corroboration to the various statements of the complainant vis a vis accused Nos. 1 to 4 by the police officials who constituted the raiding party either.
The raiding party including the police officials reached the spot at a time when they could neither hear the talk, if any, between the accused No. 2 and the complainant nor could see the alleged acceptance of money by accused No.2 and passing it on to accused No.3.
We are thus left with the sole testimony of the complainant and the test of seeing anthracene powder on the hands and fingers of accused No.2.
The High Court had acquitted accused No.3 and did not find it safe to convict him on the sole testimony of the complainant supported by the test of seeing anthracene powder on the hands and fingers of accused No.3.
in ultra violet light.
But on the same evidence the High Court upheld the conviction of accused No.2 relying on the same evidence which was rejected vis a vis accused No.3.
The High Court felt that the complainant was totally dis interested in the success of the raid and could not be called interested person and thus felt no need for corroboration of his statement.
The fact remains that the High Court totally ignored the statement of the complainant made during cross examination on behalf of accused No.2.
In his cross examination the complainant stated; "It is true that accused No.2 used to carry out raids on and often on Pan gallas.
It is true that I had felt that he is harassing businessmen selling Pan and Masalas.
It is true that is why we thought of teaching him a lesson.
It is true that in my statement before police, I have not stated that when accused No.1 asked as to why have you come, then I told that I am Kimamwala of Maninagar and according to talk with Shantilal, I have come to give money.
" It is clear that it is not a case merely of a complainant from whom bribe was demanded and he was forced to pay the same but the complainant had thought of teaching a lesson to accused No.2 for harassing the businessmen selling Pan Masalas and, therefore, it could not be said that the complainant was not interested in success or otherwise of the raid.
In fact the High Court acquitted accused No.3, though the evidence against him was the same as it was against accused No.2.
When the High Court could not find it safe to rely on the uncorroborated statement of the complainant while upholding the acquittal of accused No.3 we also find it unsafe to rely on the pise dixit of the complainant which is unsupported by both the Panch witnesses and the police officials who formed the raiding party for upholding the conviction of accused No.2, appellant before us.
The result is that the appeal succeeds, the conviction and sentence of the appellant is set aside and the appellant is acquitted.
N.V.K. Appeal allowed.
| IN-Abs | The prosecution case was that the complainant was running a shop and dealing in Kimam and that on 7th January, 1984, the Chief Inspector in the Health Department (accused No.1) and accused No. 2 (appellant in the appeal), accused No. 3 and accused No. 4 who were working as Food Inspectors had approached the complainant at his shop and stated that a they had been inspecting food articles for adulteration, and took a bottle of Kimam and opened it for sample and when the complainant told them that it may be taken in sealed condition, they refused to do so and stated that the sample would not be passed and the complainant would be put to difficulties, unless he paid Rs. 5,000.
The complainant was not wiling to make such payment but he was pressurised.
On the next day, 8th January, 1984 accused No. 4 came to the shop to enquire whether the money had been arranged.
He was given Rs. 500 and the balance was promised to be given on 30th January, 1984.
On 30th January, 1984 the complainant approaehed the office of the Anti Corruption Bureau and gave his complaint.
Two Panchas were called by the A.C.B., the number of 40 currency notes of Rs. 100 each were noted done in two batches of 20 each, the currency notes were treated with anthracene powder, a demonstration was made and shown to the complainant and the Panchas.
Panch No.1 was to remain with the complainant and Panch No. 2 was to remain with the raiding party.
The complainant and Panch No.1 went to the stop at about 6.00 p.m. and when accused No. 2 demanded the money, the complainant gave it to him, when he was apprehended by the raiding party.
The hands of accused No. 2 (appellant) were seen in the ultra violet light and the four fingers and thumb of the right hand showed the light blue colour and white sparkle.
The currency notes also showed the anthracene powder in the ultra violet light.
Thereafter, the complainant and Panchas went to the residence of accused No. 1.
The complainant offered money to accused No. 1.
He, however, refused to accept the same, and, therefore no raid was made.
All the four accused were tried by the Special Judge for offences under section 161 of the Indian Penal Code read with Sections 5(1) (d) and 5(2) of the Prevention of Corruption Act.
Accused Nos. 1, 3 and 4 were acquitted while accused No. 2 was convicted and sentenced by the Special Judge.
The State filed an appeal against the acquittal of the three accused whereas accused No. 2 filed an appeal against his conviction and sentence.
The High Court dismissed both the appeals.
It noticed that: the Panchas did not recognise any of the accused persons; there is no corroboration as to what had happened in the meetings preceding the raid on 30th January, 1984; the evidence of the complainant was disinterested and did not require any corroboration; and the hands of accused No. 2 when seen in ultra violet light the four fingers and thumb of the right hand showed the light blue colour and white sparkle.
Allowing the appeal, and setting aside the conviction and sentence, this Court, HELD: 1.
The High Court had acquitted the accused No. 3 and did not find it safe to convict him on the sole testimony of the complainant supported by the test of seeing anthracene powder on the hands and fingers of accused No. 3 in ultra violet light, but on the same evidence upheld the conviction of accused No. 2 relying on the same evidence which was rejected vis a vis accused No. 3.
[272 G] 2.
When the High Court could not find it safe to rely on the uncorroborated statement of the complainant while upholding the acquittal of accused No.3 it is unsafe to rely on the ipse dixit of the complainant which is unsupported by both the Panch witnesses and the police officials who formed the raiding party for upholding the conviction of accused No. 2, appellant.
[273 E] 3.
Not only the two Panchas could not recognise any of the accused persons but there is no corroboration to the various statements of the complainant vis a vis accused Nos.
1 to 4 by the police officials who constituted the raiding party either.
The raiding party including the police officials reached the spot at a time when they could neither hear the talk, if any, between the accused No. 2 and the complainant nor could see the alleged acceptance of money by accused No. 2 and passing it on to accused No. 3.
[272 E] 4.
The High Court totally ignored the statement of the 2complainant made during cross examination on behalf of accused No. 2, that he had thought of teaching accused No. 2 a lesson for harassing businessmen selling Pan and Masalas.
[273 A] 5.
It is clear that this is not a case merely of a complainant from whom bribe was demanded and he was forced to pay the same but the complainant had thought of teaching a lesson to accused No. 2 for harassing the businessmen selling Pan Masalas and therefore, it could not be said that the complainant was not interested in success or otherwise of the raid.
[273 D]
|
Appeal Nos.
4734 35 of 1992.
From the Judgment and Order dated 8.5.1992 of the Madhya Pradesh High Court in Misc.
Petition Nos.
48] and 533 of 1992.
Shanti Bhushan, N.C. Jain, S.K. Agnihotri and Ashok K. Singh for the Appellant.
Kapil Sibal, N.S. Kale, A.P. Dhamija, S.K. Jain, Manmohan, section Atreya, Pradeep Agarwal, Basant Bhai Mehta, Ravindra Srivastava, R.N. Srivastava, B.V. Desai and S.V. Deshpande for the Respondents.
The Judgment of the Court was delivered by VERMA, J.
The petitioner State of Madhya Pradesh in both these petitions seeks leave to appeal under Article 136 of the Constitution against the common judgment and order dated 8.5.1992 of the High Court of Madhya Pradesh in Miscellaneous Petition Nos. 481 of 1992 and 533 of 1992 under Article 226 of the Constitution.
The High Court has allowed both these writ petitions.
The material facts are these.
In Miscellaneous Petition No. 3909 of 1987 tiled in public interest by Kailash Joshi, then Leader of the Opposition in Madhya Pradesh Vidhan Sabha and now a Cabinet Minister in Madhya Pradesh, relating to the affairs of the Churhat Children 's Welfare Society and the lottery conducted by it, the M.P. High Court by its judgment dated 20.1.1989 issued a direction for setting up an independent high power agency to bold an inquiry into the affairs of the said Society of which respondent 1 Ajay Singh was one of the office bearers.
In compliance of that direction, the State Government passed a resolution on 24.2.1989 and also issued notification of the same date having the effect of setting up a Commission of Inquiry consisting of Justice S.T. Ramalingam, a Judge of the Madras High Court to investigate into the affairs of the said Society and the lottery conducted by it.
The resolution and notification are as under : "Bhopal, the 24th February, 1989 No. F. 1 3 89 l(i) E.C.
Whereas the High Court of Madhya Pradesh in its order dated the 20th January 1989 in M.P. No. 3909/87 Kailash Joshi versus State of Madhya Pradesh and others has directed that an inquiry be made by an independent high power agency into the affairs of the Churhat Children 's Welfare Society and how the share of its profits derived from all or any other draws have been utilized and to take such action as may be required under the law against the said Society and its organizing agent and that the State Government is of the view that the said order of the High Court should be implemented and carried out and whereas the State Government is also satisfied that this is a definite matter of public importance which calls for an inquiry to be made, the State Government hereby appoints an independent high power agency presided over by Shri Justice S.T. Ramalingam, Judge of the Madras High Court.
The Headquarters of the Agency shall be at Jabalpur, Madhya Pradesh.
The terms of reference for inquiry by the aforesaid Agency shall be as under: (1) How the affairs of the Churhat Children s Welfare Society are conducted and how the share of the profit derived and the money collected through lottery has been utilised ? (2) What is the amount collected draw wise, by the agent and the Society and what is the tax liability as per the Madhya Pradesh lottery (Niyantran Tatha Kar) Adhiniyam, 1973 ? (3) Whether any irregularities, illegalities and offences were committed in organizing the lottery, holding of draws of lottery, distribution of prizes, and in that event, the person responsible for the same; (4) Any other matter incidental or connected with the above subject matter of enquiry.
(4) The Agency may complete its enquiry and submit its report to the State Government within a period of six months from the date of issue of this Notification.
By order and in the name of the Governor of Madhya Pradesh, R.C. Shrivastava, Secy" "Bhopal, the 24th February, 1989 No. F.1 3 89 I(i) E.C. Whereas by Government of Madhya Pradesh Resolution dated the 24th February 1989 and Notification No. F.1 3 89 I(i) E.C., dated the 24thFebruary 1989 an independent High Power Agency presided over by Shri S.T. Ramalingam, Judge of the Madras High Court has been set up to hold an inquiry into the affairs of the Churhat Children 's Welfare Society; And whereas the State Government having regard to the nature of the inquiry to be made and other circumstances of the case is of the opinion that provisions contained in sub sections (2) to (5) of Section 5 of the , should be made applicable to the aforesaid Agency; Now,therefore, in exercise of the powers conferred by sub section (1) of Section 5 of the , the State Government hereby directs that the provisions of sub sections (2) to (5) of Section 5 of the said Act shall apply to the above described Agency.
By order and in the name of the Governor of Madhya Pradesh, R.C. Shrivastava, Secy".
According to the terms of the above notification, the inquiry was to be completed within a period of six months from the date of issue of the notification.
As the inquiry could not be completed within that period, by a notification dated 1.8.1990 the period for completing the inquiry was extended upto 22.8.1991; then by another notification dated 16.8.1991 the period was extended upto 31.3.1992; and then by another notification dated 27.3.1992 the period for completing the inquiry stands extended upto 31.3.1993.
In the meantime, Justice S.T. Ramalingam became due to retire as a Judge of the Madras High Court on 30.6.1991 on attaining the age of superannuation and, therefore, he wrote a letter dated 19.3.1991 to the Chief Secretary of the State drawing attention to this fact and requesting that necessary modalities be worked out well in time for his continuance as Commission of Inquiry in the light of the guidelines issued by the Government of India for the benefits and emoluments payable to a Judge on his retirement in such a situation.
Just Ramalingam mentioned in that letter some of the facilities he expected, to which he would not be entitled from the Government of Tamil Nadu on his retirement.
The Chief Secretary R.P. Kapoor sent a reply to Justice Ramalingam by DO No. 504/CS/91 dated 9.4.1991 as under: "My dear Hon 'ble Justice Ramalingam, Thank your very much for your letter No. 53 of 19th March, 1991.
The issues raised in your letter regarding the tenure of the Commission and the terms and conditions after your superannuation are under active consideration of the Government and I will be in a position to inform your after a final view is taken in this case.
In the meanwhile may I request that the proceedings may be continued so that the inquiry can be completed at the earliest possible.
With very kind regards, Yours sincerely, Sd/ (R.P. Kapoor)" `This letter of the Chief Secretary apart from promising to give an early reply also requested Justice Ramalingam to continue with the inquiry so that the same could be completed early.
While the promised reply from the State Government Justice Ramalingam was awaited, the State Government, without further reference to Justice Ramalingam, issued a notification dated 10.7.1991 as under: "Bhopal, the 10th July, 1991 No. F.1 6 91 I (8 Ka).
Whereas, an independent high power agency comprising of a single member namely Justice S.T. Ramalingam, Judge of the Madras High Court was appointed under this Department Notification No. F.1 3 89 I(i) E.C., dated the 24th February 1989; And whereas Justice S.T. Ramalingam has retired as Judge of the Madras High Court, on 30th of June 1991; And whereas for continuing in the said agency after retirement Justice Shri S.T. Ramalingam has placed certain terms and conditions which have not been found possible for the Government to accept.
Now, therefore, in exercise of the powers conferred by sub section (3) of Section 3 of the (No. LX of 1952), the State Government hereby appoint Justice Shri G.G. Sohani, retired Chief Justice, High Court of Patna (Bihar) as single member of the said agency in place of Justice Shri S.T. Ramalingam.
Accordingly this Department Notification Nos.
(I)F.1 3 89 I(i) E.C. dated the 24th February 1989, (2) F.1 3 89 1(i) E.C., dated the 24th February 1989 and (3) F.1 3 89 I(i) E.C. dated the 24th February 1989, shall stand amended to this extent.
By order and in the name of the Governor of Madhya Pradesh S.K. Misra, Secy.
Accordingly, by this notification, the State Government replaced Justice S.T. Ramalingam with Justice G.G. Sohani, retired Chief Justice of Patna High Court as the sole member of the Commission of Inquiry.
The appointment of Justice G.G. Sohani in place of Justice S.T. Ramalingam was challenged in the M.P. High Court by a writ petition M.P. No. 2359 of 1991 by respondent No. 1 Ajay Singh.
By an interim order dated 30.7.1991 passed by the High Court, the operation of the above notification dated 10.7.1991 was stayed.
During the pendency of that writ petition, Justice G.G. Sohani conveyed to the State Government his disinclination to continue with the assignment and tendered his resignation.
Consequently, the High Court dismissed that writ petition as infructuous on 5.9.1991.
It was only thereafter that the Chief Secretary of the State Government sent a letter dated 12.9.1991 in continuation of his earlier letter dated 9.4.1991 to Justice Ramalingam which is as under : "This is in continuation to my earlier letter No. 504/CS/91 dated 9th April, 1991 regarding the arrangement for the Commission of Enquiry (Churhat Children Welfare Society and Lottery), consequent to your superannuation as a Judge of the Madras High Court.
The State Government have considered your communications about the inconveniences you were facing in coming to Jabalpur for want of Air link between Madras and Jabalpur.
The State Government have also considered the terms and conditions mentioned in your letter of 19th March, 1991.
On careful consideration of all aspects mentioned in your communications it has not been possible for the State Government to accept the terms and conditions set out in your letter of 19th March for taking up the work of the above mentioned Enquiry Commission after your superannuation.
The State Government had accordingly appointed Justice Mr. G.G. Sohani, retired Chief Justice of the Patna High Court to be the single Member of the Commission.
I am, however, happy to convey the deep appreciation of the State Government for the services rendered by you in the Commission in spite of all the personal inconvenience it has caused.
The Hon 'ble Chief Minister had made a general mention of it in the Vidhan Sabha on the 4th July, 1991.
Delay in reply to your letter is regretted.
It was caused because of the litigation arising out of the appointment of Justice Sohani which was since been decided.
Wishing you and your family a very happy life after your superannuation.
Yours sincerely, R.P. Kapoor" The State Government thereafter issued another notification dated 9.1.1992 as under: "Bhopal, the 9th January 1992 No. F.1 6 91 I (8 Ka).
Whereas in exercise of the powers conferred by sub section (3) of Section 3 of the Commissions of Enquiry Act, 1952 (No. LX of 1952) Justice Shri G.G. Sohani, retired Chief Justice, High Court of Patna (Bihar) was appointed as single member of an independent high power agency constituted under this department notification No. F.1 3 89 I(i) E.C., dated 24th February 1998 in place of Justice Shri S.T. Ramalingam vide this department Notification No. F.1 6 91 I(8 Ka), dated the 10th July 1991; And whereas Justice Shri G.G. Sohani, retired Chief Justice, High Court of Patna (Bihar) has since withdrawn his consent to work as single member of the said agency; Now, therefore, in exercise of the powers conferred by sub section (3) of Section 3 of the Commissions of Enquiry Act, 1952 (No.LX of 1952), read with Section 21 of the General Clause Act, 1987 (No. 10 of 1897), the State Government hereby appoint Justice Shri Kamlakar Choubey, retired Judge of the Allahabad High Court as a single member of the said agency in place of Shri G.G. Sohani.
Accordingly this department Notification Nos.
(1) F.1 3 89 l(i) E.C., dated 24th February, 1989, (2) F.1 3 89 I (i) E.C., dated 24th February, 1989, and (3) F.1 3 89 I (i) E.C., dated the 24th February, 1989, shall stand amended to this extent.
By order and in the make of the Governor of Madhya Pradesh In this manner, the State Government after replacing Justice S.T. Ramalingam first by Justice G.G. Sohani, thereafter replaced him by Justice Kamlakar Choubey, a retired Judge of the Allahabad High Court, as the sole member of the Commission.
It is unnecessary to refer to the terms and conditions of appointment of Justice Kamlakar Choubey which were detailed in the General Administration Department Memo.
dated 23.3.1991 and are referred in the High Court judgment, which include the facility of a Camp Office for him at Varanasi and other facilities of vehicle, telephone and staff etc.
The appointment of Justice Kamlakar Choubey as the sole member constituting the Commission of Inquiry in this manner resulting in the replacement of Justice S.T. Ramalingam initially appointed for the purpose and to writ petitions M.P. Nos. 481 of 1992 and 533 of 1992 for quashing the notification dated 9.1.1992 appointing Justice Kamlakar Choubey.
Challenge to the notification dated 10.7.1991 issued earlier appointing, Justice G.G. Sohani is academic in view of Justice Sohani having resigned as indicated earlier.
The remaining significance of the validity of the notification dated 10.7.1991 appointing Justice G.G. Sohani relates only to the State Government 's power to appoint another person in place of Justice S.T. Ramalingam in the above circumstances.
The challenge of the writ petitioners before the High Court was that during the continuance as the single member of the Commission of Inquiry of Justice S.T. Ramalingam, there was no power in the State Government to replace him as the member of the Commission and, therefore, the appointment first of Justice G.G. Sohani and on his refusal, of Justice Kamlakar Choubey, being without any authority, was invalid.
On this basis, the relief of quashing the notification dated 9.1.1992 appointing Justice Kamlakar Choubey was sought.
In substance, the argument was that there being no vacancy in the office, the power under Section 3(3) of the , which is available only to fill any vacancy could not be invoked and there was no other source of power available to the State Government for this purpose.
The argument of the learned Advocate General on behalf of the State Government was that a vacancy had arisen in the membership of the Commission on account of Justice Ramalinga 's retirement from Madras High Court on 30.6.91, and there being his implied resignation indicated by his inclination to continue on the terms and conditions suggested by him, which the State (Government did not consider feasible, the power of the State Government under Section 3(3) of the to fill the implied vacancy was available.
It was also urged by the learned Advocate General that vacancy in the office of the single member of the Commission was also implied from the fact that the appointment of Justice S.T. Ramalingam as the Commission of Inquiry was also his status as a sitting Judge of the Madras High Court and, therefore, his retirement as a Judge resulted in creation of the vacancy.
The learned Advocate General also placed reliance on Section 16 of the , in aid of the State Government 's power under Section 3(3) of the .
Another submission of the learned Advocate General was that the State Government was the sole judge in this matter and was, therefore, competent to choose the person for making or continuing the inquiry in view of the power available under Section 3 of the lead with Section 16 of the .
The learned counsel appearing on behalf of Kailash Joshi placed reliance on Section 3(2) of the Commission of Inquiry Act read with Section 14 of the to support the State Government 's action appointing Justice Kamlakar Choubey contending that the State Government had power to reconstitute the Commission replacing Justice S.T. Ramalingam by another person.
An argument challenging the locus standi of the writ petitioner was also faintly urged by counsel for Kailash Joshi.
The High Court allowed the writ petitions and quashed the notification dated 9.1.1992 appointing Justice Kamlakar Choubey.
It held that there was no vacancy in the office of the single member of the Commission to empower the State Government to fill the vacancy under Section 3(3) of the .
On a construction of the provisions of the and those of the relied on in support of the rival contentions, the High Court came to the conclusion that there was neither any valid reason or ground nor any power available in the State Government to replace Justice S.T. Ramalingam by another person as was purported to be done by First appointing Justice G.G. Sohani and then Justice Kamlakar Choubey, both of whom were also retired Judges.
The objection to locus standi for the writ petitioners was also rejected.
The relevant part of the directions made by the High Court is as under: 42.
As a result of the aforesaid discussion, the petition succeeds and is hereby allowed.
The notification dated 10.7.1991 (Annexure H) and the consequent notification based thereon dated 9.1.1992 (Annexure M) are hereby quashed.
It is open to the State Government to propose to Hon 'ble Shri Justice S.T. Ramalingam the terms and conditions or his continuance as a member of the Commission equivalent to, loss or more favourable than those offered and fixed for Hon 'ble Shri Justice Kamlakar Choubey.
Thereafter depending on his reply the State Government may continue or discontinue his appointment or substitute another member in his place.
It is also made clear that it would be open to Justice Ramalingam to accept the terms and conditions offered by the State Government of Madhya Pradesh or to resign from the office, by taking a decision in that behalf early, so that the work of the Commission is not unduly hampered and it is completed well within the extended period i.e. before 31st March, 1993 . . " Hence, these petitions for grant of special leave.
Leave granted.
Shri Shanti Bhushan, learned senior counsel for the State of Madhya Pradesh, expressly gave up the argument advanced before the High Court of the implied resignation of Justice S.T. Ramalingam giving rise to a vacancy or any implied vacancy on retirement of Justice Ramalingam as a Judge of the Madras High Court to enable exercise of power under Section 3(3) of the for first appointing Justice G.G. Sohani and then Justice Kamlakar Choubey in place of Justice S.T. Ramalingam The case of the State of Madhya Pradesh in this Court was confined by Shri Shanti Bhushan to only one point.
The only contention of Shri Shanti Bhushan is that the aid of Section 21 of the is available to the State Government for exercising its powers under the `to add to, amend or vary ' the notification issued initially appointing Justice S.T. Ramalingam as the sole member of the Commission which enables the State Government to reconstitute the Commission by replacing Justice S.T. Ramalingam with any other person in the circumstances of the case.
He argued that it is in exercise of this power that the period fixed initially for completion of the inquiry could be amended since, to the extent the provisions in the are silent, recourse can be had to Section 21 of the for making a suitable addition, amendment or variation of the initial notification.
According to learned counsel, the power to rescind any notification being provided in Section 7 of the , such a power in Section 21 of the was not available, but not so the power given by Section 21 of the to add to, amend or vary any notification.
Shri Shanti Bhushan also referred to Section 8 A of the as an indication to support his submission of the Government 's power to reconstitute the Commission even during the availability of the person so appointed even though, he stated, Section 8 A is not the source of power for reconstitution of the Commission.
In reply, Shri Kapil Sibal, learned senior counsel for respondent No.1, submitted that the scheme of the does not permit invoking Section 21 of the except for enlarge ment of the period for completion of the inquiry by amendment of the notification only to that extent since the only situations in which reconstitution of the Commission can be made are provided in the itself and, therefore, the context rules out the applicability of Section 21 of the for any such purpose.
Shri Sibal also submitted that the construction suggested by Shri Shanti Bhushan is alien to the scheme of the .
Shri Sibal added that Section 8 A of the was enacted for an entirely different purpose, to ensure continuity of the Commission 's work and has nothing to do with its reconstitution.
Shri N.S. Kale, learned counsel for Kailash Joshi, while supporting the submission of Shri Shanti Bhushan added that Sections 14 and 16 of the are also available to support the impugned notifications issued by the State Government.
In the ultimate analysis, the controversy surviving before us on the rival contentions is considerably narrowed.
In substance, the only surviving controversy now is whether in the scheme of the , the power `to add to, amend or vary ' any notification given by Section 21 of the is available to reconstitute a Commission of Inquiry constituted under Section 3 of the by replacing the sole member appointed initially with another person during the availability of the sole member initially appointed.
The validity of the aforesaid impugned notifications dated 10.7.1991 appointing Justice G.G. Sohani and dated 9.1.1992 appointing Justice Kamlakar Choubey to replace Justice S.T. Ramalingam depends on the answer to this question which alone now survives for decision.
A reference to the object and purpose of an enactment in the nature of the would be worthwhile before proceeding to examine its scheme and the provisions therein.
The object of the enactment, to the extent it is relevant, while construing the meaning of its provisions may be of assistance.
The Commissions of Inquiry Act, 1955 is similar to and is modelled on the corresponding English statute and provides this historical back ground for the Indian statute.
The purpose of such an enactment is aptly summarised in the speech of Lord Salmon on `Tribunals of Inquiry ' as under : "In all countries, certainly in those which enjoy freedom of speech and a free Press, moments occur when allegations and rumours circulate causing a nation wide crisis of confidence in the integrity of public life or about other matters of vital public importance.
No doubt this rarely happens, but when it does it is essential that public confidence should be restored, for without it no democracy can long survive.
This confidence can be effectively restored only by thoroughly investigating and probing the rumours and allegations so as to search out and establish the truth.
The truth may show that the evil exists, thus enabling it to he rooted out, or that there is no foundation is the rumours and allegations by which the public has been disturbed.
In either case, confidence is restored.
How, in such circumstances, can the truth best be established ?" It is for the purpose of ascertaining the truth in such circumstances that the has been enacted.
While construing the provisions of the enactment, it would be useful to bear in mind its object if occasion arises for illumination of any grey areas with reference to the object of the enactment as a permissible aid to construction.
The was enacted to provide for the appointment of Commissions of Inquiry and for vesting such Commissions with certain powers.
Section 2 of the Act contains definitions.
Section 3 provides for appointment of a Commission of Inquiry.
Sub section (1) of Section 3 lays down that a Commission of Inquiry for the purpose of making an inquiry into any definite matter of public importance may be appointed by the appropriate Government it is of opinion that it is necessary so to do and shall make such an appointment if a resolution in this behalf is passed by each House of Parliament or, as the case may be, the Legislature of the State, by notification in the Official Gazette.
Sub section (2) of Section 3 says that the Commission may consist of one or more members appointed by the appropriate Government, and where the number is more than one, one of them may be appointed as the Chairman.
Sub section (3) of Section 3 enables the appropriate Government to fill any vacancy which may arise in the office of a member of the Commission whether consisting of one or more than one member, at any stage of an inquiry.
Sub section (4) of Section 3 requires the appropriate Government to cause to be laid before each House of Parliament or, as the case may be, the Legislature of the State, the report, if any, of the Commission of Inquiry together with a memorandum of the action taken thereon, within a period of six months from the submission of the report by the Commission to the appropriate Government.
Section 4 prescribes that the Commission shall have the powers or a civil court while trying a suit under the Code of Civil Procedure in respect of the matters mentioned therein.
Section 5 deals with the additional powers of the Commission.
Section 5 A relates to the power of the Commission for conducting investigation pertaining to inquiry.
Section 5 B deals with the power of the Commission to appoint assessors.
Section 6 provides for the manner of use of the statements made by persons to the Commission.
Section 6 A provides that some persons are not obliged to disclose certain facts.
Section 7 deals with the manner in which a Commission of Inquiry appointed Section 3 ceases to exist in case its continuance is unnecessary.
It provides for a notification in the Official Gazette by the appropriate Government specifying the date from which the Commission shall cease to exist if it is of the opinion that the continued existence of the Commission is unnecessary.
Where a Commission is appointed in pursuance of a resolution passed by the Parliament or as the case may be, the Legislature of the State, then a resolution for the discontinuance of the Commission is also to be passed by it.
Section 8 A provides that the inquiry is not to be interrupted by reason of vacancy or change in the constitution of the Commission and it shall not be necessary for the Commission to commence the inquiry afresh and the inquiry may be continued from the stage at which the change took place.
Section 8 B prescribes that persons likely to be prejudicially affected by the inquiry must be heard.
Section 8 C deals with the right of cross examination and representation by legal practitioner of the appropriate Government, every person referred to in Section 8 B and, with the permission of the Commission, any other person whose evidence is recorded by the Commission.
Sections 9, 10 and 10 A relate to ancillary matters while Section 12 contains the rule making power of the appropriate Government.
Section 11 provides that the Act is to apply to other inquirying authorities in certain cases and where the Government directs that the said provisions of this Act shall apply to that authority and issues such a notification, that authority shall be deemed to be a Commission appointed under Section 3 for the purposes of this Act.
Admittedly, it is by virtue of Section 11 that the Commission of Inquiry appointed in the present case is deemed to be a Commission appointed under Section 3 for the purposes of this Act because the Commission was constituted by a resolution of the Government pursuant to the direction of the M.P. High Court in the writ petition filed in public interest by Kailash Joshi as indicated earlier.
For the purposes of this case, the material provisions of the enactment are Sections 3, 7 and 8 A apart from Section 21 of the with reference to which the rival contentions were made.
These provisions are as under : The "3. Appointment of Commission. (1) The appropriate Government may, if it is of opinion that it is necessary so to do, and shall, if a resolution in this behalf is passed by each House of Parliament or, as the case may be, the Legislature of the State, by notification in the Official Gazette, appoint a Commission of Inquiry for the purpose of making an inquiry into any definite matter of public importance and performing such functions and within such time as may he specified in the notifications and the commission so appointed shall make the inquiry and perform the functions accordingly: Provided that where any such Commission has been appointed to inquire into any matter (a) by the Central Government, no State Government shall, except with the approval of the Central Government, appoint another Commission to inquire into the same matter for so long as the Commission appointed by the Central Government is functioning; (b) by a State Government, the Central Government shall not appoint another Commission to inquire into the same matter for so long as the Commission appointed by the State Government is functioning, unless the Central Government is of opinion that the scope of the inquiry should be extended to two or more States.
(2) The Commission may consist of one or more members appointed by the appropriate Government, and where the Commission consists of more than one member one of them may be appointed as the Chairman thereof.
(3) The appropriate Government may, at any stage of an inquiry by the Commission fill any vacancy which may have arisen in the office of a member of the Commission (whether consisting of one or more than one member).
(4) The appropriate Government shall cause to be laid before each House of Parliament or, as the case may be, the Legislature of the State, the report, if any, of the Commission on the inquiry made by the Commission under sub section (1) together with a memorandum of the action taken thereon, within a period of six months of the submission of the report by the Commission to the appropriate Government. ' "7.
Commission to cease to exist when so notified. (1) The appropriate Government may, by notification in the Official Gazette, declare that (a)a Commission (other than a Commission appointed in pursuance of a resolution passed by each House of Parliament or, as the case may be, the Legislature of the State) shall cease to exist, if it is of opinion that the continued existence of the Commission is unnecesary; (b) a Commission appointed in pursuance of a resolution passed by each House of Parliament or as the case may he, the Legislature of the State, shall cease to exist if a resolution for the discontinuance of the Commission is passed by each House of Parliament or, as the case may be, the Legislature of the State.
(2) Every notification issued under sub section (1) shall specify the date from which the Commission shall cease to exist and on the issue of such notification, the Commission shall cease to exist with effect from the date specified therein." "8 A. Inquiry not to be interrupted by reason of vacancy or change in the constitution of the Commission. (1) Where the Commission consists of two or more members, it may act notwithstanding the absence of the Chairman or any other member or any vacancy among its members.
(2) Where during the course of an inquiry before a Commission, a change has taken place in the constitution of the Commission by reason of any vacancy having been filed or by any other reason, it shall not be necessary for the Commission to commence the inquiry afresh and the inquiry may be continued from the stage at which the change took place.
" The "21.
Power to issue, to include power to add to, amend, vary or rescind, notifications, orders, rules or bye laws.
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, exercisably in the like manner and subject to the like sanction and conditions (if any) to and to, amend, vary or rescind any notifications, orders, rule or bye laws so issued.
" It may be mentioned that sub sections (3) and (4) of Section 3 and Section 8 A were inserted while Section 7 was substituted in the by the Commissions of Inquiry (Amendment) Act, 1971 (No.79 of 1971) as a result of the recommendations of the Law Commission of India made in paras 26 and 34 of its 24th Report.
In para 26, the recommendation made was to amend Section 3 of the Act `to provide expressly for the filling up of vacancy or for an increase in the number of members whenever the Government thinks it necessary or expedient to do so '.
In para 34 of the Report, the recommendation was to insert a new section 8 A in the light of the proposed amendment in Section 3 to clarify that `it is not necessary for the Commission to recommence its inquiry if a change takes place in the constitution of the Commission during the pendency of an inquiry '.
The legislative history of sub section (3) of Section 3 and Section 8 A inserted simultaneously by amendment of the Act shows their interrelation and the object of enacting Section 8 A is to clarity that the inquiry is not required to recommence or be interrupted by reason of the filling of any vacancy or decrease in the number of members of the Commission.
Section 8 A along with Sections 8 B and 8 C inserted simultaneously by amendment in the principal Act relate to the procedure of the Commission and were inserted to provide for specific situations while Section 8 contains the general power of the Commission to regulate its own procedure.
The real question for decision in the present case is: Whether the appropriate Government after constituting the Commission under Section 3 of the Act is empowered to reconstitute the Commission substituting another person as the sole member in place of the initial appointee? In substance, it is this power that the State Government claims to have exercised in the present case and is attempted to be justified by the argument advanced by Shri Shanti Bhushan to support the appointment first of Justice G.G. Sohani and then of Justice Kamlakar Choubey in place of Justice S.T. Ramalingam.
To recapitulate, the argument of Shri Shanti Bhushan is that the power of reconstituting the Commission in this manner is available to the State Government under Section 21 of the which can be invoked in aid of the power of the Government under Section 3 of the .
Section 8 A of the is referred to by Shri Shanti Bhushan as an indication of the existence of this power in the State Government even though he does not rely on it as a source of this power.
Shri Kapil Sibal, on the other hand, contends that the scheme of the enactment shows that the appropriate Government cannot interfere with the working of the Commission after its constitution except in the manner expressly provided in the Act and Section 7 is a clear indication that interference with the functioning of the Commission is not permissible in any other manner.
Shri Sibal contends that Section 21 of the is not available to support the Government 's action in the present case.
Shri Shanti Bhushan concedes that there is no express provision in the empowering the Government to replace or substitute the sole member of a Commission with another person during the continuance of the Commission, but he submits that this is implicit in the power to appoint a Commission and designate its personnel under sub sections (1) and (2) of Section 3 of the read with the power to amend or vary any notification available under Section 21 of the .
Shri Shanti Bhushan also conceded that the aid of Section 21 of the is available only if the context and the scheme of the so permits.
He submitted that the Government 's power to extend the time specified in the initial notification for completing the work of the Commission is not to be found in any express provision in the , but is exercised by amendment of the initial notification only under Section 21 of the .
According to Shri Shanti Bhushan, the appointment of a Commission is under sub section (1) and it is under sub section (2) of Section 3 that the person constituting the Commission is appointed even though it may be a simultaneous process.
The replacement of the member initially appointed to constitute the Commission, according to learned counsel, is by re exercise of the power under sub section (2) of Section 3.
The submission is that the Commission appointed under sub section (1) of Section 3 continues while it may be reconstituted by replacement of the member which is done under sub section (2).
In our opinion, the power of the Government to appoint a Commission of Inquiry and name the person or persons constituting it is in sub section (1) of Section 3 and is not an exercise divided between subsections (1) and (2) of Section 3 as suggested by Shri Shanti Bhushan.
Sub section (2) merely confers the power in the Government to appoint a Commission consisting of one or more members and provides that if there be more than one member of the Commission, then one of them may be appointed Chairman of the Commission.
lt is not as if sub section (1) deals with mere appointment of a Commission of Inquiry without clothing it with its personnel and the power to appoint the member/members thereof is to be found only in sub section (2).
That apart, there is nothing in any of these provisions to suggest that the Government has the power to reconstitute the Commission after its appointment by replacing the existing sole member with another person, Sub section (3) deals expressly with the Government 's power to fill any vacancy which may have arisen since the constitution of the Commission.
The question of replacement of a member appointed initially is obviously beyond its scope.
Sub section (3) inserted by amendment in Section 3 of the is a clear contra indication to the construction suggested by Shri Shanti Bhushan of sub sections (1) and (2) of Section 3 in the scheme of the Act.
If the construction suggested by Shri Shanti Bhushan be correct, there was no need to make this amendment and insert sub section (3) which is a clear indication of the limit and extent to which the power of reconstitution of the Commission can be exercised by the Government after the Commission has been constituted.
As the Law Commission 's Report itself indicates, this amendment became necessary to provide expressly in the statute for the Government 's power to till any vacancy after the initial constitution Whatever may have been the position prior to insertion of sub section (3) in Section 3, there can be no doubt that after its insertion, the scheme of the enactment excludes the power of reconstitution of the Commission in a manner not expressly provided therein.
In view of sub section (3), it is not permissible to construe sub sections (1) and (2) of Section 3 in any other manner.
If the scheme of the enactment gave such wide power to reconstitute a Commission after its initial constitution and permitted replacement or substitution of the existing member of a Commission with another person sans sub section (3) of Section 3, the power to fill any vacancy was not required to be provided separately ahat the Commission functions as an independent a gency free from any govern mental control after its constitution.
It follows that after appointment the tenure of members of the commission should not be dependent on the will of the Government to secure their independence.
A body not so independent is not likely to enjoy the requisite public confidence and may not attract men of quality and self respect.
In such a situation the object of the enactment would be frustrated.
[302 H. 303 A C] Minerva Mills Ltd. v, There Workers, ; distinguished.
The State of Bihar vs D. N. Ganguly.; , , relied on.
in Rangachari and Soshit Karamchari respectively reiterated in State of Punjab vs Hira Lal, ; , and Comptroller and Auditor General of India, Gian Prakash vs K.S. Jagannathan & Anr., ; In Rangachari it was held, 'The condition precedent may refer either to numerical inadequacy of representation in the services or even to the qualitative inadequacy of representation '.3
In the context the expression, 'adequately represented imports consideration of size as well as values, numbers as well as the nature of appointments '.4
But, inadequacy of representation is creative of jurisdiction only.
It is not measure of backwardness.
That is why less rigorous test or lesser marks and competition amongst the class of unequals at the point of entry has been approved both this Court and American courts.
But a student admitted to a medical or engineering college is further not granted relaxation in passing the examinations.
In fact this has been explained as valid basis in American decisions furnishing justification for racial admissions on lower percentage.
Rationale appears to be that every one irrespective of the source of entry being subjected to same test neither efficiency is effected nor the equality is disturbed.
After entry in service the class is one that of employees.
If the social scar of backwardness is carried even, thereafter the entire object of equalisation stands frustrated.
No further classification amongst employees would be justified as is not done amongst students.
Constitutional, legal or moral basis for protective discrimination is redressing identifiable backward class for historical injustice.
That is they are today, what they would not have been but for the victimisation.
Remedytuting the Comm ission.
The enactment, therefore, also provides in Section 7 the only situation in which the Government can rescind the notification issued under Section 3 constituting the Commission.
To the extent to which express provision is made in the enactment, it is common ground, Section 21 of the cannot be invoked.
These aspects have to be borne in mind while considering the tenability of the submission made by Shri Shanti Bhushan with the aid of Section 21 of the .
It is common ground before us that Section 21 of the can be invoked only if, and to the extent, if any, the context and the scheme of the so permits.
The general power in Section 21 of the is to add to, amend, vary or rescind any notification etc.
In the context of reconstitution of the Commission, the power to fill any vacancy in the office of a member of the Commission is expressly provided in sub section (3) of Section 3 of the Commission of Inquiry Act.
Similarly, the power to discontinue the existence of the Commission when it becomes unnecessary can be exercised by issue of a notification in accordance with Section 7 of the Act which results in rescinding the notification issued under Section 3 constituting the Commission.
Thus, the power to rescind any notification conferred generally in Section 21 of the is clearly inapplicable in the scheme to the which expressly provides for the exercise of this power in relation to a Commission constituted under Section of the Act.
The only material remaining general powers in Section 21 of the are the power to `amend ' or `vary ' any notification.
The extent to which the constitution of the Commission can be amended or varied by filling any vacancy in the office of a member as provided in the is also obviously excluded from the purview of Section 21 of the which cannot be invoked for this purpose.
The surviving question, therefore, is: Whether there is power to reconstitute the Commission by replacement or substitution of the existing member, though not provided in the by invoking the residuary power to amend or vary any notification under Section 21 of the ? In the first place, in a case like the present where the scheme of the does provide for amendment and variation of the notification issued under Section 3 for the purpose of reconstitution of the Commission in the manner indicated, even that power to amend or vary any notification by virtue of Section 21 of the must be taken as excluded by clear implication in the sphere of reconstitution of the Commission.
Moreover, the power to amend or vary cannot include the power to replace or substitute the existing composition of the Commission with an entirely new composition.
Shri Shanti Bhushan submitted that the time specified in the initial notification for completing the task of the Commission is enlarged by subsequent notification and this is done in exercise of the general power available under the to extend time.
This submission does not support the argumentof learned counsel that the general power under Section 21 of the is also available to reconstitute the Commission by replacement or substitution of its sole member.
The aid of Section 21 of the general Clauses Act for enlargement of time does not conflict with the context or scheme of the .
The context as well as the scheme of the clearly indicate that Section 21 of the cannot be invoked to enlarge the Government 's power to reconstitute the Commission constituted under Section 3 of the Act in a manner other than that expressly provided in the .
There being no express power given by the to the appropriate Government to reconstitute the Commission of Inquiry constituted under Section 3 of the Act by replacement or substitution of its sole member and the existence of any such power being negatived by clear implication, no such power can be exercised by the appropriate Government.
The scheme of the enactment is that the appropriate Government should have no control over the Commission after its constitution under Section 3 of the Act except for the purpose of filling any vacancy which may have arisen in the office of a member of the Commission apart from winding up the Commission by issuance of a notification under Section 7 of the Act if the continued existence of the Commission is considered unnecessary.
The vacancy in the office of a member of the Commission may arise for several reasons, including resignation by the member, when the Government 's power to fill the vacancy under Section 3(3) of the Act can be exercised.
Even though a case of implied resignation creating an implied vacancy was set up by the State of Madhya Pradesh before the High Court, that stand was rightly abandoned before us by Shri Shanti Bhushan.
We have no doubt that the rule of construction embodied in Section 21 of the cannot apply to the provisions of the relating to reconstitution of a Commission constituted thereunder since the subject matter, context and effect of such provisions are inconsistent with such application.
Moreover, the construction made by us best harmonises with the subject of the enactment and the object of the legislation.
Restoring public confidence by constituting a Commission of Inquiry to investigate into a 'definite matter of public importance ' is the purpose of such an exercise.
It is, therefore, the prime need that the Commission functions as an independent agency free from any governmental control after its constitution.
It follows that after appointment, the tenure of members of the commission should not be dependent on the will of the Government, to secure their independence.
A body not so independent is not likely to enjoy the requisite public confidence any may not attract men of quality and self respect.
In such a situation, the object of the enactment would be frustrated.
This aspect suggests that the construction made by us, apart from harmonising the provisions of the statute, also promotes the object of the enactment while the construction suggested by the appellant frustrates both.
Shri Shanti Bhushan placed reliance on the decision in Minerva Mills Ltd. vs Their Workers, 1 19541 S.C.R. 465.
In that decision, the power of the appropriate Government under Section 7 of the to constitute an industrial tribunal for a fixed period of time and to constitute a new tribunal on the expiry of that period to hear and dispose of references made to the previous tribunal which had not been disposed of by that tribunal was upheld.
Shri Shanti Bhushan contended that the observations made in that decision are not confined to the exercise of that power on the expiry of the tenure of the tribunal first constituted.
It was clearly indicated in that decision that 'when the life of the first tribunal automatically came to end by efflux of time, no question of vacancy in the office really arose and, therefore, it was not a case falling under sub clause (2) of Section 8 but the situation that arose fell within the ambit of Section 7 '.
The observations made in that decision have to be read in the context of the facts of that case.
That decision is clearly distinguishable.
On the other hand, Shri Kapil Sibal placed reliance on The State of Bihar vs D.N. Ganguly & Others, [1959] S.C.R. 1191.
This decision also related to the reference of a dispute under the .
It was pointed out that 'it was well settled that the rule of construction embodied in Section 21 of the can apply to the G provisions of a statute only where the subject matter, context, and effect of such provisions are in no way inconsistent with such application .
On this basis it was held that it did not apply to Section 10(1) of the .
On a construction of Section 10(1 ) of the , it was held that it 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.
Reliance placed on Section 21 of the on behalf of the Government to invoke such a power by necessary implication was clearly negatived.
The decision of this Court in Minerva Mills Ltd. (supra) was distinguished as we have already indicated.
In our opinion, the ratio in D.N. Ganguly (supra) supports the view taken by us in the present case that Section 21 of the cannot be invoked to support the impugned action of the State of Madhya Pradesh as contended by Shri Shanti Bhushan.
The construction suggested by Sri Shanti Bhushan is inconsistent with the provisions and the scheme of the and must, therefore, be rejected.
Admittedly, the power under Section 3(3) of the was not available to the State of Madhya Pradesh in the facts of the present case to appoint any other person replacing Justice S.T. Ramalingam as the sole member of the Commission of Inquiry.
The power under sub sections (1) and (2) of Section 3 read with Section 21 of the or even Sections 14 or 16 thereof was also not available for this purpose, for the reasons given earlier.
Accordingly, the notification dated 10.7.1991 appointing Justice G.G. Sohani and the notification dated 9.1.1992 appointing Justice Kamlakar Choubey were both invalid.
It is not unlikely that Justice G.G. Sohani may have resigned forming the same opinion when his appointment was challenged.
However, the State of Madhya Pradesh did not choose to reflect and reconsider the legality of its action in spite of the resignation of Justice G.G. Sohani and it continued to move in the wrong direction by making another invalid appointment of Justice Kamlakar Choubey.
Consequently, these appeals are dismissed and the impugned judgment of the High Court quashing the notifications dated 10.7.1991 and 9.1.1992 is sustained for the aforesaid reasons given by us.
The State of Madhya Pradesh shall, in view of the retirement of Justice S.T. Ramalingam as a Judge of the Madras High Court in the meanwhile, take necessary action to finalise his terms and conditions in accordance with the guidelines issued by the Government of India in this behalf.
Such action be taken promptly to avoid any undue delay in completion of the Commission 's task.
No costs.
N.P.V. Appeal dismissed.
| IN-Abs | : Section 21 Power to add to amend or vary or rescind any notification Whether could be invoked to reconstitute the Commission of Inquiry by replacement of substitution of the existing members, though not provided in the scheme of the Act.
Pursuant to the direction given by the State High Court, the appellant State by a Notification dated 24.2.1989, constituted a Commission of Inquiry under the (Commission of Inquiry) Act, 1952, to investigate into the affairs of the children 's Welfare Society, of which Respondent No.1 was an office bearer and appointed a sitting Judge of the High Court of another State as the sole member of the Commission.
The inquiry was to be completed within a period of six months, but the period was extended from time to time.
Meanwhile, the sole member became due to retire as a Judge of the High Court on attaining the age of superannuation and, therefore, he wrote a letter dated 19 3.1991 to the Chief Secretary of the appellant State drawing attention to this fact and requesting that the necessary modalities be worked out well in time for his continuance as Commission of Inquiry, in the light of the guidelines issued by the Government of India for the benefits and emoluments payable to a Judge on his retirement in such a situation.
The Judge also mentioned some of the facilities he expected, to which be would not be entitled from the State Government on his retirement.
The Chief Secretary sent a reply dated 9.4.1991 to the Judge promising to give an early reply and requesting him to continue with the inquiry so that the same could be completed early.
However, without further reference to the Judge, the State Government issued a notification dated 10.7.1991, replacing him by a retired Chief Justice of another High Court.
This appointment was challenged before the High Court, which, by an interim order dated 30.7.1991 stayed the operation of the notification.
During the pendency of the writ petition, the new member tendered his resignation.
Consequently, the High Court dismissed the writ petition as infructuous on 5.9.1991.
Thereafter, the Chief Secretary to the Government sent a letter dated 12.9.1991 to the original appointee expressing the State Government 's inability to accept the terms and conditions of the Judge, and informing him of the appointment of retired Chief Justice of another High Court, who had since resigned.
Thereafter the State Government issued another notification dated 9.1.1992 appointing a retired Judge of another High Court as a single member of the Commission.
This was challenged before the High Court on the ground that during the continuance as the single member of the Commission of Inquiry of the original appointee, there was no power in the State Government to replace him, and there being no vacancy in the office, the power under Section 3(3) of the , which was available only to fill any vacancy, could not be invoked and there was no other source of power available to the State for the purpose and, therefore, the appointment first of the retired Chief Justice and then, on his refusal, of another retired Judge, being without any authority, was invalid.
The High Court allowed the writ petitions and quashed the notification dated 9.1.1992.
It held that there was no vacancy in the office of the single member of the Commission to empower the State Government to fill the vacancy under Section 3(3) of the .
It also held there was neither any valid reason or ground nor any power available in the State Government to replace the original member by another person as was purported to be done by first appointing one member and then another member, both of whom were also retired Judges .
In the appeals, by special leave, on behalf of the State Government, it was contended that aid of Section 21 of the was available to the State Government for exercising its powers under the 'to add, to amend or vary ' the notification issued initially appointing the sitting Judge as the sole member of the Commission which enabled the State Government to reconstitute the Commission by replacing that Judge with any other person in the circumstances of the case, though the power to rescind any notification was not available, since this was provided in Section 7 of the .
Reference was also made to Section 8 A of the to support the Contention that Government 's power to reconstitute the Commission even during the availability of the person so appointed even though it was submitted that Section 8 A was not the source of power for reconstitution of the Commission.
It was also contended that the Government 's power to extend the time specified in the initial notification for Completing the work of the Commission was not to be found in any express provision in the .
but was exercised by amendment of the initial notification only under Section 21 of the .
and that though there was no express provision in the empowering the Government to replace or substitute the sole member of a Commission with another person during the continuance of the Commission.
this was implicit in the power to appoint a Commission and designate its personnel under Sub sections (1) and (2) of Section 3 of the read the power to amend or Vary any notification available under Section 21 of the .
It Was submitted on behalf of the petitioner in the Public Interest Petition that Sections 14 and 16 of the were also available to support the notifications under challenge issued by the State Government.
On behalf of respondent No.1 it was submitted that the scheme of the did not permit invoking Section 21 of the except for enlargement of the period for completion of the inquiry by amendment of the notification only to that extent since the only situations in which reconstitution of the Commissions could be made were provided in the itself, that Section 8 A of the was enacted for an entirely different purpose namely to ensure continuity of the Commission 's work and had nothing to do with its reconstitutions that the scheme of the enactment showed that the appropriate Government could not interfere provide expressly in the statute for the Government 's power to fill any vacancy after the initial constitution After its insertion the scheme of the enactment excludes the power of reconstitution of the Commission in a manner not expressly provided therein.
In view of sub section (3), it is not permissible to construe sub sections (1) and (2) of Section 3 in any other manner.
If the scheme of the enactment gave such wide power to reconstitute a Commission after its initial constitution and permitted replacement or substitution of the existing member of a Commission with another person sans sub section (3) of Section 3 the power to fill any vacancy was not required to be provided separately and expressly.
It is also significant that in the amendment so made the power is limited only to filling any vacancy without conferring any power to reconstitute the Commission by replacement or substitution of the existing member which indicates that no such power of replacement or substitution of the existing member was contemplated in the scheme of the Act or intended to be conferred on the Government even after the amendment.
[298 H: 299 A C; 300 A] 2 7.
Section 8 A was simultaneously inserted by amendment to provide that the procedure does not require interruption of the inquiry by reason of change in the constitution of the Commission due to filling any vacancy or decrease in the number of members.
The expression 'or by any other reason ' in sub section (2) of Section 8 A cannot be widened to include the reason of reconstitution of the Commission by replacement or substitution of the existing member since that power is not available to the Government in the scheme of the Act and, therefore.
this expression in Section 8 A(2) cannot be read as conferring any additional power or giving any such indication.
The expression or by any other reason following `vacancy having been filled ' in Section 8 A(2) must therefore.
mean any other reason such as decrease in the number of members when the initial number is more than one and the vacancy remains unfilled.
It cannot mean substitution of the existing member with another person, since no such power exists.
Section 8 A(2) is not the source of an additional power, but merely an indication of the power to reconstitute the Commission.
The indication is of the power of reconstitution being available only in the manner indicated.
The only situation in which the Government can rescind the notification issued under Section 3 constituting the Commission is laid down in Section 7 the Act, which provides that the Commission would cease to exist when the appropriate Government by notification with the working of the Commission after its constitution except in the manner expressly provided in the Act and Section 7 was a clear indication that interference with the functioning of the Commission was not permissible in any other manner, and, therefore, Section 21 of the was not available to support the Government 's action in the instant case.
Dismissing the appeal, this court, HELD: 1.
The power under Section 3(3) of the Commissions of the Inquiry Act, 1952, was not available to the State Government in the facts of the instant case to appoint any other person replacing the original member as the sole member of the Commission of Inquiry.
The power under sub sections (1) of (2) of Section 3 read with Section 21 of the or even Section 14 or Section 16 thereof was also not available for the purpose.
Accordingly, the notifications dated 10.7.1991 and 9.1.1992 issued by the State Government appointing the retired Chief justice and another retired Judge were both invalid.
The high Court was, therefore, right in quashing the notifications dated 10.7.1991 and 9.1.1992.
The appellant state should, in view of the retirement of the original member as a judge of the High Court in the meanwhile, take necessary action to finalise his terms and conditions in accordance with the guidelines issued by the Government of India in this behalf.
Such action should be taken promptly to avoid any undue delay in completion of the commission 's task.
[304 C F] 2.1.
The power of the Government to appoint a Commission of Inquiry and name the person or persons constituting it is in sub section (1) of Section 3.
It is not as if sub section (1) deals with the mere appointment of the Commission of Inquiry without clothing it with its personnel and the power to appoint the member/members thereof is to be found only in sub section (20 That apart, there is nothing in any of these provisions to suggest that the Government has the power to reconstitute the commission after its appointment by replacing the existing sole member with another person.
Sub Section (3) of Section 3, inserted by the Amendment Act of 1971, deals expressly with the Government 's power to fill any vacancy which may have arisen since the constitution of the Commission.
The question of replacement of a member appointed initially is beyond its scope.
The insertion of sub section (3) became necessary to declares that 'the continued existence of ' the Commission is unnecessary '.
The scheme of the enactment is that the appropriate Government should have no control over the Commission after its constitution under Section 3 of the Act except for the purpose of filling any vacancy which may have arisen in the office of a member of the Commission apart from winding up the Commission by issuance of a notification under section 7 of the Act if the continued existence of the Commission is considered unnecessary.
The vacancy in the office of a member of the Commission may arise for several reasons, including resignation by the member, when the Government power to fill the vacancy under Section 3(3) of the Act can be exercised.
[300 A E & G] 2.4.
The context as well as the scheme of the clearly indicate that Section 21 of the General clauses Act 1897 cannot be invoked to enlarge the Government 'section power to reconstitute the Commission constituted under Section 3 of the Act in a manner other that that expressly provided in the .
There being no express power given by the Commissions of inquiry Act to the appropriate Government to reconstitute the Commission of Inquiry constituted under Section 3 of the Act by replacement or substitution of its sole member and the existence of any such power being negatived by clear implication, no such power can be exercised by the appropriate Government.
[302 C F] 2.5.
Section 21 of the can be invoked only if, and to the extent.
if any the context and the scheme of the so permits.
The general power in Section 21 of the is 'to add, to amend vary or rescind any notifications ' etc.
In the context of reconstitution of the Commission the power to fill any vacancy in the office of a manner of the Commission is expressly provided in sub section (3) of Section 3 of the Similarly the power to discontinue the existence of the Commission when it becomes unnecessary can be exercised by issue of a notification in accordance with Section 7 of the Act which results in rescinding the notification issued under Section 3 constituting the Commission.
Thus the power to rescind any notification conferred generally in Section 21 of the is Clearly inapplicable in the scheme of the Commissions of inquiry Act which expressly provides for the exercise of his power in relation to Commission constituted under Section 3 of the Act.
The only other material general powers in Section 21 of the are the power to 'amend ' or vary any notification.
The extent to which the constitution of the Commission can be amended or varied by filling any vacancy in the office of a member as provided in the is also obviously excluded from the purview of Section 21 of the which cannot be invoked for this purpose.
In a case like the instant one where the scheme of the does provide for amendment and variation of the notification issued under Section 3 for the purpose of reconstitution of the Commission in the manner indicated even that power to amend or vary any notification by virtue of Section 21 of the must be taken as excluded by clear implication in the sphere of reconstitution of the Commission.
Moreover, the power to amend or vary cannot include the power to replace or substitute the existing Composition of the Commission with an entirely new composition.
The aid of Section 21 of the for enlargement of time does not conflict with the context or scheme of the Commissions of Inquiry Act.[301 A E] 2.6.
The rule of Construction embodied in Section 21 of the cannot apply to the provisions of the relating to reconstitution of a Commission constituted there under since the Subject matter.
context and effect of such provisions are inconsistent with such application.
Moreover.
this construction best harmonises with the subject of the enactment and the object of the legislation.
Restoring public Confidence by constituting a Commission of Inquiry to investigate into a 'definite matter of public importance ' is the purpose of such an exercise.
It is therefore, the prime need that the Commission functions as an independent agency free from any govern mental control after its constitution.
It follows that after appointment the tenure of members of the commission should not be dependent on the will of the Government to secure their independence.
A body not so independent is not likely to enjoy the requisite public confidence and may not attract men of quality and self respect.
In such a situation the object of the enactment would be frustrated.
[302 H. 303 A C] Minerva Mills Ltd. v, There Workers, ; distinguished.
The State of Bihar vs D. N. Ganguly.; , , relied on.
|
tition No. 90 of 1981 etc.
etc, (Under Article 32 of the Constitution of India).
Dr. Devi Prasad Pal, Dinesh Vyas, P.H. Parekh, B.N. Aggarwal, A.S. Rao, Ravinder Narain, section Ganesh, A.K. Verma, Amrita Mitra, Ms. Priya Hingorani, section Sukumaran, Ms. Amrita Mitra, Ms. S.Bagga, Krishan Kumar, Bhaskar Pradhan, Ms. Poonam Madan, Ms. Gauri Advani, section Pathak, B. Lal, B.P. Aggarwal, Ms. Geetanjali Mohan, P.K. Mukherjee and S.C. Patel for the Petitioners.
S.C. Manchanda, B.B. Ahuja, Manoj Arora, section Rajappa and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
The seeds of the present controversy were sown as early as in 1946.
It is unfortunate that this matter should be coming up before this Court for its consideration nearly five decades later, though it must be pointed out that the issue in its present form is the outcome of an amendment made by the Finance (No.2) Act, 1980 (hereinafter referred to as 'the 1980 Act ') to the Income Tax Act, 1961* (hereinafter referred to as 'the 1961 Act ').
It is also a curious co incidence that the 1980 Act effected two amendments in the 1961 Act with retrospective effect and the validity of both these provisions have been challenged before the courts.
The first was the controversy with regard to the retrospective amendment of s.80 J which was settled by this Court by its decision in Lohia Machines Limited vs Union of India, It is the second amendment to the provisions contained in section 35(2) of the 1961 Act that has given rise to the present controversy between the parties.
The question is really one of interpretation of two important provisions relating to the computation of business income for purposes of income tax.
We may start with the provisions of the Indian lncome Tax Act, 1922 (hereinafter referred to as the '1922 Act ').
The computation of business income for purposes of income tax was done in accordance with the provisions of section 10 of the said Act.
In the process of making such computation, the Act provided for two important deductions (among others), in respect of the capital assets employed in the business.
The first was the deduction under clause (vi) of Section 10(2) of an allowance in respect of the depreciation of building, machinery, plant or furniture being the property of the assessee and used for the purposes of the business, at a prescribed percentage of the written down value of such assets.
This allowance is calculated, in respect of the year of acquisition of the property, at a percentage of its actual cost to the assessee and in subsequent years at a graduated scale on the basis of the actual cost less the depreciation allowances granted in the preceding years.
In strict principle, this is an allowance of capital nature but it is now well settled that the allowance of depreciation has to be taken into account in order to ascertain the true profits of a business and, therefore, an assessee is permitted to deduct, in the computation of the business income year after year, the prescribed percentage of the value of the assets used for the purposes of business.
The second allowance was not there in the 1922 Act originally and was introduced by the Income tax (Amendment) Act, 1946.
The introduction was of certain allowances in respect of expenditure on.
"scientific research related to the business", an expression which was defined in a fairly comprehensive manner by the statute.
Three types of allowances were permitted in respect of this category of expenditure of which we are here concerned with only one.
This provision was contained in clause (xiv) of S.10(2) which permitted a deduction. "in respect of any expenditure of a capital nature on scientific research related to the business, an allowance for each of the Five consecutive previous year.
beginning with the year in which the expenditure was incurred, or where the expenditure was incurred prior to the commencement of the business, for each of the five consecutive previous years beginning with the year in which the business was commenced, equal 2to one fifth of such expenditure: Provided that no allowance shall be made for any expenditure incurred more than three years before the commencement of the business: A Provided further that XXX XXX XXX (d) where a deduction is allowed for any previous year under this clause in respect of expenditure represented wholly or partly by any asset, no deduction shall be allowed under clause (vi) or clause (vii) for the same previous year in respect of that asset; (e) where an asset is used in the business after it ceases to be used for scientific research related to that business, and a claim for an allowance under clause (vi) or clause (vii) is made in respect of that asset, the actual cost to the assessee of the asset shall be treated as reduced by the amount of any deductions allowed under this clause;" A cursory and conjoint reading of section 10(2) (vi) and section 10(2) (xiv) suggests that where an assessee incurs expenditure of a capital nature on scientific research related to the business and the expenditure results in the acquisition of an asset, the assessee can claim, under clause (vi), a deduction of the specified percentage of the written down value of the asset and under clause (xiv) he can ask for a deduction, in five consecutive years, of the expenditure he has incurred on the acquisition of the asset.
For this purpose, we are assuming that an asset used for scientific research related to the business is also ipso facto an asset used for the purpose of business.
There has been some debate before us as to whether this is always so but we need not enter into that controversy for the purposes of the present case.
It will at once be seen that, if these two provisions are applied simultaneously, it would result in granting an assessee a double allowance in respect of the same expenditure one of the entire amount over a period of 5 years and the other a percentage of the expenditure over a number .
consecutive years at a graded scale as already mentioned.
The question at once leaps to the mind as to whether it could have been the intention of the legislature to permit both these deductions simultaneously to an assessee.
The provisions of clauses (d) and (e) of the proviso to S.10(2) (xiv) contain a clue to answer this question.
More about it later.
We next turn to the provisions of 1961 Act.
The topic of depreciation is dealt with by section 32.
Section 32(1) (ii) provides for depreciation.
As under the 1922 Act, it is allowed at a percentage of the written down value of certain capital assets employed in the bussiness.
The topic of scientific research expenditure is dealt with by section 35.
Section 35(1) provides for the deduction of four types of expenditure on scientific research and what we are concerned with is the deduction provided under section 35(1) (iv), which is to the following effect: (iv) in respect of any expenditure of a capital nature on scientific research related to the business carried on by the assessee, such deduction as may be admissible under the provisions of sub section (2).
" Sub section (2) provides that, for the purposes of clause (iv)of sub section (1), one fifth of the capital expenditure incurred in any previous year shall be deducted for that previous year; and the balance of the expenditure shall be deducted in equal instalments in each of the four immediately succeeding previous years.
There is an explanation which is not relevant for our present purposes.
Reading S.35(2) further, it provides in clauses (iv) and (v) as follows: "(iv) where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed under clauses (i), (ii) and (iii) of sub section (1) of section 32 for the same previous year in respect of that asset; (v) where the asset mentioned in clause (ii) is used in the business after it ceases to be used for scientific research related to that business, depreciation shall be admissible under clauses (i), (ii) and (iii) of sub section(1) of section 32.
" Reference must also be made to Explanation 1 to section 43(1) in this context.
It read as follows at the relevant time: "Explanation: Where an asset is used in business after it ceases to be used for scientific research related to that business and a deduction has to be made under clause (i), clause (ii) or clause (iii) of sub section (I) or sub section (1A) of section 32 in respect of that asset, the actual cost of the asset to the assessee, as reduced by the amount of any deduction allowed under clause (iv) of sub section (1) of section 35 or under any corresponding provision of the Indian Income tax Act, 1922 (11 of 1922).
" From the above it will be seen that the provisions of Section 32(1) (ii) and Section 35(2) (i) (iv) and (v) read with Explanation 1 to s.43(1) virtually repeat the provisions contained in Section 10(2) (vi) and 10(2)(xiv) of the 1922 Act, so that the question earlier posed still loomed in the background of 1961 Act.
In 1968 there was an amendment in the provisions of Section 35(2).
The sub section was amended to read as follows: "(2) For the purposes of clause (iv) of sub section (1), (i) in a case where such capital expenditure is incurred before the 1st day of April, 1967, one fifth of the capital expenditure incurred in any previous year shall be deducted for that previous year; and the balance of the expenditure shall be deducted in equal instalments for each of the four immediately succeeding previous years; (i a) in a case where such capital expenditure is incurred after the 31st day of March, 1967, the whole of such capital expenditure incurred in any previous year shall be deducted for that previous year.
" The effect of this amendment was only to provided that the entire amount of capital expenditure incurred in relation to scientific research was allowed as a deduction in one year instead of being spread over a period of five years as was the position earlier.
This amendment does not touch the controversy in issue before us and it has no solution to offer to our present difficulty.
The provisions of Section 10(2) (vi) and (xiv) of the old Act had been administered between 1946 and 1962 and the provisions of Section 32 and 35 of the 1961 Act have been administered since 1962.
The question whether an assessee can simultaneously claim an allowance or deduction in respect of the same expenditure once under Section 32 and again in Section 35 must have cropped up in some cases and does appear that such a double claim was put forward in some cases.
The contention on behalf of the assessees was that the allowances in respect of depreciation on the one hand and in respect of capital expenditure on scientific research on the other are two totally different and independent heads of allowances.
one is a notional allowance to provide for the wear and tear of a capital asset employed in the business as the years roll by; the other is an allowance for actual expenditure of a capital nature granted, on the eve of our country 's independence, in order to give fillip to new industrial innovations and the development of indigenous know how and techniques by proper planning on research and development by various business houses.
It is therefore suggested that there is nothing absurd in construing the statutes act as providing cumulatively for both types of deductions in respect of the same capital asset.
The only limitations on this right are the two placed by the statute itself.
The first limitation, contained in clause (d) of the proviso to Section 10(2) (xiv) and s.35(2) (iv) is that both the deductions cannot be claimed "for the same previous year" in respect of the same capital asset.
The second limitation is found in clause (e) of the proviso to Section 10(2) (xiv) and s.35(2) (v) which say that if a capital asset used for scientific research ceases to be so used but is thereafter brought into a business for use therein, the actual cost for purposes of granting depreciation in respect of the asset thereafter should be taken as the amount of its original cost reduced by the amount of deductions allowed under Section 10(2) (xiv) or s.35(2).
In other words, the contention of the assessee was and is that both the types of allowances are permissible under the statute except to the extent limited by clauses (d) and (e) of the proviso to Section 10(2) (xiv) of the 1922 Act and reproduced in clauses (iv) and (v) of Section 35(2) of the 1961 Act.
Before us it is claimed on behalf of the assessee that this interpretation of the statutory provisions is very clear, patent and unambiguous.
It is alleged that despite this, some Income tax Officers started disallowing the claim of depreciation in respect of such capital assets even in previous years during which no deduction was claimed or allowed under Section 10(2) (xiv) or Section 35(2), contrary to the clear language of clause (d) of s.10(2) (xiv) and s.35(2) (iv).
These Of orders were reversed on appeal either by the Appellate Commissioner or by the Tribunal.
It was suggested that these decisions were almost unanimously in favour of the assessee but the department persisted in pursuing the matter upto the stage of the High Court.
Only one reference on this topic came up before the High Courts and is reflected in the decision of the Karnataka High Court, reported as CIT vs Indian Telephone Industries Ltd., This was a reference of the year 1977 made at the instance of the Commissioner of Income Tax and the Commissioner of Income Tax lost this reference.
The High (Sourt re affirmed the position contended for by the assessee as the one and only possible interpretation of the statutory provisions.
It is, therefore, contended that there was, and could have been, no doubt that an assessee was entitled to claim depreciation allowance in respect of such assets in respect of previous years other than those in which an allowance had been allowed under the other head.
We shall revert later to this aspect of the matter.
At this stage, the Finance (No.2) Act, 1980 intervened.
It amended section 35(2) (iv) to read as follows: "(iv) where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed under clauses (i), (ii) and (iii) of sub section (1) of section 32 for the same or any other previous year in respect of that asset.
" (Emphasis added) The Finance Act made this amendment retrospective w.e.f. 1.4.62, that is, the date of the commencement of the 1961 Act.
This amendment is undoubtedly far reaching in its effect.
It will result in completion of the pending assessments of several years on the footing of the new provision.
It will also involve re opening or rectification of completed assessments of earlier years, to the extent permissible under the provisions of sections 148 and 154, in cases where assessees had been granted "double allowance" accepting their contention at the time of the original assessments.
The effect will be not for one assessment year but for a number of assessment years in succession.
Painting a very grim picture of the consequences of giving full retrospective effect to the amendment, the assessees say that it will impose unexpected and impossible burden on them over the years.
jeopardise their solvency and lay them open to action by creditor and financial institutions.
Such an onerous burden, it is said.
is unreasonable and oppressive and the provision imposing such burden violates the fundamental rights of the assessees under Articles 14 and 19(1) (g) of the Constitution of India.
It is on this plea that, even though assessments and appeals are pending in several of these cases, the petitioners chose to approach this Court by way of writ petitions under Article 32 of the Constitution.
These are mostly writ petitions of the year 1981 and are now coming up for hearing after a period of 10 years.
Learned counsel for the assessees do not contest the competence of the legislature to enact the impugned provision, nor do they dispute the right of the legislature to give retrospective effect to statutory provisions.
The contention only is that retrospective provisions may be permissible even in taxing statutes in certain special circumstances such as in the case of provisions clarifying the impact of a statute, provisions curing defective legislations in the light of the judicial decisions and the like.
They, however, say that if the legislature chooses to impose a totally new burden, which was not at all in contemplation earlier and proceeds to give full retrospective effect thereto, such an attempt should be struck down as unreasonable and discriminatory.
The principal questions, therefore, for our consideration are: 1) Were the earlier statutory provisions capable of only one interpretation, namely, that placed by the assessees or was there any ambiguity in relation thereto ? (2) If there was some doubt or ambiguity about the earlier legislation, and the 1980 Act clarified the position by a retrospective amendment, would it offend the provisions of the Constitution ? (3) If, on the other hand, the earlier provision was very clear and capable of only one interpretation, as placed by the assessee, was the legislature within its rights in amending the provision retrospectively w.e.f. 1.4.62 and thus imposing an unreasonable tax burden on the assessees? Taking up the first of the three questions, it has to be considered from two angles, one factual and the other, legal.
An attempt was made on behalf of the petitioners to project an image as if the interpretation sought to be placed by the department on pre 1980 provisions to disallow depreciation on such assets was so far fetched that it never received the approval of the higher appellate authorities.
It was suggested that the appeals by assessees against the disallowance invariably succeeded and it was the Department that had to move the High Court on reference, the first of which references came up before the Karnataka High Court in C.l.
T. vs Indian Telephone Industries (1980) 126 I.T.R. 548 and was answered against the Department.
On the basis of such allegations the petitioners attempted to make out that the Department 's interpretation was patently untenable and that the 1980 amendment is not in the nature of a statutory clarification of an ambiguity but a totally new and fresh imposition sought to be unjustifiably given retrospective effect.
But, as Shri B.B. Ahuja has pointed out on the basis of the averments of the petitioner in one of the cases, viz., W.P.1153/81, the impression sought to be created by the petitioners does not accord with the correct facts.
The position in the case is available only as it stood at the time when the writ petition and the counter affidavit were filed and subsequent developments are not known.
Nevertheless, the picture that emerges is this.
In that case, the Income tax Officer (I.T.O.) is said to have allowed depreciation on assets used for scientific research, for the assessment year 1969 70, though this is denied by the department.
The claim was perhaps disallowed by the I.T.O. for the assessment year 1970 71, but it was allowed by the Allahabad Bench of the Income tax Appellate Tribunal (I.T.A.T.) by its order dated 30.8.76.
For the assessment year 1971 72, the I.T.O. disallowed the depreciation.
The Appellate Assistant Commissioner (A.A.C.) allowed it.
The department appealed to the Delhi Bench of the I.T.A.T. which accepted the department 's plea by its order dated 13.8.79 placing reliance on the decision of a Special Bench of the I.T.A.T.
It has been stated that the assessee filed an application for reference to the High Court which was pending when the writ petition was filed.
For the assessment years 1972 73 to 1974 75, the assessments are pending as a stay order had been obtained for reasons which are not known.
For the assessment years 1975 76 and 1976 77, the assessee claimed depreciation on a number of items of scientific research assets.
The I.T.O. "allowed" the claims subject to the rider that "there is no provision to give deduction of more than 100% of the expenditure by way of depreciation".
The assessee appealed to Commissioner of Income tax (Appeals) who disallowed the claim.
For 1977 78, the l.
T.O. disallowed the claim and the C.l.T. dismissed the assessee 's appeals.
For assessment years 1978 79 to 1980 81, the assessments are stated to be pending.
The above facts are sufficient to show that, atleast after 1.4.1968, there is no information before us as to the position between 1.4.1946 and 31.3.1968 the Department has been putting forward its objections on the issue and that the same was the subject matter of controversy at various appellate stages, some decided in favour of, and some against, the assessee.
A Special Bench of the l.
T.A.T. had indeed decided the issue against the assessee.
In this background, it is not correct to say that the position was crystal clear and that, save for a few ITOs who took a biassed view, the authorities were all agreed that the Department 's stand was untenable.
Some of the reported decisions also show that there was a live controversy and that references have been made to the High Court both at the instances or the assessees [see Alkali & Chemical Corporation of India Ltd. vs C.l.T. , and C.I.T. vs Indian Explosives Ltd., , as well as at the instance of the Revenue [see, C.I.T. vs International Instruments P. Ltd., ; C.I.T. vs Mahindra Sintered Products Ltd. and Warner Hindustan Ltd. vs CIT, The petitioner 's contention that, under the pre amended provisions, depreciation on such assets was recognised allround as clearly allowable is therefore rejected.
We have dealt with this aspect only to meet an aspect that was urged.
What is really important is the true and correct interpretation of those provisions, not what someone thought of it then and to this aspect we shall now turn.
4 The second aspect of the First of the three questions posed earlier for our consideration is the legal or interpretational aspect of the provisions as they stood prior to the 1980 Amendment.
Under the provisions of the statute as they stood earlier, could the assessees have claimed continued grant of depreciation after the expiry of five previous years before the 1968 amendment and after the expiry or the first year after the 1968 amendment, even though the entire cost of the capital asset in question had been allowed to be written off completely against the business profits of those five previous years or one previous year as the case may be? We think the answer to this question must emphatically be in the negative.
In our view, it is impossible to conceive of the legislature having envisaged a double deduction in respect of the same expenditure, even though it is true that the two heads of deduction do not completely overlap and there is some difference in the rationale of the two deductions under consideration.
On behalf of the assessees reliance is placed on the following circumstances to support a contention that the statute did not intend one deduction to preclude the other : (i) lt is pointed out that s.10(2) (xiv) of the 1922 Act, was inserted in 1946 consequent on the insertion of a corresponding provision in the United Kingdom.
That provision, viz. s.20(4) of the U.K. Finance Act, 1944 read thus : (4) Where a deduction is allowed for any year under this or the last preceding section in respect of expenditure represented wholly or partly by any assets, no deduction shall be allowed under any provisions of the Income tax Act other than this part of this Act in respect of wear and tear, obsolescence, depreciation or exceptional depreciation of these assets for any year of assessment during any part of which they are used by the person carrying on the trade for scientific research related to the trade. " (emphasis supplied) The Indian provision, it is said, has made a deliberate departure from the said provision and limited the bar of depreciation only to those previous years during which a deduction is allowed under S.10(2) (xiv); (ii) When the Income tax Bill, 1961 was under the consideration of the Law Commission, the provisions of S.10(2) (vi) and (xiv) were carefully reviewed.
But changes were made and the provisions of the new Act in this regard were drafted in pari materia with those of the old Act ; (iii) The language used in clause (d) of the proviso to S.10(2) (xiv) and S.35(2) (iv) again is significantly different from the language used in various other provisions of the Act which, in like contexts of possible double allowances, emphatically rule out deductions in respect of the same expense or exemptions in respect of the same income under two different provisions for the same or even any other assessment year : See, for example, Sections 20(2) 35B(2), 35C(2), 35CC(4), 35CCA(3), 35CCB(3), 35D(b), 35E(8), 80GGA(4), 80HH(9A), 80HHA(7) and 80HHB(S); and (iv) When the relevant provisions say that depreciation shall not be allowed in certain previous years, it permits a disallowance only in those previous years and means, by necessary implication, that it shall be allowed in other years, if otherwise eligible on the language of the provision for depreciation.
There is an apparent plausibility about these arguments, particularly in the context of the alleged departure in the language used by S.10(2)(xiv) from that employed in S.20 of the U.K. Finance Act, 1944.
We may, however, point out that the last few underlined words of the English statute show that there is really no difference between the English and Indian Acts; the former also in terms prohibits depreciation only so long as the assets are used for scientific research.
In our opinion, the other provisions of the Act to which reference has been made some of which were inserted after the present controversy started are not helpful and we have to construe the real scope of the provisions with which we are concerned.
We think that all misconception will vanish and all the provisions will fall into place, if we hear in mind a fundamental, through unwritten, axiom that no legislature could have at all intended a double deduction in regard to the same business outgoing, and if it is intended it will be clearly expressed.
In other words, in the absence of clear statutory indication to the contrary, the statute should not be read so as to permit an assessee two deductions both under S.10(2) (vi) and S.10(2) (xiv) under the 1922 Act or under S.32(1)(ii) and 35(2)(iv) of the 1922 Act qua the same expenditure.
Is then the use of the words "in respect of the same previous year" in clause (d) of the proviso to S.10(2) (xiv) of the 1922 Act and section 35(2) (iv) of the 1961 Act a contra indication which permits a disallowance of depreciation only in the previous years in which the other allowance is actually allowed.
We think the answer is an emphatic `no ' and that the purpose of the words above referred to is totally different.
If, as contended for by the assessees, there can be no objection in principle to allowances being made under both the provisions as their nature and purpose are different, then the interdict disallowing a double deduction will be meaningless even in respect of the previous years for which deduction is allowed under S.10(2) (xiv) /S.35 in respect of the same asset.
If that were the correct principle, The assessee should logically be entitled to deduction by way of depreciation for all previous years including those for which allowance have been granted under the provision relating to scientific research.
The statute does not permit this.
The restriction imposed would, therefore, be illogical and unjustified on the basis suggested by the assessees.
On the other hand, if we accept the principle we have outlined earlier viz. that, there is a basic legislative scheme, unspoken but clearly underlying the Act, that two allowances cannot be, and are not intended to be, granted in respect of the same asset or expenditure, one will easily see the necessity for the limitation imposed by the quoted words.
For, in this view, where the capital asset is one of the nature specified, the assessee can get only one of the two allowances in question but not both.
Then the question would arise and might create a difficulty : in that event, which not the two allowance should the assessee be granted that which the assessee chooses or that which the assessing officer might prefer? It is necessary for the statute to define this and this is what has been done by the rider in clause (d) of the proviso to S.10 (2) (xiv)/S.35(2) (iv).
It mandates that the assessee should, in such a case, be granted the special allowance for scientific research and not the routine and annual one for depreciation.
Clause (d) of the proviso to S.10(2) (xiv) and S.30(2) (iv) thus fall into place as an appropriate and necessary provision.
The provision contained in clause (e) of the proviso to S.10(2) (xiv) of the 1922 Act, re enacted in Explanation, to S.43 (1) of the 1961 Act, also reinforces this line of approach.
It provides that the extent of capital expenditure written off under the second of the above headings (whether it be ]00% under the post 1968 provision or 20%, 40%, 60%, 80% or 100% under the pre 1968 provision) has to be pro tanto deducted in ascertaining the actual cost for purposes of depreciation.
This provision militates, in our view, against the petitioners, contention that the allowances under the two provisions are by nature unconnected with, and independent of, each other.
Its effect is this.
Suppose a person uses an asset for scientific research for sometime and then brings it into his business for other use later, he would be thereafter entitled to depreciation thereon only on the actual cost less deduction allowed under S.10 (2) (xiv)/S.35.
However, if the asset continues to be used in scientific research related to the business, he would be entitled to get depreciation on its full cost after the first few previous years during which allowance is granted under those provisions.
This seems to be anomalous but Shri Ganesh says that there is no anomaly because this is a provision intended to act as a disincentive to persons who purport to purchase assets for scientific research but withdraw it from such use soon after.
Granted that this is so, still the deduction of the allowances given on scientific research assets for computing depreciation is consistent only with the principle stated by us that they are deductions basically of the same nature intended to enable the assessee to write off certain items of capital expenditure against his business profits.
We may add that the report of the Chocksi Committee, on the basis of which the 1980 amendment was effected only echoed the same view when it said in para 3.29 of its report : "3.29 Our attention has also been drawn to certain anomalous situations in the matter of allowance of depreciation.
In certain cases where a full deduction has been allowed in relation to a capital asset under other sections (as for example, section 35 which permits a deduction in respect of capital expenditure for scientific research), the taxpayers have contended that such deduction is independent of the allowance by way of depreciation.
In our view, the intention of the legislature is not to allow a double deduction (of 200%) in respect of the same asset, once under section 35 and, again, by way of depreciation under section 32.
If and to the extent that there is any anomaly or contrary view possible on a construction of section 35, we recommend that the law should be clarified to provide that no depreciation under section 32 shall be allowable in respect of capital expenditure for scientific research qualifying for deduction under section 35.
" For the reasons discussed above, we are of the view that, even before the 1980 amendment, the Act did not permit a deduction for depreciation in respect of the cost of a capital asset acquired for purposes of scientific research to the extent such cost has been written off under S.10(2) (xiv)/35 (1) & (2).
Prior to 1968, such assets qualified for an allowance of one fifth of the cost of the asset in five previous years starting with that of its acquisition and during these years the assessee could not get any depreciation in relation thereto.
In respect of assets acquired in previous year relevant to assessment year 1968 69 and thereafter, their cost was written off in the previous year of acquisition and no depreciation could be allowed in that year.
This is clear from the statute.
Equally, it is not envisaged, and indeed, it would be meaningless to say, that depreciation could be allowed on them thereafter with a further absurdity that it could be allowed starting with the original cost of the asset despite its user for scientific research and the allowances made under the 'scientific research ' clause.
In our view, there was no difficulty at all in the interpretation of the provisions.
The mere fact that a baseless claim was raised by some over enthusiastic assessees who sought a double allowance or that such claim may perhaps have been accepted by some authorities is not sufficient to attribute any ambiguity or doubt as to the true scope of the provisions as they stood earlier.
We are, for the reasons discussed above, unable to approve of the cryptic view expressed by the Karnataka High Court in C.I.T. vs Indian Telephone Industries Ltd., or the view taken by the Bombay High Court in C.I.T. vs Hico Products, In view of the answer given by us to the first question posed by us, there is no need to answer the second and third questions since, even without the amendment, the assessees cannot claim the depreciation allowance in question.
The second question can arise only if it is assumed that there was an ambiguity or doubt as to interpretation that was retrospectively clarified by the legislature.
But it is common ground before us that, even on this hypothesis, the validity of the amendment cannot be challenged.
This is indeed beyond all doubt: See Rai Ramkrishna vs State of Bihar, ; ; Asst Commissioner of Urban Land Tax vs Buckingham & Carnatic Co. Ltd., ; ; Krishnamurthi & Co. vs State of Madras, ; ; Hira Lal Rattan Lal vs Sales Tax Officer and Another, (1973) 31 S.T.C. 178 and Shiv Dutt Rai Fateh Chand vs Union of India, Even the Bombay decision inC.l.
T. vs Hico Products, on which the assessees heavily rely, concedes, in our opinion rightly, this position.
The assessees may have some possible case only if the earlier statutory provisions can be said to have been unambiguously in favour of the assessee and the 1980 amendment had radically altered the provisions to cast a new and substantial burden on the assessee with retrospective effect.
It is this third alternative, reflected by the third question posed by us, that was success fully urged before the High Court by the assessees.
But we are unable to accept this argument or conclusion.
In our view, the first question has to be answered by saying that the pre 1980 provisions were capable of only one interpretation but that was as urged on behalf of the Revenue.
The 1980 amendment has effected no change at all in the provision except to set out more clearly and categorically what the provision said even earlier.
In this view, the second and third questions earlier posed do not arise.
For the reasons discussed above, these Writ Petitions are dismissed.
We, however, make no order as to costs.
B.P JEEVAN REDDY, J.
I agree with my learned brother Ran ganathan, J. that these writ petitions should fall.
Having regard to the nature and significance of the question raised herein, however, I felt impelled to say a few words.
The challenge in this batch of writ petitions is to the retrospective operation given to the amended clause (iv) of sub section (2) of Section 35 of Income Tax Act, 1961, by the Finance (No.2) Act, 1980.
The said Finance Act added the words "or any other" in the said clause and gave it retrospective effect from April 1, 1962.
As amended, clause (iv) reads as follows: "(iv) where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed under clause (ii) or sub section (1) of section 32 for the same or any other previous year in respect of that asset.
" Learned Counsel for the petitioners assessees contended that the retrospective effect given to the said amendment has the effect of taking away the rights vested in the assessees by the unamended provisions, making them liable to pay huge amounts by way of tax.
Such payment, if enforced, has the effect of debilitating the assessees, industries beyond recall.
It is submitted that the retrospectivity given to the said amendment is violative of the petitioners fundamental rights guaranteed by Articles 19(1) (g) and 14 besides the guarantee in Article 300A.
In the year 1946, clause (xiv) among other clauses was introduced in sub section (2) of Section 10 of the Indian Income tax Act, 1922.
It provided, for the first time, that even expenditure of a capital nature laid out on scientific research related to the business of the assessee shall be allowed to be deducted.
The deduction was hundred per cent spread over a period of five consecutive previous years commencing from the previous year on which the expenditure was incurred.
Sub clause (d) of clause (xiv) provided at the same time that "where a deduction is allowed for any previous year under this clause in respect of expenditure represented wholly or partly by any asset, no deduction shall be allowed under clause(vi) or clause (vii) for the same previous year in respect of that asset.
" The effect of sub clause (d) was that if an assessee claimed and was allowed a deduction in respect of expenditure of a capital nature on scientific research, and where such expenditure took the shape of an asset, which in the normal course would be entitled to deduction on account of depreciation under clauses (vi) and (vii) of Section 10(2) no depreciation would be allowed in respect of that asset in those respective previous years.
In other words, during the period of five previous years the assessee was allowed the deduction under clause (xiv) of sub section (2) of section 10, claim for depreciation under clauses (vi) an/or (vii) of the same sub section was excluded.
In the Income tax Act, 1961, a similar provision was made in section 35.
Clause (iv) of sub section (1) of section 35 provided for deduction of expenditure of a capital nature incurred on scientific research related to the business carried on by the assessee.
Sub section (2) of Section 35 set out the manner in which and the terms subject to which the deduction was to be allowed.
As enacted in 1961, sub section (2) provided, as was done by clause (xiv) of Section 10(2) of the 1922 Act that the said deduction shall be allowed in equal measure in five consecutive previous years, commencing from the previous year in which the expenditure was incurred.
In the year 1967, however, sub section (2) was amended, providing for full deduction of the expenditure in the very previous year in which such expenditure was incurred.
Clause (iv) of sub section (2), however, remained unchanged.
Clause (iv) declares that where a deduction is allowed for any previous year under the said section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed under clauses (i), (ii) and (iii) of sub section (I) or under sub section (1A) of section 32 for the same previous year in respect of that asset.
Thus, the position obtaining under the 1922 Act and the previous Act is the same, with the difference that if such expenditure is incurred after April 1, 1967, hundred per cent deduction was granted in the very previous year in which the asset (representing the capital expenditure of the nature mentioned in clause (iv) of sub section (1) of Section 35) is acquired.
The Revenue says that the deduction provided by Section 35(1) (iv) is in the alternative to the deduction provided by clauses (i), (ii) and (iii) of sub section (1) and sub section (1A) of Section 32.
If one is availed of, the other is not available, not only during the year or years in which the deduction under Section 35(1) (iv) is availed of, but permanently.
The reason, according to them, is obvious: if both are allowed to be availed of, it amounts to grant of 200% deduction viz., 100% under Section 35 (1) (iv) and another 100% under sub sections (1) and (1A) of Section 32.
This is totally outside the contemplation of the Act, they say.
On the other hand, the case of the asssessees is that the bar created by clause (iv) of sub section (2) applies only to that previous year or those previous years during which the said expenditure is allowed as a deduction.
That is the express language of the clause.
The bar does not extend beyond the year or years in which the deduction under Section 35(1) (iv) is availed.
There is no reason more so in a taxing enactment to extend the said bar beyond the limit prescribed by the statute.
They say, if the intention of the Parliament was to bar the claim of depreciation in respect of such asset for all time to come, nothing was easier than to say so in clear words, as was done by sub section (4), of section 20 of U.K. Finance Act, 1944.
It is pointed out that clause (xiv) of sub section (2) of section 10 was introduced in the Indian Income tax Act within two years of the introduction of a similar provision in the English Act, evidently inspired by the Amendment in the English Act.
But while incorporating the said provision, a conscious, departure was made by the Indian Legislature, say the assessees.
Having regard to the scant investment in scientific research in India, it is submitted, the legislature must have thought it necessary to provide an additional inducement over and above the deduction on account of depreciation.
Considerations of equity have no place in the interpretation of a taxing enactments, they say further.
I find it difficult to agree with the reasoning of the assessees.
Acceding to it would amount to placing an unreasonable interpretation upon the relevant provisions and to negating the intention of Parliament.
I find it difficult to agree that the Indian Legislature as also the Parliament made a conscious departure from the English Amendment with the idea of providing an additional benefit to induce the Indian assessees to invest more in scientific research.
I find the argument rather convoluted.
If the intention of the Legislature/Parliament was to provide more than 100% deduction, they would have said so, as they have done in cases where they provided for what is called weighted deduction '.
(For example, See Section 35(B) of 1961 Act).
A double deduction cannot be a matter of inference, it must be provided for in clear and express language.
regard having to its unusual nature and its serious impact on the Revenues of the State.
Now, what does clause (iv) of Section 35(2) say? It says that during the years or the year in which the assessee avails of the deduction under Section 35(1 ) (iv) he shall not avail of the deduction on account of depreciation provided by clauses (i), (ii) and (iii) of sub section (1) and sub section (1A) of Section 32.
What could be the underlying reason? It is obviously to ensure that the assessee doesn 't get double deduction.
Take a case where the asset was acquired prior to April 1,1957.
The deduction under Section 35(1) (iv) would be allowed in five consecutive years.
If during the very five previous years, depreciation under the aforementioned provisions is also allowed, the assessee would obtain, at the end of five years, a double depreciation i.e., 100% under Section 35 and almost 100% under Section 32.
(It may be noted that in many cases, the rate of depreciation under Section 32 is 20% or even higher).
If such a course was barred by clause (iv) during the initial five years, would it be reasonable to say that same thing can be achieved by claiming the deduction after the expiry of five years? If both the deductions are in the alternative, as indicated by clause (iv), they must be understood as being in the alternative and not consecutive.
It would be a rather curious thing to say (in the case of an asset acquired prior to April 1, 1967) that Parliament barred claim for depreciation under Section 32 even in the first year when only 20% of the cost of the asset is allowed as deduction under Section 35(1) (iv), it barred it in the second, third and fourth years, when the deduction has reached 40, 60 and 80 per cent, but permitted it be claimed after the fifth year, by which year the entire 100% cost was allowed as a deduction.
No express provision was necessary to say what is so obvious.
The position after April 1, 1967 is no different.
That the aforesaid view is the correct one is indicated by Explanation (1) to clause (1) of section 43 [the corresponding provision in the 1922 Act being sub clause (e) of clause (xiv) of Section 10(2)].
Clause (1) of section 43 defines the expression `actual cost '.
Explanation (1) appended , to the definition says "Where an asset is used in the business after it ceases to be used for scientific research related to that business and a deduction has to be made under clause (ii) of sub section (1) of section 32 in respect of that asset, the actual cost of the asset to the assessee shall be the actual cost to the assessee as reduced by the amount of any deduction allowed under clause (iv) of sub section (1) of section 35 or under any corresponding provision of the Indian Income tax Act, 1922 (11 of 1922).
" Now what does this mean? Take a case where the asset of a like nature acquired prior to April 1, 1967 is diverted to other purposes after the expiry of two previous years; the `actual cost ' of the asset to the assessee in such a case would be 60% of the original cost.
And if it is diverted after five years, it would be nil which means that the assessee cannot claim any depreciation on it at all.
Counsel for the assessee explains this provision to say that it was meant to prevent diversion of such an asset from scientific research to assessee 's business purposes.
The explanation does not stand scrutiny.
The fallacy in the explanation can be demonstrated by taking the very same illustration, where the asset is acquired prior to April 1, 1967.
Suppose, such an asset is diverted after first two previous years, its `actual cost ' to the assessee would be 60% of the original cost, which alone would qualify for deduction under Section 32(1) and (1A).
The remaining 40% would not.
This 40% goes without earning any depreciation.
Why is it so, if the assessees are right in saying what they do.
According to their reasoning, this 40% too should qualify for depreciation.
The fallacy in their argument would become clearer, if the diversion is at the end of the fifth year.
That the Parliament never intended to provide for a double deduction is also the opinion of the Direct Tax Law Committee.
In its interim report, (December, 1977) the Committee (popularly known as 'Choksi Committee ') had this to say in para 3.29 of its report: "3.29.
Our attention has also been drawn to certain anomalous situations in the matter of allowance of depreciation.
In certain cases where a full deduction has been allowed in relation to a capital asset under other sections (as for example, section 35 which permits a deduction in respect of capital expenditure for scientific research), the tax payers have contended that such deduction is independent of the allowance by way of depreciation.
In our view, the intention of the legislature is not to allow a double deduction (of 20%) in respect of the same asset, once under section 35 and, again, by way of depreciation under section 32.
If and to the extent that there is any anomaly or contrary view possible on a construction of section 35, we recommend that the law should be clarified to provide that no depreciation under section 32 shall be allowable in respect of capital expenditure for scientificresearch qualifying for deduction under section 35.
" lt is evidently on the basis of this recommendation that clause (iv) of sub section (2) of section 35 was amended to make express what was implicit in it.
The amendment introduced the words "or any other" in the said clause.
After amendment, clause (iv) of section 35 (2) reads as follows: "where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed under clause (ii) of sub section (1) of section 32 for the same or any other previous year in respect of that asset.
" In our opinion the said amendment is merely clarificatory in nature.
It makes explicit what was implicit in the provisions.
Question of its constitutionality, therefore, does not arise.
Though purporting to be retrospective, it does not take away any rights which had legally vested in the assessees.
The Bombay High Court has struck down the said amendment of clause (iv) in Commissioner of Income Tax vs Hico Products Pvt. Ltd., The approach of the Bombay High Court is at variance with ours.
It has practically accepted the line of reasoning put forward by the assessees which has not commended to us.
Among other reasons, the High Court was impressed by the difference in the language employed in Section 10(2)(xiv)(d) and the one employed in Section 20 (4) of the U.K.Finance Act, which reads as follows: "(4) Where a deduction is allowed for any year under this or the last preceding section in respect of expenditure represented wholly or partly by any assets, no deduction shall be allowed under any provisions of the Income tax Act other than this part of this Act in respect of wear and tear, absolescence, depreciation or exceptional depreciation of these assets for any year of assessment during any part of which they are used by the person carrying on the trade for scientific research related to the trade.
" It is apparent that the scheme and structure of the English provision is different than ours, as has been demonstrated by my learned brother G Ranganathan, J. So far as the arguments of taking away of vested rights is concerned, it is evident from the facts stated in the writ petition 1153/81 which was treated as representative of the facts and contentions in all the writ petitions and with reference to which facts were arguments addressed itself that none of the assessments relating to any of the assessment years concerned herein has become final.
They are pending at one or the other stage and in one or the other forum.
I need not dilate upon this aspect inasmuch as the impugned amendment merely makes explicit what was implicit in the unamended clause, as explained hereinabove.
In such a situation, the argument of any right vesting in the assessees is misplaced.
The writ petitions accordingly fail and are dismissed.
No costs.
N.P.V. Petitions dismissed.
| IN-Abs | Section 32 (1) (ii) of the Income Tax Act, 1961 provided for depreciation, while computing business income for purpose of income tax.
It was allowed at a percentage of the written down value of certain capital assets employed in the business.
Section 35(1) provided for the deduction of four types of expenditure on scientific research and the deduction provided under 35 (1 ) (iv) was to the effect that in respect of any expenditure of a capital nature on scientific research related to the business carried on by the assessee, such deduction as may be admissible under the provisions of sub section (2).
Sub Section (2) provided that, for the purposes of clause (iv) of sub section (1), one fifth of the capital expenditure incurred in any previous year should be deducted for that previous year; and the balance of the expenditure should be deducted in equal instalments in each of the four immediately succeeding previous years.
It further provided in clauses (iv) and (v) that where a deduction was allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction should be allowed under clauses (i), (ii) and (iii) of sub section (1) of section 32 for the same previous year in respect of that asset; and where the asset mentioned in clause (ii) was used in the business after it ceased to be used for scientific research related to that business, depreciation should be admissible under clauses (i), (ii) and (iii) of sub section (1) of Section 32.
Explanation 1 to Section 43(1) also provided that where an asset was used in business after it ceased to be used for scientific research related to that business and a deduction had to be made under clause (i), clause (ii) or clause (iii) or sub section (1) or sub section (1A) of Section 32 in respect of that asset, the actual cost of the asset to the assessee, as reduced by the amount of any deduction allowed under clause (iv) of sub section (1) of Section 35.
The provisions of Section 32(1) (ii) and Section 35(2) (1) (iv) and (v) read with Explanation 1 to Section 43(1) virtually repeated the provisions contained in Section 10(2) (vi) and 10(2) (xiv) of the 1922 Act.
In 1968, there was an amendment in the provisions of Section 35(2).
The effect of the amendment was that the entire amount of capital expenditure incurred in relation to scientific research was allowed as a deduction in one year, instead of being spread over a period of five years as was the position earlier.
Thereafter, the Finance Act, 1980 made an amendment with retrospective effect from 1.4.1962, i.e. from the date of commencement of Act of 1961 which provided under clause (iv) of Section 35(2), that where a deduction was allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction should be allowed under clauses (i), (ii) and (iii) of sub section (1) of Section 32, for the same or any other previous year in respect of that asset.
In the Writ Petitions filed before this Court on behalf of the asses sees it was contended that the allowances in respect of depreciation on the one hand and of capital expenditure on scientific research on the other are two totally different and independent heads of allowances; one was a notional allowance to provide for the wear and tear of a capital asset employed in the business as the years rolled by; and the other was an allowance for actual expenditure of a capital nature granted to give fillip to new industrial innovations and development of indigenous know how and techniques by proper planning on research and development by various business houses; and therefore there was nothing wrong in construing the statute as providing cumulatively for both types of deductions in respect of the same capital asset; that both the types of allowances were permissible under the statute except to the extent limited by clauses (iv) and (v) of Section 35 of the Act/Clauses (d) and (e) of the proviso to Section 10(2) (xiv) of the 1922 Act; that this interpretation of the statutory provisions was very clear.
patent and unambiguous; that the retrospective amendment of the provision would impose unexpected and impossible burden on them over the years, jeopardise their solvency and lay them open to action by creditors and financial institutions and such an onerous burden was unreasonable and oppressive and the provision imposing such a burden violated the fundamental rights of the assessees under Articles 14 and 19(1) (g) of the Constitution that retrospective provisions may be permissible even in taxing statutes in certain special circumstances such as in the case of provisions clarifying the impact of a statute provision curing defective legislations in the light of the judicial decisions and the like but if the legislature chose to impose a totally new burden which was not at all in contemplation earlier and proceeded to give full retrospective effect thereto such an attempt should be struck down as unreasonable and discriminatory.
that the amendment was not in the nature of a statutory clarification of an ambiguity but a totally new and fresh imposition sought to be unjustifiably given retrospective effect and that the statute did not intend one deduction to preclude other.
On behalf of the Revenue it was contended that the deduction provided by Section 35 (1) (iv) was in the alternative to the deduction provided by clauses (i) (ii) and (iii) of sub section (1) and sub section (1A) of Section 32; if one was availed of the other was not available not only during the year or years in which the deduction under Section 35(1) (iv) was availed of but permanently; for the reason that if both were allowed to be availed of; it amounted to grant of 200% deduction viz., 100% under Section 35(1) (iv) and another 100% under sub sections (1) and (1A) of Section 32, and this was totally outside the contemplation of the Act.
Dismissing the writ petitions, this Court, HELD: Per Ranganathan J. (For himself and Ramaswami, J.) 1.1.
There is a fundamental, though unwritten, axiom that no legislature could have at all intended a double deduction in regard to the same business outgoing; if it is intended it will be clearly expressed.
In other words, in the absence of clear statutory indication to the contrary, the statute should not be read so as to permit an assessee two deductions both under Section 10(2) (vi) and section 10(2) (xiv) under the 1922 Act or under Section 32 (i) (ii) and 35(2) (iv) of the 1961 Act qua the same expenditure.
The use of the words "in respect of the same previous year" in clause (d) of the proviso to Section 10(2) (xiv) of the 1922 Act and Section 35 (2) (iv) of the 1961 Act is not a contra indication which permits a disallowance of depreciation only in the previous years in which the other allowance is actually allowed.
The purpose of the words above referred to is totally different.
That the two allowances cannot be and are not intended to be granted in respect of the same asset or expenditure, can be easily seen from the limitation imposed by these words.
Where the capital asset is one of the nature specified, the assessee can get only one of the two allowances in question but not both.
For determining which of the two allowances should be granted that which the assessee chooses or that which the assessing officer might prefer, it is necessary for the statute to define this and this is what has been done by the rider in clause (d) of the proviso to Section 10(2) (xiv) of the 1922 Act Section 35(2) (iv) of the 1961 Act.
It mandates that the asssessee should, in such a case, be granted the special allowance for scientific research and not the routine and annual one for depreciation.
Clause (d) of the proviso to Section 10(2) (xiv) of the 1922 Act and Section 30(2)(iv) of the 1961 Act thus fall into place as an appropriate and necessary provision.
The provision contained in clause (e) of the proviso to Section 10(2) (xiv) of the 1922 Act, re enacted in Explanation to Section 43(1) of the 1961 Act, also reinforces this line of approach.
Therefore, it is not correct to say that the allowances under the two provisions are by nature unconnected with, and indpendent of, each other.
[171 D H; 172 A E] 1.2.
Under the provisions of the statute as they stood earlier, the assessees could not have claimed continued grant of depreciation after the expiry of five previous years before the 1968 amendment and after the expiry of the first year after the 1968 amendment, even though the entire cost of the capital asset in question had been allowed to be written off completely against the business profits of those five previous years or one previous year as the case may be.
It is impossible to conceive of the legislature having envisaged a double deduction in respect of the same expenditure even though it is true that the two heads of deduction do not completely overlap and there is some difference in the rationale of the two deductions under consideration.
The last few words of the English statute, viz., "assets for any year of assessment during any part of which they were used by the person carrying on the trade for scientific research related to the trade" show that there is really no difference between the English and Indian Acts; the former also in terms prohibits depreciation only so long as the assets are used for scientific research.
[169 F H; 171 B, C] 1.3.
In the circumstances, it is clear that, even before the 1980 amendment, the Act did not permit a deduction for depreciation in respect of the cost of a capital asset acquired for purposes of scientific research to the extent such cost has been written off under Section 10(2) (xiv) of the 1922 Act/35(1) & (2) of the 1961 Act.
Prior to 1968, such assets qualified for an allowance of one fifth of the cost of the asset in five previous years starting with that of its acquisition and during these years the assessee could not get any depreciation in relation thereto.
In respect of assets acquired in previous year relevant to assessment year 1968 69 and thereafter, their cost was written off in the previous year of acquisition and no depreciation would be allowed in that year.
This is clear from the statute.
Equally, it is not envisaged, that depreciation could be allowed on them thereafter and also that it could be allowed starting with the original cost of the asset despite its user for scientific research and the allowances made under the 'scientific research ' clause.
There was no difficult at all in the interpretation of the provisions.
The mere fact that a baseless claim was raised by some over enthusiastic assessees who sought a double allowance or that such claim may perhaps have been accepted by some authorities is not sufficient to attribute any ambiguity or doubt as to the true scope of the provisions as they stood earlier.
[173 E H; 174 A] C.I.T. vs Indian Telephone Industries Ltd., and C.l.T. vs Hico Products, (1991) 187 I.T.R. 517, overruled.
Lohia Machines limited V. Union of India, S.C.; Alkali & Chemical Corporation of India Ltd, vs C.l.T., Cal.; C.l.
T vs Indian Explosive Ltd., Cal.; C.I.T vs International Instruments P. Ltd., Kar.
and Warner Hindustan Ltd. vs C.l.T., (1988) 171 I.T.R. 224 A.P., referred to.
The assessees may have some possible case only if the earlier statutory provisions can be said to have been unambiguously in favour of the assessee and the 1980 amendment had radically altered the provisions to cast a new and substantial burden on the assessee with retrospective effect but there is no ambiguity.
The 1980 amendment has effected no change at all in the provisions except to set out more clearly and categorically what the provision said even earlier.
Thus, even without the amendment, the assessees cannot claim the depreciation allowance in question.
Even if it is assumed that there was an ambiguity or doubt as to interpretation, that was retrospectively clarified by the legislature.
Therefore, the validity of the amendment cannot be challenged.
This is indeed beyond all doubt.
[174 C G] Rai Ramkrishna vs State of Bihar, [1964] 1 S.C.R. 897;Asst.
Commissioner of Urban Land Tax vs Buckingham & Carnatic Co. Ltd., ; ; Krishnamurthi & Co. vs State of Madras; , ; Hira Lal Rattan Lal vs Sales Tax Officer and Anr., (1973) 31 S.T.C. 178 and Shiv Dutt Rai Fateh Chand vs Union of India, (1984) 148 I.T.R. 644, referred to.
Per Jeevan, Reddy, J. (Concurring) 1.1.
A double deduction cannot be a matter of inference; it must be provided for in clear and express language, regard having to its serious impact on the revenues of the State.
If the Legislature/Parliament wanted to provide for more than 100% deduction they would have said so, as they done in cases where they have provided for what is called "weighted deduction", vide Section 35(B) of the Act of 1961.
It is not possible to agree that while introducing clause (xiv) in sub section (2) of Section 10 of the 1922 Act consequent on the introduction of Section 20(4) in the U.K. finance Act, 1944, the Indian Legislature as also the Parliament made a conscious departure from the English Amendment with the idea of providing an additional incentive over and above the deduction on account of depreciation, to induce the Indian assessees to invest more in scientific research.
The underlying reason in clause (iv) of Section 35(2) of Act of 1961 providing that during the years or year in which the assessee avails of the deduction under Section 35(1) (iv) he should not avail of the deduction on account of depreciation provided by clauses (i), (ii) and (iii) of sub section (1) and sub section (1A) of Section 32 is to ensure that the assessee does not get double deduction for example, where the asset was acquired prior to April 1, 1957, the deduction under Section 35(1) (iv) would be allowed in five consecutive years.
If during the very five previous years, depreciation under the aforementioned provisions is also allowed, the assessee would obtain, at the end of five years, a double depreciation i.e., 100% under Section 35 and almost 100% under Section 32.
(In many cases, the rate of depreciation under Section 32 is 20% or even higher).
If such a course was barred by clause (iv) during the initial five years, it would not be reasonable to say that same thing can be achieved by claiming the deduction after the expiry of five years.
If both the deductions are in the alternative, as indicated by clause (iv), they must be understood as being in the alternative and not consecutive.
It would be a rather curious thing to say (in the case of an asset acquired prior to April 1, 1967) that Parliament barred claim for depreciation under Section 32 even in the first year when only 20% of the cost of the asset is allowed as deduction under Section 35(1) (iv), it barred it in the second, third and fourth years, when the deduction had reached 40, 60 and 80 per cent but permitted it be claimed after the fifth year, by which year the entire 100% cost was allowed as a deduction.
No express provision was necessary to say what is so obvious.
The position after April 1.
1967 is no different.
That the aforesaid view is the correct one is indicated by Explanation (1) to clause (1) of Section 43 [the corresponding provision in the 1922 Act being sub clause (e) of clause (xiv) of Section 10(2) of 1922 Act].
[177 H; 178 A E] 13.
The amendment of Section 35(2) in 1980 is merely clarificatory in nature.
It makes explicit what was implicit in the provisions.
question of its constitutionality, therefore, does not arise.
Though purporting to be retrospective, it does not take away any rights which had legally vested in the assessees.
[180 B] Commissioner of Income Tax vs Hico Products Pvt. Ltd, , overruled.
None of the assessments relating to any of the assessment years in question has become final.
They are pending at one or the other stage and in one or the other forum.
Since the amendment under challenge merely makes explicit which was implicit in the unamended clause, there is no question of any right vesting in the assessee and its being taken away.
[180 H; 181 A]
|
Civil Appeal No. 4733 of 1992.
From the Judgment and Order dated 28.2.1992 of the Madhya Pradesh State Administrative Tribunal, Gwalior in Original Application No. 2932 of 1991.
Sakesh Kumar and S.K. Agnihotri for the Appellant.
Vivek Gambhir and S.K. Gambhir for the Respondent.
The Judgment of the Court was delivered by SHARMA, J.
1.
By the impugned order the Madhya Pradesh State Administrative Tribunal has allowed the claim of the respondent to continue in service up to the age of 60 years and has held that he cannot be retired at 58 only.
We have heard the learned counsel for the parties.
Special leave is granted.
The respondent was holding the post of Deputy Director when he was promoted as Joint Director, Social Welfare Department in 1989.
He completed the age of 58 years in January, 1991 when according to the decision of the appellant he had to retire.
According to the Rules the age of retirement in the department is 58 years excepting for teachers who are to continue in service till 60.
It is not disputed that the posts of Deputy Director and Joint Director are not teaching posts and the respondent cannot take advantage of the higher age of retirement on that account.
However, the respondent relies upon the Explanation to the Rule which is in the following terms : "Explanation: For purpose of this sub Rule "Teacher" means a Government Servant, by whatever designation called, appointed for the purpose of teaching in an educational institution run by the Government including technical or medical educational institution in accordance with the recruitment rules applicable in such appointment and shall also include the teacher who is appointed to an administrative post by promotion or otherwise and who has been engaged in teaching for not less than 20 years provided he holds a lien Collegiate/Technical/Medical Educational Service".
His case is that since initially he was appointed for the purpose of teaching in an educational institution run by the Government, he is entitled to continue in service upto the age of 60 although later he was holding a non teaching post.
At this stage it will be relevant to mention that the condition that a person claiming the benefit of the Explanation had to be engaged in a teaching post for not less than 20 years, has been struck down as ultra vires and this part of the Explanation, therefore, does not come in the way of the respondent.
On behalf of the appellant it has been contended that post of the Superintendent in a Deaf Mute and Blind School in which the respondent was initially appointed in 1965 was not a teaching post and he, therefore, cannot claim any benefit of this Explanation.
The result of the case is thus dependent upon the issue as to whether the post of Superintendent in Deaf Mute and Blind School is a teaching post or not.
The relevant document which has been referred to and relied upon by both sides is the advertisement No. 9/1965 issued by the Public Service Commission, Madhya Pradesh inviting applications for appointment to the posts of Superintendent Deaf Mute and Blind School.
The duties are mentioned in paragraph 3 of the advertisement to the following effect : "Duties (i) To undertake planning and organisation of the institution for education, vocational training, rehabilitation and recreation of children, (ii) To undertake case wise in respect of every child of the institution with a view to ascertaining the personality make up, aptitudes and interest, socio economic background and intelligence, (iii) To apply educational tests, prepare syllabus, organise specialised methods of education and vocational training of children and to organise examination, (iv) To take steps for the after care and rehabilitation of children, (v) To supervise the general maintenance of the children including the general health, recreation, discipline etc.
and to meet the special needs of the children, (vi) To supervise and control staff and undertake other administrative duties and (vii) Any other work that may be assigned to him by Government or his superior officers.
We have examined the provisions closely and are of the view that the duties were supervisory in nature and not teaching.
Accordingly, we hold that the Explanation referred to above does not come to the aid of the respondent and he was, therefore, rightly retired on 31.1.1992.
In the result the appeal is allowed, the impugned judgment is set aside and the Original Application filed by the respondent before the State Administrative Tribunal is dismissed.
The parties will bear their own costs.
We, however, make it clear that in case the respondent was paid for performing any duty after the dated of his retirement in pursuance of the impugned order he shall not be asked to refund the same.
Appeal allowed.
| IN-Abs | The respondent in the appeal after due selection by the State Public Service Commission was appointed in 1965 as a Superintendent in a Deaf Mute and Blind School.
He was thereafter promoted and posted as Deputy Director, and in 1989 he was further promoted to the rank of Joint Director in the Social Welfare Department.
He completed the age of 58 years in January, 1991 when according to the decision of the appellant he had to retire.
According to the Rules FR 56, Sub Rule (1 a) the age of retirement in the department was 58 years excepting for teachers who were to continue in service till 60.
The respondent assailed the order of retirement before the State Administrative Tribunal relying upon the Explanation to the Rule which allowed his claim to continue in service upto the age of 60 years and held that he cannot be retired at 58 years.
In the State 's appeal to this Court, it was contended that the post of Superintendent in Deaf Mute and Blind School to which the respondent was initially appointed in 1965 was not a `teaching post ' and he could not therefore claim the benefit of the Explanation to the Rule.
Allowing the appeal, this Court, HELD :1.
The parties to the appeal have referred to and relied upon the advertisement No. 9/1965 issued by the State Public Service Commission inviting applications for appointment to the posts of Superintendent Deaf Mute and Blind School.
Paragraph 3 thereof mentions the duties attached to the post, and when examined closely, indicate that they were supervisory in nature and not teaching.
The Explanation to the Rule therefore does not come to the aid of the respondent and he was therefore rightly retired on 31.1.1992.
[354 G; 355 D] 2.
The Original Application filed by the respondent before the State Administrative Tribunal is therefore dismissed.
In case the respondent was paid for performing any duty after the date of his retirement, he shall not be asked to refund the same.
[355 E, F]
|
ition (c) Nos.
655 69 of 1983.
(Under Article 32 of the Constitution of India).
WITH W.P. (C) 8131 33/82, 8125 30/82, 8349 8368/52, 8146 8166/82, 9610 9630/82, 3756 87/83, 3698 3755/83, 947 960/83, 250/86, C.A. Nos.
4099 4103/82, 10753 57/83, 10758 60/83, 10761/83, W.P. (C) No. 12834/85, C.A. Nos.
1280 83/92, 4737/91, 4302/91, 3410/91, 3481/91, 2850/91, 3171/91, 2866/91, 3905 12/91, 4202 05/91, 70/92, SLP(C) No. 1045/89, T.C. (C) No. 220/88, W.P. (C) No. 175/92.
G. Ramaswamy, Attorney General, G.L. Sanghi, B.K. Mehta, Santosh Hegde., R.R. Aggarwal, Anil B. Divan, H.N. Salve, K. Parasaran, Ms. Suman Bose, Dr. Debi Pal, A.B. Rohtagi, R.N. Sachthey, A.C. Gulati, B.B. Sawhney, Mrs. Janaki Ramachandran, section Ganesh, Ravinder Narain, S.Sukuraman, D.K. Sinha, J.R. Das, J. Gupta, Ashok K. Srivastava, H.S. Munjral, section Walia, G. Bansal, D.P. Mukherjee, R. Mohan, Mukul Mudgal, A. Subba Rao, Ms. Lata Krishnamurti, M.N. Shroff, D. Dave, Ms. Deepa Dixit, K.J. John, A.T.M. Sampath, P. Sen, G.S. Chatterjee, Ashok Mathur, M. Haravu, V.J. Francis, V. Subramaniam, P.S. Seetharaman, Ms. Indu Malhotra, A.S. Bhasme, R.B. Misra Dr. B.S. Chauhan, Ajay K. Aggarwal, Ms. Radha Rangaswamy, Anil Sachthey, Badri Nath Sharma, T.V.S.N. Chari, B. Kanta Rao and Ms. Suruchi Aggarwal for appearing parties.
The Judgments of the Court were delivered by RANGANATHAN, J. Taking a cue from the decision of this Court in Goodyear India Ltd. vs State of Haryana ; , to which I was a party, a contention has been raised, in these appeals and writ petitions, that corresponding provisions of the Gujarat Sales Tax Act, the U.P. Sales Tax Act and the Andhra Pradesh General Sales Tax Act, are ultra vires the powers of the State Legislature insofar as they seek to levy a purchase tax in certain circumstances.
My learned brother, Jeevan Reddy, J., has discussed the provisions and contentions elaborately and exhaustively in his judgment.
It is unnecessary for me to set out over again the statutory provisions considered in Goodyear or those which are challenged in these petitions and appeals or the details of the decision in Goodyear as these have been discussed in great detail in the judgment of my learned brother.
I however, think that I owe it to myself to add a separate judgment as I was a party to Goodyear and explain my views on the provisions presently under challenge in the light of what has already been stated by me in Goodyear.
So far as the U.P. Sales Tax Act is concerned, I do not think that the impugned provision of the said Act (viz. S.3AAAA, as inserted in 1992 with retrospective effect from 1.4.1974) bears any comparison with the provisions that were considered in Goodyear.
S.3AAAA is a very simple provision.
According to its marginal note, its effect is the imposition of a liability to purchase tax on certain transactions.
This liability is attracted in respect of goods, which are liable to tax at the point of sale to the consumer.
In other words, the goods in question as such have run through their gamut of sales in the State.
There will be no more sales in the State of the goods in that form, which can be taxed by the State, whether intra State or inter State, or in the course of export.
Such goods are then made liable to tax in the hands of a purchaser dealer cum consumer either because he purchases them from a registered dealer by whom tax is not payable or because he purchases them from a person other than a registered dealer i.e. a person who is not accessible to the revenue, whose sales cannot be easily verified or from whom tax may not be easily recovered.
To put it differently, since the tax is at the point of sale to the consumer, the Legislature, in order to ensure that goods do not escape tax in the State altogether, make the purchaser liable in respect of the last sale in the State of the goods in question, if otherwise the sale of the goods have not borne tax earlier in the State.
This, on the face of it, is a provision which seems to be perfectly within the legislative competence of the State Legislature.
The argument urged on behalf of the assessees, however, is that no person can be said to be the "consumer" of the goods in the State unless he consumes the goods himself or utilises the goods (where they are in the nature of raw material) for the manufacture or production of other goods.
It is urged, therefore, that as no sale can be postulated to be a sale to the consumer unless and until one of the above events happen, the real taxable event is not the purchase of the goods but their consumption, manufacture or production in the State, or their despatch, otherwise than by way of a sale outside the State, whether in the same form or in a manufactured condition.
It is therefore said that, in substance, the statutory provision is no different from the one considered by us in Goodyear and that the ratio of Goodyear will apply here equally.
So far as the Andhra Pradesh provision is concerned, the argument is the same, with an added advantage to the assessees that the section brings out more emphatically their point of view.
Under section 6 A(i), purchase of goods from a registered dealer is subjected to tax because, though the sale or purchase of that item of goods is generally liable to tax, no tax became payable by the registered dealer on the sale because of the circumstances set out in section 5 or 6.
This corresponds to section 3AAAA(a) of the U.P. Act.
As against this, clause (ii) of section 6 A deals with purchase of goods liable to tax from a person other than a registered dealer and imposes a liability to pay tax where the goods purchased are consumed by the purchaser either in the manufacture of other goods for sale or otherwise and the goods are disposed of otherwise than by way of sale or despatched outside the State otherwise than in the course of inter State trade or commerce.
In other words, the real taxable event for the charge under section 6 A(ii), it is said, is not the purchase of goods but the consumption, manufacture or consignment of the same or other goods outside the State.
If that be so, it is said, the imposition is ultra vires the State Legislature on the principle of the decision in Goodyear.
So far as the State of Gujarat is concerned, the provisions of section l5B, inserted by a retrospective amendment of 1990, are somewhat different.
Cutting out certain words not relevant in the present context, it provides that where a dealer, being liable to pay tax under the Act, purchases any taxable goods and uses them in the manufacture of taxable goods, a purchase tax will be levied on the turnover of such purchases.
Rule 42 E, which was also framed w.e.f. 1.5.90, provides that, where the assessee is a registered dealer and the goods manufactured by him have been sold in the State of Gujarat, he will be entitled to relief in respect of the purchase tax levied under section l5B.
Here again, it is argued, the provision is tainted because it refers to manufacture of the purchased goods and the rule ensures that no purchase tax is levied if the manufactured goods are sold in the State itself; in other words, the levy comes in only if they are consigned outside the State, attracting Goodyear.
It will be seen at once that the three provisions under consideration vary from one another.
S.3AAAA of the U.P. Act does not make the tax conditional on the use or consumption of raw materials purchased or the manner of dealing with the goods manufactured out of such purchases of raw materials.
Section 15B of the Gujarat Act is slightly different.
It talks of the use of the goods purchased in the manufacture of other taxable goods but it does not make any reference to the consumption of the goods otherwise or their despatch or consignment.
The Andhra Pradesh Act is more elaborate and deals with various situations in relation to the purchased goods.
2Of these, I am of opinion that the provisions of the U.P. and Gujarat Acts are clearly beyond challenge on the grounds put forward by the petitioners.
The section in the U.P. Act is a very direct and simple provision to the effect that a tax will be levied on purchases made within the State in certain circumstances.
The ambit of Entry 54 in the State List in the Constitution of India must be interpreted in the widest possible manner.
The State has full powers to levy a tax with reference to sales or purchases inside the State and to a certain extent even sales made in the course of inter State trade or commerce.
It certainly comprehends a power to tax the last sale in the State of certain goods.
I have explained earlier the reason why the incidence of tax in such sales is thrown under the Act on the consumer.
The tax is nothing but a tax on purchase, pure and simple, well within the scope of the State 's Legislative power.
The attempt, on behalf of the petitioners, to undertake an analysis of what will eventually happen to the purchased goods where the purchaser is the consumer and, on the basis thereof, to suggest that the legislature really intends to tax consumption, production or consignment is no doubt ingenious but farfetched, artificial and unrealistic.
It is true that one has to look at not merely the form but the substance of the statute and examine what exactly it is that the State purports to levy a tax in respect of but one should not permit one 's imagination to read a purpose or words into the statute which are not there.
The Gujarat provision is more careful but makes a mention of the purchased goods being used for manufacture.
But, as pointed out by Mukharji J. in Goodyear, these are only words descriptive of a class of goods the purchase of which is sought to be brought to tax.
Here again, the intention of the legislature is to tax, at purchase point, a class of goods viz. goods purchased by a manufacturer.
It has no concern, unlike the A.P. or Haryana Acts, with what he does with the manufactured goods.
Presumably the idea is that the manufacturer is able to profit by adding value to the purchased raw material by utilising the infrastructure, fillips or facilities provided in the State to encourage setting up of industries therein and so can afford to pay tax on the purchased raw materials.
The concession provided by rule 42E is an independent provision relieving him and the public consuming the manufactured goods of additional burden where such goods are sold inside the State and get taxed on the added value.
In my opinion, there is considerable force in the substance of the contention of these States that these provisions only impose a tax on purchases.
The marginal title to the provisions indicates that their direct purpose is to levy a tax on purchases effected in the State in certain circumstances.
The tax is couched as a tax on all goods (in U.P.) and on raw or processing materials and consumable stores (in the State of Gujarat).
It is designated as a purchase tax.
It is levied on the turnover of such purchases.
There is no reference in the U.P. statute to any condition for imposition of the tax except that it should be a sale to the consumer and in the State of Gujarat that it should be a purchase by a manufacturer.
It is very difficult to read into these provisions any ulterior motive on the part of the States to Levy a tax on use, consumption or consignment in the guise of a purchase tax.
The language of these two provisions is wholly different from that used in the Haryana and Bombay Acts.
As I have stated in my judgment in Goodyear, even in the context of those Acts, it may be equally plausible to consider the provision either as a purchase tax or a tax consignment.
There is no such ambiguity in the language used in these provisioins.
I have no doubt that, so far as these provisions are concerned, on the face of these acts, the levy is only of a purchase tax.
Such a levy is clearly within the domain of the State Legislature.
The Andhra Pradesh Act, however, is different in its arrangement.
The provisions of section 6 A of this Act are more or less analogous to the provisions of the Haryana Act considered in Goodyear.
The question, therefore, arises as to whether the decision in Goodyear should be applied in the context of the Andhra Pradesh Act.
On behalf of the State of Andhra Pradesh and indeed the other two States also it has been contended that Goodyear needs reconsideration.
Our attention has been drawn to one angle of approach to the statutory provisions in question which had perhaps escaped our notice in the Goodyear case.
It was pointed out that the sum and substance of these provisions is that no sale or purchase of any goods should go without being taxed atleast once in the State.
Primarily the tax is levied on sales.
Where a registered dealer sells his goods he will be liable to tax normally in respect of the taxable goods except where his turnover does not reach up to the minimum prescribed under the Sales Tax Act.
Sometimes, he may not pay any tax or may pay a concessional rate of tax on his sales because of certain declarations or certificates he may receive that the goods will be used inside the State.
Again, where goods are purchased from a person other than a registered dealer, the tax at the sales point may escape actual taxation for many reasons: such person may not be a dealer at all or, being an unregistered dealer, the State may not be able to ascertain his whereabouts and ensure that he is taxed or that the tax is collected.
In cases where no sales tax is paid at the point of sale, it becomes necessary for the State Legislature to provide that the tax will be met by the purchaser.
Invariably in such cases the legislations attach levy of tax to the last purchase made in the State, of a particular item of goods.
Of course, the legislation could have simply said that the last purchase in the State will attract tax unless the tax is payable or has been paid at one of the earlier stages of sale and could not have been objected to.
But that type of legislative wording might lead to difficult questions as to the definition of the expression "last purchase".
That is why the section imposing purchase tax is worded in the manner in which it has been worded in the Andhra and Haryana Acts.
As pointed out by the learned counsel for the assessees in the U.P. cases, a person can be said to be the last purchaser of certain goods only when he consumes those goods himself or, in case they are raw materials/stores and the like, unless he uses them in the manufacture of other goods for sale.
From this category have to be excluded cases where the manufactured goods are either sold in the State or sold in the course of inter State trade or commerce because, in those two instances, the State will be in a position to collect the tax in respect of the sale of the manufactured goods the sale price of which will also include the price of raw materials on which a priori the State could have only got a lesser amount of tax and to tax both would escalate the price and affect the consumer.
Also excluded are cases where the manufactured goods are exported abroad to earn foreign currency.
If these situations are borne in mind, one would realise that the language used in the various clauses and phrases used in these legislations is only to levy a tax on the last purchase in the State and not with a view to levy a tax either on the use or consumption of raw materials or on the manufacture or production of manufactured goods or on the despatch of the goods manufactured from the State otherwise than by way of sale.
In the Haryana case also the statute mentioned these several alternatives but a consideration of section 9(1) (b) of the Haryana Act as well as of the corresponding clause of the Bombay Act were posed in isolation before us and emphasis placed on consignment being a sine qua non of the levy.
This larger concept, namely, that these various alternatives are not set out in the section with a view to fasten the charge of tax at the point of use, consumption, manufacture, production and consignment or despatch but in an attempt to make clear that what is sought to be levied is a tax on raw materials on the occasion of their last purchase inside the State had not been projected before, or considered by us.
I am inclined now to think that this is an approach that basically alters the parameters and removes the provision from the area of vulnerability.
It is true that it is difficult to define a last purchase except with reference to the mode of the use of the purchased goods subsequent to that purchase and in that sense the levy of tax can crystallise only at a point of time when the goods have been utilised in a particular way but will it be correct to say that the power of the State to levy a tax on sales or purchases cannot include a right or power to tax goods at the point of their first sale in the State or their last purchase in the State? The mere fact that the purchase cannot be characterised as a last purchase except by reference to the subsequent utilisation of those goods cannot mean that the taxable event is not the purchase but something else.
What we are really concerned with in deciding the question of constitutional validity of the levy of a sales tax is to pose the question "Is the tax levied one with reference to the sale or purchase of goods ?" The ambit of the power to levy a tax in respect of sale of goods is very wide and will cover any tax which has a nexus with the sale or purchase of goods including a last purchase in the State.
This I think is a more appropriate test to be applied in these cases rather than the test of "taxable event" l which is somewhat ambiguous in the context.
I am not inclined to agree that a tax on the sale or purchase of goods will cease to be so merely because the determination of its character as a last purchase would depend upon certain subsequent events which may be spread over a subsequent period of time.
In this view of the matter I am inclined to agree with my learned brother Jeevan Reddy, J. that the levy under the Andhra Pradesh Act is also within the legislative competence of the State.
I am quite conscious that the conclusion I have expressed here as to the vires of the provision impugned is contrary to the conclusion I reached in Goodyear on somewhat analogous provisions.
I need not, for the purposes of the present cases, express any final conclusion as to whether the conclusion in Goodyear was rightly reached in the context of the provisions of the statutes there considered or would need a second look and fresh consideration in the context of what has been said here.
But, I should not, I think, hesitate to accept the point of view now presented to us which appeals to me as more realistic, appropriate and preferable, particularly when I see that the view one way or the other would affect the validity of a large number of similar legislations all over India, merely because it may not be consistent with the view I took in Goodyear.
Consistency, for the mere sake of it, is no virtue.
If precedent is needed to justify my change of mind, I may quote Bhagwati J. (as he then was) in Distributors (Baroda) P. Ltd. vs Union of India, ; S.C.: "We have given our most anxious consideration to this question, particularly since one of us, namely, P.N. Bhagwati, J. was a party to the decision in Cloth Traders ' case.
But having regard to the various considerations to which we shall advert in detail when we examine the arguments advanced on behalf of the parties, we are compelled to reach the conclusion that Cloth Traders ' case must be regarded as wrongly decided.
The view taken in that case in regard to the construction of section 80M must be held to be erroneous and it must be corrected.
To perpetuate an error is no heroism.
To rectify it is the compulsion of the judicial conscience.
In this, we derive comfort and strength from the wise and inspiring words of Justice Bronson in Pierce vs Delameter (A.M.Y. at page 18): "a judge ought to be wise enough to know that he is fallible and, therefore, ever ready to learn: great and honest enough to discard all mere pride of opinion and follows truth wherever it may lead: and courageous enough to acknowledge his errors".
For the reasons above mentioned, I agree with my learned brother and hold that the impunged provisions under all the three enactments are intra vires the powers of the concerned State Legislature.
B.P. JEEVAN REDDY, J. Validity of provisions of several States Sales Tax enactments imposing purchase tax fall for our consideration in this group of appeals and writ petitions.
Initially the matters arising from Andhra Pradesh (writ petitions 655 669/83 Hotel Balaji and Ors.
vs State of Andhra Pradesh and Civil Appeal No. 10753 57/83 Hindustan Milk Food Manufacturers Limited vs State of Andhra Pradesh) came up for hearing.
During the course of hearing, counsel for the petitioners/appellants relied upon the decision of this court in Goodyear India Ltd vs State of Haryana (1990) 76 S.T.C. 71 whereas the counsel for the State of Andhra Pradesh challenged the correctness of the said decision and pleaded for re consideration of the said judgment.
It was then brought to our notice that a large number of matters coming from different States raising inter alia the question relating to the correctness or the ratio Or Goodyear were also posted before us.
Indeed it was brought to our notice that a bench of three Judges comprising M.N. Venkatachaliah, A.M. Ahmadi, JJ.
and one of us (B.P. Jeevan Reddy, J.) had directed two matters namely State of Punjab vs Industrial Cables India Ltd., C.A. No. 2990 (N.T.) of 1991 and the State of Punjab vs Hindustan Lever Ltd., C.A.480/91 raising a similar question to be posted before a Bench of three Judges.
Those matters are also before us.
It is in this manner that a large number of appeals and writ petitions arising from several States came to be posted before us for hearing.
During the course of hearing, however, we found that on account of restriction of time it would not be possible for this Bench to hear all the matters.
Accordingly, we indicated to the counsel that we shall confine our attention only to three State enactments namely, Gujarat.
Uttar Pradesh and Andhra Pradesh.
Counsel appearing in these matters have been heard fully.
This judgment, therefore, deals only with the validity of Section 15B of the Gujarat Sales Tax Act, Section 3 AAAA of Uttar Pradesh Sales Tax Act and Section 6 A of the Andhra Pradesh Sales Tax Act.
We shall first take up Section 15B of the Gujarat Sales Tax Act.
PART 11 (GUJARAT) Though several appeals and writ petitions from this State are placed before us, it is sufficient to refer to the facts in Civil Appeal No.3410 (N.T.) of 1992 as representative of the facts in all the matters.
This appeal is preferred by the writ petitioner against the judgment of a Division Bench of the High (Court of Gujarat upholding the constitutional validity of Section 15B of the Gujarat Sales Tax Act, 1969 as substituted by the Gujarat Sales Tax (Amendment) Act 6 of 1990.
The Gujarat Sales Tax Act, 1969 (being Act No. 1 of 1970) came into effect on and from May 6,1970, replacing the Bombay Sales Tax Act, which was in force in the State of Gujarat till then.
Section 15 of the Act levied purchase tax on purchases made by a dealer from a person who is not a registered dealer.
Section 15A was introduced by amendment Act 7 of 1983.
It provided for levy of concessional rate of tax in respect of purchase of raw material made by Recognised dealers (who are necessarily manufacturers), provided the goods (raw material) purchased by them fell in Schedule II or III (other than prohibited goods).
Section 15B was introduced by Amendment Act Or 1986.
It provided for levy of an additional purchase tax on raw material purchased by a manufacturing dealer in case he used the said raw material for the manufacture of other goods which he despatched to his own place of business or to his agent 's place of business situated outside the State but within India.
By an Amendment Act made in 1987, the Section was substituted.
There was, however, no substantial change in the Section.
Following upon the decision of this court in Goodyear, a batch of writ petitions was filed in the Gujarat High Court challenging the validity of Section 15B on the ground that in truth and effect it levied a consignment tax and, hence was outside the competence of the State Legislature.
While the said writ petitions were pending, Section 15B was substituted by an Ordinance being Ordinance No.3 of 1990 issued on 20.4.1990.
Subsequently the Gujarat Sales Tax Amendment Act 6 of 1990 was enacted in terms of and replacing the Ordinance.
The substituted Section 15(B) was given retrospective effect on and from April 1, 1986, the date on which Section 15(B) first came into force.
In view of the said Amendment Act, the batch of writ petitions challenging Section 15(B), as it stood prior to its substitution by the 1990 Amendment Act, were dismissed as having become infructuous.
A fresh batch of writ petitions followed questioning the validity of the substituted Section 15(B), again on the ground that it continued to be, in essence, a consignment tax.
The contention was that Section 15(B) must be read along with Rule 42(E) of the Gujarat Sales Tax, Rules (inserted by Notification dated 1.5.90) and if so read, the position is the same as was obtaining prior to 1990 Amendment.
Yet another ground urged was that the levy imposed by the new provision is really in the nature of an excise duty, and thus beyond the competence of the State legislature.
The assessees placed strong reliance upon the decision of the Division Bench of the Bombay High Court in Hindustan Lever Ltd vs State of Maharashtra, 79 S.T.C. 255 where, the petitioners say, construing a similar provision in the Bombay Sales Tax Act it was held that the levy created by the said provision is in the nature of an excise duty.
Disagreeing with the Bombay judgment, the High Court dismissed the writ petitions.
Counsel for the appellant/assessee urged that Section 15B (as substituted in 1990) is no different from the earlier provision.
The basic scheme of the earlier provision is now split into two provisions namely, substituted Section 15B and Rule 42E, which Rule was inserted into the Rules simultaneously.
This is a clear instance of colourable legislation and ought not to be countenanced by this court.
The High Court was in error in justifying the same on the theory that just as it is open to an assesses to reduce the tax burden by resorting to legitimate tax planning, similarly it is open to a legislature to make an appropriate enactment to remain outside the mischief pointed out by the court.
It is submitted that as rightly held by the Bombay High Court construing a similar provision, the levy created by the substituted Section 15B is really upon the manufacture of goods and, therefore, not a tax referable to Entry 54 of List II of the Seventh Schedule to the Constitution.
On the other hand, it is argued by F Sri B.K. Mehta, learned counsel appearing for the State of Gujarat that the Legislative competence of the Gujarat Legislature to enact Section 15B ought to be determined on its own language and not with reference to a Rule made by the Government of Gujarat as the delegate of the legislature.
He submitted that on its own language, Section 15B levies a pure and simple purchase tax on raw material purchased by a manufacturer.
It is unconcerned with what happens to the manufactured goods.
For the purpose of Section 15B, it is immaterial whether the manufactured goods are sold inside the State or despatched to a place outside the State of Gujarat or are dealt with or disposed of otherwise.
The principle of Goodyear has absolutely no application to this provision.
Counsel also submitted that when the tax is upon the purchase price of the raw material and is relatable to the act of purchase, it cannot he held to be an excise duty which is levied on the act of manufacture and is levied with reference to the value of such manufactured goods.
For a proper appreciation of the contentions arising herein it would be appropriate to notice a few relevant provisions of the Act.
Clause (16) in Section 2 defines the expression 'manufacture ' in the following words: "manufacture" with all its grammatical variations and cognate expressions, means producing, making, extracting, collecting, altering, ornamenting, finishing or otherwise processing, treating, or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed.
" Clauses 35 and 36 define the expressions "turn over of purchases" and "turn over of sales".
It would be enough to notice the definition of the expression "turn over of purchases".
It reads: "turn over of purchases ' means the aggregate of the amounts of purchase price paid and payable by a dealer in respect of any purchase of goods made by him during a given period, after deducting the amount of purchase price, if any, refunded to the dealer by the seller in respect of any goods purchased from the seller and returned to him within the prescribed period.
" Section 3 is a charging section.
Section 15 which levied purchase tax on purchase of certain goods from a person who is not a registered dealer read as follows at the relevant time: 15 Purchase tax payable on certain purchases of goods.
Where a dealer who is liable to pay tax under this Act purchases any goods specified in Schedule II or III from a person who is not a Registered dealer, then, unless the goods so purchased are resold by the dealer.
there shall be levied, subject to the provisions of section 9.
(i) in the case of goods specified in Schedule 11.
a purchase tax on the turnover of such purchase at the rate set out against them in that Schedule, and (ii) in the case of goods specified in Schedule III, a purchase tax on the turnover of such purchase at a rate equivalent to the rate of sales tax act out against them in that Schedule.
" The said Section has, however, been substituted by Gujarat Amendment Act 9 of 1992 with effect from 1.4.1992, but since the Amendment is not a retrospective one, it is unnecessary to notice the amended provision.
Section 15A provides for a concessional rate of tax in the case of purchases of raw material by a recognised dealer provided the goods purchased are those specified in Schedule II or III (other than the prohibited goods) and he issues a certificate contemplated by Section 13(1)(B).
Prior to the Amendment Act 9 of 1992, Section 15(A) read as follows: "15A. Purchase tax payable on purchases of goods by certain dealers where (i) a recognised dealer purchases any goods specified in Schedule II or III other than prohibited goods, under a certificate given by him under clause (B) of sub section (I) of section 13, or (ii) a commission agent holding permit purchases any goods specified in Schedule II or III other than prohibited goods on behalf of his principal who is recognised under a certificate given by him under clause (C) of sub section (1) of section 13, there shall be levied a purchase tax on the turnover of such purchase at the rate of two paise in the rupee.
" 8 Since the Amendment of this provision in 1992 is also not retrospective, it is unnecessary to notice the same.
We may now set out Section 15B both as it obtained prior to Amendment Act 6 of 1990 and as substituted thereby.
Prior to Amendment it read thus: "Where any dealer liable to pay tax under this Act uses any goods other than declared goods purchased by him or through commission agent as raw or processing materials or consumable stores (irrespective of whether such goods are prohibited goods or not) in the manufacture of taxable goods and despatches any of the goods so manufactured to his own place to business or to his agents place of business situate outside the State hut within India such dealer will be liable to pay, in addition to any tax paid or payable under other provisions of this Act, a purchase tax at the rate of four paise in the rupee on the purchase price of such raw or processing materials or consumable stores used in the goods so manufactured and despatched and accordingly he shall include the purchase price thereof in his turnover of purchases in his declaration or return under section 40 which he is to furnish next thereafter.
Provided that where the raw materials so used is bullion or specie, the purchase tax payable on such bullion or specie under this section shall not exceed the aggregate of the rates of sales tax and the general sales tax payable on bullion or specie.
" After it is substituted in 1990 with retrospective effect from 1.4.1986, this Section reads thus "Where a dealer who being liable to pay tax under this Act purchases either directly or through a commission agent any taxable goods (not being declared goods) and uses them as raw or processing materials or consumable stores, in the manufacture of taxable goods, then there shall he levied in addition to any tax levied under the other provisions of this Act, a purchase tax at the rate of (a) two paise in a rupee on the turnover of such purchases made during the period commencing on the 1st April, 1986 and ending on the 5th August, 1988; and (b) four paise in rupee on the turnover of such purchases made at any time after the 5th August, 1988, provided that where the raw materials purchased for use in the manufacture of goods are bullion or specie, the rate of purchase tax on the turnover of purchases of such raw materials shall not exceed the aggregate of the rates of sales tax and general sales tax leviable on bullion or specie under Entry I in Schedule III.
" Inasmuch as strong reliance is placed by the assessee/appellants upon Rule 42E inserted by G.S.R. 1090 (64) T.H. dated 1.5.1990, it would he appropriate to read the said Rule here: "42 E. Drawback, set off or refund of purchased Tax under section 15B: 42 E.
In assessing the purchase tax levied under section 15B and payable by a dealer (hereinafter referred to as "the assessee") the Commissioner shall subject to conditions of rule 47 in so far as they apply, and further conditions specified below, grant him a draw back, set off or as the case may be refund of the whole of the purchase tax paid in respect of purchase of goods effect on and from the 1st April, 1986 used by him, as raw materials, processing materials, or consumable stores, in the manufacture of taxable goods.
" Conditions: (1) the assessee is a registered dealer, (2) the goods purchased are taxable goods other than declared goods, (3) the said goods have been used by the assessee within the State as raw materials or processing materials or consumable stores in the manufacture of taxable goods, (4) the goods so manufactured have been sold by the assessee in the State of Gujarat.
" In view of the retrospective amendment of Section 15B, it may not be necessary to refer to Section 15B as it obtained prior to the 1990 amendment except to point out that in material particulars, it was similar to Section 13AA of Bombay Sales Tax Act, which was considered in Goodyear and held to he outside the legislative competence of the State legislature.
The correctness of the ratio in Goodyear has been discussed by us in Part V. Section 15 makes the purchaser liable to pay the tax provided thereunder in case he purchases the goods mentioned in Schedule II and III from a person who is not a registered dealer.
If, however, the goods so purchased are resold by him, he is not liable to pay the said tax.
Section 15A applies only to Recognised dealers.
A recognised dealer is defined in section 32 in short, it means a dealer who is a manufacturer and whose turnover of sales or purchases exceeds the specified limit.
If the recognised dealer purchases goods specified in Schedule II or III (other than prohibited goods) and issues a certificate contempleted by Section 13 (1)(B), he is entitled to pay purchase tax on a concessional rate.
Then comes Section 15B which provides for levy of an additional purchase tax.
An analysis of the Section yields the following ingredients: (i) where a dealer who being liable to pay tax under Act; (ii) purchases either directly or through a commission agent; (iii) any taxable goods not being declared goods and (iv) uses them as raw or processing materials or as consumable stores in the manufacture of taxable goods (v) then there shall be levied in addition to any tax levied under other provisions of the Act, a purchase tax at the rates specified.
It is thus clear that section 15B does not speak of nor does it refer in any manner to the movement sale or disposal of manufactured goods.
According to this section, it is immaterial whether the manufactured goods are sold within the State or dealt with in some other manner.
It is equally immaterial whether the manufacturer consigns them to his own depots or the depots of his agents outside the State.
Therefore, the ratio of Goodyear keeping aside its correctness for the time being has absolutely no application.
The Haryana and Bombay provisions considered in the said decision spoke of the manufactured goods being disposed of within the State otherwise than by way of sale or despatched out of State otherwise than in the course of inter State trade or commerce or in the course of export within the meaning of Section 5(1) of the .
Similarly the Bombay provision spoke of the manufactured goods being sent to the depots of the manufacturer or his agents outside the State of Maharashtra.
It was these features which weighed with this court in characterising the tax as one in the nature of a consignment tax (This aspect has been dealt with in Since the said feature is absent in the impugned provision, we hold, agreeing with the High Court, that the tax imposed by Section 15B cannot be characterised as a consignment tax.
The main contention or the appellants, however, is that Section 15B should not be read in isolation but in conjunction with Rule 42E which was introduced in the Rules simultaneously with the amendment of Section 15(B) and which Rule indeed supplements Section 15B.
They say that if both the provisions are read together, the effect and consequence is the same as that of Section 15B as it obtained prior to 1990 amendment, which means the tax is really upon the consignment of manufactured goods.
We shall first notice what Rule 42E provides.
It says that, in assessing the purchase tax levied under Section 15B, the assessee shall be granted a drawback, set off or as the case may be, refund of the whole of the purchase tax paid in respect of purchase of goods effected on or after 1.4.1986 and which goods have been used by him as raw material, processing material or as consumable stores in the manufacture or taxable goods subject however to the conditions prescribed in the said Rule and further subject to the conditions specified in Rule 47 in so far as they are applicable.
The four conditions specified in the Rule 42E are: (1) the assessee is a registered dealer, (2) the goods purchased are taxable goods other than declared goods, (3) the said goods have been used by the assessee within the State as raw materials or processing materials or consumable stores in the manufacture of taxable goods, (4) the goods so manufactured have been sold by the assessee in the State of Gujarat.
Condition No. 4, emphasised by the assessees says that the benefit of set off/drawback/refund shall be available only if the manufactured goods are sold within the State of Gujarat.
According to them it means that, where the manufactured goods are consigned by the manufacturer to his own depots or to his agents, depots outside the State of Gujarat, the benefit of drawback etc.
will not be available, which means that purchase tax shall be levied upon the purchase of raw material.
This, say the appellants, is precisely what the old Section 15 B provided for.
According to them, the present Section 15B read with Rule 42E is nothing but a re incarnation of Section 15B as it stood prior to 1990 Amendment Act and falls squarely within the ratio of Goodyear This argument raises in turn the question: how far is it permissible to refer to the Rules made under an Act while judging the legislative competence of a legislature to enact a particular provision? The necessity and significance of the delegated legislation is well accepted and needs no elaboration at our hands.
Even so, it is well to remind ourselves that Rules represent subordinate legislation.
They cannot travel beyond the purview of the Act.
Where the Act says that Rules on being made shall be deemed "as if enacted in this Act", the position may be different.
(It is not necessary to express any definite opinion on this aspect for the purpose of this case).
But where the Act does not say so, the Rules do not become part of the Act.
Sri Mehta relies upon the following statement of law in Halsbury 's Laws of England (3rd Edn.) Vol. 36 at page 40]: "Where a statute provides that subordinate legislation made under it is to have effect as if enacted in the statute such legislation may be referred to for the purpose of construing a provision in the statute itself.
Where a statute does not contain such a provision, and does not confer any power to modify the application of the statute by subordinate legislation, it is clear that subordinate legislation made under the statute cannot after or vary the meaning of the statute itself where it is unambiguous, and it is doubtful whether such legislation can be referred to for the purpose of construing an expression in the statute, even if the meaning of the expression is ambiguous." He says that this statement of law has been referred to with approval by Hegde, J. in his opinion in J.K Steel Ltd. v Union of India A.I.R. 1970 S.C. 1173.
Though the opinion of Hegde, J. is a dissenting one, he submits, the majority has not held to the contrary on this aspect.
He also relies upon the English decisions referred to in the opinion of Hegde, J. and points out that no decision of this court has expressed any opinion on the subject, a fact noted by Hegde, J. He commends the view taken by Hegde, J. for our acceptance.
Sri Mehta points out further that Section 86 which confers the Rule making power upon the Government does not say that the Rules when made shall be treated as if enacted in the Act.
Being a rule made by the Government, he says, Rule 42E can be deleted, amended or modified at any time.
In such a situation, the legislative competence of a legislature to enact a particular provision in the Act cannot be made to depend upon the Rule or Rules, as the case may be, obtaining at a given point of time, he submits.
We are inclined to agree with the learned counsel.
His submission appears to represent the correct principle in matters where the legislative competence of a legislature to enact a particular provision arises.
If so, the very foundation of the appellants ' arguments collapses.
Even if we agree with the appellants and read Rule 42E along with Section 15(B), they cannot succeed.
Rule 14E provides for set off etc.
in case the manufactured goods are sold within the State of Gujarat.
It no doubt means that set off etc.
is not available if the manufactured goods are disposed of otherwise than by way of sale or are consigned to manufacturer 's own depots (or to the depots of his agents) outside the State of Gujarat.
What in effect the State says is this: "Raw material when purchased is taxable but I won 't tax the raw material if you sell the goods manufactured out of such raw material within the State because I derive larger revenue there; I do not want to tax both the raw material and the manufactured goods, in the interest of trade and public.
But if you dispose of the manufactured goods in some other manner, I will tax the purchase of raw material because there is no reason why I should forego the purchase tax due on raw material, when I am not getting any revenue from your method of disposal or despatch of manufactured products.
" There is nothing objectionable in the State saying so.
It can indeed rely on the principle of the decision of this court in Godrej & Boyce Mfg. Co. vs Commissioner of Sales Tax, reported in (1992) 4 J.T. S.C. 317.
It is difficult to see how can it be said that by reading Rule 42E into Section 15B, the levy becomes a consignment tax.
In any event, the ratio of Goodyear cannot be accepted as good law for the reasons mentioned in part V.
We are equally not satisfied with the argument that the Gujarat legislature has resorted to a device, a stratagem to circumvent the decision or this court or that it is an instance of fraud on power what is sometimes referred to as `colourable legislation '.
That a legislature is empowered to amend a provision to remove the defect pointed out by a court is well accepted.
So far as the Gujarat Act is concerned, it was never the subject matter of an adverse decision either by this court or the Gujarat High Court.
Writ Petitions were no doubt pending challenging the validity of Section 15B as it then stood.
It was perfectly open to the Legislature to act to set its house in order to obviate a possible adverse verdict applying the ratio of Goodyear.
The question is whether the provision now enacted, with retrospective effect, is beyond the legislative competence of Gujarat Legislature? It not, no further question arises.
So far as the retrospectivity given to Section 15B by the 1990 Amendment Act is concerned, it is hardly open to doubt in the light of several decisions of this court commencing from Ramakrishna vs State of Bihar, ; This is not even a case where the old provision was struck down by a court.
The period or retrospectivity covers only the period during which Section 15B has been in force.
The levy was already there.
In any event, in view of our conclusion that Goodyear does not represent the correct position in law, this aspect has really no relevance.
It is then contended that the levy is really in the nature of excise duty or use tax inasmuch as it attaches not on purchase of goods but on their use in manufacture of other goods.
This argument in our opinion misses the true nature of tax.
It is an additional tax on the purchase of raw material used in manufacture of other goods.
A certain concession is given to manufacturers (recognised dealers) in purchase of certain types of raw material (Section 15A); an additional purchase tax is levied under Section 15B; and in certain situations, this tax is refunded or set off, as the case may be under Rule 42 E.
All these provisions are intended to encourage industry and to derive revenue at the same time.
Counsel for the assessees placed strong reliance upon the word "then" occurring in the section and its placement.
He emphasised that the tax is payable only when the dealer (1) purchases the goods and (2) uses them in the manufacture of other goods.
It is not possible to agree.
Heading of Section 15B is "Purchase tax on raw or processing materials or consumable stores used in manufacture of goods in certain cases.
" The Section, read as a whole, is applicable only to those goods which are used in the manufacture of other goods.
The levy is upon the purchase price of raw material and not upon the value of the manufactured products.
Entry 54 of List II must receive a liberal construction, being a legislative entry.
The Legislature cannot be confined to only one form of levy.
So long as the levy retains the basic character of a tax on sale, the legislature can levy it in such mode or in such manner as it thinks appropriate.
As affirmed by Mukharji, J. in Goodyear, the well established principles in such matters is "that reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act.
" The legislature must he presumed to know its limitations and acted within those limits.
Transgression must be clearly established, and is not lo be lightly assumed.
For the very same reasons, the argument that it is a use tax also fails.
In essence, the provision is akin to the one considered by this court in Andhra Sugars Ltd. & Anr.
vs The State of Andhra Pradesh & Anr., 21 S.T.C. 212.
For the above reasons, the appeals and writ petitions are dismissed with no order as to costs.
PART III (UTTAR PRADESH) These Civil Appeals and Writ Petition are filed by the Tribeni Tissues Limited, Varanasi, Uttar Pradesh.
The Appeals are preferred against the Judgment of a learned Single Judge of Allahabad High Court allowing Sales Tax Revisions No.325, 327 and 328 of 1989 preferred by the Commissioner of Sales tax, Uttar Pradesh against the orders of the Sales tax Appellate Tribunal.
The assessment years concerned are 1978 79 to 1981 82.
The appellant is a dealer registered under the U.P. Sales tax Act, having an office at Varanasi.
It has a paper mill at Calcutta.
The appellant purchases sun hemp, raw jute, old hemp rope cuttings, Old Jute rope cuttings and jute cuttings etc.
at Varanasi and sends them to the paper mill at Calcutta for being used as raw material.
These purchases are made by the appellant from farmers, `kabadis ' and other persons who are not registered dealers.
The turnover relating to such purchases was subjected to purchase tax under section 3 AAAA by the assessing authorities which the appellant objected to.
The Tribunal, by a majority of 2:1 held in favour of the appellant against which the Commissioner preferred revisions before the High Court.
Section 3AAAA read as follows at the relevant time.
"3 AAAA.
Liability to purchase tax on certain transactions Where any goods liable to tax at the point of sale to the consumer are sold to a dealer but in view of any provision of this Act no sales tax is payable by the seller and the purchasing dealer does not resell such goods within the State or in the course of inter State trade or commerce, in the same form and condition in which he had purchased them the purchasing dealer shall subject to the provisions of Section 3, be liable to pay tax on such purchases at the rate at which tax is leviable on sale of such goods to the consumer within the State; Provided that if it is proved to the satisfaction of the assessing authority that the goods so purchased had already been subjected to tax or may be subjected to tax under Section 3 AAA, no tax under this section shall be payable.
" The section subjected the purchase of "goods liable to tax at the point of sale to the consumer" to purchase tax payable by the purchasing dealer, in a case where the selling dealer was not liable to pay the sales tax on such sale.
Purchase tax was payable at the same rate as the sales tax.
If, however, the purchasing dealer resold such goods within the State or in the course of inter State trade or commerce, he was not liable to pay the purchase tax.
The expression "goods liable to tax at the point of the sale to the consumer" is explained in Section 3 AAA.
Section 3A prescribes the rates of tax.
As it stood at the relevant time, sub sections (1) and (2) prescribed different rates for different goods.
Sub section (2A) which alone is relevant herein, read as follows: "3A (2A): The turnover in respect of goods other than those referred to in sub sections (1) and (2) shall be liable to tax at the point of sale by the manufacturer or importer at the rate of seven per cent, provided that the State Government may from time to time by notification in the Gazette modify the rate or point or tax on the turnover in respect of any such goods with effect from such date as may be notified in that behalf, so however.
that the rate does not exceed seven per cent.
(The goods concerned herein, according to both the parties, fall within sub section (2A) of Section 3A).
The State Government issued a notification dated 30.5.1975 in terms of and as contemplated by the proviso to sub section (2A) of Section 3 A declaring that with effect from June 1, 1975, the turnover in respect of goods specified in column 2 of the Schedule to the notification shall be liable to tax at the point of sale and at the rate specified respectively in columns (3) and (4) thereof.
The Schedule, in so far as relevant may be set out: "SCHEDULE `M ' stands for sale by manufacturer in Uttar Pradesh.
`I ' stands for sale by the Importer in Uttar Pradesh.
Description of goods Point at which Rate of tax No. tax shall be levied (Items No.1 to 14 omitted as unnecessary.
Old, discarded, unservice able or obsolete machinery, stores or vehicles including waste products except cinder, coal ash and such items as are included in any other notification issued under the Act.
(Item Nos. 16) to 25 omitted as sale to consumer 5 per cent unnecessary.) 26.
Jute and Hemp Goods M or I 4 per cent The controversy before the High Court was a limited one.
It was: "whether the said goods will fall under the entry at SI.
No. 15 of the notification dated 30th May, 1975 as contended by the learned standing counsel (for the State of Uttar Pradesh) or under SI.
No. 26 as Jute and Hemp goods under the notification dated 1st October, 1975 as urged on behalf of the assessee." (Quoted from the judgment of the High Court.) The learned Judge held that the goods fall under item No.15 and accordingly allowed the revisions filed by the Commissioner.
The correctness of the Judgment of the High Court is questioned in these Civil Appeals.
While the Civil Appeals were pending in this Court, a Division Bench of the Allahabad High Court held in C.M.W.P.No.168 of 1983 and batch (decided on 3rd April, 1991) that Section 3 AAAA was ultra vires the legislative competence of the legislature of Uttar Pradesh and, therefore, void.
The Division Bench followed and applied the ratio of Goodyear and held that under the said provision the taxable event is not the purchase of the goods by the purchasing dealer but the subsequent event namely use of said goods in the manufacture of other goods and their despatch without effecting a sale within the State of Uttar Pradesh to a place outside the Uttar Pradesh.
To get over the said decision and to remove the defect pointed out therein, the Governor of Uttar Pradesh issued an Ordinance being Ordinance No. 45 of 1991 on 12th December, 1991 substituting Section 3 AAAA in its entirety with effect from April 1, 1974.
The said Ordinance has since been replaced by U.P. Sales tax (Amendment) Act 8 of 1992.
Section 3 AAAA as substituted by the aforesaid Amending Act reads thus: "3 AAAA.
Liability to purchase tax on certain transactions.
(1) Except as provided in sub section (2) and subject to the provision of Section 3, every dealer, who purchases any goods liable to tax at the point of sale to consumer (a) from any registered dealer in circumstances in which no tax is payable by such registered dealer, shall be liable to pay tax on the purchase price of such goods at the same rate at which, but for such circumstances, tax would have been payable on the sale of such goods; (b) from any person other than a registered dealer, whether or not tax is payable by such person, shall be liable to pay tax on the purchase price of such goods at the same rate at which tax is payable on the sale of such goods.
(2) Exemption shall be granted in the tax payable under sub section (1) to the extent of the amount or tax, (a) to which the goods purchased from a registered dealer have already been subjected or may be subjected under any provision of this Act or the ; (b) already paid in respect of the goods purchased from any person other than a registered dealer; (c) on the sale of goods liable to be exempted under Section 4 A; (d) to which the sale of dressed hides and skins (or tanned leather) and ginned cotton obtained from raw hides and skins and raw cotton so purchased or rice obtained from paddy so purchased during the period commencing on September 2, 1976 and ending with April 30, 1977, are liable under any provision of this Act or the .
" Writ Petition No. 175 of 1992 is preferred questioning the constitutional validity of the said provision.
We shall first deal with Civil Appeals.
According to the statement of facts contained in the Judgment of the High Court, the appellant purchased "sun hemp, raw jute, old hemp rope cuttings, old jute rope cuttings and jute cuttings etc.
" Item No. 26 of the notification dated October 1, 1975 speaks of "jute and hemp goods".
The appellant inter alia purchased "sunhemp" and "raw jute".
Certainly they do not fall under item 26 of the Schedule.
Coming to "old hemp rope cuttings, old jute rope cuttings and jute cuttings" they fall, by their very nature more properly under item 15 because admittedly they are discarded, worn out, and waste material.
It would he rather odd to call them "jute the hemp goods" in the presence of item (15).
The High Court was, therefore, justified in holding that the goods purchased by the appellant are properly relatable to item 15 and not to item 26 of the notification.
The learned counsel for the appellant urged that item 15 is confined only to old, discarded, unserviceable and obsolete "stores" which in the context means "stores" maintained by a factory or industry.
Having regard to the language of item 15, he submitted.
it does not take in old discarded material coming from other sources We see no warrant for this restricted reading of item 15.
Be that as it may, once the said goods do not fall under item 26, as held by us, they must fall under item 15, since it is not suggested that there is any other item which takes in these goods.
The (Civil Appeals accordingly fail and are dismissed.
No costs.
Writ Petition No. 175 of 1992.
In view of the fact that Section 3 AAAA has been substituted by the 1992 Amendment Act with retrospective effect from April 1, 1974, it is not really necessary for us to deal at any length with the Section as it stood prior to the said amendment or with the correctness of the judgment of the Division Bench of the Allahabad High Court declaring the same as beyond the legislative competence of the U.P. Legislature.
Suffice it to say that the decision of the Division Bench closely follows and applies the ratio of Goodyear which according to us does not represent the correct position in law as explained in Part V. Coming to Section 3 AAAA as it now stands, an analysis of the Section yields the following ingredients: A. (i) A dealer who purchases any goods liable to tax at the point of sale to the consumer, (ii) from any registered dealer in circumstances in which no tax is payable by such registered dealer, (iii) the purchasing dealer shall he liable to pay tax on the purchase price of such goods at the same rate at which the tax would have been payable on the sale of such goods.
B. (i) A dealer who purchases any goods liable to tax at the Joint of sale to consumer, (ii) from any person other than a registered dealer, whether or not such person is liable to pay the tax on such sale, (iii) the purchasing dealer shall be liable to pay tax on the purchase price of such goods at the same rate at which tax is payable on the sale of such goods.
The purchasing dealer is, however, entitled to be exempted from the tax payable under the above two heads to the extent of the amount of tax mentioned in clauses (a), (b), (c) and (d) of sub section (2).
Clause (a) speaks of the tax paid or payable under any of the provision of U.P. Act or C.S.T. Act.
Clause (b) speaks of the tax already paid, if any, in respect of goods purchased from any person other than a registered dealer.
Clause (c) refers to sale of goods entitled to exemption under section 4A and clause (d) refers to sale of dressed hides and skins.
In short, the scheme of the section is this: (I) if a dealer purchases the goods liable to tax at the point of sale to the consumer from any registered dealer who is not liable to pay tax on such sale, the purchasing dealer shall pay such tax.
If, however, the purchasing dealer establishes that the goods purchased by him have already been subjected to or may be subjected to tax under the U.P. Act or , he will get an exemption to that extent.
(2) If the said goods are purchased from a person other than a registered dealer the purchasing dealer shall pay the tax payable on sale of such goods.
If, however, he proves that tax payable has been paid, either wholly or partly, by the seller, the tax payable by the purchasing dealer shall be exempted to that extent.
(3) Similar exemption will be available to the purchasing dealer in case he establishes any of the facts mentioned in clauses (c) and (d) of sub section (2).
The central idea is that no transaction of sale (of goods taxable at the point of sale to consumer) should go untaxed.
Either the seller pays the tax or the purchaser pays.
It is for achieving this central purpose that Section 3 AAAA has been enacted providing for several situations.
It would be immediately evident that section that Section 3 AAAA does not speak of and does not refer in any manner to the user of the goods purchased.
It is immaterial whether the goods purchased are used in the manufacture of other goods or dealt with otherwise.
Much less does it speak of the manner in which the goods manufactured out of such purchased goods, if any, are dealt with.
The exemptions provided in sub section (2) are equally un related to the above aspects.
Sub section (1) is clear and simple.
The tax becomes payable by the purchasing dealer in the two situations contemplated by clauses (a) and (b) of the said sub section.
If he can establish any of the facts mentioned in clauses (a) to (d) of sub section (2), he gets an appropriate exemption.
Otherwise not.
We are, therefore, unable to see any room for contending that the tax imposed by the said section is in the nature of consignment tax or a use or consumption tax.
Simply because the petitioner chooses to take the goods purchased by him out of the State, in the same form and condition or otherwise, for being used as raw material in his factory at Calcutta, makes no difference to the levy.
The validity of the levy cannot depend upon what a particular dealer or person chooses to do with the goods.
It was argued for the petitioner that sub section (2) of Section 3 AAAA places a heavy and uncalled for burden upon the purchasing dealer; that it is not practicable for the purchaser to establish that the selling person (other than the registered dealer) has paid the tax or not.
It is submitted that the petitioner purchases his goods from hundreds of persons who are not registered dealers and it cannot reasonably be expected of the petitioner to gather the particulars of or from all such persons.
We are unable to appreciate this contention.
A person other than a registered dealer is not amenable to the discipline of the Act.
He cannot indeed collect any tax [Section 8(A) (2) and, therefore, will not, justified in presuming.
If, however, in any case it is proved that such person has paid the tax, the purchasing dealer will get an exemption to that extent.
It a benefit is claimed by the purchasing dealer, it is for him to prove the fact which enables him to claim the benefit.
That burden cannot be passed on to any one else.
So far as registered dealers are concerned, all that the purchasing dealer need prove is that the said goods have already been or may be subjected to tax under State Act or .
On this score, we see no difficulty for the purchasing dealer.
From the bill given by the selling dealer, the purchasing dealer can prove the payment.
Or he can simply prove, as a matter of law that the said goods are liable to be taxed under any other provision of the Act or under the .
We are equally unable to see any vagueness in the provision nor is it established that any such vagueness is operating to the prejudice of the petitioner.
In this view of the matter, it is unnecessary, strictly speaking, to consider whether the present Section 3 AAAA is in effect and substance the same as the one obtaining prior to 1992 Amendment Act.
For the sake of completeness, however, we may mention that under Section 3 AAAA (before it was substituted in 19920 tax was payable by the purchasing dealer where he purchased goods liable to tax was payable by the purchasing dealer where he purchased goods liable to tax at the point of sale to the consumer in circumstances where no tax is payable by the seller, provided he did not resell the said goods, in the same form and condition, within the State or in the course of inter State, trade or commerce.
The section was understood by the Division Bench in the following manner: " 23.
That brings us to the vital question as to which are the circumstances in which sale of the goods purchased within the State or in the course of inter State trade and commerce in the same form and condition in which the dealer purchased the goods, may be rendered impossible.
To our mind, keeping in view the usual course of business, the normal possibilities seem to be these: 1. use and consumption of the goods purchased by the purchasing dealer in the manufacture of some other taxable goods within the State; 2. despatch of the manufactured goods, without sale, outside the State otherwise than in the course of inter State trade and commerce; 3. despatch of the goods out of the territory of India pursuant to a contract of sale, i.e. despatch in the course of an export sale; 24.
These then are the activities or transactions that constitute the taxable events on the happening of which the tax would be immediately attracted, that is to say, the tax in question becomes exigible at these points.
Once these points are reached the possibility of the sale of goods purchased within State or in the course of inter State trade and commerce in the same form and condition, shall stand excluded.
The fourth and the last condition envisaged by Section 3 AAAA set out hereinabove necessary for attracting the levy would also stand fulfilled.
It is only on the happening of these events that the taxing authority can reach the conclusion that the purchasing dealer has be come liable under Section 3 AAAA.
" With respect we find ourselves unable to agree with the above understanding of the section.
All that the section provided was: (i) where the goods liable to tax at the point of sale to the consumer are sold to a dealer (ii) in circumstances in which no sales tax is payable by the seller and (iii) the purchasing dealer does not re sell the said purchased goods within the State or in the course of inter State trade or commerce (iv) the purchasing dealer shall be liable to pay the tax which would have been payable by the seller.
(v) If however, it was proved that the said goods have already suffered tax under Section 3 AA, no purchase tax was payable under Section 3 AAAA.
It is obvious that the section did not speak or the purchased goods being used in the manufacture of other goods nor of the manner of disposal or despatch of such manufactured goods.
The only two conditions stipulated (which conditions are not to he found in the present Section 3 AAAA) were that if the purchased goods are sold within the State or sold in the course of inter State trade or commerce, the tax , under it is not payable.
This is for the simple reason that in both those contingencies, the State would get the revenue (in one case under the State Sales Tax Act and in the other case, under the ).
The policy of the legislature is not to tax the same goods twice over.
The fact that in a given case, the purchased goods are consigned by the purchaser to his own depots or agents outside the State makes no difference to the nature and character of the tax.
By doing so, he cannot escape even one time tax upon the goods purchased, which is the policy of the Legislature.
The tax was directed towards ensuring levy of tax atleast on one transaction of sale of the goods and not towards taxing the consignment of goods purchased or the products manufactured out of them.
The difficulty has really arisen because of the attempt to look to the provisions of Section 3 AAAA through the prism of Goodyear.
There is a substantial and qualitative difference between the language employed in Section 9 of Haryana Act and Section 13 AA of Bombay Act and in Section 3 AAAA of U.P. Act (as it stood prior to 1992 Amendment Act) or for that matter as it stands now.
These basic differences cannot be ignored.
Constitutionality of Section 3 AAAA ought to be judged on its own language and so judged, the Section, both before and after the 1992 Amendment, represents a perfectly valid piece of legislation.
It is relatable to and fully warranted by Entry 54 of List II of the Seventh Schedule to the Constitution.
PART IV (ANDHRA PRADESH) Writ Petitions No. 655 669 of 1983 are filed by Hotel Balaji and 14 other hotels/restaurants for issuance of a writ, order or direction directing the respondents viz., State of Andhra Pradesh and its Sales Tax Authorities not to levy and collect purchase tax on milk @ 4% under Section 6 A as also the surcharge tax @ 10% of the tax.
According to the petitioners such a levy violates Article 14 as also the fundamental right guaranteed to them by sub clause (g) of clause (1) of Article 19 of the Constitution.
Civil Appeal Nos.
10753 57 of 1983 are directed against the judgment and order of a Division Bench of the Andhra Pradesh High Court upholding the validity of Section 6 A of the Andhra Pradesh General Sales Tax Act.
The case of the petitioners in the writ petitions is this: They purchase the milk required by them both from registered dealers as well as persons other than registered dealers.
The authorities are collecting purchase tax @ 4% under Section 6 A from the petitioners which is illegal in view of the fact that the sale of fresh milk is exempted from tax by a notification issued by the Government of Andhra Pradesh under Section 9 of the Act being G.O.Ms.
No.1091 dated 10.6.1957.
Because of the said exemption notification not only the seller is exempted but also the purchaser.
In some cases, the petitioners purchased milk from registered dealers like Andhra Pradesh Dairy Development Corporation which is exempted from sales tax by virtue of a notification issued under Section 9.
In such cases, the tax is sought to be levied upon the petitioners which is equally illegal.
The milk purchased by the petitioners is being consumed in preparing and serving to consuming public tea, coffee and other eatables.
The tax levied under Section 6 A is really not upon the purchase but upon the use and consumption.
G.O.Ms.
No.1091 dated 10.6.1957 as originally issued read as follows: "In exercise of the power conferred by sub section (1) of Section 9 of the Andhra Pradesh General Sales Tax Act 1957 (Andhra Pradesh Act 6 of 57), the Governor of Andhra Pradesh hereby exempts from the tax payable under the said Act the sales of following goods: (1) and (2) omitted as unnecessary; (3) fresh milk, curd and butter milk." By G.O,Ms. No. 60 (Revenue) dated 10.1.1961, item (3) was substituted as follows: "fresh milk, curd and butter milk sold by dealers exclusively dealing in them." By G.O.Ms.
No. 1786 dated 20.11.1962, the words "and their byeproducts realised by utilisation of surpluses thereof were added at the end of the entry.
By yet another amendment, the word "bye products" was substituted by the word "products".
Thus, at the relevant time item 3 of the said notification read as follows: "fresh milk,.curd and butter milk sold by dealers exclusively dealing in them and their products realised by utilisation of surpluses thereof.
" It is also brought to our notice that by G.O.Ms.
No. 669 dated 26.5.1975, the Government of Andhra Pradesh exempted the sale of pasturised milk by the Andhra Pradesh Dairy Development Corporation from the levy of tax payable under the said Act with effect from the 1st day of May, 1975.
In the Civil Appeals the appellant is Hindustan Milk Food Manufacturers Ltd. They purchased milk mainly from persons other than registered dealers which they utilised in manufacture of various products.
Its products are sold not only within the State of Andhra Pradesh but also in other States of the country.
It has an office at Dhawaleshwaram in East Godavari Distt.
of Andhra Pradesh.
It is registered as a dealer under the Act.
In the course of their assessment proceedings for the assessment year 1979 80 (among other assessment years) the appellant contended that the milk having been exempted by virtue of a notification issued under Section 9 is not taxable and that levy of purchase tax is incompetent.
They questioned the constitutionality of Section 6 A.
The Assessing authority overruled the said objections and levied the purchase tax on the turnover of milk purchased by the appellant.
The matter was brought to the High Court which, as stated above.
negatived the challenge to the constitutionality of the provision .
So far as the exemption notification in G.O.Ms.
No. 1091 dated 10.6.1957 is concerned, it must be noticed that what was exempted there under was the tax payable on the "sale of fresh milk sold by dealers exclusively dealing in them.
So far as agriculturists are concerned, they are not dealers at all by virtue of Explanation II to the definition of "dealer" H contained in clause (e) of Section 2.
The notification has, therefore, no application to sale of milk by them.
Since the purchase by Hindustan Milk Food is almost wholly from such agriculturists, it cannot take advantage of the said notification.
If, however, any milk is purchased by the appellant or the writ petitioners from dealers exclusively dealing in milk, they would be liable to pay the purchase tax only in cases where the selling dealer is not liable to pay the tax either because of an exemption notification or otherwise.
A contention was urged before us that the milk was not at all taxable under the Act.
It was submitted that milk is not mentioned in any of the Schedules I to VI appended to the Act.
This argument in our opinion proceeds upon a mis apprehension of the scope and scheme of Section 5, as we shall presently demonstrate.
Fresh milk was taxable as general goods under Section 5(1) of the Act before it was amended by Amendment Act 4 of 1989.
After the coming into force of the said Amendment Act, it falls under Schedule VII, (which was introduced simultaneously with the said Amendment Act) and which takes in all goods other than those specified in first to sixth Schedules.
Milk was subject to multi point tax prior to the said Amendment Act whereas after the said amendment if has become taxable only at single point namely, point of first sale in the State.
If fresh milk was not at all taxable under the Act, there was no necessity to issue notifications exempting its sale in certain situations.
Section 6 A was inserted by Andhra Pradesh General Sales Tax .
(Amendment) Act, 49 of 1976 with effect from September 1, 1976.
As originally enacted, the section read as follows: "6 A: Levy of tax on turnover relating to purchase of certain goods: Every dealer, who in the course of business (i) Purchases any goods (the sale or purchase of which is liable to tax under this Act) from a registered dealer in circumstances in which no tax is payable under Section 5 or under Section 6, as the case may be, or (ii) purchases any goods (the sale or purchase of which is IV liable to tax under this Act) from a person other than a registered dealer, and (a) either consumes such goods in the manufacture of other goods for sale or otherwise, or (b) disposes of 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, shall pay tax on the turnover relating to purchase aforesaid at the same rate which but for the existence of the aforementioned circumstances, tile tax would have been leviable on such goods under Section 5 or 6".
The Section has been amended in some particulars by the Amendment Act 18 of 1985 but these amendments do not make a difference to nature or character of the tax.
Be that as it may , we may as well set the section as it stands now, in view of the fact that the validity of the section as such is questioned before us.
It reads: "6 A. Levy of tax on turnover relating to purchase of certain goods: Every dealer, who in the course of business: (i) purchases any goods (the sale or purchase of which is liable to tax under this Act) from a registered dealer in circumstances in which no tax is payable under section 5 or under Section 6, as the case may be, or (ii) purchases any goods (the sale or purchase of which is liable to tax under this Act) from a person other than a registered dealer, and (a) consumes such goods in the manufacture of other goods for sale or consumes them otherwise, or (b) discloses of 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, shall pay tax on the turnover relating to purchase aforesaid at the same rate at which but for the existence of the aforementioned circumstances, the tax would have been leviable on such goods under Section 5 or Section 5 A or Section 6: Provided that in respect Or declared goods such rate together with the rate of additional tax specified in Section 5 A shall not exceed four percent of the purchase price of such goods." An analysis of the Section yields the following ingredients: "A. (i) a dealer who in the course of business purchases any goods liable to tax under the Act, (ii) from a registered dealer in circumstances in which no tax is payable by such selling dealer under Section 5 or 6 and (iii) consumes such goods in the manufacture of other goods for sale or consumes them otherwise or, (iv) disposes of such goods in any manner other than by way of sale in the State or, (v) 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, (vi) such purchasing dealer shall pay the tax at the same rate at which it would have been payable by the selling dealer.
B.(i) A dealer who in the course of his business purchases any goods which are taxable under the Act (ii) from a person other than a registered dealer and, (iii) consumes such goods in the manufacture of other goods for sale or consumes them otherwise or, (iv) disposes of such goods in any manner other than by way of sale in the State or, (v) despatches them to a place outside the Stale except as a direct result of sale or purchase in the course of inter State trade or commerce, (vi) such purchasing dealer shall pay the tax at the same rate at which it would have been payable by the selling dealer.
" The proviso which governs both the above situations provides that in case of declared goods the total tax shall not exceed 4% of the purchase price of such goods.
Broadly speaking, the effect is Tax payable at sale point becomes the tax payable on the purchase point, in certain circumstances.
Because, the seller is not or cannot be taxed for certain reasons, the purchasing dealer is being taxed.
Two examples, each illustrating one of the two situations envisaged by the Section may be given: (a) Andhra Pradesh Dairy Development Corporation, a registered dealer, is exempted from paying the tax on sale of pasturised milk.
The purchaser of pasturised milk from the Corporation is taxed provided he satisfies one of the conditions specified in clauses (i) to (iii) mentioned in the Section, thereby becoming the last purchaser in the State of such milk.
(b) Fresh milk is taxable at sale point.
But when it is sold by a farmer/agriculturist raising cattle on lands held by him, he cannot be taxed because he is not a dealer.
The purchaser is taxed in such cases provided he satisfies one of the conditions specified in clauses (i) to (iii) in the Section, thereby becoming the last purchaser in the State of such milk.
It would, therefore, be clear that the real object of the clauses (i) to (iii) in the Section is not to levy a consumption tax, use tax or consignment tax but only to point out that thereby the purchasing dealer converts himself into the last purchaser in the state of such goods.
The goods cease to exist or case to be available in the State for sale or purchase attracting tax.
In these circumstances, the purchasing dealer of such goods is taxed, if the seller is not or cannot be taxed.
In this connection, observations of P.S. Poti, J. in Malabar Fruit Products Co.v.
S.T.O., 30 S.T.(J. 537, which have been expressly approved by this court in State of Tamil Nadu vs Kanda Swami, 36 S.T.C. 191 = discussed in detail in part V may be referred to.
It is not necessary to set out the said discussion here over again.
In the circumstances, we are unable to see how the tax imposed by Section 6 A be described either as use tax, consumption tax or consignment tax.
Since we are of the opinion, as explained in Part V, that Goodyear does not interpret Section 9 of Haryana Act and Section 13AA of Bombay Act correctly, its reasoning cannot be brought in here to contend that clause (c) of Section 6 A imposes a consignment tax.
It is a purchase tax perfectly warranted by Entry 54 of List II of the Seventh Schedule to the Constitution.
Reference to a few more provisions of the Act would be appropriate at this stage to complete the picture.
The expression "dealer" has been defined in clause (e) of Section 2.
It is not necessary to notice the entire definition except Explanation II which says that a grower of agricultural or horticultural produce cannot be deemed to be a dealer if he sells his produce.
Explanation reads as follows: "Explanation II: Where a grower of agricultural or hor ticultural produce sells such producer grown by himself on any land in which he has an interest whether as owner, usufructuary mortgage, tenant or otherwise, in a form different from the one in which it was produced after subjecting it to any physical, chemical or any process other than mere cleaning, grading or sorting he shall be deemed to be a dealer for the purpose of this Act.
" Section 5 is the charging section.
Prior to the Amendment Act 4 of 1989, Section 5 had four sub sections.
The first sub section made all sales/purchases by dealers within the State of Andhra Pradesh subject to tax.
It, however, the goods sold were those mentioned in Schedule I they were taxable at a single point, viz., at the point of sale and at the rate prescribed in the said Schedule.
Similarly, if the goods fell in the Second Schedule they too were taxable only at one point namely, the point of purchase at the rate prescribed.
[Sub section (2)1 Schedule III comprises of declared goods while Schedule IV sets out goods which are totally exempted Income tax under Section 8 of the Act.
Schedule V deals with jaggery and Schedule VI with 2liquors.
In other words, goods which did not fall in any of the Schedules I to VI fell under sub section (I) and were taxed as general goods.
In this sense, fresh milk which is not mentioned in any of the Schedules i to VI was chargeable as general goods under sub section (I) of Section 5.
By Amendment Act 4 of 1989 the entire scheme of Section 5 has been changed.
The present section says that the goods mentioned in Schedules I to VII shall be taxed at the point and at the rate specified therein.
Schedule VII which has been inserted by the very same Amendment Act is in the nature of a residuary Schedule, the good which do not fall in any of the Schedules I to VI fall under Schedule VII.
Even such goods have also been made taxable only at one point and at the rate specified.
After the coming into force of the said Amendment Act of 1989, fresh milk would fall under Schedule VII and taxable as such.
It is, therefore wrong to say that sale of milk was or is not taxable under the Act.
Section 9 empowers the Government to exempt either the sale of certain goods or sates by certain persons either wholly or partly.
Section reads as follows: "9.
Power of State Government to notify exemptions and reductions of tax (or interest): (1) The State Government may, by notification in the Andhra Pradesh Gazette, make an exemption, or reduction in rate, in respect of any tax or interest payable under the Act (i) on the sale or purchase of any specified class of goods, at all points or at any specified point or points in series of sales or purchases by successive dealers; or (ii) by any specified class of persons, in regard to the whole or any part of their turnover.
(2) Any exemption from tax or interest or reduction in the rate of tax notified under sub section (I) (a) may extend to the whole of the State or to any specified area or areas therein; (b) may he subject to such restrictions and conditions as may be specified in the notification, including conditions as to licences and licence fees.
" It may be noticed that while exempting the sale or purchase of any specified class of goods the Government is empowered to specify whether the exemption operates at all points or any specified point or points in the scries of sales or purchases of successive dealers.
Several notifications have been issued by the Government from time to time exempting certain dealers or exempting certain goods at the point of sale or purchase, as the case may be.
G.O.Ms.
No.1091 is one of them.
We have already noticed the rather qualified terms in which the exemption is couched.
It is not a general exemption but a qualified one.
In the light of the specific scheme of Section 9 and the language of G.O.Ms.
No.1091, the exemption at the point of sale by a particular category of persons cannot be construed as operating to exempt the purchase tax under Section 6 A as well, much less in all cases.
For the above reasons, appeals and writ petitions are dismissed with no order as to costs.
PART V (DOES GOODYEAR REQUlRE RE CONSIDERATION?) As mentioned earlier, counsel for all the assessees in these matters strongly rely on the decision of this Court in Goodyear which invalidated a purchase tax levied by the Haryana and Maharashtra Sales Tax Acts.
We may, therefore, notice this decision in some detail.
What precisely is the ratio of Goodyear? Provisions relating to purchase tax in Haryana Sales Tax Act and Bombay Sales Tax Act fall for consideration in this case.
Section 9 of the Haryana Act, before it was amended by Haryana General Sales (Amendment and Validation) Act, 1983, read as follows: 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 (l) of Section 5 of the , in the course of export out of the territory of India.
(b) exports them, in the circumstances in which no tax is payable under any other provisions of this Act, there shall be levied, of 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.
" A notification dated 19th July, 1974 was issued by the Government of Haryana under the said provision read with Section 15(1) of the Act in purported implementation of the said provision.
Validity of Section 9 as well as of the notification was challenged in a batch of writ petitions filed in the High Court of Punjab and Haryana.
The High Court upheld the challenge holding that "whereas the said provision (Section 9) 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 them selves taxable in essence, legislates and imposes a substantive tax which it obviously cannot." Goodyear India Ltd. vs State of Haryana (1990) 76 S.T.C. 71.
After it was amended by the aforesaid amendment Act, sub sections (] ) and (2) of Section 9 read as follows: "9. Liability to pay purchase tax, (1) Where a dealer liable to pay tax under this Act, (a) purchases goods, other than those specified in Schedule B, from any source in the State and uses them in the State in the manufacture of goods specified in Schedule B; or (b) purchases goods, other than those specified in Schedule B, from any source in the State and uses than 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 B the ; or (c) 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 the Act, there shall be levied, subject to the provisions of Section 17 a tax on the purchases of such goods at such rate as may be notified under Section 15.
(2) Notwithstanding anything contained in this Act or the rules made thereunder, if the goods leviable to tax under this section are exported in the same condition in which they wore purchased, the tax shall be levied, charged and paid at the station of despatch or at any other station before the goods leave the State and the tax so levied, charged and paid shall be provisional and the same shall be adjustable towards the tax due from the dealer on such purchase as a result of assessment or re assessment made in accordance with the provisions of this Act and the rules made there under on the production of proof regarding the payment thereof in the State." Again a batch of writ petitions was filed questioning the validity of the amended provision which challenge too was upheld by the High Court in its decision in Bata India Ltd. vs State of Haryana, 54 S.T.C. 226.
The main ground upon which the High Court allowed the writ petitions was that mere despatch of goods to a place outside the State in any manner other 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 consignment of goods to the person making it or to any other person in the course of inter state trade or commerce as specified in Article 269(l)(iv) and Entry 92(B) of List l of the Seventh Schedule to the Constitution and thus beyond the competence of the State legislature.
According to the High Court, the taxable event was not the purchase of goods nor the use of such goods in manufacture of end products but the despatch of goods.
Doubting the view taken in Bata India, one of the learned Judges of the Punjab and Haryana High Court, Punchhi, J. (as he then was) referred the matter to a Bull Bench which took a different view in Desraj Pushp Kumar Gulati vs State of Punjab, 58 S.T.C.393.
The Full Bench was of the view that according to Section 9 (amended) the taxing event is the act of purchase of goods which are used in the manufacture of end products and not the act of despatch or consignment as held in Bata India.
The correctness of all the three decisions aforesaid was questioned in appeals filed before this Court.
The appeals were heard by a Bench comprising Sabyasachi Mukharji, J. (as he then was) and one of us (S.Ranganathan, J.).
Mukharji, J., in his separate judgment, set out the test for determining the taxable event in the following words: "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 recovery of tax are also postponed in some cases Taxable event is that which on its occurrence creates or attracts the liability to tax." Then the learned Judge proceeded to analyse Section 9 (amended) and concluded as follows: "Analysing the section it appears to us that 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 tax under Section (I)(b) The liability to pay tax in this section does not accrue on purchasing the goods simplicitor, but only when these are despatched or consigned out of 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 purchase tax under Section 9, one gets the conclusion that the Section itself does not provide for imposition of the purchase tax on the transaction 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 "According , the learned judge held , the is in the nature of a consignment tax which the Parliament alone could impose and not the State legislature.
The correctness of the said view is questioned by the learned counsel for the State of Andhra Pradesh and other counsel for the State Governments.
The question for our consideration is whether the learned Judge was not right in holding that the taxable event under the section Is not the purchase goods used in the manufacture of end products but the despatch of manufactured goods to out state destinations.
The other provision considered in the said decision is the one contained in Section 13AA of the Bombay Sales Tax Act.
The said provision which was introduced into the Act by the Maharashtra Act (28 of 82) read as follows at the relevant time: "13AA.
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 specified 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 Indian 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 provisions 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 purchases in his return under Section 32, which he is to furnish next thereafter.
The validity of the said provision was challenged inter alia by Hindustan Lever Limited which was negatived by the Bombay High Court in its decision reported in 72 S.T.C. 69.
The High Court was of the opinion that the additional purchase tax leviable under the said provision is on the purchase value of V.N.E.Oil used in the manufacture of goods transferred outside the State and not on the value of the manufactured goods so transferred.
It held further that the goods taxed under Section 13AA are consumed in the State as raw material in the process of manufacturing other commodities and therefore tax imposed thereon cannot be said to hinder the free flow of trade within the meaning of Article 301 of the Constitution.
The question again was which is the taxable event according to Section 13AA.
Mukharji, J. on an analysis of the section held that the taxable event is the despatch of manufactured goods outside the State which means that the levy is beyond the competence of the State legislature.
The attack based upon Article 301 of the Constitution was, however, repelled.
Though agreeing with the conclusion arrived at by Mukharji, J., Ranganathan, J. made a few pertinent observations in his separate opinion.
The learned Judge opined that both Section 9 of the Haryana Act and Section 13AA of the Bombay Sales Tax Act "purport only to levy a purchase tax" and further that "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 (otherwise than by way of sale) to a place of business situated outside the State.
The legislature, 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.
The State describes 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.
" The learned Judge opined: "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 raw material purchase inside the State and utilised therein." The learned Judge stated that he had "considerable doubts" as to the taxable event but that on further reflection he was inclined to agree with H S.Mukharji, J. that the tax though described as a purchase tax actually became 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 and therefore, in truth and essence, it was a consignment tax.
The crucial question, therefore, is what is the basis of taxation in either of the above provisions? In other words, the question is whether levy of tax is on the purchase of goods or upon the consignment of the manufactured goods? Let us first deal with Section 9 of the Haryana Act (as amended in 1983).
Properly analysed, the following are the ingredients of the Section: (i) a dealer liable to pay tax under the Act purchases goods (other than those specified in Schedule B) from any source in the State and (ii) uses them in the State in the manufacture of any other goods and (iii) 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 a 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 (Central Sales Tax Act, 1956.
If all the above three ingredients are satisfied, the dealer becomes liable to pay tax on the purchase of such goods at such rate, as may be notified under Section 15.
Now, what does the above analysis signify? The section applies only in those cases where (a) the goods are purchased (for convenience sake, I may refer to them as raw material) by a dealer liable to pay tax under the Act in the State.
(b) the goods so purchased cease to exist as such goods for the reason they are consumed in the manufacture of different commodities and (e) such manufactured commodities are either disposed of within the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of an inter State sale or export sale.
It is evident that if such manufactured goods are not sold within the State of Haryana, but yet disposed of within the State, no tax is payable on such disposition; similarly, where manufactured goods are despatched out of State as a result of an inter State sale or export sale, no tax is payable on such sale.
Similarly again where such manufactured goods are taken out of State to manufacturers own depots or to the depots of his agents, no tax is payable on such removal.
Goodyear takes only the last eventuality and holds that the taxable event is the removal of goods from the State and since such removal is to dealers own depots/agents outside the State, it is consignment, which cannot be taxed by the State legislature.
With the greatest respect at our command, we beg to disagree.
The levy created by the said provision is a levy on the purchase of raw material purchased within the State which is consumed in the manufacture of other goods within the State.
If, however, the manufactured goods are sold within the State, no purchase tax is collected on the raw material, evidently because the State gets larger revenue by taxing the sale of such goods.
(The value of manufactured goods is hound to be higher than the value of the raw material).
The State legislature does not wish to in the interest of trade and general public tax both the raw material and the finished (manufactured) product.
This is a well known policy in the field of taxation.
But where the manufactured goods are not sold within the State but are yet disposed of or where the manufactured goods are sent outside the State (otherwise than by way of inter State sale or export sale) the tax has to be paid on the purchase value of the raw material.
The reason is simple: if the manufactured goods are disposed of otherwise than by sale within the State or are sent out of State (i.e., consigned to dealers own depots or agents), the State does not get any revenue because no sale of manufactured goods has taken place within Haryana.
In such a situation, the State says, it would retain the levy and collect it since there is no reason for waiving the purchase tax in these two situations.
Now coming to inter State sale and export sale, it may be noticed that in the case of inter State sale, the State of Haryana does get the tax revenue may not be to the full extent.
Though the Central Sales Tax is levied and collected by the Government of India, Article 269 of the Constitution provides for making over the tax collected to the States in accordance with certain principles.
Where, of course, the sale is an export sale within the meaning of Section 5(1) of the (export sales) the State may not get any revenue but larger national interest is served thereby.
It is for these reasons that tax on the purchase of raw material is waived in these two situations.
Thus, there is a very sound and consistent policy underlying the provision.
The object is to tax the purchase of goods by a manufacturer whose existence as such goods is put an end to by him by using them in the manufacture of different goods in certain circumstances.
The tax is levied upon the purchase price of raw material, not upon the sale price or consignment value of manufactured goods.
Would it be right to say that the levy is upon consignment of manufactured goods in such a case? True it is that the levy materialises only when the purchased goods (raw material) is consumed in the manufacture of different goods and those goods are disposed of within the State otherwise than by way act sale or are consigned to the manufacturing dealer 's dopots/agents outside the State of Haryana.
But does that change the nature and character of the levy? Does such postponement if one can call it as such convert what is avowedly a purchase tax what is on raw material (levied on the purchase price of such raw material) to a consignment tax on the manufactured goods? We think not.
Saying otherwise would defeat the very object and purpose of Section 9 and amount to its nullification in effect.
The most that can perhaps be said is that it is plausible (as pointed out by Ranganathan, J. in his separate opinion) to characterise the said tax both as purchase tax as well as consignment tax.
But where two interpretations are possible, one which sustains the constitutionality and/or effectuates its purpose and intendment and the other which effectively nullifies the provision, the former must be preferred, according to all known canons of interpretation.
This is also the view expressly approved by Mukharji, J. in his opinion, as pointed out hereinbefore.
In para 71 of his opinion, the learned Judge states: `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.
Commissioner of Wealth Tax, Bihar and Orissa vs Kirpa Shankar Daya Shankar Vorah at page 768 and Income Tax Commissioners for City of London vs Gibbs ' (1942) 10 ITR Suppl.
121 at page 132 (H.L.)".
(emphasis supplied) However, we would presently show that merely because the levy attaches on the happening or non happening of a subsequent event, the nature and character of the levy does not change.
In several enactments.
for instance, tax is levied at the last sale point or last purchase point, as the case may be.
How does one determine the last purchase point in the State '? Only when one knows that no purchase took place within the State thereafter.
But that can only be known later.
If there is a subsequent purchase within the State, the purchase in question ceases to be the last purchase.
As pointed out pertinently by P.S.Poti, J. (as he then was) in Malabar Fruit Products Company and Ors.
vs The Sales Tax Officer and Ors, (1972) 30 S.T.C. 537, applying the logic of the dealers, it would not be possible to tax any goods at the last purchase point in the State, inasmuch as the last purchase point in regard to any goods could be determined only when the goods are sold later and not when the goods are purchased.
In the said decision.
the learned Judge was dealing with the validity and construction of Section 5 A of Kerala General Sales Tax Act, 1963, sub section (l) whereof read as follows: "5A. Levy of purchase tax (1) Every dealer who in the course of his business purchases from a registered dealer or from any other person any goods.
the sale or purchase of which is liable to tax under this Act, in circumstances in which no tax is payable under Section 5, and either (a) consumes such goods in the manufacture of other goods for sale or otherwise; or (b) disposes of such goods in any manner other than by way of sale in the State; or (c) despatches them to any place outside the State except as a direct result of sale or purchase in the course of inter State trade or commerce, shall whatever be the quantum of the turnover relating to such purchase for that year at the rates mentioned in Section 5.
" One of the arguments urged against the validity of the said provision was that inasmuch as the tax is levied depending upon the mode in which the goods purchased are consumed, disposed of or despatched, the tax is really one in the nature of consumption tax or use tax, but not sales tax.
This argument was answered by the learned Judge in the following words: According to me, this contention is based on a misconception of the scope of taxation on the sale of goods.
It is true that sales tax is a tax imposed on the occasion of the sale of goods.
But it has no reference to the point of time at which the sale or purchase takes place.
It refers to the connection with the event of purchase or sale and not the point of time at which such purchase or sale takes place.
To read it otherwise would render any retrospective in position of sales tax invalid as in every such case the tax would not be one which arises on the occasion of sale.
By the same logic, it would not he possible to tax any goods at the last purchase point in the State, for the last purchase point in regard to any goods could be determined only when the goods arc sold later and not when the goods are purchased.
On the same reasoning as urged by counsel, one should say in such a case that since the goods are taxed only when the goods are sold outside the State or are despatched for such sale outside the State and so the last purchases are taxed not on the "occasion" of the purchases and, consequently, it is beyond the competence of the Legislature.
That certainly cannot be and the Supreme Court has held in the decision in State of Madras vs Narayanaswami Naidu, (1968) 21 S.T.C.1 (S.C.), that the goods are taxable in such cases in the financial year when they become the last purchases.
" C: The decision of Poti, J. was affirmed by a Division Bench of Kerala High Court in Yusuf Shabeer and Ors.
vs State of Kerala and Ors.
, (1973) 32 S.T.C. 359.
Both these decisions were expressly referred to and approved by a three Judge Bench of this Court in State of Tamil Nadu vs Kandaswami and Ors., (1975) 36 S.T.C. page 191.
Kandaswami was concerned with the construction of Section 7 A of the Tamil Nadu General Sales Tax Act which too a levied purchase tax and is couched in language similar to Section 5 A of the Kerala Act.
While dealing with the scheme of Section 7 A, this court quoted with approval certain passages from the judgment of Poti, J. including the following sentence: "If the goods are not available in the State for subsequent taxation by reason of one or other of the circumstances mentioned in clauses (a), (b) and (c) of Section 5 A(1) ofthe Act then the purchaser is sought to be made liable under Section 5 A.
This statement accords with our understanding of the scheme of Section 9 of Haryana Act as set out hereinabove.
To repeat, the scheme of Section 9 of Haryana Act is to levy the tax on purchase of raw material and not to forego it where the goods manufactured out of them are disposed of (or despatched, as the case may be) in a manner not yielding any revenue to the State nor serving the interests of nation and its economy, as explained hereinbefore.
The purchased goods are put an end to by their consumption in manufacture of other goods and yet the manufactured goods are dealt with in a manner as to deprive the State of any revenue; in such cases, there is no reason why the State should forego its tax revenue on purchase of raw material.
Another observation in Kandaswami relevant for the present purpose may also be noticed: "It may be remembered that Section 7 A is at once a charging as well as a remedial provision.
Its main object is 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 he eschewed.
If more than one construction is possible that which preserves its workability and efficacy is to be preferred to the one which would render it otiose or sterile.
The view taken by the High Court is repugnant to this cardinal canon of interpretation.
" In the light of the above scheme of Section 9, it would not be right, in our respectful opinion, to say that the tax is not upon the purchase of raw material but on the consignment of the manufactured goods.
It is well settled that taxing power can be utilised to encourage commerce and industry.
It can also be used to serve the interests of economy and promote social and economic planning.
Section 9 of Haryana Act and Section 13AA of Bombay Act are intended to encourage the industry and at the same time derive revenue.
It is also not right to concentrate only on one situation viz., consignment of goods to manufacturer 's own depots (or to the depots of his agents) outside the Side.
Disposal of goods within the State without effecting a sale also stands on the same footing, an instance of which may be captive consumption of manufactured products in the manufacture of yet other products.
Once the scheme and policy of the provision is appreciated, there is no room, in our respectful opinion, for saying that the tax is on the consignment of manufactured goods.
We may in this connection refer to the decision of a Constitution Bench of this Court in Andhra Sugars vs State of Andhra Pradesh, 21 S.T.C, 212, relating to the validity of Section 21 of the A.P. Sugarcane Regulation of Supply and Purchase Act, 1961.
Sub section (1) of Section 21 read as follows: "21.
(1) The Government may, by notification, levy a tax at such rate not exceeding five rupees per metric tonne as may be prescribed on the purchase of cane required for use, consumption or sale in a factory.
" One of the arguments urged against the validity of the levy was that since the levy is not on every purchase of sugarcane but only "on the purchase of cane required for use, consumption or sale in a factory" the tax is not really a purchase tax referable to Entry 54 of List II of the VIIth Schedule to the Constitution but a use tax, a tax of a different character altogether not falling under Entry 54.
It was also argued that since the tax is levied at the stage of entry of cane into the factory for being used and consumed in the manufacture of sugar, it is in the nature of an entry tax but since the factory was not a "local area" within the meaning of Entry 52 of List II, the levy was incompetent.
Both the arguments were rejected in the following words: "Under that entry, the State Legislature is not bound to levy a tax on all purchase of cane.
It may levy a tax on purchases of cane required for "use, consumption or sale in a factory.
The Legislature is competent to tax and also to exempt from payment of tax sales or purchases of goods required for specific purposes.
Other instances of special treatment of goods required for particular purpose may he given.
Section 6 and Schedule I, item 23 of the Bombay Sales Tax Act, 1946, levy tax on fabrics and articles for personal wear.
Section 2(j)(a)(ii) of the C.P. and Berar Sales Tax Act, 1947, exempts sales of goods intended for use by a registered dealer as raw materials tor the manufacture of goods.
Mr. Chatterjee submitted that the tax levied under Section 21 was a use tax and referred to Mcleod vs Dilworth and Co. ; ; , and C.G. Naidu and Co. vs The State of Madras, A.I.R. 1953 Mad.
116, 127 128; 3 STC 405.
He argued that the State Legislature could not levy a use tax which was essentially different from a purchase tax.
The assumption of counsel that Section 21 levies a use tax is not well founded.
The taxable event under Section 21 is the purchase of goods and not the use or enjoyment of what is purchased.
The constitutional implication of a use tax in American law is entirely irrelevent.". . "To appreciate another argument of Mr. Chatterjee, it is necessary to refer to a few Acts.
It appears that paragraph 21 of the Bill published in the Gazette on March 3, 1960 preliminary to the passing of Act No. 43 of 1961 provided for a levy of a cess on the entry of cane into the premises of a factory for use, consumption or sale therein.
On December 13, 1960, this court in Diamond Sugar Mills Ltd., and Another vs The State of Uttar Pardesh and Another, ; , struck down a similar provision in the U.P. Sugarcane Cess Act, 1956, on the ground that the State Legislature was not competent to enact it under Entry 52, List II, as the premises of a factory was not a local area within the meaning of the entry.
Having regard to this decision, paragraph 21 of the Bill was amended and Section 21 in its present form was passed by the State Legislature.
The Act was published in the Gazette on December 30, 1961.
Mr. Chatterjee submitted that in this context the levy under Section 21 was really a levy on the entry of goods into a factory for consumption, use or said therein.
We are unable to accept this contention.
As the proposed tax on the entry of goods into a factory was unconstitutional, paragraph 21 of the original Bill was amended and Section 21 in its present form was enacted.
The tax under Section 21 is essentially a tax on purchase of goods The taxable event is the purchase of cane for use, consumption or sale in a factory and not the entry of cane into a factory.
As the tax is not on the entry of the cane into a factory, it is not payable on cane cultivated by the factory and entering the factory premises.
" For the above reasons, we find it difficult to agree with the reasoning of Mukharji, J, in Goodyear.
It is also not possible to agree with the learned Judge when he says 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)(h) in the event to despatch outside the State".
When the tax is levied on the purchase of raw material on the purchase price and not on the manufacture of goods or on the consignment value (such a concept is unknown to Haryana Act) or sale price of the manufactured goods the above construction, in our respectful opinion, runs against the very grain of the provision and has the effect of nullifying the very provision.
By placing the said interpretation, Section 9 has been rendered nugatory; except for the two minor areas pointed out in Murli Manohar and Company vs State of Haryana; , , the Section which has its parallels in all the State enactments has practically become redundant.
This was the main reason we undertook to reconsider the said decision which course we would not have ordinarily agreed to adopt.
In our respectful opinion, the tax purports to be and is in truth a purchase tax levied on the purchase price of raw material purchased by a manufacturer.
In certain situations (the three situations mentioned above viz, sale of manufactured goods within the State, inter State sale and export sale of manufactured goods) it is waived.
In other cases, it is not.
It is argued for the assessees that apart from Goodyear a Bench of three Judges of this Court has independently approved and affirmed the correctness of the ratio and reasoning in Goodyear.
Reference is to Mukerian Papers Ltd. vs State of Punjab; , The case arose under the Punjab General Sales Tax Act and the provision which fell for interpretation was Section 4B.
It levied purchase tax on the raw material used in the manufacture of goods which in turn are sold outside the State otherwise 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.
The argument for the assessee/appellant was "that the main question of law involved in this case is concluded by the decision of this court in Goodyear India Ltd. vs State of Haryana which was an appeal arising from the High Court 's decision in the case of the same assessee. ".
It was this contention which was examined by the Bench.
Section 4B of the Punjab Act was analysed and it was found that it is in material particulars, similar to Section 9 of the Haryana Act even though the language was not identical.
Ahmadi, J. speaking for the Bench observed: "therefore, even though the language of Section 4B of the Act is not identical with the relevant part of Section 9(1) of the Haryana Act, it is in substance similar in certain respects, particularly in respect of the point of time when the liability to pay tax arises.
Under that provision, as here, the liability to pay purchase tax on the raw material purchased in the State which was consumed in the manufacture of any other taxable goods arose only on the despatch of the goods outside the State.
We are, therefore, of the opinion that the ratio of the said decision of this Court in Goodyear India Ltd. applies on all fours to the main question at issue in this case." When the counsel for the revenue sought to argue that the decision of this court in Kandaswami takes a different view the Bench did not permit the same to be urged in the view of the fact that the correctness of the judgment in Goodyear was not canvassed before them.
The Bench said "the decision in Kandaswami though in the context of an analogous provision was distinguished by this court in Goodyear India Ltd. on the ground that it did not touch the core of the question at issue in the latter case.
This aspect of the matter is elaborately dealt with in paragraphs 31 to 34 at page 796 of the report.
We need not dilate on this any more since the correctness of the judgment in Goodyear India Ltd. is not canvassed before us.
" It is, thus, clear that the main argument for the Bench was that the ratio of Goodyear governs the said case and it was so found.
It is equally clear that the correctness of the decision in Goodyear was not questioned before the Bench and that is why the Bench took care to specifically advert to and record the said circumstance.
So far as the decision in Murli Manohar & Co. vs State of Haryana ; is concerned, it arose under Haryana Sales Tax Act and explains the meaning of export sale referred to in Section 9(1)(h) of the Act.
There is no discussion in this decision about the point at issue before us.
The same is the position under Section 13AA of the Bombay Sales Tax Act.
The said provision, properly analysed, yields the following ingredients: (i) where a dealer who is liable to pay tax under this Act purchases any goods specified in Part I of Schedule (C) either directly or through commission agent, from a person who is or is not a registered dealer and (ii) uses such goods in the manufacture of taxable goods and (iii) despatches the goods so manufactured to his own place of business or to his agent 's place or business situated outside the State within India.
(iv) such dealer shall pay, in addition to the sales tax/purchase tax paid or payable or levied or leviable, as the case may be, a purchase tax at the rate of two paise in the rupee on the purchase price of the goods so used in the manufacture.
Here again it may be noticed that the tax levied is a purchase tax on the purchase of raw material and not upon the consignment of the manufactured goods The object of this provision too is the same as of the Haryana provision The levy is waived where the manufactured goods are sold within the State, or sold in the course of inter State trade or commerce or sold in the course of export.
It is retained and collected where the goods are taken out of Maharashtra State by way of consignment, in which event the State sees no reason not to retain and collect the levy on purchase of raw material The provisions is substantially similar to Section 9 of Haryana Act.
Whatever we have said with respect to the Haryana provision applies equally to this provision.
It is not necessary to repeat the same here.
Before parting with this matter, it is necessary to clarify: it was brought to our notice that both the Haryana and Bombay provisions have since been substituted with retrospective effect.
We have not referred to those provisions in this part for the reason that we are concerned only with the reasoning in Goodyear.
For the reasons mentioned above, we uphold the constitutional validity of the impugned provisions.
The appeals, writ petitions, S.L.Ps and T.C. accordingly fail and are dismissed No order as to costs G.N. Petitions dismissed.
| IN-Abs | The constitutional validity of S.15B of Gujarat Sales Tax Act, S.3 AAAA of Uttar Pradesh Sales Tax Act and S.6A of the Andhra Pradesh General Sales Tax Act was challenged in the present Appeals, Writ Petitions SLPs and Transferred case.
S.15 B of the Gujarat Sales Tax Act, 1969 was introduced by Amendment Act, 1986.
It provided for levy of additional purchase tax on raw materials purchased by a manufacturing dealer in case he used the said raw material for the manufacture of other goods which he despatched to his own place of business or to his agent 's place of business outside the State but within India.
By the Amendment Act, 1987, the section was substituted.
Writ Petitions were filed before the High Court challenging the validity of unamended S.15 B on the ground that it levied a consignment tax and hence was outside the competence of State Legislature.
During the pendency of the writ petitions, S.15 B was substituted by an Ordinance.
Subsequently the Gujarat Sales Tax Amendment Act 6 of 1990 was enacted in terms of and replacing the Ordinance.
S.15 B was given retrospective effect from 1.4.1986, the date on which it first came into force.
In view of the said Amendment Act, the Writ Petitions came to be dismissed as infructuous.
A fresh batch of Writ Petitions were filed challenging the validity of substituted S.15 B on the ground that it continued to be a consignment tax.
The High Court having dismissed the Writ Petitions, the matter has come up before this Court.
Section 3 AAAA of the U.P. Sales Tax subjected the purchase Of "goods liable to tax at the point of sale to the consumer" to purchase tax payable by the purchasing dealer, in a case where the selling dealer was not liable to pay the sales tax on such sale.
Purchase tax was payable at the same rate as the sales tax.
If, however, the purchasing dealer resold such goods within the State or in the course of inter State trade or commerce, he was not liable to pay the purchase tax.
While the Civil Appeals were pending in this Court as regards the validity of S.3 AAAA, the High Court, while deciding some Writ Petitions, applied the ratio in Good Year and held that section was ultra vires the legislative competence of the State Legislature.
It held that under the said provision the taxable event was not the purchase of the goods by the purchasing dealer but the subsequent event namely use of the said goods in the manufacture of other goods and their despatch without effecting a sale within the State of U.P. to a place outside U.P.
To overcome this decision an Ordinance was issued which was later replaced by the U.P. Sales Tax (Amendment) Act, 1992, the constitutional validity of which has been challenged before this Court.
In the A.P. Sales Tax Act Section 6 A was inserted by the Andhra Pradesh General Sales Tax (Amendment) Act of 1976 with effect from 1.9.76.
The effect was that tax payable at sale point became tax payable on purchase point in certain circumstances.
Writ Petitions were filed before the High Court challenging the validity of S.6 A.
It was contended that the notification issued under S.9 of the Act exempted from tax certain goods which were sought to be taxed under S.6 A and that S.6 A was in fact a consumption or consignment tax and hence void.
Unable to succeed before the High Court, the assessees challenged the vires of the said section before this Court.
Apart from challenging the constitutional validity of the above said provisions of the three State Sales Tax Acts, the correctness of Good Year India Ltd vs State of Haryana, ; which invalidated certain purchase tax levied by the Haryana and Maharashtra Sales Tax Acts, was also questioned by the Revenue before this Court.
Dismissing the matters.
this Court, HELD: (By the Court): S.15B of the Gujarat Sales Tax, 1969, S.3AAAA of Uttar Pradesh Sales Tax Act, 1948 and S.6 A of the Andhra Pradesh General Sales Tax Act, 1957 are intra vires the powers of the respective State Legislatures and hence valid.
[249 D] Per B.P Jeevan Reddy, J: (for himself and V. Ramaswami, J.) 1.
The necessity and significance of the delegated legislation is well accepted and needs no elaboration.
They cannot travel beyond the purview of the Act.
Where the Act says that Rules on being made be deemed "as if enacted in this Act", the position may be different.
But where the Act does not say so, the Rules do not become part of the Act.
[212 B, Cl Halsbury 's Laws of England (3rd.
Edn.) Vol.
36, referred to.
Entry 54 of List 11 of Seventh Schedule to the Constitution must receive a liberal construction, it being a legislative entry.
The Legislature cannot be confined to only one form of levy.
So long as the levy retains the basic character of a tax on sale, the Legislature can levy it in such mode or in such manner as it thinks appropriate, the well established principles in such matters being that reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act.
The Legislature must be presumed to know its limitations and act within those limits.
Transgression must be clearly established, and is not to be lightly assumed.
[214 H; 215 A, B] 3.
A person other than a registered dealer is not amenable to the discipline of the Sales Tax Act.
He cannot indeed collect any tax and, therefore, will not make over or pay any tax.
This the legislature is justified in presuming.
If, however, in any case it is proved that such person has paid the tax, the purchasing dealer will get an exemption to that extent.
If a benefit is claimed by the purchasing dealer, it is for him to prove the fact which enables him to claim the benefit.
That burden cannot be passed on to any one else.
[222 C, D] 4.
So far as registered dealers are concerned, all that the purchasing dealer need to prove is that the said goods have already been or may be subjected to tax under State Act or Central Sales Tax Act.
On this score, there is no difficulty for the purchasing dealer.
From the bill given by the selling dealer, the purchasing dealers can prove the payment.
Or he can simply prove, as a matter of law that the said goods are liable to be taxed under any other provision of the Act or under the Central Sales Tax Act.
[222 E, F] GUJARAT SALES TAX ACT/RULES: 5.1.
S.15 B of the Gujarat Sales Tax Act read as a whole, is applicable only to those goods which are used in the manufacture of other goods.
The levy is upon the purchase price of raw material an not upon the value of the manufactured products.
[214 G, H] 5.2.
Rule 14E of Gujarat Sales Tax Rules along with S.15B of the Gujarat Sales Tax Act provide for set off etc., in case the manufactured goods are sold within the State of Gujarat.
It no doubt means that set off etc.
is not available if the manufactured goods are disposed of otherwise than by way of sale or are consigned to manufacturer 's own depots or to the depots or his agents outside the State of Gujarat.
There is nothing objectionable in the State doing so.
It cannot be said that by reading Rule 42 E into S.15 B, the levy becomes a consignment tax.
[213 E F] Godrej & Boyce Mfg. Co. vs Commissioner of Sales Tax, (1992) 4 J.T.(S.C.) 317 and Andhra Sugars Ltd. & Anr.
v The State of Andhra Pradesh and Anr., 21 S.T.C. 212, relied on.
Goodyear India Ltd. vs State of Haryana, ; , dissented from.
Ramkrishna vs State of Bihar, A.l.
R. 1963 S.C.1667, referred to.
U.P. SALES TAX ACT: 6.1.
All that section 3 AAAA of the U.P. Sales Tax Act prior to its substitution in 1992 provided was; (i) where the goods liable to tax at the point of sale to the consumer are sold to a dealer (ii) in circumstances in which no sales tax is payable by the sellers and (iii) the purchasing dealer does not re sell the said purchased goods within the State or in the course of inter state trade or commerce (iv) the purchasing dealer shall be liable to pay the tax which would have been payable by the seller.
(v) If, however, it was proved that the said goods have already suffered tax under section 3 AAAA, no purchase tax was payable under section 3 AAAA.
It is obvious that the section did not speak of the purchased goods being used in the manufacture of other goods nor of the manner of disposal or despatch of such manufactured goods.
The only two conditions stipulated (which conditions are not to be found in the present Section 3 AAAA) were that if the purchased goods are sold within the State or sold in the course of inter state trade or commerce, the tax under it is not payable.
This is for the simple reason that in both the contingencies, the State would get the revenue (in one case under the State Sales Tax Act and in the other case, under the Central Sales Tax Act).
The policy of the legislature is not to tax the same goods twice over.
The fact that in a given case, the purchased goods are consigned by the purchaser to his own depots or agents outside the State makes no difference to the nature and character of the tax.
By doing so, he cannot escape even one time tax upon the goods purchased, which is the policy of the Legislature.
The tax was directed towards ensuring levy of tax at least on one transaction of sale of the goods and not towards taxing the consignment of goods purchased or the products manufactured out of them.
[223 G H; 224 A D] 6.2.
There is no vagueness in the provision viz. sub sec.(2) of S.3 AAAA of U.P. Sales Tax Act nor can it be said that it placed heavy and uncalled for burden upon the purchasing dealer or that it is not practicable for the purchaser to establish that the seller (other than the registered dealer) has paid the tax or not.
[222 B] 6.3.
The difficulty has really arisen because of the attempt to look to the provisions of Section 3 AAAA through the prism of Goodyear.
There is a substantial and qualitative difference between the language employed in Section 9 of Haryana Act and Section 13 AA of Bombay Act on the one hand and in Section 3 AAAA of U.P. Act on the other (as it stood prior to 1992 Amendment Act or for that matter as it stands now).
These basic differences cannot be ignored.
[1224 E] Constitutionality of Section 3 AAAA of the U.P. Sales Tax Act ought to be judged on its own language and so judged, the Section, both before and after the 1992 Amendment, represents a perfectly valid piece of legislation.
It is relatable to and fully warranted by Entry 54 of List 11 of the Seventh Schedule to the Constitution.
[224 F] Goodyear India Ltd vs State of Haryana, ; , dissented from.
ANDHRA PRADESH GENERAL SALES TAX ACT/RULES: 7.1.
The real object of clauses (i) to (iii) in Section 6 A of the A.P. Sales Tax Act is not to levy a consumption tax, use tax or consignment tax but only to point out that thereby the purchasing dealer converts himself into the last purchaser in the state of such goods.
The goods cease to exist or cease to be available in the State for sale or purchase attracting tax.
In these circumstances, the purchasing dealer of such goods is taxed, if the seller is not or cannot be taxed.
The tax imposed by S.6 A cannot be described either as use tax, consumption tax or consignment tax.
It is a purchase tax perfectly warranted by Entry 54 of List ll of the Seventh Schedule to the Constitution.
[230 G & 231 B] 7.2.
While exempting the sale or purchase of any specified class of goods the Government is empowered to specify whether the exemption operates at all points or any specified points in the series of sales or purchase of successive dealers.
Several notifications have been issued the Government from time to time exempting certain dealers or exempting certain goods at the point of sale or purchase, as the case may be.
G.O.Ms.
1091 is one of them.
The exemption is couched in qualified form.
Thus, it is not a general exemption but a qualified one.
In the light of the specific scheme of Section 9 of the A.P. Sales Tax Act and the language of G.O.Ms No. 1091, the exemption at the point of sale by a particular category of persons cannot be construed as operating to exempt the purchase tax under Section 6 A of the Act, as well, much less in all cases.
[233 B, C] 7.3.
Fresh milk was taxable as general goods under Section 5(l) of the Andhra Pradesh Sales Tax Act before it was amended by Amendment Act 4 of 1989.
After the coming into force of the said Amendment Act, it falls under Schedule VII, (which was introduced simultaneously with the said Amendment Act) aud which takes in all goods other than those specified in first to sixth Schedules.
Milk was subject to multi point tax prior to the said Amendment Act whereas after the said amendment it has become taxable only at single point namely, point of first sale in the State.
If fresh milk was not at all taxable under the Act, there was no necessity to issue notifications exempting its sale in certain situations.[227 C D] Goodyear India Ltd. vs State of Haryana ; , dissented from.
RATIO OF GOODYEAR RECONSIDERATION OF: 8.1.
The ingredients of Section 9 of Haryana Sales Tax Act are: (i) a dealer liable to pay tax under the Act purchases goods (other than those specified in Schedule B) from any source in the State and (ii) uses them in the State in the manufacture of any other goods and (iii) either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured to a place outside the State in any manner otherwise than by way of sale in the course of an 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 .
If all the above three ingredients are satisfied the dealer becomes liable to pay tax on the purchase of such goods at such rate, as may be notified under Section 15.
It applies only in those cases where (a) the goods are purchased (referred to as material) by a dealer liable to pay tax under the Act in the State, (b) the goods so purchased cease to exist as such goods for the reason they are consumed in the manufacture of different commodities and (c) such manufactured commodities are either disposed of within the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of an inter State sale or export sale.
It is evident that if such manufactured goods are not sold within the State of Haryana, but yet disposed of within the State no tax is payable on such disposition; similarly where manufactured goods are despatched out of State as a result of an inter State sale or export sale no tax is payable on such sale.
Similarly against where such manufactured goods are taken out of State to manufacturers own depots or to the depots of his agents no tax is payable on such removal.
Goodyear takes only the last eventuality and holds that the taxable event is the removal of goods from the State and since such removal is to dealers own depots/agents outside the State it is consignment which cannot be taxed by the State Legislature.
This is not correct.
The levy created by the said provision is a levy on the purchase of raw material purchased within the State which is consumed in the manufacture of other goods within the State.
If however the manufactured goods are sold within the State no purchase tax is collected on the raw material evidently because the State gets larger revenue by taxing the sale of such goods.
(The value of manufactured goods is bound to be higher than the value of the raw material).
The State Legislature does not wish to in the interest of trade and general public tax both the raw material and the finished (manufactured) product.
This is a well known policy in the field of taxation.
But where the manufactured goods are not sold within the State but are yet disposed of or where the manufactured goods are sent outside the State (otherwise than by way of inter State sale or export sale) the tax has to be paid on the purchase value of the raw material.
The reason is simple: if the manufactured goods are disposed of otherwise than by sale within the State or are sent out of State (i.e. consigned to dealers own depots or agents) the State does not get any revenue because no sale of manufactured goods has taken place within Haryana.
In such a situation the State would retain the levy and collect it since there is no reason for waiving the purchase tax in these two situations.
[239 B D; 240 A D] 8.2.
In the case of inter State sale the State of Haryana does get the tax revenue may not be to the full extent.
Though the Central Sales Tax is levied and collected by the Government of India Article 269 of the Constitution provides for making over the tax collected to the State in accordance with certain principles.
Where of course the sale is an export sale within the meaning of Section 5 (1) of the (export sales) the State may not get any revenue but larger national interest is served thereby.
It is for these reasons that tax on the purchase of raw material is waived in these two situations.
Thus, there is a very sound and consistent policy underlying the provision.
The object is to tax the purchase of goods by a manufacturer whose existence as such goods is put and end to by him by using them in the manufacture of different goods in certain circumstances.
The tax is levied upon the purchase price of raw material, not upon the sale price or consignment value of manufactured goods.
Levy materialises only when the purchased goods (raw material) is consumed in the manufacture of different goods and those goods are disposed of within the State otherwise than by way of sale or are consigned to the manufacturing dealers ' depots/agents outside the State of Haryana.
Such postponement does not convert what is avowedly a purchase tax on raw material (levied on the purchase price of such raw material) to a consignment tax on the manufactured goods.
Saying otherwise would defeat the very object and purpose of Section 9 and amount to its nullification in effect.
The most that can perhaps be said is that it is plausible to characterise the said tax both as purchase tax as well as consignment tax.
But where two interpretations are possible, one which sustains the consititutionality and/or effectuates its purpose and intendment and the other which effectively nullifies the provisions, the former must be preferred, according to all known canons of interpretation.
[240 E H; 241 A C] 8.3.
In several enactments tax is levied at the last sale point or last purchase point, as the case may be.
The last purchase point in the State can be determined only when one knows that no purchase took place within the State thereafter.
But that can only be known later.
If there is a subsequent purchase within the State, the purchase in question ceases to be the last purchase.
Applying the logic of the dealers, it would not be possible to tax any goods at the last purchase point in the State, inasmuch as the last purchase point in regard to any goods could be determined only when the goods are sold later and not when the goods are purchased.
[241 F G] 8.4.
The scheme of Section 9 of Haryana Sales Tax Act is to levy the tax on purchase of raw material and not to forego it where the goods manufactured out of them are disposed of (or despatched, as the case may be) in a manner not yielding any revenue to the State nor serving the interests of the nation and its economy.
The purchased goods are put an end to by their consumption in manufacture of other goods and yet the manufactured goods are dealt with in a manner as to deprive the State of any revenue; in such cases, there is no reason why the State should forego its tax revenue on purchase of raw material.
It would not be right to say that the tax is not upon the purchase of raw material but on the consignment of the manufactured goods.
It is well settled that taxing power can be utilised to encourage commerce and industry.
It can also be used to serve the interests of economy and promote social and economic planning.
It is also not right to concentrate only on one situation viz., consignment of goods to manufacturer 's own depots (or to the depots of his agents) outside the State.
Disposal of goods within the State without effecting a sale also stands on the same footing, an instance of which may be captive consumption of manufactured products in the manufacture of yet other products.
Once the scheme and policy of the provision is appreciated, there is no room for saying that the tax is on the consignment of manufactured goods.[243 G H; 244 A F] 8.5.
When the tax is levied on the purchase of raw material, on the purchase price and not on the manufacture of goods or on the consignment value (such a concept is unknown to Haryana Act) or sale price of the manufactured goods the construction placed in Goodyear runs against the very grain of the provision and has the effect of nullifying the very provision.
By placing the said interpretation, Section 9 has been rendered nugatory.
The tax purports to be and is in truth a purchase tax levied on the purchase price of raw material purchased by a manufacturer.
[247 A C] 8.6.S. 13AA of the Bombay Sales Tax Act is substantially similar to Section 9 of Haryana Sales Tax Act.
Whatever is said with respect to the Haryana provision applies equally to this provision.
[249 D] Andhra Sugars Ltd. & Anr.
vs The State of Andhra Pradesh & Anr., 21 S.T.C. 212 and State of Tamil Nadu vs Kandaswami, 36 S.T.C. 191, relied on.
Goodyear India Ltd. vs State of Haryana, ; , dissented from.
Mukerian Papers Ltd. vs State of Punjab, ; , Explained.
Murli Manohar and Company vs State of Haryana [199]1 1 S.C.C. 377, distinguished.
Malabar Fruit Products Co. vs S.T.O., 30 S.T.C. 537, approved.
Hindustan Lever Ltd. vs State of Maharashtra, 79 S.T.C. 255; J.K Steel Ltd. vs Union of India, A.l.
R. 1970 S.C. 1173; Bata India Ltd. vs State of Haryana, 54 S.T.C. 226; Desraj Pushp Kumar Gulati vs State of Punjab, 58 S.T.C. 393; Commissioner of Wealth Tax, Bihar and Orissa vs Kirpa Shankar Daya Shankar Vorah, ; Yusuf Shabeer and Ors.
vs State of Kerala and Ors.
, (1973) 32 S.T.C. 359 and Income Tax Commissioners for City of London vs Gibbs, (1942) 10 ITR Suppl.
121 (H.L.), referred to.
Per Ranganathan, J. (Concurring): 1.
The provisions of the U.P. and Gujarat Sales Tax Acts are clearly beyond challenge.
The section in the U.P. Act is a very direct and simple provision to the effect that a tax will be levied on purchases made within the State in certain circumstances.
The ambit of Entry 54 in the State List in the Constitution of India must be interpreted in the widest possible manner.
The State has full powers to levy a tax with reference to sales or purchases inside the State and to a certain extent even sales made in the course of inter State trade or commerce.
It certainly comprehends a power to tax the last sale in the State of certain goods.
The tax is nothing but a tax on purchase, pure and simple, well within the scope of the State 's Legislative power.
It is true that one has to look at not merely the form but the substance of the statute and examine what exactly is the purport behind the levy, but should not permit one 's imagination to read a purpose or words into the statute which are not there.
1198 C G] 2.
The Gujarat provision is more careful but makes a mention of the purchased goods being used for manufacture.
But, these are only words descriptive of a class of goods the purchase of which is sought to be brought to tax.
Here again, the intention of the legislature is to tax, at purchase point, a class of goods viz. goods purchased by a manufacturer.
It has no concern, with what the manufacturer does with the manufactured goods.
Presumably the idea is that the manufacturer is able to profit by adding value to the purchased raw material by utilising the infrastructure, fillips or facilities provided in the State to encourage setting up of industries therein and so can afford to pay tax on the purchased raw materials.
The concession provided by rule 42E of the Gujarat Sales Tax Rules is an independent provision relieving him and the public consuming the manufactured goods of additional burden where such goods are sold inside the State and get taxed on the added value.
[198 H; 199 A, B] 3.
The marginal title to the provisions under challenge indicates that their direct purpose is to levy a tax on purchases effected in the State in certain circumstances.
The tax is couched as a tax on all goods (in U.P.) and on raw or processing materials and consumable stores (in the State of Gujarat).
It is designated as a purchase tax.
It is levied on the turnover of such purchases.
There is no reference in the U.P. statute to any condition for imposition of the tax except that it should be a sale to the consumer and in the State of Gujarat that it should be a purchase by a manufacturer.
It is very difficult to read into these provisions any ulterior motive on the part of the States to levy a tax on use, consumption or consignment in the guise of a purchase tax.
The language of these two provisions is wholly different from that used in the Haryana and Bombay Acts.
Even in the context of those Acts, it may be equally plausible to consider the provisions either as a purchase tax or a tax on consignment.
There is no such ambiguity in the language used in these provisions, and the levy is only of a purchase tax.
Such a levy is clearly within the domain of the State Legislature.
[199 C F] 4.
A person can be said to be the last purchaser of certain goods only when he consumes those goods himself or, in case they are raw materials/stores and the like, unless he uses them in the manufacture of other goods for sale.
From this category have to be excluded cases where the manufactured goods are either sold in the State or sold in the course of inter State trade or commerce because, in those two instances, the State will be in a position to collect the tax in respect of the sale of the manufactured goods the sale price of which will also include the price of raw materials on which apriori the State could have only got a lesser amount of tax and to tax both would escalate the price and affect the consumer.
Also excluded are cases where the manufactured goods are exported abroad to earn foreign currency.
If these situations are borne in mind, one would realise that the language used in the various clauses and phrases used in these legislations is only to levy a tax on the last purchase in the State and not with a view to levy a tax either on the use or consumption of raw materials or on the manufacture or production of manufactured goods or on the despatch of the goods manufactured from the State otherwise than by way of sale.
In the Haryana case also the statute mentioned these several alternatives but a consideration of section 9(1)(b) of the Haryana Act as well as of the corresponding clause of the Bombay Act were posed in isolation and emphasis placed on consignment being a sine qua non of the levy.
This larger concept, namely, that these various alternatives are not set out in the section with a view to fasten the charge of tax at the point of use, consumption, manufacture, production and consignment or despatch but in an attempt to make clear that what is sought to be levied is a tax on raw materials on the occasion of their last purchase inside the State had not been projected or considered.
This approach would basically alter the parameters and remove the provision from the area of vulnerability.
[200 F H; 201 A D] 5.
It is difficult to define a last purchase except with reference to the mode of the use of the purchased goods subsequent to that purchase and in that sense the levy of tax can crystallise only at a point of time when the goods have been utilised in a particular way.
The mere fact that the purchase cannot be characterised as a last purchase except by reference to the subsequent utilisation of those goods cannot mean that the taxable event is not the purchase but something else.
The more appropriate test would be to see whether the ambit of the power to levy a tax in respect of sale of goods is very wide and will cover any tax which has a nexus with the sale or purchase of goods including a last purchase in the State.
In this view of the matter the levy under the A.P. Act is also within the legislative competence of the State. , B] 6.
The conclusion reached as to the vires of the provisions under challenge is contrary to the conclusion reached in Goodyear on somewhat analogous provisions.
No final conclusion is expressed as to whether the conclusion in Goodyear was rightly reached in the context of the provisions of the statutes considered there, or would need a second look and fresh consideration in the context of what has been said now.
There is no hesitation to accept the point of view now presented and which appeals to be more realistic, appropriate and preferable, particularly the view one way or the other would affect the validity of a large number of similar legislations all over India, merely because it may not be consistent with the view taken in Goodyear.
Consistency, for the mere sake of it, is no virtue.
[202 C, D] Distributors (Baroda) P. Ltd. vs Union of India, (1985 )155 I.T.R. 120 S.C., relied on.
Goodyear India Ltd. vs State of Haryana, ; , referred to.
|
433 of 1955 and 40 41 of 1956.
Petitions under Article 32 of the Constitution of India for enforcement of Fundamental Rights.
M.C. Setalvad, Attorney General for India, M. K. Nambiyar, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the petitioners.
T. M. Sen, for the State of Madras.
K. V. Suryanarayana Iyer, Advocate General for the State of Kerala and T. M. Sen, for the State of Kerala.
M. R. Krishna Pillai, for respondents Nos.
Purshottam Tricumdas and M. R. Krishna Pillai, for respondent No. 12 in Petitions Nos. 40 and 41 of 1956.
K.R. Krishnaswami, for respondents Nos. 11, 13 17 in Petn.
No. 443 of 55.
Purshottam Tricumdas and K. R. Krishnaswami, for respondent No. 12 in Petn.
No. 443 of 55.
A.V. Viswanatha Sastri and M. R. Krishna Pillai, for Intervener No. 1.
Sardar Bahadur, for Intervener No. 2.
M. R. Krishna Pillai, for Intervener No. 3. 1959.
March 4.
The Judgment of Das, C. J., Bhagwati, Sinha and Subba Rao, JJ., was delivered by Das, C. J. Wanchoo, J., delivered a separate Judgment.
DAS, C. J.
The circumstances leading up to the presentation of the above noted three petitions under article 32, which have been heard together, may be shortly stated : In pre British times the Kavalappara Moopil Nair, who was the senior most male member of Kavalappara Swaroopam of dynastic family, was the ruler of the Kavalappara territory situate in Walluvanad 320 Taluk in the district of South Malabar.
He was an independent prince or chieftain having sovereign rights over his territory and as such was the holder of the Kavalappara sthanam, that is to say, " the status and the attendant property of the senior Raja ".
Apart from the Kavalappara sthanam, which was a Rajasthanam the Kalvappara Moopil Nair held five other sthanams in the same district granted to his ancestors by the superior overlord, the Raja of Palghat, as reward for military services rendered to the latter.
He also held two other sthanams in Cochin, granted to his ancestors by another overlord, the Raja of Cochin, for military services.
Each of these sthanams has also properties attached to it and such properties belong to the Kavalappara Moopil Nair who is the sthanee thereof.
On the death in 1925 of his immediate predecessor the petitioner in Petition No. 443 of 1955 became the Moopil Nair of Kavalappara and as such the holder of the Kavalappara sthanam to which is attached the Kavalappara estate and also the holder of the various other sthanams in Malabar and Cochin held by the Kavalappara Moopil Nair.
The petitioner in Petition No. 443 of 1955 will hereafter be referred to as " the sthanee petitioner ".
According to him all the properties attached to all the sthanams belong to him and respondents 2 to 17, who are the junior members of the Kavalappara family or tarwad, have no interest in them.
The Madras Marumakkattayam Act (Mad. XXII of 1932) passed by the Madras Legislature came into force on August 1, 1933.
This Act applied to tarwads and not to sthanams and section 42 of the Act gave to the members of a Malabar tarwad a right to enforce partition of tarward properties or to have them registered as impartible.
In March 1934 respondents 10 to 17, then constituting the entire Kavalappara tarwad, applied under section 42 of the said Act for registration of their family as an impartible tarwad.
In spite of the objection raised by the sthanee petitioner, the SubCollector ordered the registration of the Kavalappara tarwad as impartible.
The sthanee petitioner applied to the High Court of Madras for the issue of a writ to 321 quash the order of the Sub Collector, but the High Court declined to do so on the ground that the sthanee petitioner had no real grievance as the said order did not specify any particular property as impartible property.
While this decision served the purpose of the sthanee petitioner, it completely frustrated the object of respondents 10 to 17.
On April 10, 1934, therefore, respondents 10 to 17 filed O. section No. 46 of 1934 in the court of the Subordinate Judge of Ottapalam for a declaration that all the properties under the management of the defendant (meaning the sthanee petitioner) were tarwad properties belonging equally and jointly to the plaintiffs (meaning the respondents 10 to 17 herein) and the defendant, i.e., the sthanee petitioner, and that the latter was in management thereof only as the Karnavan and manager of the tarwad.
The sthanee petitioner contested the suit asserting that he was the Kavalappara Moopil Nair and as such a sthanee and that the properties belonged to him exclusively and that the plaintiffs (the respondents 10 to 17 herein) had no interest in the suit properties.
By his judgment pronounced on February 26, 1938, the Subordinate Judge dismissed the O. section 46 of 1934.
The plaintiff (the respondents 10 to 17 herein) went up in appeal to the Madras High Court, which, on April 9, 1943, allowed the appeal and reversed the decision of the Subordinate Judge and decreed the suit.
That judgment will be found reported in Kuttan Unni vs Kochunni (1).
The defendant, i.e., the sthanee petitioner herein carried the matter to the Privy Council and the Privy Council by its.
judgment, pronounced on July 29, 1947, reversed the judgment of the High Court and restored the decree of dismissal of the suit passed by the Subordinate Judge.
In the meantime in 1946 respondents 10 to 17 had filed a suit (O. section 77 of 1121) in the Cochin Court claiming similar reliefs in respect of the Cochin sthanam.
After the judgment of the Privy Council was announced, respondents 10 to 17 withdrew the Cochin suit.
The matter rested here for the time being.
(1) (1943) I.LR.
41 322 On February 16, 1953, respondents 10 to 17 took the initiative again and presented a Memorial to the Madras Government asking that legislation be undertaken to reverse the Privy Council decision.
The Government apparently did not think fit to take any action on that Memorial.
Thereafter a suit was filed in the court of the Subordinate Judge at Ottapalam by respondents 2 to 9 who were then the minor members of the tarwad claiming Rs. 4,23,000 as arrears of maintenance and Rs. 44,000 as yearly maintenance for the future.
The suit was filed in forma pauperism There were some interlocutory proceedings in this suit for compelling the defendant (i.e., the sthanee petitioner) to deposit the amount of the maintenance into court which eventually came up to this Court by special leave but to which it is not necessary to refer in detail.
During the pendency of that paper suit, the sthanee petitioner, on August 3, 1955, executed two deeds of gift, one in respect of the Palghat properties in favour of his wife and two daughters who are the petitioners in.
Petition No. 40 of 1956 and the second in respect of the Cochin properties in favour of his son who is the petitioner in Petition No. 41 of 1956.
Meanwhile respondents 2 to 17 renewed their efforts to secure legislation for the reversal of the decree of the Privy Council and eventually on August 8, 1955, procured a private member of the Madras Legislative Assembly to introduce a Bill (L. A. Bill No. 12 of 1955) intituled " The Madras Marumakkathayam (Removal of Doubts) Bill, 1955 " with only two clauses on the allegation, set forth in the statement of objects and reasons appended to the Bill, that certain decisions of courts of law had departed from the age old customary law of Marumakkathayees with regard to stha nams and sthanam properties and that those decisions were the result of a misapprehension of the customary law which governed the Marumakkathayees from ancient times and tended to disrupt the social and economic structure of several ancient Marumakkathayam families in Malabar in that Karnavans of tarwad were encouraged to claim to be sthanees and thus deny the legitimate rights of the members of tarwads 323 with the result that litigation had arisen or were pending.
It was said to be necessary, in the interests of harmony and well being of persons following the Marumakkathayam law, that the correct position of customary law governing sthanams and sthanam properties should be clearly declared.
This Bill came before the Madras Legislative Assembly on August 20, 1955, and was passed on the same day.
The Bill having been placed before the Madras Legislative Council, the latter passed the same on August 24, 1955.
The assent of the President to the Bill was obtained on October 15, 1955, and the Act intituled "the Madras Murumakkathayam (Removal of Doubts) Act, 1955 " being Madras Act 32 of 1955 and hereinafter referred to as the impugned Act, was published in the official gazette on October 19, 1955.
Section I of the impugned Act is concerned with the short title and its application.
Section 2, which is material for our purposes, is expressed in the following terms: " 2.
Certain kinds of sthanam properties declared to be tarwad properties: Notwithstanding any decision of Court, any sthanam in respect of which (a) there is or had been at any time an intermingling of the properties of the sthanam and the properties of the tarwad, or (b)the members of the tarwad have been receiving maintenance from the properties purporting to be sthanam properties as of right, or in pursuance of a custom or otherwise, or (c)there had at any time been a vacancy caused by there being no male member of the tarwad eligible to succeed to the sthanam, shall be deemed to be and shall be deemed always to have been a Marumakkathayam tarwad and the properties appertaining to such a sthanam 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, (Madras Act XXII of 1933), shall apply.
Explanation All words and expressions used in this Act shall bear the same meaning as in the Madras 324 Marumakkathayam Act, 1932 (Madras Act XXII of 1933).
" Almost immediately after the publication of the impugned Act in the gazette, respondents 2 to 17 published notices in " Mathrubumi ", a Malayalam daily paper with large circulation in Malabar, Cochin and Travancore, to the effect that by reason of the passing of the impugned Act, Kavalappara estate had become their tarwad properties and that rents could be paid to the sthanee petitioner only as the Karnavan of the properties and not otherwise.
The notices further stated that the donees under the two deeds of gift executed by the sthanee petitioner were not entitled to the properties conveyed to them and should not be paid any rent at all.
After the passing of the impugned Act one of the respondents filed another suit, also in forma pauperis, in the same court.
It is also alleged by the petitioners that respondents 2 to 17 are contemplating the filing of yet another suit for partition, taking advantage of the provisions of the impugned Act.
It was in these circumstances detailed above that the Kavalappara Moopil Nair, i.e., the sthanee petitioner, on December 12, 1955, filed the present petition No. 443 of 1955 under article 32 of the Constitution.
This was followed by Petition No. 40 of 1956 by his wife and two daughters and Petition No. 41 of 1956 by his son.
Both the last mentioned petitions were filed on February 3, 1956.
The first respondent in all the three petitions is the State of Madras and respondents 2 to 17 are the members of the sthanee petitioner 's tarwad.
In his petition the sthanee petitioner prays " that a writ of Mandamus or any other proper ,writ, order or directions be ordered to issue for the purpose of enforcing his fundamental rights, directing the respondents to forbear from enforcing any of the provisions of the Madras Act 32 of 1955 against the petitioner, his Kavalappara sthanam and Kavalappara estate, declaring the said Act to be unconstitutional and invalid ".
The prayers in the other two petitions are mutatis mutandis the same.
Shri Purshottam Tricumdas appearing for some of 325 the respondents has taken a preliminary objection as to the maintainability of the petitions.
The argument in support of his objection has been developed and elaborated by him in several ways.
In the first place, he contends that the petitions, in so far as they pray for the issue of a writ of Mandamus, are not maintainable because the petitioners have an adequate remedy in that they can agitate the questions now sought to be raised on these petitions and get relief in the pauper suit filed by one of the respondents after the passing of the impugned Act.
This argument overlooks the fact that the present petitions are under article 32 of the Constitution which is itself a guaranteed right.
In Rashid Ahmed vs Municipal Board, Kairana (1) this Court repelled the submission of the Advocate General of Uttar Pradesh to the effect that, as the petitioner had an adequate legal remedy by way of appeal, this Court should not grant any writ in the nature of the prerogative writ of Mandamus or Certiorari and observed: " There can be no question that the existence of ,an adequate legal remedy is a thing to be taken into consideration in the matter of granting writs, but the powers given to this Court tinder article 32 are much wider and are not confined to issuing prerogative writs only." Further, even if the existence of other adequate legal remedy may be taken into consideration by the High Court in deciding whether it should issue any of the prerogative writs on an application under article 226 of the Constitution, as to which we say nothing now this Court cannot, on a similar ground, decline to entertain a petition under article 32, for the right to move this Court by appropriate proceedings for the enforcement of the rights conferred by Part III of the Constitution is itself a guaranteed right.
It has accordingly been held by this Court in Romesh Thappar vs The State of Madras (2) that under the Constitution this Court is constituted the protector and guarantor of fundamental rights and it cannot, consistently with the responsibility so laid upon it, (1) ; (2) ; 326 refuse to entertain applications seeking the protection of this Court against infringement of such rights, although such applications are made to this Court in the first instance without resort to a High Court having concurrent jurisdiction in the matter.
The mere existence of an adequate alternative legal remedy cannot per se be a good and sufficient ground for throwing out a petition under article 32, if the existence of a fundamental right and a breach, actual or threatened, of such right is alleged and is prima facie established on the petition.
The second line of argument advanced by learned counsel is that the violation of the right to property by private individuals is not within the purview of article 19(1)(f) or article 31(1) and that a person whose right to property is infringed by a private individual must, therefore, seek his remedy under the ordinary law and not by way of an application under article 32.
In support of this part of his argument, learned counsel relies on the decision of this Court in P. D. Shamdasani vs Central Bank of India Ltd. (1).
In that case the respondent Bank had, in exercise of its right of lien under its articles of association, sold certain shares belonging to the petitioner and then the latter started a series of proceedings in the High Court challenging the right of the Bank to do so.
After a long lapse of time, after all those proceedings had been dismissed, the petitioner instituted a suit against the Bank challenging the validity of the sale of his shares by the Bank.
The plaint was rejected by the court under O. 7, r. 11(d) of the Code of Civil Procedure as barred by limitation.
Thereupon the petitioner filed an application under article 32 of the Constitution praying that all the adverse orders made in the previous proceedings be quashed and the High Court be directed to have " the above suit set down to be heard as undefended and pronounce judgment against the respondent or to make such orders as it thinks fit in relation to the said suit ".
It will be noticed that the petitioner had no grievance against the State as defined in article 12 of the Constitution and his petition (1)[1952] S.C.R. 391.
327 was not founded on the allegation that his fundamental right under article 19(1)(f) or article 31(1) had been infringed by any action of the State as so defined or by anybody deriving authority from the State.
The present position is, however, entirely different, for the gravamen of the complaint of the sthanee petitioner and the other petitioners, who claim title from him, is directly against the impugned Act passed by the Madras Legislature, which is within the expression" State " as defined in article 12.
Therefore in the cases now before us the petitions are primarily against the action of the State and respondents 2 to 17 have been impleaded because they are interested in denying the petitioner 's rights created in their favour by the impugned Act.
Indeed by means of suits and public notices, those respondents have in fact been asserting the rights conferred upon them by the impugned Act.
In these circumstances, the petitioners ' grievance is certainly against the action of the State which by virtue of the definition of that term given in article 12 of the Constitution, includes the Madras Legislature and it cannot certainly be said that the subject matters of the present petitions comprise disputes between two sets of private individuals unconnected with any State action.
Clearly disputes are between the petitioners on the one hand and the State and persons claiming under the State or under a law made by the State on the other hand.
The common case of the petitioners and the respondents, therefore, is that the impugned Act does affect the right of the petitioners to hold and enjoy the properties as sthanam properties; but, while the petitioners contend that the law is void, the respondents maintain the opposite view.
In our opinion these petitions under article 32 are not governed by our decision in P. D. Shamdasani 's case (1) and we see no reason why, in the circumstances, the petitioners should be debarred from availing themselves of their constitutional right to invoke the jurisdiction of this Court for obtaining redress against infringement of their fundamental rights.
(1)[1952] S.C.R. 391, 328 The third argument in support of the preliminary point is that an application under article 32 cannot be maintained until the State has taken or threatens to take any action under the impugned law which action, if permitted to be taken, will infringe the petitioners ' fundamental rights.
It is true that the enactments abolishing estates contemplated some action to be taken by the State, after the enactments came into force, by way of issuing notifications, so as to vest the estates in the State and thereby to deprive the proprietors of their fundamental right to hold and enjoy their estates.
Therefore, under those enactments some overt act had to be done by the State before the proprietors were actually deprived of their right, title and interest in their estates.
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.
But 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 is said to be an instance, of such enactment.
In such a case the infringement of the fundamental right is complete eo instanti the passing of the enactment and, therefore, there can 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.
To say that a person, whose fundamental right has been infringed by the mere operation of an enactment, is not entitled to invoke the jurisdiction of this Court under article 32, for the enforcement of his right, will be to deny him the benefit of a salutary constitutional remedy which is itself his fundamental right.
The decisions of this Court do not compel us to do so.
In the State of Bombay vs United Motors (India) Limited (1) the petitioners applied to the High Court on November 3, 1952 under article 226, of the Constitution challenging the validity of the Bombay Sales Tax Act, 1952, which came into force on November 1, 1952.
No notice had (1) ; 329 been issued, no assessment proceeding had been started and no demand had been made on the petitioners for the payment of any tax under the impugned Act.
It should be noted that in that petition one of the grounds of attack was that the Act required the dealers, on pain of penalty, to apply for registration in some cases and to obtain a license in some other cases as a condition for the carrying on of their business, which requirement, without anything more, was said to have infringed the fundamental rights of the petitioners under article 19(1)(g) of the Constitution and no objection could, therefore, be taken to the maintainability of the application.
Reference may also be made to the decision of this Court in Himmatlal Harilal Mehta vs The State of Madhya Pradesh (1).
In that case, after cotton was declared, on April 11, 1949, as liable to sales tax under the Central Provinces and Berar Sales Tax Act, 1947, the appellant commenced paying the tax in respect of the purchases made by him and continued to pay it till December 31, 1950.
Having been advised that the transactions (lone by him in Madhya Pradesh were not " sales " within that State and that consequently he could not be made liable to pay sales tax in that State, the appellant declined to pay the tax in respect of the purchases made during the quarter ending March 31, 1951.
Apprehending that he might be subjected to payment of tax without the authority of law, the appellant presented an application to the High Court of Judicature at Nagpur under article 226 praying for an appropriate writ or writs for securing to him protection from the impugned Act and its enforcement by the State.
The High Court declined to issue a writ and dismissed the petition on the ground that a mandamus could be issued only to compel an authority to do or to abstain from doing some act and that it was seldom anticipatory and was certainly never issued where the action of the authority was dependent on some action of the appellant and that in that case the appellant had not even made his return and no demand for the tax could be made from him.
(1) ; 42 330 Being aggrieved by that decision of the High Court, the petitioner in that case came up to this Court on appeal and this Court held that a threat by the State to realise the tax from the assessee without the authority of law by using the coercive machinery of the impugned Act was a sufficient infringement of his fundamental right which gave him a right to seek relief under article 226 of the Constitution.
It will be noticed that the Act impugned in that case had by its terms made it incumbent on all dealers to submit returns, etc., and thereby imposed restrictions on their fundamental right to carry on their businesses under article 19(1) (g).
The present case, however, stands on a much stronger tooting.
The sthanee petitioner is the Kavalappara Moopil Nair and as such holds certain sthanams and the petitioners in Petitions Nos. 40 and 41 of 1956 derive their titles from him.
According to the petitioners, the sthanee petitioner was absolutely entitled to all the properties attached to all the sthanams and respondents 2 to 17 had no right, title or interest in any of the sthanam properties.
Immediately after the passing of the impugned Act, the Madras Marumakkathayam Act, 1932, became applicable to the petitioners ' sthanams and the petitioners ' properties became subject to the obligations and liabilities imposed by the last mentioned Act.
On the passing of the impugned Act, the sthanee petitioner immediately became relegated from the status of a sthanee to the status of a Karnavan and manager and the sthanam properties have become the tarwad properties and respondents 2 to 17 have automatically become entitled to a share in those properties along with the petitioners.
The right, title or interest claimed by petitioners in or to their sthanam properties is, by the operation of the statute itself and without anything further being done, automatically taken away or abridged and the impugned Act has the effect of automatically vesting in respondents 2 to 17 an interest in those properties as members of the tarwad.
Indeed respondents 2 to 17 are asserting their rights and have issued public notices on the basis thereof and have also instituted a suit on the strength of the rights 331 created in them by the impugned Act.
Nothing fur; the remains to be done to infringe the petitioners right to the properties as sthanam properties.
It is true that the sthanee petitioner or the other petitioners deriving title from him are still in possession of the sthanam properties, but in the eye of law they no longer possess the right of the sthanee and they cannot, as the sthanee or persons deriving title from the sthanee, lawfully claim any rent from the tenants.
In view of the language employed in section 2 quoted above and its effect the petitioners can legitimately complain that their fundamental right to hold and dispose of the sthanam properties has been injured by the action of the Legislature which is " State " as defined in article 12 of the Constitution.
In the premises, the petitioners are prima facie entitled to seek their fundamental remedy under article 32.
The next argument in support of the objection as to the maintainability of these petitions is thus formulated: The impugned Act is merely a piece of a declaratory legislation and does not contemplate or require any action to be taken by the State or any other person and, therefore, none of the well known prerogative writs can afford an adequate or appropriate remedy to a person whose fundamental right has been infringed by the mere passing of the Act.
If such a person challenges the validity of such an enactment, he must file a regular suit in a court of competent jurisdiction for getting a declaration that the law is void and, therefore, cannot and does not effect his right.
In such a suit he can also seek consequential reliefs by way of injunction or the like, but he cannot avail himself of the remedy under article 32.
In short, the argument is that the proceeding under article 32 cannot be converted into or equated with a declaratory suit under section 42 of the Specific Relief Act.
Reference is made, in support of the aforesaid contention, to the following passage in the judgment of Mukherjea, J., as he then was, in the case of Chiranjit Lal Chowdhuri vs The Union of India(1) : " As regards the other point, it would appear from (1)[1950] S.C.R. 869, 900.
332 the language of article 32 of the Constitution that the sole object of the article is the enforcement of fundamental rights guaranteed by the Constitution.
A proceeding under this article cannot really have any affinity to what is known a,; a declaratory suit".
But further down on the same page his Lordship said: Any way, article 32 of the Constitution gives us very wide discretion in the matter of framing our writs to suit the exigencies of particular cases, and the application of the petitioner cannot be thrown out simply on the ground that the proper writ or direction has not been prayed for ".
It should be noted that though in that case the petitioner prayed, inter alia, for a declaration that the Act complained of was void under article 13 of the Constitution it was not thrown out on that ground.
The above statement of the law made by Mukhekjea, J., is in accord with the decision of this Court in the earlier case of Rashid Ahmed vs Municipal Board, Kairana (1).
The passage from our judgment in that case, which has already been quoted above, also acknowledges that the powers given to this Court by article 32 are much wider and are not confined to the issuing of prerogative writs only.
The matter does not rest there.
In T. C. Basappa vs T. Nagappa (2) Mukherjea, J., again expressed the same view: (Page 256).
" The language used in articles 32 and 226 of our Constitution is very wide and the powers of the Supreme Court as well as of all the High Courts in India extend to issuing of orders, writs or directions including writs in the nature of habeas corpus, mandamus, quo warranto, prohibition and certiorari as may be considered necessary for enforcement of the fundamental rights and in the case of the High Courts, for other purposes as well.
In view of the express provisions of our Constitution we need not now look back to the early history or the procedural technicalities of these writs in English law, nor feel oppressed by any difference or change of opinion expressed in particular cases by English Judges ".
(1) ; (2) ; , 256. 333 In Ebrahim Vazir Mayat vs The State of Bombay (1) the order made by the majority of this Court was framed as follows: " As a result of the foregoing discussion we declare section 7 to be void under Article 31(1) in so far as it conflicts 'which the fundamental right of a citizen of India under article 19(1) (e) of the Constitution and set it aside.
The order will, however, operate only upon proof of the fact that the appellants are citizens of India.
The case will, therefore, go back to the High Court for a finding upon this question.
It will be open to the High Court to determine this question itself or refer it to the court of District Judge for a finding ".
That was a case of an appeal coming from a High Court and there was no difficulty in remanding the case for a finding, on an issue, but the fact to note is that this Court did make a declaration that section 7 of the Act was void.
We are not unmindful of the fact that in the case of Maharaj Umeg Singh vs The State of Bombay(2) which came up before this Court on an application under article 32, the petitioner had been relegated to filing a regular suit in a proper court having jurisdiction in the matter.
But on a consideration of the authorities it appears to be well established that this Court 's powers under article 32 are wide enough to make even a declaratory order where that is the proper relief to be given to the aggrieved party.
The present case appears to us precisely to be an appropriate case, if the impugned Act has taken away or abridged the petitioners ' right under article 19(1) (f) by its own terms and without anything more being done and such infraction cannot be justified.
If, therefore, the contentions of the petitioners be well founded, as to which we say nothing at present, a declaration as to the invalidity of the impugned Act together with the consequential relief by way of injunction restraining the respondents and in particular respondents 2 to 17 from asserting any rights under the enactment so declared void will be the only appropriate reliefs which the petitioners will be entitled to get.
Under article 32 we must, in appropriate cases, exercise our discretion and (1) ; , 941 (2) ; 334 frame our writ or order to suit the exigencies of this case brought about by the alleged nature of the enactment we are considering.
In a suit for a declaration of their titles on the impugned Act being declared void, respondents 2 to 17 will certainly be necessary parties, as persons interested to deny the petitioners ' title.
We see no reason why, in an application under article 32 where declaration and injunction are proper reliefs, respondents 2 to 17 cannot be made parties.
In our opinion, therefore, there is no substance in the argument advanced by learned counsel on this point.
The last point urged in support of the plea as to the non maintainability of these applications is that this Court cannot, on an application under article 32, embark upon an enquiry into disputed question of fact.
The argument is developed in this, way.
In the present case the petitioners allege, inter alia, that the impugned Act has deprived them of their fundamental right to the equal protection of the law and equality before the law guaranteed by article 14 of the Constitution.
Their complaint is that they, have been discriminated against in that they and their sthanam properties have been singled out for hostile treatment by the Act.
The petitioners contend that there is no other sthanam which comes within the purview of this enactment and that they and the sthanams held by them are the only target against which this enactment is directed.
The res pondents, on the other hand, contend that the language of section 2 is wide and general and the Act applies to all sthanams to which one or more of the conditions specified in section 2 may be applicable and that this Court cannot, on an application under article 32, look at any extraneous evidence but must determine the issue on the terms of the enactment alone and that in any event this Court cannot go into disputed questions of fact as to whether there are or are not other sthanees or sthanams similarly situate as the petitioners are.
In support of his contention Shri Purshottam Tricumdas refers us to some decisions where some of the High Courts have declined to entertain applications under article 226 of the Constitution involving disputed 335 questions of fact and relegated the petitioners to regular suits in courts of competent jurisdiction.
We are not called upon, on this occasion, to enter into a discussion or express any opinion as to the jurisdiction and power of the High Courts to entertain and to deal with applications under article 226 of the Constitution where disputed questions of fact have to be decided and we prefer to confine our observations to the immediate problem now before us, namely, the limits of the jurisdiction and power of this Court *hen acting under article 32 of the Constitution.
Shri Purshottam Tricumdas concedes that the petitioners have the fundamental right to approach this Court for relief against infringement of their fundamental right.
What he says is that the petitioners have exercised that fundamental right and that this fundamental right goes no further.
in other words he maintains that nobody has the fundamental right that this Court must entertain his petition or decide the same when disputed questions of fact arise in the case.
We do not think that that is a correct approach to the question.
Clause (2) of article 32 confers power on this Court to issue directions or orders or writs of various kinds referred to therein.
This Court may say that any particular writ asked for is or is not appropriate or it may say that the petitioner has not established any fundamental right or any breach thereof and accordingly dismiss the petition.
In both cases this Court decides the petition on merits.
But we do not countenance the proposition that, on an application under article 32, this Court may decline to entertain the same on the simple ground that it involves the determination of disputed questions of fact or on any other ground.
If we were to accede to the aforesaid contention of learned counsel, we would be failing in our duty as the custodian and protector of the fundamental rights.
We are not unmindful of the fact that the view that this Court is bound to entertain a petition under article 32 and to decide the same on merits may encourage litigants to file many petitions under article 32 instead of proceeding by way of a suit.
But that consideration cannot, by itself, be a cogent reason 336 for denying the fundamental right of a person to approach this Court for the enforcement of his fundamental right which may, prima facie, appear to have been infringed. 'Further, questions of fact can and very often are dealt with on affidavits.
In Chiranjitlal Chowdhuri 's case (1) this Court did not reject the petition in limine on the ground that it required the determination of disputed questions of fact as to there being other companies equally guilty of mismangement.
It went into the facts on the affidavits and held, inter alia, that the petitioner had not discharged the onus that lay on him to establish his charge of denial of equal protection of the laws.
That decision was clearly one on merits and is entirely different from a refusal to entertain the petition at all.
In Kathi Raning Rawat vs The State of Saurashtra (2) the application was adjourned in order to give the respondent in that case an opportunity to adduce evidence before this Court in the form of an affidavit.
An affidavit was filed by the respondent setting out facts and figures relating to an increasing number of incidents of looting, robbery, dacoity, nose cutting and murder by marauding gangs of dacoits in certain areas of the State in support of the claim of the respondent State that " the security of the State and public peace were jeopardised and that it became impossible to deal with the offences that were committed in different places in separate courts of law expeditiously ".
This Court found no difficulty in dealing with that application on evidence adduced by affidavit and in upholding the validity of the Act then under challenge.
That was also a decision on merits although there were disputed questions of fact regarding the circumstances in which the impugned Act came to be passed.
There were disputed questions of fact also in the case of Ramkrishna Dalmia vs Shri Justice section R. Tendolkar (3).
The respondent State relied on the affidavit of the Principal Secretary to the Finance Ministry setting out in detail the circumstances which lead to the issue of the impugned notification and the matters (1) ; , 900.
(2) ; (3) ; 337 recited therein and the several reports referred to in the said affidavit.
A similar objection was taken by learned counsel for the petitioners in that case as has now been taken.
It was urged that reference could not be made to any extraneous evidence and that the basis of classification must appear on the face of the notification itself and that this Court should not go into disputed questions of fact.
This Court overruled that objection and held that there could be no objection to the matters brought to the notice of the Court by the affidavit of the Principal Secretary being taken into consideration in order to ascertain whether there was any valid basis for treating the petitioners and their companies as a class by themselves.
As we have already said, it is possible very often to decide questions of fact on affidavits.
If the petition and the affidavits in support thereof are not convincing and the court is not satisfied that the petitioner has established his fundamental right or any breach thereof, the Court may dismiss the petition on the ground that the petitioner has not discharged the onus that lay on him.
The court may, in some appropriate cases, be inclined to give an opportunity to the parties to establish their respective cases by filing further affidavits or by issuing a commission or even by setting the application down for trial on evidence, as has often been done on the original sides of the High Courts of Bombay and Calcutta, or by adopting some other appropriate procedure.
Such occasions will be rare indeed and such rare cases should not in our opinion, be regarded as a cogent reason for refusing to entertain the petition under article 32 on the ground that it involves disputed questions of fact.
For reasons given above we are of opinion that none of the points urged by learned counsel for the respondents in support of the objection to the maintainability of these applications can be sustained.
These applications will, therefore, have to be heard on merits and we order accordingly.
The respondents represented by Shri Purshottam Tricumdas must pay one set of costs of the hearing Of this preliminary objection before us to the petitioners, 43 338 WANCHOO, J.
I have read the judgment just delivered by my Lord the Chief Justice, with which my other brethren concur, with great care.
With the utmost respect for my brethren for whom I have the highest regard, I must state that if these applications were based only on the infringement of article 14 of the Constitution, I would have no hesitation in dismissing them as not maintainable.
I need riot elaborate my reasons in this case and shall content myself by observ ing that where the law, as in this case, is general in terms and there is no question of its direct enforcement by the State in the form, for example, of grant of licences, issue of notices, submission of returns, and so on, actually resulting in wholesale abuse of its provisions, this Court will not permit an applicant under article 32 to lead evidence to show that the law was meant to hit him alone.
However, the applicants also rely on the infringement of the fundamental right guaranteed under article 19(1)(f).
As to that, I have doubts whether an application under article 32 challenging a general law of this kind, which affects one or other.
of the fundamental rights guaranteed under article 19, can be maintained, in the absence of any further provision therein for direct enforcement of its provisions by the State in the form already indicated above, by a person who merely apprehends that he might in certain eventualities be affected by it.
However, on the present occasion, I do not propose to press my doubts to the point of dissent and therefore concur with the proposed order.
Preliminary objection overruled.
| IN-Abs | The petitioner in Petition No. 143 was the Moopil Nair of the Kavalappara sthanam and, as the sthanee, claimed to be the sole proprietor of the sthanam properties.
The respondents Nos. 2 to 17, who were the junior members of the Kavalappara tarward or family, resisted the claim on the ground that the properties were tarward properties and they had rights in them.
There was litigation between the parties and ultimately the Privy Council held in favour of the petitioner.
The petitioner transferred some of the properties to his wife and two daughters and son and they were the petitioners in the two other petitions.
The parties were governed by the Marumakkathayam Law and in 1955 the Madras Legislature, purporting to remove certain misapprehensions evident in decisions of courts, passed the Madras Marumakkathayani (Removal of Doubts) Act, 1955 (Act 32 of 1955) which by section 2 provided as follows: " 2.
Certain kinds of sthanam properties declared to be tarward properties : Notwithstanding any decision of Court, any sthanam in respect of which (a)there is or had been at any time an intermingling of the properties of the sthanam and the properties of the tarward, or (b)the members of the tarwad have been receiving main tenance from the properties purporting to be sthanam properties as of right, or in pursuance of a custom or otherwise, or (c)there had at any time been a vacancy caused by there being no male member of the tarwad eligible to succeed to the sthanam, shall be deemed to be and shall be deemed always to have been a Marumakkathayam tarwad and the properties appertaining to such a sthanam 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, (Madras Act XXII Of 1932), shall apply." 317 Immediately after the publication of the Act, the respondents Nos. 2 to 17, published notices in the press that by reason of the passing of the Act, Kavalappara estate had become their tarwad property and that rents could be paid to the sthanee only as the Karnavan of the properties and not otherwise.
The notices further stated that the donees under the two deeds of gift executed by the sthanee were not entitled to the properties conveyed to them and should not be paid any rents at all.
One of the respondents filed a partition suit and others also contemplated doing the same.
The petitioners sought for a writ of mandamus or any other writ or order directing the respondents to forbear from enforcing the impugned Act against the sthanee and the sthanam estate and declaring the Act to be unconstitutional and invalid.
Preliminary objection was raised on behalf of some of the respondents as to the maintainability of the petitions and it was contended that (1) the prayer for a writ of mandamus Was not maintainable since there was an adequate remedy in the partition suit filed by one of the respondents ; (2) that violation of right of property by private individuals was not within the purview of article 19(1)(f) or article 31(1) and the remedy was not by way of application under article 32; (3) that no application under article 32 could be maintained until the State had taken or threatened to take any action under the impugned law that would infringe fundamental rights; (4) that the proceeding under article 32 could not be converted into or equated with a declaratory suit under section 42 Of the Specific Relief Act in and (5) that this court could not, on an application under article 32, embark upon an enquiry into disputed questions of fact.
Held (per Das, C. J., Bhagwati, Sinha and Subba Rao, jj.), that all the contentions must be negatived and all the preliminary objections must fail.
The right to enforce a fundamental right conferred by the Constitution was itself a fundamental right guaranteed by article 32 of the Constitution and this court could not refuse to entertain a petition under that Article simply because the petitioner might have any other adequate, alternative, legal remedy.
Rashid Ahmed vs Municipal Board, Kairana, ; and Romesh Thappar vs The State of Madras, [1950] S.C.R. 594, referred to.
In the instant cases as the grievance of the petitioners was primarily against the impugned Act passed by the Madras Legislature, which was a State as defined by article 12 of the Constitution and the dispute was not one between two sets of private individuals but between the petitioners on the one hand and the State and persons claiming under a law made by the State on the other, article 32 must apply.
P.D. Shamdasani vs Central Bank of India Ltd., [1952] S.C.R. 391, distinguished and held inapplicable.
Where an enactment such as the impugned Act, unlike 318 others 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 rights immediately it came into force, there was no reason why the aggrieved person should not immediately be entitled to seek the ' remedy under article 32 Of the Constitution.
State of Bombay vs United, Motors (India) Limited, ; and Himmatlal Harilal Mehta vs The State of Madhya Pradesh, , referred to.
In view of the language used in section 2 of the impugned Act and its effect, there could be no doubt that the petitioners could legitimately complain that their fundamental right to hold and dispose of the sthanam properties have been violated by the action of the Legislature.
Article 32 of the Constitution conferred wide powers on this Court and such powers were not confined to the issuing of prerogative writs alone.
In appropriate cases, this court had the right in its discretion to frame its writs or orders suitable to the exigencies created by enactments.
It was clear on the authorities that this Court could, where the occasion so required, make even a declaratory order with consequential relief under article 32 of the Constitution.
Chiranjit Lal Chowdhury vs The Union of India, [1950] S.C.R. goo, Rashid Ahmed vs Municipal Board, Kairana, [1950] S.C.R. 566, T. C. Basappa vs T. Nagappa, ; and Ebrahim Vazir Marat vs The State of Bombay, [1954] S.C.R. 933, relied on.
Maharaj Umeg Singh vs The State Of Bombay, [1955] 2 S.C.R. 164, considered.
This court would fail in its duty as the custodian and pro tector of the fundamental rights if it were to decline to entertain a petition under article 32 simply because it involved the determination of disputed questions of fact.
Clause (2) of article 32 conferred on this court the power to issue directions or orders or writs of various kinds mentioned therein and in dismissing a petition, it had either to hold that any particular writ asked for was not appropriate to the occasion or that the petitioner had failed to establish a fundamental right or its breach .
In either case, however, it had to decide the petition on merits.
Chiranjit Lal Chowdhuri vs The Union of India, [1950] S.C.R. 869,Kathi Raning Rawat vs The State of Saurashtra, ; and Ramkrishna Dalmia vs Shri ' justice section R. Tendolkar; , , referred to.
In appropriate cases opportunity might also be given to the parties to establish their cases by further affidavits, or by issuing a commission or even by setting the application down for trial on evidences.
Per Wanchoo, J. If the petitions were based solely on the infringement of article 14, there could be no doubt that they would not be maintainable.
Even though they were based on the 319 infringement of article 19(1)(f) also, their maintainability would still be in doubt in the absence of any further provision in the impugned Act for its direct enforcement by the State.
|
Special Leave Petition (Civil) Nos.
16041 42/88.
From the Judgment and Order dated 27.7.1988 of the Karnataka High Court in W.P.
No 9173/86 and W.A.
No 2707/85.
WITH SLP (C) Nos. 12258, 12254, 12260/90 & 8608/91 R.N. Narasimhamurthy, S.S. Javali, S.N. Bhat and Ravi P. Wadhwani for the Petitioners.
M.S. Nesargi, R. Jagannath Goulay, M.K. Dua, M. Veerappa, K.H. Nobin Singh, S.K. Kulkarni and Surya Kant for the Respondents.
The following Order of the Court was delivered by K. JAYACHANDRA REDDY, J.
In all these special leave petitions the common question that arises for consideration is whether the provisions of the Karnataka Land Reforms Act, 1961 as amended in 1974 (`Act ' for short) cease to be applicable in all respects to the lands which came within the purview of the Urban Land (Ceiling and Regulation) Act, 1976 ( 'Ceiling Act ' for short).
The lands involved in these matters are covered by the development plan by the Belgaum City Town Planning authority as per the Master Plan for the said City and they are included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling Act.
In the year 1972 the Karnataka Legislature passed a resolution under Article 252 of the Constitution to the effect that imposing a ceiling on urban immovable property and the acquisition of such property in excess of the ceiling limit for public purposes and all the matters connected therewith shall be regulated in the State by Parliament Qby law.
The State Legislature thus divested itself of the legislative competence to enact law in respect of subject matter of the resolution.
On 1.4.74 the amended Karnataka Land Reforms Act was enacted and under the said Act the tenant of the land covered by the Act is entitled to the grant of occupancy rights after making an application under the Act.
This Act came into force with effect from 2.1.85.
But for the purpose of grant of occupancy rights 1.4.74 was the relevant date.
While so in the year 1975 the Governor of Karnataka passed the Urban Aggolmeration Ordinance whereunder all lands between the periphery of 8 K.Ms.
of the municipal limits of Hubli Dharwad were declared as urban agglomeration land.
In the year 1976 the Parliament passed the Ceiling Act for imposition of ceiling on urban properties and the Act was made applicable to Karnataka also in view of the resolution passed by the State Government referred to above.
The order of the Land Tribunal under the Act conferring occupancy rights on the tenants was challenged before the High Court contending that the lands involved in these cases were within the purview of the Ceiling Act and therefore the provisions of the Land Reforms Act had no application to such lands on the ground that the provisions of the State Act were repugnant to the provisions of the Central Act namely the Ceiling Act.
The writ petition was dismissed by the High Court.
The owners preferred writ appeals and they were also dismissed by a common judgment in Writ Appeal Nos. 2707 and 2361/85 etc.
The Division Bench held that there is no conflict between the two enactment in certain respect i.e. atleast so far as the implementation of the provisions of Chapter III of the Act are concerned and that provisions of this Chapter of the Act do not cease to apply to the agricultural lands coming within the meaning of urban agglomeration in the Ceiling Act.
The judgment of the Division Bench is challenged in S.L.P.(Civil) No. 16041 42/88.
Many of the similar writ petitions that were pending before the High Court were transferred to the Land Reforms Appellate Tribunal.
The Appellate Tribunal dismissed the petitions by a common order following the judgment of the Division Bench of the High Court in Writ Appeal No.2707/85 and connected matters.
Several civil revisions petitions filed by the land owners against the order of the Appellate Tribunal were dismissed by the High Court.
Some of the special leave petitions are filed against the order of the High Court in the said civil revision petitions.
Therefore all these special leave petitions can be disposed of by a common order.
It was urged before us that the resolution of the State Legislature passed under Article 252 of the Constitution shifted the topic covered by the resolution from List II of Schedule VII to the Constitution and vested the competence to make the law in respect of the said topic in the Parliament and that thereafter the State enactment ceased to have efficacy in respect of said topic.
Alternatively it was urged that, when in pursuance of the resolution the Parliament legislates in respect of the topic covered by the resolution, the Parliamentary law, repeals or supersedes any existing State legislation on the topic and therefore such law cannot be enforced thereafter.
We shall first extract some of the relevant provisions of the Constitution of India and the respective enactments.
Article 246 of the Constitution reads thus: "246.
Subject matter of laws made by Parliament and by the Legislatures of States (l) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List").
(2) xx xx xx (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List").
(4)xx xx xx " 2 Entry 18 in List II namely the State List of the VII Schedule to the Constitution is in the following terms: "18.
Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents, transfer and alienation of agricultural land; land improvement and agricultural loans; colonization.
" Article 252 of the Constitution reads thus: "252.
Power of Parliament to legislate for two or more States by consent and adoption of such legislation by any other State (1) If it appears to the Legislatures of two or more States to be desirable that any of the matters with respect to which Parliament has no power to make laws for the States except as provided in Articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the Legislatures of those States, it shall be lawful for Parliament to pass an Act for regulating that matter accordingly, and any Act so passed shall apply to such States and to any other State by which it is adopted afterwards by resolution passed in that behalf by the House or, where there are two Houses, by each of the Houses of the Legislature of that State.
(2) Any Act so passed by Parliament may be amended or repealed by an Act of Parliament passed or adopted in like manner but shall not, as respects any State to which it applics, be amended or repcaled by an Act of the Legislature of that State.
" Article 252 empowers the Parliament to legislate for two or more States on any of the matters with respect of which the Parliament has no power to make law except as provided under Articles 249 and 250.
This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by Parliament on such matters in List II i.e. with respect to which the Parliament has no power to make law for the State.
The passing of the resolutions by the State Legislatures is a condition precedent for vesting the Parliament with such power.
The relevant portion of the resolution passed by the State Legislature under Article 252 reads thus: "Now, therefore, in pursuance of clause (1) of Article 252 of the Constitution, this Assembly hereby resolves that the imposition of a ceiling on urban immovable property and F acquisition of such property in excess of the ceiling and all matters connected therewith or ancillary and incidental thereto should be regulated in the State of Karnataka by Parliament by law.
" The resolution states that the imposition of ceiling on urban immovable property and the acquisition of such property in excess of the ceiling limit with a view to utilising such excess property for public purposes and all other matters connected therein or incidental thereto shall be regulated in this State by Parliament by law.
The basic question that arises is what is the actual content of the subject matter that was resolved to be entrusted to Parliament by the State Legislature under Article 252 of the Constitution.
From the resolution it is clear that the subject matter that was resolved to be entrusted to the Parliament was the one imposing a ceiling on urban immovable property and acquisition of such property in excess of the ceiling.
It is true that this subject matter is the topic that falls within Entry 18 of List 11 of Schedule VII to the Constitution and the said subject matter of Entry 18 has been originally kept apart for the State Legislature to make law and Parliament had no competence in respect of those matters falling under the wide scope of Entry 18.
Now by virtue of this resolution a part of the area falling under Entry 18 is transferred to the domain of Parliament to make law relating to the matters within the transferred area.
The scope of Entry 18 is very wide and the land mentioned therein may be agricultural or non agricultural and may be rural or urban.
The subject matter carved out of Entry 18 under the resolutions passed by the various State Legislatures related to only "urban immovable property" and by virtue of the resolution the law that can be enacted by the Parliament should be a law "imposing a ceiling on such urban immovable property.
The learned counsel for the petitioners, however, urged that vesting of tenanted land in the State and conferment of occupancy rights under the provisions of the State Act directly fall under the subject of imposing ceiling on and holding and other matters incidental or ancillary to the main topic of imposing ceiling and therefore they are fully covered by the Ceiling Act passed by the Parliament and the same supersedes the State enactment in respect of this land.
The learned counsel appearing for the respondents on the contrary submitted that "imposition of ceiling" is a distinct and separately identifiable subject and is the power carved out of Entry 18 and vested in the Parliament to legislate and that the power of the State to legislate in respect of the remaining part of the subject matter is unaffected and that when two distinct powers have come into existence, vesting law making competence in the State and Parliament, the pith and substance of the laws made by each of them has to be examined to see whether any one of them encroaches the field set apart as falling within the competence of the other body.
The learned counsel for the respondents, however, submitted that in any event the provisions of Chapter III of the Act have nothing to do with the imposition of ceiling on the urban land and that conferring of occupancy rights etc.
to the tenants under Chapter 111 of the Act do not come under the category of "the matters connected therewith or ancillary or incidental to the imposition of ceiling" on urban immovable property.
Now we shall refer to the provisions of the Urban Ceiling Act.
The Statement of Objects and Reasons under Preamble to the said Act would show that the primary object and the purpose is to provide for the imposition of ceiling on vacant land in urban agglomeration and for acquisition of such lands in excess of the ceiling limit and to regulate the Marwaha and others.
; ; Miss Neelima Shangla vs State of Haryana and others; , , or Jitendra Kumar and others vs State of Punjab and others: If we have regard to the above enunciation that a candidate who finds a place in the select list as a candidate selected for appointment to a civil post, does not acquire an indefeasible right to be appointed in such posting the absence of any specific Rule entitling him for such appointment and he could be aggrieved by his non appointment only when the Administration does so either arbitrarily or for no bona fide reasons, it follows as a necessary concomitant that such candidate even if has a legitimate expectation of being appointed in such posts due to his name finding a place in the select list of candidates, cannot claim to have a right to be heard before such select list is cancelled for bona fide and valid reasons and not arbitrarily: In the instant case, when the Chandigarh Administration which received the complaints about the unfair and injudicious manner in which select list of candidates for appointment as conductors in CTU was prepared by the Selection Board constituted for the purpose, found those complaints to be well founded on an enquiry got made in that regard, we are unable to find that the Chandigarh Administration had acted either arbitrarily or without bona fide and valid reasons in cancelling such 0dubious select list.
Hence, the contentions of the learned counsel for the Respondents as to the sustainability of the Judgment of CAT under appeal on the ground of non affording of an opportunity of hearing to the Respondents (candidates in the select list) is a misconceived one and is consequently rejected.
In the result, we allow this appeal, set aside the Judgment under appeal, and reject the applications made by Respondents before CAT, Chandigarh.
However, in the facts and circumstances of this appeal, we make no order as to costs.
G.N. Appeal allowed.
FOOD CORPORATION OF INDIA V. KAMDHENU CATTLE FEED INDUSTRIES NOVEMBER 3, 1992 [J.S. VERMA, YOGESHWAR DAYAL AND N. VENKATACHALA, JJ.] Constitution of India, 1950: Article 14 Contractual transactions of State or its instrumentality Essential requisites Non arbitrariness, fairness in action and due consideration of legitimate expectation Ignoring the highest bid Negotiations for higher offer and acceptance thereof Validity of.
Administrative Law: Doctrine of legitimate expectation Forms part of non arbitrariness and Rule of Law To be determined in the larger public interest Open to judicial review.
The appellant Corporation invited tenders for sale of stocks of damaged food grains.
The respondent 's bid was the highest.
Since the appellant was not satisfied about the adequacy of the amount offered even in the highest tender, it invited all the tenders to participate in the negotiations, instead of accepting the highest tender.
During the course of negotiations, the respondent refused to revise the rates in its offer.
On the basis of the highest bid made during the negotiations, the appellant disposed of the stocks of damaged foodgrains, rejecting the highest tenders.
The respondent, whose tender was the highest, challenged the decision of the appellants by filing a Writ Petition before the High Court.
It was contended that the action of the appellant was arbitrary and hence violative of article 14 of the Constitution.
The High Court accepted the contention and allowed the Writ Petition.
Being aggrieved by the High Court 's decision the appellant Corporation preferred the present appeal.
It was contended on behalf of the appellant that there being no right in the person submitting the highest tender to claim acceptance thereof, and since all tenderers were given equal opportunity to participate in the negotiations and to revise the bid before acceptance, the action of the appellant was not arbitrary.
The Respondent contended that since no cogent reasons were indicated for rejecting all the tenders and for deciding to dispose of the stock by negotiating with the tenderers for procuring a higher price, such a decision was arbitrary.
Allowing the appeal, this Court, HELD: 1.1.
In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non arbitrariness is a significant facet.
There is no unfettered discretion in public law.
A public authority possesses powers only to use them for public good.
This imposes the duty to act fairly and to adopt a procedure which is `fairplay in action '.
Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions.
To satisfy this requirement of non arbitrariness in a State action, it is necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case.
The decision so made would be exposed to challenge on the ground of arbitrariness.
Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review.
[328 A D] 12.
The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non arbitrariness, a necessary concomitant of the rule of law.
Every legitimate expectation is a relevant factor requiring due consideration in a fair decision making process.
Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case.
Whenever the question arises, it is to be determined not according to the claimant 's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant.
A bona fide decision of the public authority reached in this manner would satisfy the requirement of non arbitrariness and withstand judicial scrutiny.
[328 E G] 2.1.
Even though the highest tenderer can claim no right to have his tender accepted, there being a power while inviting tenders to reject all the tenders, yet that power cannot be exercised arbitrarily and must depend for its validity on the existence of cogent reasons for such action.
The object of inviting tenders for disposal of a commodity is to procure the highest price while giving equal opportunity to all the intending bidders to compete.
Procuring the highest price for the commodity is undoubtedly in public interest since the amount so collected goes to the public fund.
Accordingly, inadequacy of the price offered in the highest tender would be a cogent ground for negotiating with the tenderers giving them equal opportunity to revise their bids with a view to obtain the highest available price.
Retaining the option to accept the highest tender, in case the negotiations do not yield a significantly higher offer would be fair to the tenderers besides protecting the public interest.
A procedure wherein resort is had to negotiations with the tenderers for obtaining a significantly higher bid during the period when the offers in the tenders remain open for acceptance and rejection of the tenders only in the event of a significant higher bid being obtained during negotiations would ordinarily satisfy this requirement.
This procedure involves giving due weight to the legitimate expectation of the highest bidder to have his tender accepted unless outbid by a higher offer, in which case acceptance of the highest offer within the time the offers remain open would be a reasonable exercise of power for public good.
[329 E H; 330 A] Shanti Vijay & Co. etc.
vs Princess Fatima Fouzia & Ors.
, [1980] I S.C.R. 459, relied on.
Council of Civil Service Unions and Others vs Minister for the Civil Service, , and In re Preston; , , referred to.
In the instant case, the respondent 's highest tender was super seded only by a significantly higher bid made during the negotiations with all tenderers giving them equal opportunity to compete by revising their bids.
The fact that it was a significantly higher bid obtained by adopting the right course is sufficient to demonstrate that the action of the appellant satisfied the requirement of non arbitrariness, and it was taken for the cogent reason of inadequacy of the price offered in the highest tender, which reason was evident to all tenderers invited to participate in the negotiations and to revise their bids.
The High Court was in error in taking the contrary view.
[330 D E] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4731 of 1992.
From the Judgment and Order dated 21.7.92 of the C.W.N. 7419 of 1992.
Y.P. Rao for the Appellant.
Ashok Sen, H.L. Aggarwal, and K.K. Gupta (NP) for the Respondent.
The Judgment of the Court was delivered by VERMA, J.
Leave granted.
The appeal by special leave under Article 136 of the Constitution is against the judgment and order dated 21.7.92 by which the Civil Writ Petition No. 7419 of 1992 has been allowed by the Punjab & Haryana High Court directing the appellant Food Corporation of India to allot to the respondent the necessary stocks of damaged rich for which the tenders had been invited by the appellant, since the respondent was the highest bidder.
The appellant invited tenders for sale of stocks of damaged foodgrains in accordance with the terms and conditions contained in the tender notice (Annexure `A ').
The tenders were required to be submitted upto 2.45 p.m. on 18.5.92; the tenders were to be opened on 18.5.92 at 3.00 p.m.; and offers were to remain open for acceptance upto and inclusive of 17.7.92.
The respondent submitted its tender for a stock of damaged rice within the time specified, but the respondent 's tender was conditional and the full amount of earnest money required by the terms was also not deposited.
It is, however, not necessary to mention the particulars of these two deficiencies in respondent 's tender since they appear to have been waived by the appellant and are not relied on before us to support the appellant 's action.
The respondent 's bid in the tender was admittedly the highest as found on opening, the tenders.
lt appears that the appellant was not satisfied about the adequacy of the amount offered in the highest tenders for purchase of the stocks of damaged foodgrains and, therefore.
instead of accepting any of the tenders submitted, the appellant invited all the tenderers to participate in the negotiation on 9.6.92.
The respondent refused to revise the rates offered in its tender.
It was Rs. 245 per quintal for certain lots of this stock;, while the highest offer made during the negotiations was Rs. 275.72 per quintal.
Similarly, as against the respondent 's offer of Rs. 201 per quintal in respect of some other lots, the highest offer made during the negotiation was Rs. 271.55 per quintal.
On this basis, the appellant was to receive an additional amount of Rs. 8 lakhs by accepting the highest offer made during the negotiations over the total amount offered by the respondent for the stock of damaged rice.
Overall, the appellant was offered an excess amount of Rs. 20 lakhs for the entire stock of damaged foodgrains in the highest offer made during the negotiations, inasmuch as against the total amount Rs.90 lakhs which the appellant would have received by acceptance of the highest tenders, the appellant was to receive the amount of Rs. 1 crore 10 lakhs by accepting the highest offers made during the negotiations in which all the tenderers, including the respondent, were given equal opportunity to participate.
The respondent filed the above Writ Petition in the High Court challenging the appellant 's refusal to accept the highest tender submitted by it for the stock of damaged rice claiming that the appellant having chosen to invite tenders, it could not thereafter dispose of the stocks of damaged foodgrains by subsequent negotiations rejecting the highest tenders on the ground that a higher bid was obtained by negotiations.
This action of the appellant, was alleged to be arbitrary and, therefore, in substance, violative of Article 14 of the Constitution.
The High Court by its impugned order accepted this contention of the respondent and allowed the Writ Petition.
Hence, this appeal.
It is not disputed that according to the terms and conditions on which the appellant had invited tenders, the appellant had reserved the right to reject all the tenders and, therefore, the highest tender was not bound to be accepted.
Learned counsel for the appellant submitted that there being no right in the person submitting the highest tender to claim acceptance of the tender, in a case like the present.
where all the tenderers including the respondent, were invited for negotiation and given equal opportunity to participate and to revise the bid before acceptance of the highest bid offered during negotiation which resulted in obtaining an additional amount of Rs. 8 lakhs for the stock relating to respondent 's tender and an overall gain of Rs. 20 lakhs in disposal of the entire stock of damaged foodgrains, the action of the appellant could not be termed arbitrary.
In reply, Shri A.K. Sen, learned counsel for the respondent contended that even though the appellant had the right to reject any tender, including the highest tender, and thereafter negotiate with all the tenderers to procure the highest price for the commodity, yet this right has to be exercised reasonably and not arbitrarily, otherwise, the credibility of the procedure of sale by inviting tenders would be lost.
Shri Sen submitted that the decision not to accept any tender and to negotiate thereafter for obtaining a higher price than that quoted in the highest bid, cannot be taken on the whim and caprice of the concerned authority and can be only for cogent reasons indicated while taking the decision, or else, the decision would be arbitrary.
On this basis, Shri Sen further submitted that in the present case, no cogent reasons were indicated for rejecting all the tenders and deciding to dispose of the commodity by negotiation with the tenderers for procuring a higher price.
He also added that the mere fact that a higher price was obtained by negotiation would not justify the decision if it was not taken in the manner permissible.
This was the only submission of Shri Sen to support the decision of the High Court.
In our view, Shri A.K. Sen is right in the first part of his submission.
However, in the present case, the respondent does not get any benefit therefrom.
The High Court 's decision is based on the only ground that once tenders have been invited and the highest bidder has come forward to comply with the conditions stipulated in the tender notice, it is not permissible to switch over to negotiation with all the tenderers and thereby reject the highest tender.
According to the High Court, such a procedure is not countenanced by the rule of law.
This is not the same, as the submission of Shri Sen which is limited to permissibility of such a course only on cogent grounds indicated while deciding to switch over to the procedure of negotiation after receiving the tenders to satisfy the requirement of non arbitrariness, a necessary concomitant of the rule of law.
The proposition enunciated by the High Court which forms the sole basis of its decision is too wide to be acceptable and has to be limited in the manner indicated hereafter.
In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non arbitrariness is a significant facet.
There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good.
This impose the duty to act fairly and to adopt a procedure which is `fairplay in action '.
Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions.
To satisfy this requirement of non arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely lo be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case.
The decision so made would be exposed to challenge on the ground of arbitrariness.
Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but providers for control of its exercise by judicial review.
The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a Legitimate expectation forms part of the principle of non arbitrariness, a necessary concomitant of the rule of law.
Every legitimate expectation is a relevant factor requiring due consideration a fair decision making process.
Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case.
Whenever the question arises, it is to be determined not according to the claimant 's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant.
A bona fide decision of the public authority reached in this manner would satisfy the requirement of non arbitrariness and withstand judicial scrutiny.
The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent.
In Council of Civil Service Unions and Others vs Minister for the Civil Service, the House of Lords indicated the extent to which the legitimate expectation interfaces with exercise of discretionary power.
The impugned action was upheld as reasonable, made on due consideration of all relevant factors including the legitimate expectation of the applicant, wherein the considerations of national security were found to outweigh that which otherwise would have been the reasonable expectation of the applicant.
Lord Scarman pointed out that `the controlling factor in determining whether the exercise of prerogative power is subject to judicial review is not its source but its subject matter '.
Again in In re preston ; it was stated by Lord Scarman that `the principle of fairness has an important place in the law of judicial review ' ant `unfairness in the purported exercise of a power can be such that it is an abuse of excess of power '.
These decisions of the House of Lords give a similar indication of the significance of the doctrine of legitimate expectation.
Shri A.K. Sen referred to Shanti Vijay & Co. etc.
vs Princess Fatima Fouzia & Ors.
etc., [1980] 1 S.C.R. 459, which holds that court should interfere where discretionary power is not exercised reasonably and in good faith.
From the above, it is clear that even though the highest tenderer can claim no right to have his tender accepted, there being a power while inviting tenders to reject all the tenders, yet the power to reject all the tenders cannot be exercised arbitrarily and must depend for its validity on the existence of cogent reasons for such action.
The object of inviting tenders for disposal of a commodity is to procure the highest price while giving equal opportunity to all the intending bidders to compete.
Procuring the highest price for the commodity is undoubtedly in public interest since the amount so collected goes to the public fund.
Accordingly, inadequacy of the price offered in the highest tender would be a cogent ground for negotiating with the tenderers giving them equal opportunity to revise their bids with a view to obtain the highest available price.
The inadequacy may be for several reasons known in the commercial field.
Inadequacy of the prince quoted in the highest tender would be a question of fact in each case.
Retaining the option to accept the highest tender, in case the negotiations do not yield a significantly higher offer would be fair to the tenderers besides protecting the public interest.
A procedure wherein resort is had to negotiations with the tenderers for obtaining a significantly higher bid during the period when the offers in the tenders remain open for acceptance and rejection of the tenders only in the event of a significant higher bid being obtained during negotiations would ordinarily satisfy this requirement.
This procedure involves giving due weight to the legitimate expectation of the highest bidder to have his tender accepted unless outbid by a higher offer, in which case acceptance of the highest offer within the time the offers remain open would be a reasonable exercise power for public good.
In the present case, the last date upto which the offer made in the tender was to remain open for acceptance was 17.7.92.
After opening the tenders on 18.5.92, the appellant decided to negotiate with all the tenderers on 9.6.92 when significantly higher amount, as indicated earlier, was offered above the amount quoted in the highest tender.
In such a situation, if the negotiations did not yield the desirable result of obtaining a significantly higher price, the appellant had the option to accept the highest tender before the last date, viz., 17.7.92 upto which the offer made therein was to remain open for acceptance.
In this manner, the respondent 's higher tender was superseded only by a significantly higher bid made during the negotiations with all tenderers giving them equal opportunity to compete by revising their bids.
The fact that it was a significantly higher bid obtained by adopting this course is sufficient in the facts of the present case to demonstrate that the action of the appellant satisfied the requirement of non arbitrariness, and it was taken for the cogent reason of inadequacy of the price offered in the highest tender, which reason was evident to all tenderers invited to participate in the negotiations and to revise their bids.
The High Court was in error in taking the contrary view.
Consequently, this appeal is allowed.
The impugned judgment of the High Court is set aside, resulting in dismissal of the respondent 's writ petition, No costs, G.N. Appeal allowed.
KRISHNA BHIMRAO DESHPANDE vs LAND TRIBUNAL, DHARWAD AND ORS.
NOVEMBER 3, 1992 [LALIT MOHAN SHARMA AND K. JAYACHANDRA REDDY, JJ.] Constitution of India, 1950: Article 252 read with Schedule VII, List n Entry 18 Legislation by Parliament Requirement Central Law on ceiling on urban immovable property in pursuance of Resolution of State Legislature State Laws on other matters relating to the subject matter of resolution Legality of.
Constitution of India, 1950: Article 252, Schedule VII, list II, Entry 18 Urban Land (Ceiling and Regulation) Act, 1976 and Karnataka Land Reforms Act as amended in 1974 Object and application of Whether any conflict between the Acts.
In the year 1972 the Karnataka Legislature passed a resolution under Article 252 of the Constitution imposing a ceiling on urban immovable property and the acquisition of such property in excess of the ceiling is limit for public purposes and all the matters connected therewith shall be regulated in the State by Parliament by law.
On 1.4.74 the Karnataka Land Reforms (Amendment) Act was enacted and under the Act the tenant of the land covered by the Act was entitled to the grant of occupancy rights after making an application under the Act.
The Act came Into force with effect from 2.1.85.
But for the purpose of grant of occupancy rights, 1.4.74 was the relevant date.
In the year 1975 the Karnataka Urban Agglomeration Ordinance was passed, whereunder all lands between the periphery of 8 K.Ms.
of the municipal limits of Hubli Dharwad were declared as urban agglomeration land.
The Parliament passed the Urban Land (Ceiling and Regulation) Act, 1976 for imposition of ceiling on urban properties and the Ceiling Act was made applicable to Karnataka also in view of the resolution passed by the State Government.
The lands involved in the present cases were covered by the development plan by the Belgaum City Town Planning authority as per the Master Plan and they were included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling Act.
The owners of the agglomeration lands challenged the order of the Land Tribunal under the Land Reforms Act conferring occupancy rights on the tenants before the High Court.
They contended that the lands involved in the cases were within the purview of the Ceiling Act and therefore the provisions of the Land Reforms Act had no application to such lands on the ground that the provisions of the Ceiling Act.
The writ petitions were dismissed by the High Court.
The owner 's writ appeals were also dismissed by a common judgment by the Division Bench of the High Court.
The Division Bench held that there was no conflict between the two enactments.
The judgment of the Division Bench was challenged in S.L.P. (Civil) No. 16041 42/88.
Many of the similar writ petitions that were pending before the High Court were transferred to the Land Reforms Appellate Tribunal.
The Appellate Tribunal dismissed the petitions by a common order following the judgment of the Division Bench of the High Court.
Several Civil revision petitions filed by the land owners against the order of the Appellate Tribunal were dismissed by the High Court.
Some of the special leave petitions were filed against the order of the High Court in the said civil revision petitions.
The petitioners land owners contended that when in pursuance of the resolution of the State Legislature passed under Article 252 of the Constitution the Parliament legislated in respect of the topic covered by the resolution.
The Parliamentary law repealed or superseded the existing State legislation on the topic and therefore such law could not be enforced thereafter; and that vesting of tenanted land in the State and conferment of occupancy rights under the provisions of the State Act directly fall under the subject of imposing ceiling on land holding and other matters incidental or ancillary to the main topic of imposing ceiling and therefore they were fully covered by the Ceiling Act passed by the Parliament and the same superseded the State enactment in respect of such lands.
The respondents submitted that "imposition of ceiling" was a distinct and separately identifiable subject and the Parliament was empowered to legislate; that the power of the State to legislate in respect of the remaining part of the subject matter was unaffected; that when two distinct powers came into existence, vesting law making competence in the State and Parliament, the pith and substance of the laws made by each of them had to be examined to see whether any one of them encroached the field set apart as falling within the competence of the other body; that in any event the provisions of Chapter III of the Karnataka Land Reforms Act had nothing to do with the imposition of ceiling on the urban land and that conferring of occupancy rights etc.
to the tenants under Chapter III of the Karnataka Land Reforms Act did not come under the category of "the matters connected therewith or ancillary or incidental to the imposition of ceiling" on urban immovable property.
Dismissing the special leave petitions, this Court, HELD: 1.01.
Article 252 empowers the Parliament to legislate for two or more States on any of the matters with respect of which the Parliament has no power to make law except as provided under Articles 249 and 250.
This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by Parliament on such matters in List II, i.e. with respect to which the Parliament has no power to make law for the State.
The passing of the resolutions by the State Legislatures is a condition precedent for vesting the Parliament with such power.
[339 C D] 1.02.
The scope of Entry 18 is very wide and the land mentioned therein may be agricultural or non agricultural and may be rural or urban.
The subject matter carved out of Entry 18 under the resolutions passed by The various State Legislatures related to only "urban immovable property" and by virtue of the resolution the law that can be enacted by the Parliament should be a law "imposing a ceiling on such urban immovable property." [340 B, C] 1.03.
From the resolution it is clear that the subject matter that was resolved to be entrusted to the Parliament was the one imposing a ceiling on urban immovable property and acquisition of such property in excess of the ceiling.
This subject matter is the topic that falls within Entry 18 of List II of Schedule VII to the Constitution and the subject matter of Entry 18 has been originally kept apart for the State Legislature to make law and Parliament had no competence in respect of those matters falling under the wide scope of Entry 18.
By virtue of this resolution a part of the area falling under Entry 18 is transferred to the domain of Parliament to make law relating to the matters within the transferred area.
[339 G, H; 341 A] 2.01.
The primary object and the purpose of the Urban Land (Ceiling and Regulation) Act, 1976 is to provide for the imposition of ceiling on vacant land in urban agglomeration and for acquisition of such lands in excess of the ceiling limit and to regulate the construction of buildings on such lands and for matters connected therewith.
[340 H; 341 A] 2.02.
The Karnataka Land Reforms Act as amended in 1974 is a welfare legislation.
The object of the Act was to have a uniform law in the State of Karnataka relating to agrarian reforms, conferment of ownership on tenants, ceiling on land holdings and for certain other matters contained therein.
[342 D] 2.03.
In respect of imposing ceiling on the land under urban agglomeration the provisions of the Ceiling Act alone are applicable and to that extent the provisions of Chapter IV of the Karnataka Land Reforms Act which also deal with the imposition of ceiling would not be applicable.
[344 C] 2.04.
The land in the instant case comes under the urban agglomeration the imposition of the ceiling should naturally be under the provisions of the Urban Ceiling Act and not under the Karnataka Land Reforms Act.
[344 B, C] 2.05.
Imposition of ceiling on urban land is a distinct and independent subject as compared to imposition of ceiling on owning or to hold agricultural land or any other kind of property which do not attract the Urban Ceiling Act.
These are two distinct powers and therefore the law making competence can be in two different legislative bodies.
Consequently it is difficult to hold that the provisions of Chapter III of the Karnataka Land Reforms Act are outside the legislative competence of the State Legislature.
[350 C, D] 2.06.
The one topic that is transferred in the resolution passed under Article 252 as distinct and separately identifiable and does not include the remaining topics under Entry 18 in respect of which the State alone has the power to legislate.
[351 D] 2.07.
The legislative power of the State has to be reconciled with that of the Parliament and that in their respective fields each is supreme.
Even assuming that the State enactment has same effect on the subject matter falling within the Parliament 's legislative competence that by itself will not render such law invalid or inoperative.
[350 G H] 2.08.
There is no conflict between the Ceiling Act and the State Act.
The imposition of ceiling on urban immovable property is an independent topic and cannot be construed as to nullify the other subject left in the domain of the State Legislature under Entry 18 inasmuch as imposition of ceiling is a distinct and separately identifiable subject and does not cover the other measures such as regulation of relationship of landlord and tenant in respect of which the State Legislature has competence to legislate.
[351 C D] 2.09.
There is a ceiling provision under Section 45(2) of the Karnataka Land Reforms Act providing for computation of the area in respect of which the tenant may be granted occupancy rights.
But it is clear that ceiling on the area in this context is only for the purpose of Section 45.
[351 F] 2.10.
Provisions in the Chapters II, III, V, VI to XI of the Karnataka Land Reforms Act deal with the conferment of occupancy rights on the respective tenants and they do not in any way conflict with the subject matter transferred to the Parliament by the resolution passed under Section 252.
[351 E,F] Thumati Venkaiah and others vs State of Andhra Pradesh and of others; , ; Union of India and others vs Valluri Basavaiah Chowdhary and others; , ; Calcutta Gas Company (Proprietory) Ltd. vs State of West Bengal and others, and Kannan Devan Hills Produce Company Ltd. vs The State of Kerala etc.; , referred to.
CIVIL APPELLATE JURISDICTION: Special Leave Petition (Civil) Nos.
16041 42/88.
From the Judgment and Order dated 27.7.1988 of the Karnataka High Court in W.P.
No 9173/86 and W.A.
No 2707/85.
WITH SLP (C) Nos. 12258, 12254, 12260/90 & 8608/91 R.N. Narasimhamurthy, S.S. Javali, S.N. Bhat and Ravi P. Wadhwani for the Petitioners.
M.S. Nesargi, R. Jagannath Goulay, M.K. Dua, M. Veerappa, K.H. Nobin Singh, S.K. Kulkarni and Surya Kant for the Respondents.
The following Order of the Court was delivered by K. JAYACHANDRA REDDY, J.
In all these special leave petitions the common question that arises for consideration is whether the provisions of the Karnataka Land Reforms Act, 1961 as amended in 1974 (`Act ' for short) cease to be applicable in all respects to the lands which came within the purview of the Urban Land (Ceiling and Regulation) Act, 1976 ( 'Ceiling Act ' for short).
The lands involved in these matters are covered by the development plan by the Belgaum City Town Planning authority as per the Master Plan for the said City and they are included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling Act.
In the year 1972 the Karnataka Legislature passed a resolution under Article 252 of the Constitution to the effect that imposing a ceiling on urban immovable property and the acquisition of such property in excess of the ceiling limit for public purposes and all the matters connected therewith shall be regulated in the State by Parliament Qby law.
The State Legislature thus divested itself of the legislative competence to enact law in respect of subject matter of the resolution.
On 1.4.74 the amended Karnataka Land Reforms Act was enacted and under the said Act the tenant of the land covered by the Act is entitled to the grant of occupancy rights after making an application under the Act.
This Act came into force with effect from 2.1.85.
But for the purpose of grant of occupancy rights 1.4.74 was the relevant date.
While so in the year 1975 the Governor of Karnataka passed the Urban Aggolmeration Ordinance whereunder all lands between the periphery of 8 K.Ms.
of the municipal limits of Hubli Dharwad were declared as urban agglomeration land.
In the year 1976 the Parliament passed the Ceiling Act for imposition of ceiling on urban properties and the Act was made applicable to Karnataka also in view of the resolution passed by the State Government referred to above.
The order of the Land Tribunal under the Act conferring occupancy rights on the tenants was challenged before the High Court contending that the lands involved in these cases were within the purview of the Ceiling Act and therefore the provisions of the Land Reforms Act had no application to such lands on the ground that the provisions of the State Act were repugnant to the provisions of the Central Act namely the Ceiling Act.
The writ petition was dismissed by the High Court.
The owners preferred writ appeals and they were also dismissed by a common judgment in Writ Appeal Nos. 2707 and 2361/85 etc.
The Division Bench held that there is no conflict between the two enactment in certain respect i.e. atleast so far as the implementation of the provisions of Chapter III of the Act are concerned and that provisions of this Chapter of the Act do not cease to apply to the agricultural lands coming within the meaning of urban agglomeration in the Ceiling Act.
The judgment of the Division Bench is challenged in S.L.P.(Civil) No. 16041 42/88.
Many of the similar writ petitions that were pending before the High Court were transferred to the Land Reforms Appellate Tribunal.
The Appellate Tribunal dismissed the petitions by a common order following the judgment of the Division Bench of the High Court in Writ Appeal No.2707/85 and connected matters.
Several civil revisions petitions filed by the land owners against the order of the Appellate Tribunal were dismissed by the High Court.
Some of the special leave petitions are filed against the order of the High Court in the said civil revision petitions.
Therefore all these special leave petitions can be disposed of by a common order.
It was urged before us that the resolution of the State Legislature passed under Article 252 of the Constitution shifted the topic covered by the resolution from List II of Schedule VII to the Constitution and vested the competence to make the law in respect of the said topic in the Parliament and that thereafter the State enactment ceased to have efficacy in respect of said topic.
Alternatively it was urged that, when in pursuance of the resolution the Parliament legislates in respect of the topic covered by the resolution, the Parliamentary law, repeals or supersedes any existing State legislation on the topic and therefore such law cannot be enforced thereafter.
We shall first extract some of the relevant provisions of the Constitution of India and the respective enactments.
Article 246 of the Constitution reads thus: "246.
Subject matter of laws made by Parliament and by the Legislatures of States (l) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List").
(2) xx xx xx (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List").
(4)xx xx xx " 2 Entry 18 in List II namely the State List of the VII Schedule to the Constitution is in the following terms: "18.
Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents, transfer and alienation of agricultural land; land improvement and agricultural loans; colonization.
" Article 252 of the Constitution reads thus: "252.
Power of Parliament to legislate for two or more States by consent and adoption of such legislation by any other State (1) If it appears to the Legislatures of two or more States to be desirable that any of the matters with respect to which Parliament has no power to make laws for the States except as provided in Articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the Legislatures of those States, it shall be lawful for Parliament to pass an Act for regulating that matter accordingly, and any Act so passed shall apply to such States and to any other State by which it is adopted afterwards by resolution passed in that behalf by the House or, where there are two Houses, by each of the Houses of the Legislature of that State.
(2) Any Act so passed by Parliament may be amended or repealed by an Act of Parliament passed or adopted in like manner but shall not, as respects any State to which it applics, be amended or repcaled by an Act of the Legislature of that State.
" Article 252 empowers the Parliament to legislate for two or more States on any of the matters with respect of which the Parliament has no power to make law except as provided under Articles 249 and 250.
This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by Parliament on such matters in List II i.e. with respect to which the Parliament has no power to make law for the State.
The passing of the resolutions by the State Legislatures is a condition precedent for vesting the Parliament with such power.
The relevant portion of the resolution passed by the State Legislature under Article 252 reads thus: "Now, therefore, in pursuance of clause (1) of Article 252 of the Constitution, this Assembly hereby resolves that the imposition of a ceiling on urban immovable property and F acquisition of such property in excess of the ceiling and all matters connected therewith or ancillary and incidental thereto should be regulated in the State of Karnataka by Parliament by law.
" The resolution states that the imposition of ceiling on urban immovable property and the acquisition of such property in excess of the ceiling limit with a view to utilising such excess property for public purposes and all other matters connected therein or incidental thereto shall be regulated in this State by Parliament by law.
The basic question that arises is what is the actual content of the subject matter that was resolved to be entrusted to Parliament by the State Legislature under Article 252 of the Constitution.
From the resolution it is clear that the subject matter that was resolved to be entrusted to the Parliament was the one imposing a ceiling on urban immovable property and acquisition of such property in excess of the ceiling.
It is true that this subject matter is the topic that falls within Entry 18 of List 11 of Schedule VII to the Constitution and the said subject matter of Entry 18 has been originally kept apart for the State Legislature to make law and Parliament had no competence in respect of those matters falling under the wide scope of Entry 18.
Now by virtue of this resolution a part of the area falling under Entry 18 is transferred to the domain of Parliament to make law relating to the matters within the transferred area.
The scope of Entry 18 is very wide and the land mentioned therein may be agricultural or non agricultural and may be rural or urban.
The subject matter carved out of Entry 18 under the resolutions passed by the various State Legislatures related to only "urban immovable property" and by virtue of the resolution the law that can be enacted by the Parliament should be a law "imposing a ceiling on such urban immovable property.
The learned counsel for the petitioners, however, urged that vesting of tenanted land in the State and conferment of occupancy rights under the provisions of the State Act directly fall under the subject of imposing ceiling on and holding and other matters incidental or ancillary to the main topic of imposing ceiling and therefore they are fully covered by the Ceiling Act passed by the Parliament and the same supersedes the State enactment in respect of this land.
The learned counsel appearing for the respondents on the contrary submitted that "imposition of ceiling" is a distinct and separately identifiable subject and is the power carved out of Entry 18 and vested in the Parliament to legislate and that the power of the State to legislate in respect of the remaining part of the subject matter is unaffected and that when two distinct powers have come into existence, vesting law making competence in the State and Parliament, the pith and substance of the laws made by each of them has to be examined to see whether any one of them encroaches the field set apart as falling within the competence of the other body.
The learned counsel for the respondents, however, submitted that in any event the provisions of Chapter III of the Act have nothing to do with the imposition of ceiling on the urban land and that conferring of occupancy rights etc.
to the tenants under Chapter 111 of the Act do not come under the category of "the matters connected therewith or ancillary or incidental to the imposition of ceiling" on urban immovable property.
Now we shall refer to the provisions of the Urban Ceiling Act.
The Statement of Objects and Reasons under Preamble to the said Act would show that the primary object and the purpose is to provide for the imposition of ceiling on vacant land in urban agglomeration and for acquisition of such lands in excess of the ceiling limit and to regulate the construction of buildings on such lands and for matters connected therewith.
Section 21(n) of the Urban Ceiling Act defines "urban agglomeration" and the material part of it reads thus: "(n) "urban agglomeration" (A) in relation to any State or Union territory specified in column (1) of Schedule 1, means (i) the urban agglomeration specified in the corresponding entry in column (2) thereof and includes the peripheral area specified in the corresponding entry in column (3) thereof; and xx xx xx" Section 2(o) defines "urban land" which reads thus: "(o) "urban land" means, (i) any land situated within the limits of an urban agglomeration and referred to as such in the master plan; or (ii) in a case where there is no master plan, or where the master plan does not refer to any land as urban land, any land within the limits of an urban agglomeration and situated in any area included within the local limits of a municipality (by whatever name called), a notified area committee, a town area committee, a city and town committee, a small town committee, a cantonment board or a panchayat, but does not include any such land which is mainly used for the purpose of agriculture.
Explanation For the purpose of this clause and clause (q) (A) xx xx xx (B) land shall not be deemed to be used mainly for the purpose of agriculture, if such land is not entered in the revenue or land records before the appointed day as for the purpose of agriculture; xx xx xx (C) notwithstanding anything contained in clause (B) of this Explanation, land shall not be deemed to be mainly used for the purpose of agriculture if the land has been specified in the master plan for a purpose other than agriculture;" For the purpose of the instant case it is enough to note that Hubli Dharwad is shown in the Schedule and there is also a master plan prepared for the area and the land in question also is undoubtedly within the urban agglomeration and therefore there is no doubt that in respect of imposition of ceiling on this area comes within the purview of the Urban Ceiling Act.
But the question is whether granting occupancy rights under Chapter III of the Act are in any manner affected.
The Karnataka Land Reforms Act as amended in 1974 is a welfare legislation.
The object of the Act was to have a uniform law in the State of Karnataka relating to agrarian reforms, conferment of ownership on tenants, ceiling on land holding and for certain other matters contained therein.
Section 34 of the Act defines "tenant" thus: "(34) "tenant" means an agriculturist who cultivates personally the land he holds on lease from a landlord and includes, (i) a person who is deemed to be a tenant under Section 4; (ii) a person who was protected from eviction from any land by the Karnataka Tenants (Temporary Protection from Eviction) Act, 1961; (iia) a person who cultivates personally any land on lease under a lease created contrary to the provisions of section 5 and before the date of commencement of the Amendment Act; (iii) a person who is a permanent tenant; and (iv) a person who is a protected tenant.
Explanation A person who takes up a contract to cut grass, or to gather the fruits or other produce of any land, shall not on that account only be deemed to be a tenant.
" The provisions of Chapter III of the Karnataka Land Reforms Act deal with conferment of ownership on tenants.
Section 45 occurring in this Chapter in particular deals with conferring of occupancy rights on the tenants subject to certain conditions.
The relevant portion of Section 45 reads as under: "45.
Tenants to be registered as occupants of land on certain conditions (1) Subject to the provisions of the succeeding sections of this Chapter, every person who was a permanent tenant, protected tenant or other tenant or where a tenant has lawfully sublet, such sub tenant shall with effect on and from the date of vesting be entitled to be registered as an occupant in respect of the lands of which he was a permanent tenant, protected tenant or other tenant or sub tenant before the date of vesting and which he has been cultivating personally.
(2) If a tenant or other person referred to in sub section (1) (i) holds land partly as owner and partly as tenant but the area of the land held by him as owner is equal to or exceeds a ceiling area he shall not be entitled to be registered as an occupant of the land held by him as a tenant before the date of vesting; (ii) does not hold and cultivate personally any land as an owner, but holds land as tenant, which he cultivates personally in excess of a ceiling area, he shall be entitled to be registered as an occupant to the extent of a ceiling area; (iii) holds and cultivates personally as an owner of any land the area of which is less than a ceiling area, he shall be entitled to be registered as an occupant to the extent of such area as will be sufficient to make up his holding to the extent of a ceiling area.
xx xx xx The provisions under Chapter III which exclusively deal with conferment of occupancy rights on tenants have nothing to do with the imposition of ceiling on holdings of agricultural land under the Act.
It is only Chapter IV of the said Act which deals with ceiling on land holdings.
Now that the land in the instant case comes under the urban agglomeration the imposition of the ceiling should naturally be under the provisions of the Urban Ceiling Act and not under the Karnataka Land Reforms Act.
The High Court, however, did not deal with this aspect.
Perhaps it is necessary for us to make it clear that in respect of imposing ceiling on the land under urban agglomeration the provisions of the Ceiling Act alone are applicable and to that extent the provisions of Chapter IV of the Act which also deal with the imposition of ceiling would not be applicable.
As a matter of fact in Thumati Venkaiah and Others vs State of Andhra Pradesh and Others, ; to which we will refer to at a later stage in detail on the main point, this Court observed thus: "It is no doubt true that if the Andhra Pradesh Act seeks to impose ceiling on land falling within an urban agglomeration, it would be outside the area of its legislative competence, since it cannot provide for imposition of ceiling on urban immovable property." However, the crucial question in the instant case with which we are concerned is whether the provisions of Chapter III of the Act also become inoperative by virtue of the resolution passed under Article 252 and particularly on the ground that it is a matter of imposition of ceiling on urban land or other matters connected therewith or ancillary and incidental thereto.
A plain reading of the above provisions in the background of the objects underlying these two enactments clearly shows that the two Acts operate in two different fields to a large extent.
This Court had an occasion to consider these aspects in a few cases.
In Union of India and others vs
Valluri Basavaiah Chowdhary and others; , this Court, in respect of effect of passing a resolution under Article 252 of the Constitution by the Andhra Pradesh Legislature, observed thus: "The effect of the passing of a resolution under clause (1) of Article 252 is that Parliament which has no power to legislate with respect to the matter which is the subject of the resolution, becomes entitled to legislate with respect to it.
On the other hand, the State Legislature ceases to have a power to make a law relating to that matter.
" It was further observed that: ".
It is not disputed that the subject matter of Entry 18, List II of the Seventh Schedule i.e. `land ' covers `land and buildings ' and would, therefore, necessarily include `vacant land '.
The expression `urban immovable property ' may mean, land and buildings or `buildings ' or `lands '.
It would take in lands of every description i.e., agricultural land, urban land or any other kind and it necessarily includes vacant land.
" With regards the concept of ceiling on urban immovable property and the object underlying in passing the resolution by the several State Governments under Article 252 it was further observed in the above judgment thus: ".
A Working Group was constituted under the Chairmanship of the Secretary, Ministry of Works, Housing and Urban Development.
The report of the Working Group shows that the proposal was to impose a ceiling on urban immovable property.
In the report the said Working Group defined `urban area ' to include the area within the territorial limits of municipalities or other local bodies and also the peripheral area outside the said limits.
Such inclusion of the peripheral limits in an urban area was accepted by the Government and a model bill prepared in pursuance thereof also contained such a definition.
A copy of each of the report of the Working Group and the Model Bill referred to was placed on the table of the Parliament on December 15, 1970 and March 22, 1972 respectively.
The said documents were forwarded to the State Government of Andhra Pradesh, besides other State Governments, for consideration by the State Legislatures before they passed a resolution authorising the Parliament to make a law in respect of urban immovable property.
Their intention was to include the lands within the territorial area of an urban area and also its peripheral areas.
The concept of ceiling on urban immovable property and the nature and content of urban agglomeration ultimately defined by Section 2(n) of the impugned Act was, therefore, fully, under stood by the State Governments.
" Some more observations in the above judgment read thus: "It is but axiomatic that once the legislatures of two or more States, by a resolution in terms of Article 252(1), abdicate or surrender the area, i.e. their power of legislation on a State subject, the Parliament is competent to make a law relating to the subject.
It would indeed be contrary to the terms of Article 252(1) to read the resolution passed by the State legislature subject to any restriction.
The resolution, contemplated under Article 252(1) is not hedged in with conditions.
In making such a law, the Parliament was not bound to exhaust the whole field of legislation.
It could make a law, like the present Act, with respect to ceiling on vacant land in an urban agglomeration, as a first step towards the eventual imposition of ceiling on immovable property of every other description.
" One other decision also arose from State of Andhra Pradesh.
In Thumati Venkaiah 's case Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act which is analgous to Karnataka Land Reforms Act was challenged on the ground that the subject matter of the said law was covered by the topic of the legislation transferred to Parliament by the resolution under Article 252 passed by the Andhra Pradesh Legislative Assembly and that provisions of the Ceiling Act alone covered that subject and therefore Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act was unenforceable.
In this context Supreme Court again reiterated the same in the said decision.
This Court proceeded to observe as under: "The effect of passing of resolutions by the Houses of Legislature of two or more States under this constitutional provision is that Parliament which has otherwise no power to legislate with respect to a matter, except as provided in Articles 249 and 250, becomes entitled to legislate with respect to such matter and the State legislatures passing the resolutions cease to have power to make law relating to that matter.
The resolutions operate as abdication or surrender of the powers of the State legislatures with respect to the matter which is the subject of the resolutions and such matter is placed entirely in the hands of Parliament and Parliament alone can then legislate with respect to it.
It is as if such matter is lifted out of list II and placed in List I of the Seventh Schedule to the Constitution.
" It was further observed that: "The result was that at the date when the Andhra Pradesh Act was enacted, Parliament alone was competent to legislate with respect to ceiling on urban immovable property and acquisition of such property in excess of the ceiling and all connected, ancillary or incidental matters, and the Andhra Pradesh Legislature stood denuded of its power to legislate on that subject.
" On the effect of ceiling this Court stated thus: "It will thus be seen that the Central Act imposes a ceiling on holding of land in urban agglomeration other than land which is mainly used for the purpose of agriculture and agriculture in this connection includes horticulture, but does not include raising of grass, dairy farming, poultry farming, breeding of live stock and such cultivation or the growing of such plants as may be prescribed by the Rules, and moreover, in order to fall within the exclusion, the land must be entered in the revenue or land record before the appointed day for the purpose of agriculture and must also not have been specified in the master plan for a purpose other than agriculture.
" Considering the contention that the whole of Andhra Pradesh Land Reforms Act was ultra vires this Court held thus: "The argument of the landholders was that the Andhra Pradesh Act sought to impose ceiling on land in the whole of Andhra Pradesh including land situate in urban agglomeration defined in Section 2(n) of the Central Act was an expansive concept and any area with an existing or future population of more than one lakh could be notified to be an urban agglomeration, the whole of the Andhra Pradesh Act was ultra vires and void as being outside the legislative competence of the Andhra Pradesh Legislature.
This argument, plausible though it may seem, is in our opinion, unsustainable.
It is not doubt true that if the Andhra Pradesh Act seeks to impose ceiling on land falling within an urban agglomeration, it would be outside the area of its legislative competence, since it cannot provide for imposition of ceiling on urban immovable property.
But the only urban agglomerations in the State of Andhra Pradesh recognised in the Central Act were those referred to in Section 2(n)(A)(i) and there can be no doubt that, so far as these urban agglomerations are concerned, it was not within the legislative competence of the Andhra Pradesh Legislature to provide for imposition of ceiling on land situate within these urban agglomerations.
It is, however, difficult to see how the Andhra Pradesh Act could be said to be outside the legislative competence of the Andhra Pradesh Legislature insofar as land situate in the other areas of the State of Andhra Pradesh is concerned.
We agree that any other area in the State of Andhra Pradesh with a population of more than one lakh could be notified as an urban agglomeration under Section 2(n) (A) (ii) of the Central Act, but until it is so notified it would not be an urban agglomeration and the Andhra Pradesh Legislature would have legislative competence to provide for imposition of ceiling on land situate within such area.
No sooner such area is notified to be an urban agglomeration, the Central Act would apply in relation to land situate within such area, but until that happens, the Andhra Pradesh Act would continue to be applicable to determine the ceiling on holding of land in such area.
It may be noted that the Andhra Pradesh Act came into force on January 1, 1975 and it was with reference to this date that the surplus holding of land in excess of the ceiling area was required to be determined and if there was any surplus, it was to be surrendered to the State Government.
It is therefore clear that in an area other than that comprised in the urban agglomerations referred to in Section 2(n)(A)(i), land held by a person in excess of the ceiling area would be liable to be determined as on January 1, 1975 under the Andhra Pradesh Act and only land within the ceiling area would be allowed to remain with him.
It is only in respect of land remaining with a person, whether an individual or a family unit, after the operation of the Andhra Pradesh Act, the Central Act would apply, if and when the area in question is notified to be an urban agglomeration under Section 2(n)(A)(ii) of the Central Act.
We fail to see how it can at all be contended that merely because an area may possibly in the future be notified as an urban agglomeration under Section 2(n)(A)(ii) of the Central Act, the Andhra Pradesh Legislature would cease to have competence to legislate with respect to ceiling on land situate in such area, even though it was not an urban agglomeration at the date of enactment of the Andhra Pradesh Act.
Undoubtedly, when an area is notified as an urban agglomeration under Section 2(n)(A)(ii), the Central Act would apply to land situate in such area and the Andhra Pradesh Act would cease to have application, but by that time the Andhra Pradesh Act would have already operated to determine the ceiling on holding of land falling within the definition of Section 3(j) and situate within such area.
It is therefore not possible to uphold the contention of the landholders that the Andhra Pradesh Act is ultra vires and void as being outside the Legislative competence of the Andhra Pradesh Legislature.
" The above observations throw a flood of light on the question involved before us.
It can be seen that entire power to legislate in respect of several matters falling under the wide scope of Entry 18 List II is not transferred.
The power transferred is only in respect of imposition of ceiling on urban immovable property.
There can be several topics in respect of the subject matters of regulatory legislations governing the lands or other immovable properties.
The imposition of ceiling on owning property is one such topic and there can be laws regulating ceiling on owing the property, relationship of lessor and lessee, payment of rent, manner of granting the lease, conferment of ownership on the lessee etc.
It is the concept of a welfare State which is the underlying object in such welfare legislations.
When viewed from that angle it is axiomatic that imposition of ceiling on urban land is a distinct and independent subject as compared to imposition of ceiling on owning or holding agricultural land or any other kind of property which do not attract the Urhan Ceiling Act.
Likewise it cannot be said that the pith and substance of the law governing the conferment of ownership of land on the tenant is a law regulating the imposition of ceiling on land holding.
Equally it cannot be said that the pith and substance of the law imposing the ceiling on land holding covers the subject of conferring ownership of land on the tenant.
These are two distinct powers and therefore the law making competence can be in two different legislative bodies.
Consequently it is difficult to hold that the provisions of Chapter III of the Karnataka Land Reforms Act are outside the legislative competence of the State Legislature.
In Calcutta Gas Company (Proprietory) Ltd. vs State of West Bengal and others, this Court observed as under: "The entries in the three Lists are only legislative heads or fields of legislation; they demarcate the area over which the appropriate Legislatures can operate.
It is also well settled that widest amplitude should be given to the language of the entries.
But some of the entries in the different Lists 1 or in the same Lists may overlap and sometimes may also appear to be in direct conflict with each other.
It is then the duty of this Court to reconcile the entries and bring about harmony between them.
" It is well settled that the legislative power of the State has to be reconciled with that of the Parliament and that in their respective fields each is supreme.
Even assuming that the State enactment has same effect on the subject matter falling within the Parliament 's legislative competence, that by itself will not render such law invalid or inoperative.
In Kannan Devan Hills Produce Company Ltd. vs The State of Kerala etc.
; , this Court held as under: "It seems to us clear that the State has legislative competence to legislate on Entry 18, List II and Entry 42 List III.
This power cannot be denied on the ground that it has some effect on an industry controlled under Entry 52 List 1.
Effect is not the same thing as subject matter.
If a State Act, otherwise valid, has effect on a matter in List I it does not cease to be a legislation with respect to an entry in List II or List III.
" However, in the instant case, we are clearly of the view that there is no conflict.
The imposition of ceiling on urban immovable property is an independent topic and cannot be construed as to nullify the other subject left in the domain of the State Legislature under Entry 18 inasmuch as imposition of ceiling is a distinct and separately identifiable subject and does not cover the other measures such as regulation of relationship of landlord and tenant in respect of which the State Legislature has competence to legislate.
Thus the one topic that is transferred in the resolution passed under Article 252 is distinct and separately identifiable and does not include the remaining topics under Entry 18 in respect of which the State alone has the power to legislate.
An examination of the various provisions of the State Act makes this aspect clear.
The object underlying the Act is to make a uniform law in the State of Karnataka relating to agrarian relations, conferment of ownership on tenants, ceiling on land holdings etc.
Chapter II of the Act contains general provisions regarding tenancy, deemed tenancy, regulation of relationship between landlord and tenant etc.
Sections 44 to 62 of Chapter III provide for vesting of tenanted lands in the State Government with effect from 1.3.74 and conferment of occupancy rights on the tenants.
Chapter V controls the eligibility to purchase or possess agricultural lands.
Chapters VI to XI have many other provisions regarding agrarian reforms.
We, however, find a ceiling provision under Section 45(2) providing for computation of the area in respect of which the tenant may be granted occupancy rights.
But it is clear that ceiling on the area in this context is only for the purpose of Section 45.
These are all topics regarding the conferment of occupancy rights on the respective tenants and they do not in any way conflict with the subject matter transferred to the Parliament by the resolution passed under Section 252.
Consequently these Special Leave Petitions are dismissed.
Petitions dismissed.
| IN-Abs | In the year 1972 the Karnataka Legislature passed a resolution under Article 252 of the Constitution imposing a ceiling on urban immovable property and the acquisition of such property in excess of the ceiling is limit for public purposes and all the matters connected therewith shall be regulated in the State by Parliament by law.
On 1.4.74 the Karnataka Land Reforms (Amendment) Act was enacted and under the Act the tenant of the land covered by the Act was entitled to the grant of occupancy rights after making an application under the Act.
The Act came Into force with effect from 2.1.85.
But for the purpose of grant of occupancy rights, 1.4.74 was the relevant date.
In the year 1975 the Karnataka Urban Agglomeration Ordinance was passed, whereunder all lands between the periphery of 8 K.Ms.
of the municipal limits of Hubli Dharwad were declared as urban agglomeration land.
The Parliament passed the Urban Land (Ceiling and Regulation) Act, 1976 for imposition of ceiling on urban properties and the Ceiling Act was made applicable to Karnataka also in view of the resolution passed by the State Government.
The lands involved in the present cases were covered by the development plan by the Belgaum City Town Planning authority as per the Master Plan and they were included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling Act.
The owners of the agglomeration lands challenged the order of the Land Tribunal under the Land Reforms Act conferring occupancy rights on the tenants before the High Court.
They contended that the lands involved in the cases were within the purview of the Ceiling Act and therefore the provisions of the Land Reforms Act had no application to such lands on the ground that the provisions of the Ceiling Act.
The writ petitions were dismissed by the High Court.
The owner 's writ appeals were also dismissed by a common judgment by the Division Bench of the High Court.
The Division Bench held that there was no conflict between the two enactments.
The judgment of the Division Bench was challenged in S.L.P. (Civil) No. 16041 42/88.
Many of the similar writ petitions that were pending before the High Court were transferred to the Land Reforms Appellate Tribunal.
The Appellate Tribunal dismissed the petitions by a common order following the judgment of the Division Bench of the High Court.
Several Civil revision petitions filed by the land owners against the order of the Appellate Tribunal were dismissed by the High Court.
Some of the special leave petitions were filed against the order of the High Court in the said civil revision petitions.
The petitioners land owners contended that when in pursuance of the resolution of the State Legislature passed under Article 252 of the Constitution the Parliament legislated in respect of the topic covered by the resolution.
The Parliamentary law repealed or superseded the existing State legislation on the topic and therefore such law could not be enforced thereafter; and that vesting of tenanted land in the State and conferment of occupancy rights under the provisions of the State Act directly fall under the subject of imposing ceiling on land holding and other matters incidental or ancillary to the main topic of imposing ceiling and therefore they were fully covered by the Ceiling Act passed by the Parliament and the same superseded the State enactment in respect of such lands.
The respondents submitted that "imposition of ceiling" was a distinct and separately identifiable subject and the Parliament was empowered to legislate; that the power of the State to legislate in respect of the remaining part of the subject matter was unaffected; that when two distinct powers came into existence, vesting law making competence in the State and Parliament, the pith and substance of the laws made by each of them had to be examined to see whether any one of them encroached the field set apart as falling within the competence of the other body; that in any event the provisions of Chapter III of the Karnataka Land Reforms Act had nothing to do with the imposition of ceiling on the urban land and that conferring of occupancy rights etc.
to the tenants under Chapter III of the Karnataka Land Reforms Act did not come under the category of "the matters connected therewith or ancillary or incidental to the imposition of ceiling" on urban immovable property.
Dismissing the special leave petitions, this Court, HELD: 1.01.
Article 252 empowers the Parliament to legislate for two or more States on any of the matters with respect of which the Parliament has no power to make law except as provided under Articles 249 and 250.
This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by Parliament on such matters in List II, i.e. with respect to which the Parliament has no power to make law for the State.
The passing of the resolutions by the State Legislatures is a condition precedent for vesting the Parliament with such power.
[339 C D] 1.02.
The scope of Entry 18 is very wide and the land mentioned therein may be agricultural or non agricultural and may be rural or urban.
The subject matter carved out of Entry 18 under the resolutions passed by The various State Legislatures related to only "urban immovable property" and by virtue of the resolution the law that can be enacted by the Parliament should be a law "imposing a ceiling on such urban immovable property." [340 B, C] 1.03.
From the resolution it is clear that the subject matter that was resolved to be entrusted to the Parliament was the one imposing a ceiling on urban immovable property and acquisition of such property in excess of the ceiling.
This subject matter is the topic that falls within Entry 18 of List II of Schedule VII to the Constitution and the subject matter of Entry 18 has been originally kept apart for the State Legislature to make law and Parliament had no competence in respect of those matters falling under the wide scope of Entry 18.
By virtue of this resolution a part of the area falling under Entry 18 is transferred to the domain of Parliament to make law relating to the matters within the transferred area.
[339 G, H; 341 A] 2.01.
The primary object and the purpose of the Urban Land (Ceiling and Regulation) Act, 1976 is to provide for the imposition of ceiling on vacant land in urban agglomeration and for acquisition of such lands in excess of the ceiling limit and to regulate the construction of buildings on such lands and for matters connected therewith.
[340 H; 341 A] 2.02.
The Karnataka Land Reforms Act as amended in 1974 is a welfare legislation.
The object of the Act was to have a uniform law in the State of Karnataka relating to agrarian reforms, conferment of ownership on tenants, ceiling on land holdings and for certain other matters contained therein.
[342 D] 2.03.
In respect of imposing ceiling on the land under urban agglomeration the provisions of the Ceiling Act alone are applicable and to that extent the provisions of Chapter IV of the Karnataka Land Reforms Act which also deal with the imposition of ceiling would not be applicable.
[344 C] 2.04.
The land in the instant case comes under the urban agglomeration the imposition of the ceiling should naturally be under the provisions of the Urban Ceiling Act and not under the Karnataka Land Reforms Act.
[344 B, C] 2.05.
Imposition of ceiling on urban land is a distinct and independent subject as compared to imposition of ceiling on owning or to hold agricultural land or any other kind of property which do not attract the Urban Ceiling Act.
These are two distinct powers and therefore the law making competence can be in two different legislative bodies.
Consequently it is difficult to hold that the provisions of Chapter III of the Karnataka Land Reforms Act are outside the legislative competence of the State Legislature.
[350 C, D] 2.06.
The one topic that is transferred in the resolution passed under Article 252 as distinct and separately identifiable and does not include the remaining topics under Entry 18 in respect of which the State alone has the power to legislate.
[351 D] 2.07.
The legislative power of the State has to be reconciled with that of the Parliament and that in their respective fields each is supreme.
Even assuming that the State enactment has same effect on the subject matter falling within the Parliament 's legislative competence that by itself will not render such law invalid or inoperative.
[350 G H] 2.08.
There is no conflict between the Ceiling Act and the State Act.
The imposition of ceiling on urban immovable property is an independent topic and cannot be construed as to nullify the other subject left in the domain of the State Legislature under Entry 18 inasmuch as imposition of ceiling is a distinct and separately identifiable subject and does not cover the other measures such as regulation of relationship of landlord and tenant in respect of which the State Legislature has competence to legislate.
[351 C D] 2.09.
There is a ceiling provision under Section 45(2) of the Karnataka Land Reforms Act providing for computation of the area in respect of which the tenant may be granted occupancy rights.
But it is clear that ceiling on the area in this context is only for the purpose of Section 45.
[351 F] 2.10.
Provisions in the Chapters II, III, V, VI to XI of the Karnataka Land Reforms Act deal with the conferment of occupancy rights on the respective tenants and they do not in any way conflict with the subject matter transferred to the Parliament by the resolution passed under Section 252.
[351 E,F] Thumati Venkaiah and others vs State of Andhra Pradesh and of others; , ; Union of India and others vs Valluri Basavaiah Chowdhary and others; , ; Calcutta Gas Company (Proprietory) Ltd. vs State of West Bengal and others, and Kannan Devan Hills Produce Company Ltd. vs The State of Kerala etc.; , referred to.
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Civil Appeal Nos. 4799 4800 of 1992.
From the Judgments dated 4.3.1992 and 8.4.1992 in Madras High Court in W.P. No. 246/92 and W.A. No. 349 of 1992.
G. Ramaswamy Attorney General, K. Sankaran, A. Rangananthan and A.V. Rangam for the Appellants.
M.K. Ramamurthi, M.A. Krishnmoorthy, M.A. Chinnaswamy, H. Subramaniam and Ms. C. Ramamurthi for the Respondents.
Rajendra Sachhar, Ambrish Kumar and M.D. Pandey for the Inter vener.
The Order of the Court was delivered: Intervention application is allowed.
Leave granted.
Civil Appeal No. 4799 of 1992.
The controversy in this case is in a narrow compass.
The appellant Bank issued Staff Circular No. 42 containing an understanding reached with the Bank staff union laying down the policy for promotion of clerks to the post of Head Clerks.
Clause 1(d) of the said circular states as follows: Employees who decline to accept Head Clerk 's post at a Branch Office outside their place of service, i.e., outside their city, will again be offered the appointment only when a vacancy arises at any one of the offices within that city, provided that at the material time there is no other senior employees at that office who had earlier declined a posting outside his Branch, as a Head Clerk in which case the senior most employee will first be offered the appointment.
Also, if an employee declines to accept the post of a Head Clerk at an office within the same city, his case for appointment as Head Clerk will be considered only when a vacancy arises at his office, in the order of his seniority.
His case cannot be considered for a vacancy at any of the other offices in the city.
It will be apparent from the above provision of the said clause that those employees who decline to accept the Head Clerk 's post at a branch office which is outside the city in which they work will have a further option.
Such employees would be offered the post of Head Clerk again but only when a vacancy arises at any one of the Bank 's offices within that city.
This is of course subject to the condition that at the material time, there is no other senior employee who had similarly declined the post outside his branch office, in which case, the senior most would have the first choice.
The further provision of this rule and with which we are concerned in the present case is as follows.
If an employee declines to accept the post of Head Clerk at an office within the same city his case for appointment as Head Clerk would be considered only when a vacancy arises at his office.
This is also subject to the condition that there is no senior employee similarly situated at the material time.
If the third and the final offer for the post of Head Clerk is declined, there is a permanent debarment of the promotion.
One more thing necessary to be stated before we come to the facts of the present case is that the appellant Bank has a local Head Office at Madras.
In 1972, it was split into two the local Head Office and Madras Main Branch.
In 1976 77, there was a further splitting up of the local Head Office and the Main Branch and ultimately in 1979, the Madras Local Head Office was divided into following six offices as part of the same Head Office: "(i) Local Head Office (ii) Madras Main Branch (iii) Overseas Branch (iv) Regional Office, which is called Zonal Office (v) The Commercial Branch (vi) Siruthozhil Branch" 4.
There is no dispute that as far as the Clerks and the Head Clerks in all the six parts of the same local Head Office are concerned, a common seniority list is maintained.
The effect of the aforesaid arrangements for the purposes of the clause 1(d) is that "the employees" in the said clause means the employees in all the said six parts of the local Head Office.
In other words, if a vacancy for a Head Clerk occurred at any of the said six offices, it was considered to be a vacancy in one office, viz.
,the local Head Office of which the other five offices were only parts.
It appears that respondent Parthasarathy was working as a clerk in the Madras Regional Office (now called Zonal Office) which is, as will be clear from above, a part of the Local Head Office itself.
On 21st August, 1973, he was offered the post of Head Clerk at Deva Kottain which is outside Madras city.
This offer was declined by him.
On 1st July, 1980, he was offered the post of Head Clerk in the Sowkarpet branch office in the same city which was less than 2 kms, from his Regional office where he was working.
He declined the said offer too.
He was then entitled to be considered for posting as Head Clerk only in his office which meant in any of the six parts of the local Head Office, that being the third and the final offer that could be made to him.
The third offer was made to him for the post of Head Clerk at the Overseas branch, and that being part of the same local Head Office, he was bound to accept it.
However, he declined the third and the final offer also, and issued a lawyer 's notice to the Bank contending that the Overseas branch was different from the Regional office where he was working and, therefore, the offer given to him was contrary to the said clause 1(d).
The allegations made in the notice were of course denied by the bank.
On 6th September, 1983, one A. Nizamuddin who was working as Head Clerk in the Regional office passed away and that post became vacant.
On 24th September, 1983, the respondent filed a writ petition before the High Court for quashing the third and the final offer made to him on 4th August 1983, and for a direction for posting him in the Regional office where the vacancy had occurred.
The High Court took the view that the third offer made was not for the post of the Head Clerk in the same office where the respondent was working and, therefore, his refusal to accept the post did not exhaust the third option and he was entitled to the vacancy created by Nizamuddin 's death in the Regional office where the respondent was working.
We are afraid this interpretation is incorrect in view of the position explained above with regard to the local Head Office which was split into six different offices which together constituted one unit.
The respondent, when he was offered the third option in the Overseas branch, was offered the post in the same office where he was working, the Regional office being as much a part of the Head Office as the Overseas branch.
By refusing to accept the said third and the final offer, the respondent had clearly exhausted all his three options and had become permanently debarred from seeking promotion to the post of Head Clerk.
We, however, do not interfere with the appointment of the respondent to the post of Head Clerk in the Regional office in the facts and circumstances of the case which show that a fortuitous appointment had arisen within almost a month of his refusal to accept the offer.
This, however, will not be treated as a precedent nor does it affect the interpretation that we have placed on the clause 1(d) as above.
Civil Appeal No. 4800 of 1992 In this case also, the respondent Sampath was working as a Clerk in Madras Regional Office.
The first offer of the post of Head Clerk was made to him on 6th August, 1973 at Mudukulathur branch which is in Madras city.
This was declined by him.
On 12th May, 1980, he was given the second offer for the post of Head Clerk at Air Force Station branch, Tambaram which was in Madras city.
The third and final offer was made to him on 4th August, 1983 to the post of Head Clerk in the Stationery department of the Madras Local Head Office.
There is no dispute that Stationery department of the Local Head Offfice and the Regional Office form part of one unit, viz., Madras Local Head Office.
The respondent declined this offer as well, and on 23rd January, 1984 filed a writ petition in the High Court for quashing the third offer and for posting him in his office, viz., Regional Office as the Head Clerk.
The learned Single Judge of the High Court quashed the order making the third offer and allowed the petition following the earlier decision in Parthasarathy 's case with which we have dealt with earlier.
The Division Bench of the High Court also confirmed the order.
For the reasons we have given in C.A.No. 4799 of 1992, we are unable to accept the interpretation given by the High Court on clause 1(d) of Staff Circular No. 42.
However, if in the present case, the respondent has already been accommodated in the post of Head Clerk in the Regional Office itself, we do not intend to interfere with the same.
It is nonetheless made clear that it is the interpretation that we have placed on the said clause that will prevail and not the interpretation placed by the High Court.
With these observations, the appeals are allowed only to the extent that the interpretation placed by the appellant Bank on clause l(d) of the Staff Circular No. 42 is correct and the decision of the High Court on the point is incorrect.
There will be no order as to costs.
| IN-Abs | The appellant Bank issued Circular No. 42 containing an understanding reached with the Staff union laying down the policy for promotion of clerks to the post of Head Clerks.
As per clause 1(d) of the Circular the employees who decline to accept Head Clerk s post at a branch office outside the city in which they work, will have a further option when a vacancy arises at any one of the Bank 's offices within that city.
However, this was subject to the condition that at the material time there was no other senior employee who had similarly declined the post outside his branch office, in which case the senior most would have the first choice.
It was further provided that if an employee declines to accept the post of Head Clerk at an office within the same city, his case would be considered only when a vacancy arises at his office.
This was also subject to the condition that there was no senior employee similarly situated at the material time.
If the third and final offer is declined, there would be a permanent debarment of promotion.
Since there were six offices at the Madras Local Head Office, a common seniority was maintained and all the six offices were considered as one office, viz. local Head Office of which the other five offices were only parts.
The Respondents declined their first, second and final offers, though indisputably the final offer was made to them for being posted in an office forming part of the local Head Office.
Both the Respondents moved the High Court by way of Writ Petitions and the High Court took the view that the final offer made was not in the same office and so they were entitled to be posted as Head Clerks in the same office.
Being aggrieved by the said two decisions of the High Court, the appellant Bank preferred the present appeals.
On the question of interpretation of clause 1(d) of the circular in question: Allowing the appeals, this Court, HELD :1.
The High Court 's interpretation of cl. 1(d) of the Circular that the third offer made was not in the office where the Respondents were working and therefore their refusal to accept the post did not exhaust the third option and they were entitled to be posted as Head Clerks in the Office where they were working is incorrect in view of the fact that the local Head Office was split into six different offices which together constituted one unit.
By refusing to accept the third and final offer, the Respondents had clearly exhausted all the three options and had become permanently debarred from seeking promotion to the post of Head Clerk.
[366 E G] 2.
This Court does not intend to interfere with the appointment of the respondents to the post of Head Clerk in the Regional Office in the facts and circumstances of these matters which show that in one case a fortuitous appointment had arisen due to death of an employee within almost a month of the Respondent 's refusal to accept the offer, and in the other case, the Respondent has already been accommodated in the post of Head Clerk in the Regional Office itself.
However, this would not be treated as a precedent and this would not affect the interpretation of clause 1(d) of the Circular, placed by this Court.
[366 H; 367 A]
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Civil Appeal No. 4650 of 1992.
From the Judgment and Order dated 18.2.1991 of the Patna High Court in C.W.J.C 6581 of 1990.
Ranjit Kumar for the Petitioners.
Ms. Sangeeta Aggarwal for the Respondent.
The Judgment of the Court was delivered by SHARMA, J.
1.
Heard the learned Counsel for the parties.
Special Leave is granted.
This appeal by the State of Bihar and its Officers is directed against the order of the High Court dated 18.2.91 passed on a Writ Petition claiming to have been filed as a Public Interest Litigation for certain reliefs to be made available to a doctor who was earlier in the State service and whose services had been terminated in 1987.
The beneficiary of the impugned judgment Dr. Ms. Sandhya Das was appointed as a Medical Officer in the Bihar State Health Services in 1961 and worked as such till 1971.
She left India for higher studies in 1971 after obtaining leave for a period of two years.
After the expiry of the leave period, she neither returned to India nor made any further application for extension of her leave.
Nothing was heard from her thereafter.
She was not the only one to do so.
A large number of doctors employed in the Bihar Health Services were acting in similar manner, causing considerable hardship to the public.
As this trend persisted, the State authorities could not ignore the problem and the relevant rules were examined, legal opinion was obtained and it was decided to take appropriate corrective measures.
The absentee doctors, presumably placed in more lucrative jobs, did not care to inform the department of their addresses, and personal service of notice on such doctors could not be effected.
In the circumstances, acting on the opinion of the Advocate General, general notice was published and press communique was issued in newspapers in India and abroad calling upon them to offer their explanations for remaining absent from service for more than five years (this period is mentioned in the Rules), within the time indicated.
Dr. Ms. Sandhya Das was also one of such doctors and was called upon to join her duty in India by such a communique issued in 1982 telling her that on her failing to do so, her services would be terminated in accordance with the Service Code.
Nothing was heard from her.
The matter of termination of services of such doctors was referred to Bihar Public Service Commission, and the Commission gave its concurrence in 1986.
Accordingly, the services of 320 doctors including that of Dr. Das was terminated in 1987.
This had the approval of the Bihar Cabinet.
The Writ Petition out of which the present appeal arises was filed in 1990 by one Ms. Kamlesh Jain as a Public Interest Litigation, stating that Dr. Das was unwell and was in need of financial help.
Some details as to how Dr. Das was taken ill and admitted in a hospital in Glasgow and then came back here for further treatment have been given.
She was, it is stated, staying with her brother for sometime on her return to India and eminent doctors of Bihar who were consulted could not get her substantial relief and ultimately she had to be admitted in the P.M.C.H. hospital of Bihar in Patna.
In this background the writ application was filed.
The High Court 's judgment under appeal is very perfunctory.
The entire Order reads thus : "18.2.91.
Learned G.P.I. hands over a cheque of Rs. 2000 drawn in the name of Dr. Sandhya Das, to Miss Kamlesh Jain, who had filed this writ application as public interest litigation on behalf of Dr. Sandhya Das.
This has been accepted by Miss Kamlesh Jain.
The Payment has been made in compliance with the order dated 18.1.91.
We dispose of this writ application with a direction to the respondents to pay the post retirement benefits to Dr. Sandhya Das within a period of three months from today.
We make it clear that this order will not be construed to mean that Dr. Sandhya Das accepts her date of retirement to be 21.7.1987.
If so advised, she may agitate the matter through a fresh writ application.
" We have not been able to discover as to how the writ petitioner became so interested in Dr. Das who was being taken care of in the P.M.C.H. hospital of Bihar and receiving attention of eminent doctors and who has atleast a brother with whom she was staying for sometime.
The learned Counsel for the writ petitioner, respondent before us, could not tell us about the other family members and relations of Dr. Das, or how and why in this background the writ petitioner Ms. Kamlesh Jain chose Dr. Das for showering her benevolence in preference over the far more needy old and sick persons who are, unfortunately, in large number in Bihar.
The impugned judgment also does not indicate any reason.
There is no doubt that the State should strive to promote the welfare of its people so that at least the bare necessities of life are met and the needy and the sick are properly looked after.
This can be done only by adopting a welfare scheme in the interest of the general public; and since the resources of the State are not unlimited, the State is not expected, in absence of relevant reasons, to choose an individual for special treatment at the cost of the others.
Ordinarily, therefore, it is desirable for the State authorities to take up the individual cases coming to their notice and do their best in accordance with the policy decision of general application.
This will ensure equal treatment to all of course in accordance with the individual needs.
Unless all relevant materials are placed by an applicant, it will be an onerous task for the Court to take upon itself to determine the extent of help a particular individual has to get.
The circumstance that a particular person is smart enough to approach the Court or is so fortunate to get somebody to do that on his or her behalf, cannot be a valid ground to divert the State funds to his or her advantage at the cost of corresponding disadvantage to others.
A judicial process should not be allowed to be used for the satisfaction of an individual 's whims, pious, though, they may apparently look.
Since we do not find any reason in the impugned order or in the writ petition which may justify the relief granted in the present case, we are of the view that the writ petition should have been dismissed.
The learned Counsel for the respondent made a grievance before us that the cheque for Rs. 2000 mentioned in the first paragraph of the High Court 's orders has been drawn in the name of Dr. Das whose fingers have become stiff and the money, therefore, could not be encashed.
It was suggested that a cheque may be directed to be drawn in the name of the writ petitioner Ms. Kamlesh Jain.
We do not see any reason for acceding to this prayer as it is not suggested that Dr. Das has no relation of her own, who can look after her needs.
For the reasons indicated above the appeal is allowed, the impugned judgment of the High Court is set aside and the writ petition (C.W.J.C. No. 6581/1990) filed in the High Court is dismissed.
There will be no order as to costs.
N P V Appeal allowed.
| IN-Abs | A large number of doctors employed in the State Health Services of the appellant State were leaving India for higher studies, after obtaining leave for a couple of years, and thereafter, they were neither returning to India, nor were sending any further applications for extension of leave.
This was causing considerable hardship to the public.
As this trend persisted, the state authorities wanted to take appropriate corrective steps.
Since the absentee doctors had not informed the department of their addresses, personal service of notice on such doctors could not be effected.
A general notice was published and press communique was issued in newspapers in India and abroad calling upon them to offer their explanations for remaining absent from service for more than five years, within the specified time and indicating that on their failure to do so, the services of 320 doctors would be terminated with the concurrence of the State Public Service Commission and the approval of the State Cabinet.
Services of doctors were, accordingly, terminated.
The respondent filed a Public Interest Litigation before the High Court stating that the particular doctor was unwell and was in need of financial help.
The services of this doctor had also been terminated along with others.
The details as to how she was taken ill and admitted in a hospital outside the country and then brought back to India for further treatment in the State, were given.
The High Court directed the appellants to pay the post retirement benefits to the medical officer doctor concerned.
Earlier the High Court had also directed payment of Rs.2,000 to the respondent writ petitioner as relief to the doctor concerned.
Allowing the appeal of the State, this Court, HELD: 1.1.
It is not known how the respondent writ petitioner became so interested in the beneficiary, who was being taken care of in the hospital and receiving attention of eminent doctors, and who had atleast a brother with whom she was staying for sometime.
The respondent writ petitioner could not tell about the other family members and relations of the beneficiary or how and why in this background the respondent chose the beneficiary for showering her benevolence in preference over the far more needy old and sick persons who are, unfortunately, in large number in the appellant State.
The judgment under challenge also does not indicate any reason.
[360 B D] 1.2.
Since there is no reason at all in the order under challenge or in the writ petitioner which may justify the relief granted in the present case, the writ petition should have been dismissed.
[360 H; 361 A] 1.3.
There is also no reason to accede to the request made on behalf of the respondent that the cheque for Rs. 2000, mentioned in the first paragraph of the High Court 's orders, drawn in the name of the beneficiary, may be directed to be drawn in the name of the respondent writ petitioner for the beneficiary 's fingers had since become stiff and hence the cheque could not be encashed.
There is no suggestion to the effect that the beneficiary has no relation of her own, who can look after her needs.
[361 B] 2.
There is no doubt that the State should strive to promote the welfare of its people so that at least the bare necessities of life are met and the needy and the sick are properly looked after.
This can be done only by adopting a welfare scheme in the interest of the general public; and since the resources of the State are not unlimited, the State is not expected, in absence of relevant reasons, to choose an individual for special treatment at the cost of the others.
Ordinarily, therefore, it is desirable for the State authorities to take up the individual cases coming to their notice and do their best in accordance with the policy decision of general application.
This will ensure equal treatment to all of course in accordance with the individual needs.
Unless all relevant materials are placed by an applicant, it will be onerous task for the Court to take upon itself to determine the extent of help a particular individual has to get.
The circumstance that a particular person is smart enough to approach the Court or is so fortunate to get somebody to do that on his or her behalf, cannot be a valid ground to divert the State funds to his or her advantage at the cost to corresponding disadvantage to others.
A judicial process should not be allowed to be used for the satisfaction of an individual 's whims, pious, though, they may apparently look.
[360 E, F, G]
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Civil Appeal No. 2213 of 1978.
From the Judgment and Order dated 31.1.1978 of the Delhi High Court in Civil Writ Petition No. 106 of 1978.
V.M. Tarkunde, S.B. Wad, Mrs. J.S. Wad and Mrs. Tamali Wad for the Appellants.
K.T.S. Tulsi, Solicitior General, T.C. Sharma and P. Parmeshwaran for the Respondents.
Kirpal Singh and M.A. Krishna Moorthy for the Intervener.
The Judgment of the Court was delivered by KASLIWAL, J.
This appeal by the Ramjas Foundation, a society duly registered under the Societies Registration Act, 1960 and five others who are the Secretary and trustees of the Ramjas Foundation is directed against the order of the Delhi High Court dated January 31, 1978 dismissing the civil Writ Petition No.106 of 1978 in limine.
On November 13, 1959, the Chief Commissioner Delhi issued a Notification under Section 4 of the Land Acquisition Act, 1894 (hereinafter referred to as 'the Act ') Land measuring 34070 acres was notified as land likely to be acquired by the Government at the public expense for a public purpose, namely, the planned development of Delhi.
The following land was excluded from the scope of the notification: (a) Government land and evacues land; (b) the land already notified, either under Section 6 of the Land Acquisition Act for any Government Scheme; (c) the land already notified either under Section 4 o. under Section 6 of the Land Acquisition Act, for House Building Cooperative Societies mentioned in annexure lII; (d) the land under graveyards, tombs, shrines and the land attached to religious institutions and Wakf property.
The aforesaid land measuring 34070 acres included land measuring about 872 bighas, 9 biswas situated in Chowkri Mubarikabad and measuring about 730 bighas situated in Chowkri Sadhurakhurd, belonging to the Ramjas Foundation.
The present appeal relates to the land situated in Chowkri Sadhurakhurd.
The Ramjas Foundation on December 11, 1959 filed objections under Section 5A of the Act for the entire land situated in Mubarikabad as well as Sadhurakhurd.
The Lt. Governor of Delhi subsequently issued notifications under Section 6 of the Act on 15.4.1968, 27.4.1968, 15.5.1968, 19.8.1968, 14.1.1969 and 18.1.1969.
The Lt. Governor also issued notices under Sections 9 and 10 of the Act on December 27, 1972 for Sadhurakhurd land.
As regards the land in Mubarikabad notification under Section 6 of the Act was issued on February 28, 1968.
Ramjas Foundation filed a writ petition in may, 1968 in the Delhi High Court challenging the action of the Government in acquiring their lands situated in Mubarikabad.
In the said writ petition Sachar, J. (as he then was) who heard the petition was of the view that the matter ought to be tried in a suit instead of writ proceedings.
He, therefore, by his order dated August 10, 1971 permitted the Ramjas Foundation to withdraw the petition with liberty to agitate the matter in a suit and as such the writ petition was dismissed as withdrawn.
The Ramjas Foundation then filed a suit in the Delhi High Court on November 8, 1971 for quashing the notifications issued under Sections 4 and 6 of the Act in respect of the land situated in Mubarikabad.
The suit was dismissed by Awadh Behari Rohtagi, J. of the Delhi High Court by order dated 21.3.1977 reported in AIR 1977 Delhi 261.
Learned Counsel for the appellants brought to our notice that Letters Patent Appeal before the Division Bench of the High Court is pending against the aforesaid Judgment of the Learned Single Judge.
So far as the land situated in Sadhurakhurd with which we are concerned in the present appeal a Writ Petition No. 213 of 1973 was filed in the High Court and the same was dismissed as withdrawn on 30th March, 1977.
Thereafter another Writ Petition No. 106 of 1978 was filed challenging the notifications issued under Sections 4, 6, 9 and 10 of the Act and the same was dismissed by the High Court by the impugned order dated January 31, 1978 in limine as already mentioned above.
We have heard Mr. Tarkunde, Learned Senior Advocate on behalf of the appellants and Mr. Tulsi, Learned Additional Solicitor General on behalf of the respondents.
Learned counsel for the appellants contended that the appellants had submitted their objections under Section 5A of the Act on 11.12.1959 but the same were rejected without affording any opportunity of personal hearing.
It was submitted that it was mandatory on the part of the respondents to have given an opportunity of personal hearing specially when the same was desired and a denial of such opportunity of personal hearing invalidates the notifications issued under Sections 6 and 9 of the Act.
Reliance in respect of the above contention is placed on Farid Ahmed Abdul Samad & Anr.
vs Municipal Corporation of the City of Ahmedabad & Anr., [19771 1 SCR 71.
It was also contended on behalf of the appellants that the notification issued under Section 4 of the Act itself excludes the land of wakf property.
It has thus been contended that so far as the land in question is concerned the same being also a wakf property as such ought to have been exempted under the notification itself.
It was submitted that Ramjas Foundation is an educational charitable society which is running several schools and post graduate college in Delhi and several educational institutions are being run on the alleged acquired land itself.
As an alternative argument it was submitted that in case this Hon 'ble Court takes the view that wakf property mentioned in the alleged notification does not include the educational and charitable institutions run by Hindus or non Muslims then such notification is void for violation of article 14 of the Constitution.
As regards the objection of the violation of the mandatory provisions of Section 5A of the Act in.
not affording an opportunity of personal hearing while deciding such objections, we granted an opportunity to the Learned Additional Solicitor General to place material after examining the original record.
We granted, this opportunity to the respondents on account of the reason that the writ petition had been dismissed by the High Court in limine without issuing notice to the respondents and as such the respondents had not been given any opportunity before the High Court to place any material to refute the allegations made by the appellants in this regard.
The Additional Solicitor General during the course of the hearing of the matter placed an order of the Land Acquisition Collector, Delhi dated 23.2.1968 which has been taken on record and for the purposes of identification has been marked as Annexure 'X '.
A copy of the said Annexure 'X ' was also given to the Learned counsel for the appellants.
A perusal of the aforesaid order dated 22.3.1968 clearly shows that the Ramjas Foundation Society was represented through Sh.
Ratan Lal Gupta, Advocate who was given a personal hearing.
From a perusal of the aforesaid document Annexure 'X ' dated 23.2.1968 it is clear that full opportunity of hearing through counsel was afforded to the Ramjas Foundation.
It has been further mentioned in this order that the Ramjas Foundation Society was also allowed to file fresh objections if so desired, but Sh.
Ratan Lal Gupta, Learned Advocate for the Petitioner society declined and stated that there was nothing more to add in the previous objection petition.
After bringing the said document Annexure 'X ' to the notice of the Learned counsel for the appellants, no satisfactory explanation or argument came forward on behalf of the appellants.
The conduct of the appellants in raising the plea that no opportunity of personal hearing was given to the appellants in respect of the objections filed under Section 5A of the Act was totally baseless and factually incorrect and such conduct is reprehensible.
lt is well settled that a person invoking an equitable extraordinary jurisdiction of the Court under article 226 of the Constitution is required to come with clean hands and should not conceal the material facts.
The objection regarding not affording an opportunity of personal hearing in respect of objections filed under Section 5A of the Act was one of the main planks of the grounds raised in the writ petition as well as in the Special Leave Petition filed before this Court and ought we know if such ground had not been taken this Court would have entertained this appeal or not.
The appellants have taken the advantage of obtaining the stay order also from this Court which is continuing for the last 14 years as the Special Leave Petition was filed in 1978 itself.
It may be further noted that a common objection petition under Section 5A of the Act in respect of both the lands situated in Mubarikabad as well as in Sadhurakhurd was filed on 11.12.1959 through Sh.
Ratan lal Gupta, Advocate.
The said objections were heard in the presence of Shri Ratan Lal Gupta, Advocate and disposed of by one common order Annexure 'X ' and we cannot believe an ipse dixit explanation made orally during the course of arguments on behalf of the appellants that they had no knowledge of any personal hearing being given to Shri Ratan Lal Gupta, Advocate.
It is also important to note that no such objection was taken in respect of land in Mubarikabad.
Another ground on which the present appeal has been contested is the ground of delay, laches and acquiescence in filing the writ petition challenging the acquisition proceedings.
As already mentioned above a common notification was issued under Section 4 of the Act for an area of 34070 acres of land needed for planned development of Delhi.
Between 1959 and 1961, about, six thousand objections were filed under Section 5A of the Act.
The objections were overruled.
On March 18, 1966, the declaration under Section 6 of the Act was published in respect of a portion of the area.
Thereafter, in 1970 notices were issued under Section 9(1) of the Act and some of the persons who had received such notices challenged the validity of acquisition proceedings by filing writ petitions before the High Court of Delhi.
The High Court negatived all the contentions raised in those cases and dismissed the writ petitions.
Thereafter appeals by grant of special leave against the judgment of the Delhi High Court as well as writ petitions filed directly under article 32 of the Constitution were heard and disposed of by this Court by a common Judgment reported in Aflatoon & Ors.
vs Lt. Governor Delhi & Ors., ; In the aforesaid case a Constitution Bench of this Court held that in the case of an acquisition of a large area of land comprising several plots belonging to different persons, the specification of the purpose can only be with regard to the acquisition of the whole area.
Unlike in the case of an acquisition of a small area, it might be practically difficult to specify the particular purpose for which each and every item of land comprised in the area is needed.
It was further held in the above case that about six thousand objections were filed under Section 5A by persons interested in the property.
Several writ petitions were also filed in 1966 and 1967 challenging the validity of the acquisition proceedings.
The Government had necessarily to wait for the disposal of the objections and petitions before proceeding further in the matter.
The High Court was of the view that there was no inordinate delay on the part of the Government in completing the acquisition proceedings.
The conclusion of the High Court was held to be correct.
It was also held in the above case that the writ petitions were liable to be dismissed on the grounds of laches and delay on the part of the petitioners.
In the above case this Court had found that the appellants of that case had not moved in the matter even after the declaration under Section 6 was published in 1966.
They approached the High Court with their writ petitions only in 1970 when the notices under Section 9 were issued to them.
This Court then observed as under: "There was apparently no reason why the writ petitions should have waited till 1972 to come to this Court for challenging the validity of the notification issued in 1959 on the ground that the particulars of the public purpose were not specified.
A valid notification under Section 4 is sine qua non for initiation of proceedings for acquisition of property.
To have sat on the fence and allowed the Government to complete the acquisition proceedings on the basis that the notification under Section 4 and the declaration under Section 6 were valid and then to attack the notification on grounds which were available to them at the time when tile notification was published would be putting a premium on dilatory tactics.
The writ petitions are liable to be dismissed on the ground of laches and delay on the part of the petitioners".
The delay and laches in the case before us are even worse than those in the above cited Aflatoon 's case.
The appellants had initially filed a writ petition No. 213/73 challenging the notification dated 13.11.1959 under Section 4 of the Act and notification dated 27.4.1968 under Section 6 of the Act with respect to 245 bighas and 1 biswas of land situated in the revenue estate of Sadhurakhurd and the notices dated 27.12.1972 under Sections 9 and 10 of the Act issued by the Land Acquisition Collector, Delhi with respect to Khasra No. 1040/353 (12 bighas and 8 biswas).
On 30.3.1977 Shri M.C. Gupta, Learned counsel for the Ramjas Foundation stated that he had instructions from his clients to state that they did not want to press the petition and wish to withdraw it.
The statement of Sh.
Gupta had been separately recorded.
The Court, in these circumstances permitted to withdraw the petition and dismissed the same as withdrawn.
lt is important to note that in the statement Sh.
M.C.Gupta, Learned counsel for the petitioners stated as under: "I may be permitted to withdraw this petition in view of the Judgment delivered by Hon.
Mr. Justice Awadh Behari in Suit 451 of 1971 decided on 21st March, 1977, between the parties, wherein the contentions urged were precisely the same as urged in this petition, my clients reserved the opportunity to file a fresh suit if so necessitated by the circumstances in future.
" It may be noted that the reference with regard to suit No. 451 of 1971 decided on 21st March, 1977 is in respect of the land of petitioners situated in Mubarikabad.
It is surprising that though the opportunity was sought for filing a fresh suit, the appellants again filed a writ petition No. 106 of 1978 in the High Court on 7.1.1978 which was ultimately dismissed by the High Court in limine on 31st January, 1978 by a Division Bench comprising of T.P.S. Chawla and Awadh Behari, JJ.
In this writ petition No. 106 of 1978 the appellants conveniently omitted to mention that the permission to withdraw the petition No. 213 of 1973 was granted on the statement of Sh.
M.C. Gupta that his clients reserved the liberty to file a fresh suit and not writ.
Thus no liberty was sought or given for filing a fresh writ petition.
In any case there were no fresh ground or circumstances available to the appellants to file a fresh writ petition No. 106 of 1978 on 7.1.1978 on identical grounds when the earlier writ petition No. 213 of 1973 had been dismissed as withdrawn on 30.3.1977.
Nothing had happened between 30.3.1977 and 7.1.1978 for giving a fresh cause of action to the appellants to file the writ petition No. 106 of 1978.
Awadh Behari, J. had dismissed the suit No. 451 of 1971 by order dated 21.3.1977 in regard to the lands in Mubarikabad and he was also one of the Judges of the Division Bench who passed the impugned order dated January 31, 1978 dismissing the writ petition in limine as he was fully aware of the entire background of this litigation.
The appellants are themselves responsible for creating confusion in initiating separate proceedings at different period of time in respect of the lands situated in Mubarikabad and Sadhurakhurd though challenge to the acquisition proceedings was on common grounds.
Learned counsel for the appellants was unable to satisfy in respect of such conduct of hide and seek on the part of the appellants.
In case, as sought to be explained by Mr. Tarkunde, Learned Senior Counsel for the appellants, the appellants were depending on the result of the civil suit filed in respect of the lands situated in Mubarikabad there was no justification for filing the writ petition No. 213 of 1973 in respect of the land situated in Sadhurakhurd as the suit was not decided in 1973 but was in fact dismissed on 21.3.1977.
We find no justification for filing the writ petition in respect of the land situated in Sadhurakhurd in 1973 and subsequently withdrawing the writ petition on 30th March, 1977 reserving the liberty to file a fresh suit but thereafter again filing the writ petition on 7.1.1978 instead of suit.
Independently, of all the circumstances mentioned above, we shall now consider the question of delay and laches in filing the writ petition No. 106 of 1978 and the earlier writ petition No. 213 of 1973 relating to lands in Sadhurakhurd.
Mr. Tarkunde, Learned Senior Counsel vehemently contended that there is no limitation prescribed for filing the writ petition and the question of delay and laches has to be examined independently in the facts and circumstances of each case.
He has argued that the appellants are continuing in possession uptil date and though challenge has been made to the validity of notifications issued under Section 4 in 1959, Section 6 in 1968 and 1969 and Section 9 and 10 in 19722, there is no delay, since no award has been passed so far and no loss has occasioned to the respondents due to lapse of time.
It has been submitted that there was no change of circumstances during the intervening period and the delay had been fully explained on the aforesaid grounds.
It has also been argued that notifications under Sections 9 and 10 were issued in 1972 and soon there after the appellants came forward with a writ petition No. 213 of 1973 challenging the notifications issued under Sections 4, 6, 9 and 10 of the Act.
We find no force at all in the above contentions.
It is an admitted fact that notification under Section 4 of the Act was issued as early as 1959 and all the notifications under Section 6 of the Act in relation to the land of the appellants in Sadhurakhurd were issued in 1968 and 1969.
The challenge to the acquisition proceedings was mainly based on the ground that in the notification dated 13.11.1959 issued under Section 4 of the Act the lands of wakf property were excluded and the lands of the appellants being also used for educational and charitable purposes the same were also liable to be excluded.
At a later stage a ground was also taken that if wakf property in the aforesaid notification under Section 4 of the Act meant only wakf properties of the Mohammedans, then such notification was discriminatory and violative under article 14 of the (Constitution as there was no reasonable ground to discriminate such properties of Hindus or non Muslims also meant for charitable purposes.
So far as the notifications under Section 6 of the Act are concerned the same were attacked on the ground that no opportunity of personal hearing was given to hear the objections filed under Section 5A of the Act.
Thus it is abundantly clear that the challenge was in respect of notifications under Sections 4 and 6 of the Act alone and though in the prayer clause relief had been sought to quash the notification under Sections 9 and 10 of the Act also which were issued in 1972 but no ground whatsoever has been pleaded in the writ petition nor raised before us as to how the notifications under Sections 9 and 10 had any concern for explaining the delay in respect of the challenge to notifications under Sections 4 and 6 of the Act.
It is worthwhile to note that according to the appellants own showing the notices under Sections 9 and 10 issued to the appellants in 1972 were in respect of the land being Khasra No. 1040/353 which related to 12 bighas and 8 biswas only.
The challenge on the other hand in the writ petition is in respect of notifications under Sections 4 and 6 covering the entire land measuring about 730 bighas situate in village Sadhurakhurd.
We find no justification at all in explaining the delay on the ground that no award has been passed nor the appellants have been dispossessed so far.
This cannot be an explanation for not challenging the notifications under Sections 4 and 6 of the 9Act and in the present case the appellants had themselves sought stay from this Court as early as 15.11.1978 for not making and declaring the award and not to dispossess the appellants.
Thus we find no justification at all for the delay in not challenging the notification issued under Section 4 on 13.11.1959 till 1973.
Even notifications under Section 6 of the Act were issued in 1968 and 1969 but not challenged till 1973.
As already mentioned above in Aflatoon 's case (supra) a Constitution Bench of this Court has clearly held that even after the declaration under Section 6 of the Act published in 1966, the appellants had approached with their writ petitions in 1970 when the notices under Section 9 were issued to them the writ petitions were liable to be dismissed on the grounds of laches and delay.
Mr. Tarkunde, learned senior counsel made strenuous effort to distinguish the aforesaid case on the ground that in the aforesaid case the Court was influenced with the fact that the petitioners had sat on the fence and allowed the Government to complete (emphasis added) the acquisition proceedings.
Much emphasis has been laid on the word 'to complete ' the acquisition proceedings.
We find no force in this submission as the facts narrated in the above case clearly shows that the petitioners in those cases had filed writ petitions in the High Court in 1970 and in the Supreme Court in 1972 after the issuance of notices under Sections 4, 6 and 9 of the Act.
The use of the word complete ' was not of much significance and the main reasoning of the case was that grounds to attack the notification under Sections 4 and 6 of the Act were available at the time of publication of such notifications.
In the facts and circumstances of the case before us the appellants were also sitting on the fence and did not take any steps of challenging the notification under Sections 4 and 6 of the Act till 1973 though the grounds now sought to be urged were available to the appellants as soon as such notifications were issued.
Thus viewing the matter from any angle we are clearly of the view that the writ petition was also liable to be dismissed on the ground of laches and delay on the part of the appellants apart from other grounds already dealt by us.
In the face of the aforesaid view taken by us, it is not necessary at all to go on other questions raised in the case.
We decline to express any opinion on any questions of law raised in the appeal.
In the result we dismiss this appeal with costs.
In view of the dismissal of the appeal itself all interim orders stand vacated automatically.
G.N. Appeal dismissed.
| IN-Abs | Notification under Section 4 of the Land Acquisition Act, 1894 was issued in respect of certain lands including the lands belonging to the appellant foundation situated at two different places.
The appellant Foundation filed objections.
Subsequently notifications under Sections 6 and Notices under Sections 9 and 10 were also issued.
The appellant Foundation challenged the notifications in respect of the land situated at one of the two places, by way of a Writ Petition before the High Court and the same was dismissed as withdrawn with liberty to the petitioner to agitate the matter in a suit.
Thereupon, the appellant Foundation filed a suit and the same was dismissed by a Single Judge of the High Court.
The Letters Patent Appeal filed against that decision is pending.
In respect of the land situated at the other place, a Writ Petition was filed by the appellant before the High Court, which came to be dismissed as withdrawn.
Thereafter, another Writ Petition was filed by the appellant Foundation before the High Court challenging the notifications.
The High Court having dismissed the Writ Petition, the appellant Foundation preferred the present appeal.
On behalf of the appellants, it was contended that they filed their objections under Section 5A of the Act, but the same were rejected without affording any opportunity of personal hearing, and the denial of such opportunity invalidated the notifications; and that the land of the appellants being wakf property it ought to have been excluded on the basis of the notification under Section 4 of the Act.
Alternatively it was contended that the appellant has been running several educational institutions on the very land and that if the exemption for wakf property is not applicable to such educational and charitable institutions run by Hindus or non Muslims, then such a notification would be violative of Article 14 of the Constitution.
The Respondents contested the appeal on grounds of delay, laches and acquiescence in fling the Writ Petition challenging the acquisition proceedings.
It was also stated that the appellants were given opportunity of personal hearing.
Dismissing the appeal, this Court, HELD: 1.
The conduct of the appellants in raising the plea that no opportunity of personal hearing was given to the appellants in respect of the objections filed under Section 5A of the Land Acquisition Act, 1894 was totally baseless and factually incorrect and such conduct is reprehensible.
It is well settled that a person invoking an equitable extraordinary jurisdiction of the Court under article 226 of the Constitution is required to come with clean hands and should not conceal the material facts.
[431 F, G] Farid Ahmed Abdul Samad & Anr.
vs Municipal Corporation of the City of Ahmedabad & Anr., [1977] 1 SCR 71, referred to. 2.
The challenge to the acquisition proceedings was mainly based on the ground that in the notification dated 13.11.1959 issued under Section 4 of the Act the lands of wakf property were excluded and the lands of the appellants being also used for educational and charitable purposes the same were also liable to be excluded.
At a later stage a ground was also taken that if wakf property in the aforesaid notification under Section 4 of the Act meant only wakf properties of the Mohammedans, then such notification was discriminatory and violative under article 14 of the Constitution as there was no reasonable ground to discriminate such properties of Hindus or non Muslims meant for charitable purposes.
Thus the challenge was in respect of notifications under Sections 4 and 6 of the Act alone and though in the prayer clause relief has been sought to quash the notification under Sections 9 and 10 of the Act also which were issued in 1972, no ground whatsoever has been pleaded in the writ petition nor raised in the present appeal as to how the notifications under Sections 9 and 10 had any concern for explaining the delay in respect of the Challenge to notification under Sections 4 and 6 of the Act, Admittedly the notices under sections 9 and 10 issued appellants in 1972 were in respect of a portion of the land.
The challenge on the other Land in the writ petition is in respect of notifications under Sections 4 and 6 covering the entire land.
There is no justification at all in explaining the delay on the ground that no award has been passed nor the appellants have been dispossessed so far.
This cannot be an explanation for not challenging the notifications under Sections 4 and 6 of the Act and in the present case the appellants had themselves sought stay from this Court as early as 15.11.1978 for not making and declaring the award and not to dispossess the appellants.
Thus there is no justification at all for the delay in not challenging the notification issued under Section 4 on 13.11.1959 till 1973.
Even notifications under Section 6 of the Act were issued in 1968 and 1969 but not challenged till 1973.
[435 H; 436 A G] Aflatoon & Ors.
vs Lt. Governor Delhi & Ors., [2975] 1 SCR 802, relied on.
|
tition (C) No. 499 of 1991.
(Under Article 32 of the Constitution of India).
WITH Civil Appeal Nos.
4788 & 4794 of 1992.
C.S. Vaidyanathan, K. Lahiri, P.P.Rao, Vishwajeet Singh, R.B. Misra, 4 R.K. Khanna, Surya Kant, R. Singhvi, C.V.S. Rao, Ms. A. Subhashini, R.P. Singh, S.N. Terdol, A. Sharan, H.K. Puri, Ms. Abha Sharma and K.K. Lahiri for the appearing parties.
The Judgment of the Court was delivered by K. RAMASWAMY, J.
Special leave granted.
As the trio raised common questions of law, they are disposed of by a common judgment.
The 1st petitioner in the Writ Petition is an Association representing the officers of the State Civil Service of U.P. and petitioner Nos. 2 to 17 are its members.
some of them and Bihar State Officers are the appellants in the two appeals respectively.
On January 19, 1984, the association represented to the Govt.
of India requesing to remove wide disparity prevailing in different States of promotional avenues from the State Civil Services to All India Administrative Service.
The officers from Andhra Pradesh and Kerala, on completion of 8 to 9 years of service are becoming qualified for promotion to All India Administrative Service, while the officers from States like Uttar Pradesh and Bihar would get chance only after putting 24 to 27 years of service.
The Estimate Committee of Seventh Lok Sabha too in its 77th Report highlighted the injustice.
A committee of A senior Secretaries constituted by the Union Govt.
recommended, after due consideration, to evolve equitable principles of comparable seniority from different States for promotion to Indian Administrative Service.
Pursuant thereto the Central Govt.
proposed to amend the Indian Administrative Service (Regulation of Seniority) Rules, 1954, for short 'the Seniority Rules '.
In the meantime the Rules were repealed and replaced by I.A.S. (Regulation of Seniority) Rules, 1987 which came with effect from Nov. 6, 1987 for short 'New Seniority Rules '.
The first respondent issued (Circular letter dated September 9, 1986 to the State Govts.
indicating amendments for fixation of seniority of officers promoted from State Civil Services ' to I.A.S. to give weightage over and above 4 years in the assignment of year of allotment as per the existing relevant rules, namely, four years for the first 12 years State service with additional weightage of one year for every two to three years ' completed service subject to a maximum of five years.
After receiving suggestions or comments from State Governments, the Central India exercising the power under sub sec.
(1) of Sec. 3 of All India Service Act, 1951 for short, 'the Act ' amended the New Seniority Rules, 1987 which amendment was published in the Gazette of India on February 3, 1989 for short the 'First Amendment Rules '.
The proviso thereto was made limiting its operation prospectively from February 3, 1989.
Putting the proviso and its prospective operation in issue, the appellants from U.P. in Civil Appeal No. 4788 of 1992[S.L.P. (C) No. 13823 of 1991] filed Original Application No. 18 of 1989 in the Central Administrative Tribunal, Allahabad at Lucknow Circuit Bench, contending that they were promoted in 1980 onwards but by limiting its application to November 6, 1987, they were discriminated.
Bihar Officers questioned the Rule in O.A. No. 136 of 1989 before the C.A.T. at Patna.
Therein the appellants though found to be entitled to the total weightage of 9 years since their juniors were given 1983 as the year of allotment by operation of proviso to Rule 3(3)(ii) of the First Amendment Rules were given 1983 as the year of allotment.
Thereby they were denied 3 years weightage.
The Tribunal at Lucknow held that the prospective operation discriminated the Senior State Civil Service Officers but it refused to direct the Union Govt.
to amend the Rules with retrospective effect.
However, the Govt.
of India was requested to reconsider the matter to give retrospective operation to the First Amendment Rules.
The Tribunal at Patna upheld the rules and dismissed the application.
The Officers from Uttar Pradesh through their Association filed the Writ Petition under article 32 of the Constitution seeking writ of certiorari to quash the order dated December 12, 1990 made by the Ministry of Personnel, Public Grievance and Pension Department and for a mandamus to extend the benefits flowing from the First Amendment Rules to its members promoted prior to January 1988 and to the petitioners Nos. 2 to 17 in particular.
It is needless to state that the First Amendment Rules would operate with full effect from 1992, while the Promotee Officers promoted between 1988 to 1991 would reap partial benefit.
Rule 3 of the Seniority Rules, 1954 postulated assignment of the year allotment as per the Rules to every officer appointed to the Indian Administrative Service, be it a direct recruit or a Promotee officer.
The Promotee officer appointed in accordance with rule 9 of the IAS Recruitment Rules read with regulation 9 of IAS Promotion Regulations shall be allotted an year of allotment next below the junior most direct recruit officer recruited in accordance with rule 7 of the Recruitment Rules (Direct Recruitment Rules) and who officiated continuously in a senior post from a date earlier than the date of the commencement of such officiation by the Promotee officer.
Under the New Seniority Rules 1987, rule 3(1) postulates that every officer shall be assigned year of allotment in accordance with the provisions hereinafter contained in the rules.
The year of allotment of an officer in service at the commencement of the amended Seniority Rules shall be the same as per the rule 3(2) as has been assigned to him by the Central Govt.
in accordance with the orders and instructions in force immediately before the commencement of the New Seniority Rules.
Sub rule (3) of Rule 3 provides thus: "3(3) The year of allotment of an officer appointed to the Service after the commencement of these rules shall be as follows: 3(3)(i) the year of allotment of a direct recruit officer shall be the year following the year in which the competitive examination was held: Provided that if a direct recruit officer is permitted to join probationary training under rule 5(1) of the IAS (Probation) Rules, 1954, with direct recruit officers of a subsequent year of allotment, then he shall be assigned that subsequent year as the year of allotment.
3(ii) The year of allotment of a promotee officer shall be determined in the following manner]: (a) For the service rendered by him in the State Civil Service upto twelve years, in the rank not below that of a Deputy Collector or equivalent, he shall be given a weightage of four year towards fixation of the year of allotment; (b) He shall also be given a weightage of one year for every completed three years of service beyond the period of twelve years, referred to in sub clause (a), subject to a maximum weightage of five years.
In the calculation, fractions are to be ignored.
(c) The weightage mentioned in sub clause (b) shall be calculated with effect from the year in which the officer is appointed to the service: Provided that he shall not be assigned a year of allotment earlier than the year of allotment assigned to an officer senior, to him in that select list or appointed to the service on the basis of an earlier Select List.
3(3) (iii) The year of allotment of an officer appointed by selection shall be determined in the following manner: a) for the first 12 years of gazetted service, he shall be given a weightage of 4 years towards fixation of the year of allotment; (b) he shall also be given a weightage of one year for every completed 3 years of service beyond the period of 12 years, referred to in sub clause (a), subject to a maximum weightage of 5 years.
In this calculation, fractions are to be ignored; (c) the weightage mentioned in sub clause (b) shall be calculated with effect from the year in which the officer is A appointed to the service: Provided that he shall not become senior to another non State Civil Service Officer already appointed in the service.
Provided further that he shall not be allotted a year earlier than the year of allotment assigned to an officer already appointed to the service in accordance with sub rule (1) of rule 8 of the Recruitment Rules, whose length of class I continuous service in the State Civil Service in the State Civil Service is equal to or more than the length of Class I continuous service of the former in connection with the affairs of the State".
A plain and fair reading of the sub rules manifests the Central Govt 's intention that the year of allotment of a direct recruit officer shall be the year following the year in which the competitive examination was held.
If any such officer was permitted to join probationary training with direct recruit officers of a subsequent year of allotment then he shall be assigned that subsequent year as the year of allotment.
In determining the seniority of a promotee officer in assigning year of allotment, the service rendered in the State Civil Service upto 12 years as Dy.
Collector, or equivalent posts, weightage of 4 years shall be given.
In addition he/she shall also be given further benefit of one year weightage of every completed 3 years of service, beyond the period of 12 years, subject to a maximum weightage of 5 years.
In its calculations fractions are to be ignored.
the weightage shall be computed from the year of appointment of the officer to the service.
The offending proviso limits the operation of Rule 3(3)(ii)(a) and (b) that such an officer shall not be assigned an year of allotment earlier than the year of allotment assigned to the officers senior to him in that select list or appointed on the basis of an earlier select list.
Under rule 3(3) (iii) also, though not relevant for the purpose of the case but serves as an analogy, that the year of allotment of an officer appointed by selection shall also be given the year of allotment in the same manner as adumbrated in sub rule 3(3) (ii) and its effect also was circumscribed under the proviso that he shall not become senior to another non State Civil Service Officer already appointed to the service.
It is, therefore, clear that the New Seniority Rules were to be operative from November 6, 1987 and the First Amendment Rules from February 3, 1989 with the result that in assigning the year of A allotment, full weightage of 9 years ' eligible service was given to the promotee State Civil Service Officers.
However, the senior officer to him/her appointed from the State Civil Service earlier in the same select list or one above him in the previous select list shall remain senior to him.
Thereby the proviso averted the effect of pushing an officer who gained entry into IAS service by application of rule of weightage in 3(3)(ii) of the rules down in seniority.
It is settled law that ability, merit and suitability are the criteria to select an officer of the State Civil Service for inclusion in the select list for promotion under regulation 9 of the IAS Promotion Regulations, 1955 read with rule 9 of the IAS Recruitment Rules, 1954.
In that behalf no change was brought about.
A junior officer who thus superseded a senior State Civil Officer became entitled to carry his year of allotment and became senior to him in the cadre of l.
But for the proviso, the operation of Rule 3(3)(ii), the senior officer would have been saddled with the disability to be pushed down in seniority which would have nullified and frustrated the hard earned earlier promotion and consequential effect on seniority earned by dint of merit and ability.
Moreover, the entry into the service is from different streams and predominantly by direct recruitment and promotion.
The direct recruit gets his year of allotment from the succeeding year of his recruitment.
The direct recruit officers appointed earlier to 1988 also would be adversely effected in their seniority.
Under sec.
3(2) of the Act, every rule made by the Central Govt.
under sec.3(1) and every regulation made thereunder or in pursuance of any such rules, shall be laid, as soon as may be, after such or regulation is made, before each House of Parliament while in session.
Before the expiry of the session, if both Houses agree to make any modification to such rules or regulations or both Houses agree to make any modification to such rules or regulations or both Houses agree that such rules or regulations should not be made, the rule or regulation shall thereafter have effect, only in such modified form or be of no effect as the case may be.
SO, however, that any such modification or annulment shall be, without prejudice to the validity of anything previously done under that rule or the regulation.
Thereby the rules or regulations made in exercise of the power under sec.
3(1) of the Act regulating recruitment and the conditions of service for persons appointed to an All India Service are statutory in character.
No statute shall be construed so as to have retrospective operation unless its language is such as plainly to require such construction.
The Legislature, as its policy, give effect to the statute or statutory rule from a specified time or from the date of its publication in the State Gazette.
It is equally settled law that court would issue no mandamus to the legislature to make law much less retrospectively.
It is the settled cannons of construction that every word, phrase or sentence in the statute and all the provisions read together shall be given full force and effect and no provision shall be rendered surplusage or nugatory.
I is equally settled law that the mere fact that the result of a statue may be unjust, does not entitle the court to refuse to give effect to it.
However, if two reasonable interpretations are possible, the court would adopt that construction which is just, reasonable or sensible.
Courts cannot substitute the words or phrases or supply casus omissus.
The court could in an appropriate case iron out the creases to remove ambiguity to give full force and effect to the legislative intention.
But the intention must be gathered by putting up fair construction of all the provisions reading together.
This endeavour would be to avoid absurdity or unintended unjust results by applying the doctrine of purposive construction.
In Smt.
Hire Devi & Ors.
vs District Board, Shahjahanpur, , the constitution bench of this court interpreting sections 70 and 90 of the U.P. District Board Act, in particular, the expression. "orders of any authority whose sanction is necessary", held that " No doubt it is the duty of the court to try to harmonise various provisions of an Act passed by the Legislature.
But it is certainly not the duty of the court to stretch the words used by the Legislature to fill in gaps or omissions in the provisions of an Act".
In Nalinakhaya Bysck vs Shyam Suder haldar 7 Ors.[1953] SCR 533 at 545, this court held that it is not competent to any court to proceed upon the assumption that the Legislature has made a mistake.
The court must proceed on the footing that the Legislature intended what it has said.
Even if there is some defect in the phraseology used by the Legislature the court cannot aid the Legislature 's defective phrasing of an act or add or amend or, by construction make up deficiencies which are left in the Act.
The approach adopted contra by the High Court was held illegal.
In Commissioner of Sales Tax, U.P. vs Auriya Chamber of Commerce, Allahabad; , at 438, this court held that in a developing country like ours any legal system may permit judges to play a creative role and innovate to ensure justice without doing violence to the norm as set by legislation.
But to invoke judicial activism to set at naught legislative judgment is subversive of the constitutional harmony and comity of in strumentalities.
Thus it is settled law that where the intention of statutory amendment is clear and expressive, words cannot be interpolated.
In the first place they are not, in the case, needed.
If they should be added, the statute would more than likely fail to carry out the legislative intent.
The words are the skin of the language which the Legislature intended to convey.
Where the meaning of the legislative intent is what the statute says to be so.
If the language is plain, clear and explicit, it must be given effect and the question of interpretation does not arise.
If found ambiguous or unintended, the court can at best iron out the creases.
Any wrong order or defective legislation cannot be righted merely because it is wrong.
At best the court can quash it, if it violates the fundamental rights or is ultra vires of the power or manifestly illegal vitiated by fundamental laws or gross miscarriage of justice.
It could thus be held that the legislature intended that the First Amendment Rules would operate prospectively from February 3, 1989, the date of their publication in the Gazette of India.
Its policy is explicit and unambiguous.
Rule 3(3) (ii) intended to remedy the imbalances while at the same time the proviso intended to operate prospectively to avert injustice to the officers recruited/promoted earlier than the officer promoted later to that date.
Whether the proviso is violative of article 14 and article 16(1) of the Constitution of India? Undoubtedly all the promotees form the state civil service constitute a class preceding or succeeding or succeeding the First Amendment Rules.
The purpose of temporary truce carved out by the proviso is self evident.
By dint of merit, ability and suitability a junior officer could seal a march over the senior officers in the state civil service and get entry into the Indian Administrative services earlier to the senior officers and thus becomes a member of the Indian Administrative services officer, who was superseded and subsequently became qualified for inclusion in the select list, after the New seniority Rules or the First Amendment Rules came into force, indisputably would be junior in I.A.S. cadre to his erstwhile junior officers in state civil services.
If he gets benefit of the free play of the First Amendment Rules, it would have the inevitable effect of depriving and he would be pushed down and would again become junior to him in senior officer, though had varied length of services, but because of late promotion to Indian Administrative service, would receive and forego proportionate weightage of past service for a short period till the rules fully become operational.
The first Amendment Rules doubtless provided the weightage to a maximum of 9 years and would track back the year of allotment anterior to the date of inclusion in the select list under the Recruitment Rules read with Promotion Regulations.
The proviso intended to protect the seniority of the officer promoted/appointed earlier than the appellants and its effect would be that till rule 3(3) (ii) fully becomes operational graded weightage was given to the promotees.
In other words it prevented to get seniority earlier to the date of his/her appointment to the Indian Administrative service.
Equally it intended not to let endless compulsive circumstances denied the benefits of full 9 years weightage to officers promoted during 1987 to 1992.
The discrimination, though is prevented unequals to become equals.
The contention of sri P.P Rao, therefore, that invidious discrimination was meted out to senior officers and that they are similarly circumstanced are devoid of force.
This Court by a Constitution Bench in the state of Jammu & Kashmir V. T. N. Khosa, ; at 463, held that the amended rules varying the conditions of service would operate in future and governs the future rights of the existing personnel.
The promoted state civil Service Officers who had already the year of allotment in I.A.S cadre are not discriminated.
But the benefit o f full weightage of 9 years was cut down and applied in varied degree to officers promoted during the transitional period to prevent unjust results and to mete out justice to the junior officers or officers promoted earlier and upto 1992.
It is equally settled law that in an affirmative action the court strike down a rule which offends the right to equality enshrined in articles 14 and 16(1) of the Constitution like the one arose in D.S. Nakara vs Union of India, ; and B. Prabhakar Rao vs state of A.P., [1985]2 suppl, SCR 379, this court extended parity in an affirmative action by reading the rule down without doing violence to the language or injustice to others.
The application of the First Amendment Rule has the inevitable and insiduous effect of doing injustice to the direct recruit/promotee officers or officers promoted earlier to Feb. 3 1989 and the proviso avoided such injustice to the date of promotion to I.A.S the rule to all the senior irrespective of the date of promotion to I.A.S. cadre would land in or lead to inequitous or unjust results which itself is unfair, arbitrary and unjust results which itself is unfair, arbitrary and unjust, offending article 14 of the Constitution.
To avoid such unconstitutional consequences the proviso to rule 3(3) (ii) of the First Amendment Rules was made.
The doctrine or kicking down or picking up, put forth in Union of India vs P.K. Roy, at 201 202, equally cannot be extended to the facts of the case.
But for the proviso the operation of rule 3(3) (ii) would be inconsistent with sec.
3(1A) of the Act.
Equally though the doctrine of reading down is a settled principle of law, its application to the facts of the case would lead to injustice to the officers promoted earlier to the appellants.
A writ of mandamus commanding the respondents to give full benefit of weightage of rule 3(3) (ii) and (b) of the First Amendment Rules would amount to direct the executive to disobey the proviso which is now held to be intra vires of the Constitution.
In the light of the above discussion no directions could be given to the central Govt.
to amend to Rules.
Therefore, we have no hesitation to hold that though Govt.
of India has power to amend the New Seniority Rules by First Amendment Rules prospectively giving weightage of total 9 years services to promotee officers of state Civil services in assigning a year of allotment, no direction or mandamus could be issued commanding the Central Govt.
To disobey the proviso or to apply the rules retrospectively to all the officers even to word out monetary benefits as contended by sri Vaidyanathan.
His further contention that the First Amendment Rules would be applied with effect form the date of the New seniority Rules or date of intimation of the proposed First Amendment Rules to the state Government for limited retrospectivity also cannot be acceded to for the same reasons.
In this context it is necessary to note that Sec.
3(1A) of the Act which provides: "3(1A) The power to make rules conferred by this section shall include the power to give retrospective effect from a date not earlier than the date of commencement 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 interests of any person to whom such rule may be applicable.
" Its bare reading clearly indicates that the Rules made under the Act shall not be given retrospective effect so as to prejudicially affect the "interest of any person to whom such rules may be applicable".
The attempt of Sri Vidyanathan that this rule may be so read as applicable only to the promotee officers vis a vis the senior promotee officers cannot be accepted.
The Lucknow Bench of the C.A.T glossed over it by adopting strange construction that since the offending proviso to rule 3(3) (ii) of the First Amendment Rules would apply to promotee officers inter se , sub section (1) (a) of section 3 of the Act would not apply to the direct recruits, to say the least, is disparate construction.
There is a distinction between right and interest.
No one has vested right to promotion or seniority, but an officer has an interest to seniority , But an officer has an interest to seniority acquired by working out the rule.
Of course, it could be taken away only by operation of valid law.
Sub section (1A) of sec.
3 of the Act enjoins the authorities not to give retrospective effect to such a rule or regulation so as to avoid "Prejudicial affect to the interest" of any person to whom such rule may be applicable.
The operation of law may have the effect of postponing the future consideration of the claims or legitimate expectation of interest for promotion.
Take a case as an illustration.
Articles 14 16(1), 16(4) ,335 and 46 read with proviso to article 309 of the Constitution empowers the President or the Governor to make satutory rules of reservation, where there is no adequate representation to persons belonging to scheduled castes and scheduled Tribes in a service or posts in connection with the affairs of the Central Govt.
or the state Government.
By operation of rule of reservation appointments or promotions given to a Scheduled Caste or Scheduled Tribe officer, though prejudicially affect the interest of officers of general category on parity of merit, in the larger public interest by the operation of the rule of reservation discrimination in favour of scheduled castes and scheduled Tribes ins constitutionally permissible as class.
Therefore, the proviso to rule 3(3) (ii) of the Amendment Rules is consistent with section 3(1A) of the Act, and that therefore, it is not ultra vires of the power of the central Govt.
nor it offends articles 14 and 16(1) of the constitution.
Counsel for the appellants/petitioners are their contention that there is no vested right to seniority and is variable and defeasible by operation of law.
In A.K. Bhatnagar vs Union of India,[1991] 1 SCR 544 this court held that seniority is an incidence of services and when rules prescribe the method of computation, It is squarely governed by such rules.
This would be amplified by following hypothetical illustrations.
In a direct recruitment the seniority would be arranged in the order of merit and it starts from the date of joining the duty.
Suppose 'A ' to 'D ' were appointed on the same day and 'A ' was senior most among them.
But 'A ' did not pass the prescribed tests and for varied reasons 'A 's probation was confirmed after a long period.
In the meanwhile 'B ' to 'D ' were confirmed 'B ' to 'D ' thereby became senior to 'A ' though appointed in the same day and 'A ' was No. I among them.
Suppose probation was not declared mala fide resulting in delayed confirmation and 'A ' challenged it in a court of law issued by the court to confirm 'A ' challenged it in court of law and succeeded in proving mala fide action and consequential direction was issued by the court to confirm 'A ' from the date of his appointment.
Though 'B ' to 'D ' become seniors to 'A ' later confirmation and the consequential defeasance of acquired seniority.
An empolyee has an interest in the accrued seniority which by operation of law also is liable to be varied.
by 'A ' later confirmation and the consequential defeasance of acquired seniority.
An employee has an interest in the accrued seniority which by operation of law also is liable to be varied.
Suppose 'A ' to 'D ' were appointed on the same day by direct recruitment 'A ' and 'D ' are general candidates and 'B ' and 'C ' though far below in merit and yet were assigned 2nd and 3rd places as per roster and 'D ' lost seniority though secured at the competitive examination due to operation of roster system 'D ' became junior to 'B ' and 'C '.
BY operation of law 'D ' s legitimate interest was thereby defeated.
suppose in promotion posts also similar situation may emerge. 'A ' though senior most in the feeder cadre, due to pendency of charges, he was superseded by 'B ' to 'D ' and thereby they gained early entry into promoted posts and thereby was promoted.
Though 'B ' to 'D ' became initially seniors to 'A ' he was rested to his seniority in 'D ' became initially seniors to 'A ' he was restored to his seniority in promotion posts as well and 'B ' to 'D ' interest was defeated.
Suppose the promotion was on the basis of merit and ability 'D ' was found to be more meritorious and was promoted earlier to `A ' to `C ', `D ' thereby would become senior to `A ' to `C ' though he was junior most in the feeder service.
The right to seniority and interest thereby were varied by operation of law.
Suppose `B ' and `C ' also have the benefit of reservation in promotion as well and by its application they were promoted earlier to `A ' though the latter was more meritorious.
`A ' was later on promoted.
He cannot claim his seniority over `B ' and `C ' who scaled a march over `A ' and became senior to `A ' in promoted cadre or service.
The seniority of `A ' thereby was varied.
However, law itself may protect the legitimate interest in seniority while granting relief to persons similarly circumstanced like the one under sec.
3(1A) of the Act read with proviso to Rule 3(3)(ii) & (iii) of the First Amendment Rules.
It was neither void nor ultra vires offending articles 14 and 16(1) of the Constitution.
Admittedly, the draft of the First Amendment Rules, as circulated to the State Government did not contain the offending proviso.
It is stated in the counter affidavit filed on behalf of the Central Govt.
that some of the State Government had suggested to incorporate the proviso and after necessary consultation the proviso was added to the First Amendment Rule.
Section 3(1) of the Act provide thus: "3(1) Regulation of recruitment and conditions of services.
(1) The Central Govt.
may, after consultation with the Governments of the State concerned (including the State of Jammu and Kashmir), (and by notification in the Official Gazette) make rules for the regulation of recruitment, and the conditions of service of persons appointed to an All India Service.
" It is thereby clear that sec.
3(1) empowers the Central Govt.
to make any rule regulating the recruitment and the conditions of service of All India Service, which include amendment from time to time, but the rider it engrafted is that the power should be exercised "after consultation with the Governments of the State concerned".
It is already held that by operation of sub section (2) of section 3 of the Act, the rules or regulations are statutory in character.
The meaning of the word `consultation ' was considered in catena of case.
This Court in Union of India vs Sankalchand Himatlal Sheth & Anr.,[1977] 4 SCC 193, held that the word "consult" implies a conference of two or more persons or an impact of two or more minds in respect of a topics in order to enable them to evolve a correct or at least a satisfactory solution.
In order that the two minds may be able to confer and produce a mutual impact it is essential that each must have for its consideration full and identical facts which can at one contitute both the source and foundation of the final decision.
In that case the question related to the transfer of a High Court from one High Court to another.
In that context this court considered whether sounding of the Chief Justice of India without meaningful consultation would be proper discharge of the constitutional obligation by the President.
In that context the principle of law laid was that the respective view point of the Govt.
and the Chief Justice must be known to each other and both were to the discuss and examine the merits of the proposed transfer.
The meaning of the word "consultation" was evaluated in that backdrop.
This Court approved the dictum laid by K. Subba Rao.
J., as he then was, in R.Pushpam vs State of Madras, AIR 1953 Madras 392.
In State of U.P. vs Manmohan Lal Srivastava, ; at 542, the word "consultation" in article 320 of the Constitution of India was considered by a Constitution Bench.
It was held that the word "consultation" did not envisage mandatory character for consultation, but the Constitution makers allowed the discretion to the appointing authority to consult the Public Service Commission.
But the executive Govt.
cannot completely ignore the existence of the Public Service Commission or to pick up and choose cases in which it may or may not be consulted.
However, prior consultation was held to be not mandatory for removal of a Govt.
servant as the Central Govt.
has not been tied down by the advice of the U.P.S.C.
This court did not extend the rule of consultation to making the advice of the Commission on those matter binding on the Govt.
In the absence of a binding character, this Court held that non compliance of article 320(3)(c) would not have the effect of nullifying the final order passed by the Govt.
of removal of the Govt.
servant from service.
In U.R. Bhatt vs Union of India, AIR 1962 SC 1344, this Court held that the absence of consultation of the Public Service Commission or any irregularity in consultation under article 320 does not effect the ultimate decision taken by the authority under article 311 of the Constitution.
In Ram Gopal Chaturvedi vs State of Madhya Pradesh, ; , the same view was reiterated.
In N. Raghavendra Rao vs Dy.
Commissioner, South Kanara, Mangalore, ; , words "prior approval" of the Central Govt.
in construing the proviso to sec.
115(7) of S.R. Act of the words of varying the conditions of service the Constitution Bench held that "prior approval" would include general approval to the variation in the conditions of service with certain limits indicated by the Central Govt.
Same view was reiterated by another Constitution Bench in Mohd. Sujat Ali & Ors.
vs Union of India.
, ; at 469 471.
In Chandramouleshwar Prasad vs Patna High Court & Ors. ; at 674 & 675, construing the word "consultation" in article 233 of the Constitution, another Constitution Bench in the context of removal of a District Judge by the Governor on the recommedation of the High Court, held that "consultation" or "deliberation" is not complete or effective unless the parties thereto, i.e., the State Govt.
and High Court make their respective points of view known to each other and discuss and examine the relative merits of their views.
If the one party makes a proposal to the other who has a counter proposal in his mind which is not communicated to the proposer the direction to give effect to the counter proposal without anything more, cannot be said to have been issued after consultation.
In that case it was held that the absence of any consultation with the High Court rendered the order to removal dated October 17, 1968 passed by the State Govt.
illegal.
In Narain Sankaran Mooss vs State of Kerala & Anr., ; , the facts were that the State Govt.
, exercising the power under Sec. 4 (1) of the Electricity Supply Act, cancelled the licence of the appellant without consulting the Electricity Board.
The question was whether cancellation would be ultra vires of the power.
While examining that question, this court considered whether consultation was mandatory or directory, and held that the revocation of the licence trenches into the right to carry on business guarantee under article 19(1)(g) of the Constitution.
Therefore, when the Act prescribed prior consultation of the Electricity Board such condition was incorporated to prevent abuse to power and to ensure just exercise of the power.
Section 4 of the Electricity Supply Act enjoins, in public interest, to consult the Board before revocation of the licence.
Consultation provided an additional safeguard to the license and when revoking the licence the Govt.
act in two stages.
Before and after the explanation was received and when the Govt.
considered the explanation, it is mandatory that it should consult the Electricity Board and non consultation rendered the order as void.
Consultant of the Board, was therefore, held to be a condition precedent for making order of revocation.
In Naraindas Indurkhya vs State of M.P. & Ors., , M.P. Madhyamik Siksha Adhiniyam Act, 1973 provided that before prescribing the text books the Chairman of the Board was to be consulted.
Its infraction was considered and held that any attempted exercise of the power by the State Govt.
without complying with this condition would be null and void.
On the facts of the case, it was held that the notification issued by the State Govt.
without consultation of Chairman was invalid being in breach of mandatory requirement of the proviso to Sec.4 (1) of the Act.
In Hindustan Zinc Ltd. vs A.P Electricity Board & Ors., ; the revision of tariff was effected without consulting the Consultative Council.
This Court held that the revision of tariff was a question of policy under Sec 78A of the Indian Electricity Supply Act.
The failure of the Board to consult the Consultative Council whether rendered the revision of tariff invalid.
It was held that the consequence of non compliance of Sec.
16 was not provided and the nature of the function of the Consultative Council and force of its advice being at best only persuasive, it cannot be said that the revision of tariff, without seeking the advice of the Consultative Council, rendered the revision of tariff itself invalid.
On the other hand the Board after revision of the tariff has to place the revised tariff on the table of the House or Houses of the Stat Legislature and such statement is open to discussion therein, the Board is bound to take into consideration such modification, if made, or any comments made on such statement by the State Legislature.
Under those circumstance it was held that the non compliance of Sec 16(5) did not render the revision of tariff invalid.
In Rollo & Anr.
vs Minister of Town & Country Planning [1948] 1 All Eng.
Report of the Towns Act, 1946 envisages the Minister of Town & Country Planning after consultation with the local authorities, if satisfied that it is expedient in the national interest that any area of land should be developed as a new town by the Corporation established under the Act, he may make an order designating that area as a site of the proposal of the new town.
On October 7, 1946 press notice was issued giving the date of meeting of the representatives of the local authorities and the Minister explained in the meeting what he had in his mind in arriving at the boundaries of the area.
Objections were raised and public enquiry was held.
But actual explanation was not sought from any local authorities.
In those circumstance contention was raised that there was no consultation as adumbrated under Sec.
Repelling the contention, the House of Lords held that in the meeting the local authorities clearly were informed of the general nature of the proposal, the areas suggested, it size and what the Minister wished and intended to do.
Discussion was followed.
Minutes were prepared and press notice was issued stating what had happened.
In those circumstance it was held that there was consultation and the requirement was complied with.
The ratio of Morris, J. in Elecher & Ors.
vs Minister of Town & Country Planning, [1947] 2 All.
Reports 496, was approved.
The same view was reiterated in Sinfield & Ors.
vs London Transport Executive Law Report 1970 Chancery Divn.
In Derham & Anr.
vs Church Commissioners of England, 1954 Appeal Cases 245, the Judicial Committee was to consider the question of consultation with Church Commissioners of effecting the union of beneficers under Sec.
3(1) of the Pastoral Reorganisation Measure, 1949 which postulates of "consultation so far as is practicable".
Construing the language it was held that a meeting was held explaining the proposed scheme, the members of the Church though opposed the scheme, it was approved.
As such it was held that the action was valid and their was proper consultation.
In Port Louis Corporation vs Attorney General of Mauritius, 1965 Appeal Cases 1111, the local Govt.
of Mauritius was empowered under the Local Government Ordinance, 1962 by sec.
73 (1) to alter the boundries of any town, district or village, after consultation with the local authorities concerned.
The Governor and Council of Ministers in May 1963 had in their minds to alter the boundaries of Port Louis, so that the villages surrounding Port Louis Township would be embraced within and would enlarge the area of the town of Port Louis.
The Minister by a letter asked the views of the local authorities, enclosing the details of the proposed alternation and the map.
Majority Councillors had resigned on the ground that they has no mandate to express any views.
On subsequent nomination, those Councillors raised certain points and asked for information, which was duly complied with.
Further information was called for, but the Minister refused to extend time nor supplied information.
The Governor in Council has issued a proclamation extending the boundaries of Port Louis Action was initiated by the local authorities for declaration that the proclamation was ultra vires, null and void in so far as it related to the extended boundries of the town of Port Louis, contending that there had been no consultation as required by Sec.
73 (1) of the Ordinance.
The Judicial Committee construing the word "after consultation" in that setting held that the local authorities has received a clear proposal.
The failure to supply information by detailed answers to their questions would not render the proclamation as invalid.
Accordingly uphold the action as affirmed by the Supreme Court of Mauritius.
The ratio in Union of India & Ors.
vs Dr. section Krishna Murthy & Ors., ; , renders little assistance to the appellants.
In that case the question was the year of allotment under the Forest Service (Regulation of Seniority) Rules, 1968.
By fixation of the year of allotment it had retrospective effect from the dated when the promotee was brought into select list or the date of appointment whichever was later.
Under those circumstance it was held that retrospective operation of the rules did not prejudicely affect any vested right much less any fundamental rights of the officers recruited from the State service.
The result of the above discussion leads to the following conclusions: (1) Consultation is a process which requires meeting of minds between the parties involved to evolve a correct or at least satisfactory solution.
There should be meeting of mind between the proposer and the persons to be consulted on the subject of consultation.
There must be definite facts which constitute foundation and source for final decision.
The object of the consultation is to render consultation meaningful to serve the intended purpose.
Prior consultation in that behalf is mandatory.
(2) When the offending action effects fundamental rights or to effectuate built in insulation, as fair procedure, consultation is mandatory and non consultation renders the action ultra vires or invalid or void.
(3) When the opinion or advice binds the proposer, consultation is mandatory and its infraction renders the action or order illegal.
(4) When the opinion or advice or view does not bind the person or authority, any action or decision taken contrary to the advice is not illegal, nor becomes void.
(5) When the object of the consultation is only to apprise of the proposed action and when the opinion or advice is not binding on the authorities or person and is not bound to be accepted, the prior consultation is only directory.
The authority proposing to take action should make known the general scheme or outlines of the actions proposed to be taken, be put to notice of the authority or the persons to be consulted; have the views or objections, taken them into consideration, and thereafter, the authority or person would be entitled or has/have authority to pass appropriate orders or take decision thereon.
In such circumstance it amounts to an action "after consultation".
(6) No hard and fast rules could be laid, no useful purpose would be served by formulating words or definitions nor would it be appropriate to lay down the manner in which consultation must take place.
It is for the Court to determine in each case in the light of its facts and circumstances whether the action is "after consultation"; "was in fact consulted" or was it a "sufficient consultation".
(7) Where any action is legislative in character, the consultation envisages like one under Sec.
3(1) of the Act, that the Central Govt.
is to intimate to the State Governments concerned of the proposed action in general outline and on receiving the objections or suggestions, the Central Govt.
or Legislature is free to evolve its policy decision, make appropriate legislation with necessary additions or modification or omit the proposed one in draft bill or rules.
The revised draft bill or rules, amendments or additions in the altered or modified form need not again be communicated to all the concerned State Governments nor have prior fresh consultation Rules or Regulations being legislative in character, would tacitly receive the approval of the State Government through the people 's representative when laid on the floor of each House of Parliament.
The Act or the Rule made at the final shape is not rendered void or ultra vires or invalid for non consultation.
The proposal for amending the new Seniority Rules in the draft was only for inviting discussion and suggestions on the scope and ambit of the proposed law and the effect of the operation of the First Amendment Rules.
Keeping the operational effect in view the proposed amendment could be modified or deleted or altered.
The Central Govt.
is not bound to accept all or every proposal or counter proposal.
Consultation with the Ministry of Law would be sufficient.
Thereby the Central Govt.
is not precluded to revise the draft rules in the light of the consultation and advice.
The Central Govt.
had prior consultation with the State Governments concerned and the Law Department.
In the light of the above principle and applying them to the facts of this case we have no hesitation to hold that the general consultation has by the Central Govt.
with the State Govts.
and Union Territories was sufficient and it was not necessary to have prior consultation again to bring the proviso on statutes as part of the First Amendment Rules.
The contention of Sri Vaidyanathan that the proviso is rendered void for the absence of consultation of the State Govts.
is devoid of any force.
By operation of sub sec.
(2) of Sec. 3 the rules laid on the floor of each House of the Parliament.
There were no suggestions or alterations made by either House of Parliament.
Under the circumstance we have no hesitation to hold that the failure to consult all the State Governments or Union Territories on the proviso to rule 3(3)(ii) or (iii) of the First Amendment Rules does not render the proviso ultra vires, invalid or void.
Accordingly, we do not find any merit to issue the writ as prayed for in the writ petition.
The Writ Petition and Civil Appeal arising out of S.L.P. (C) No. 12469/90 are dismissed.
The appeal arising out of S.L.P. (C) No. 13823/91 is allowed and the order of the Central Administrative Tribunal, Allahabad Bench at Lucknow is set side.
But in the circumstance parties are directed to bear their own costs throughout.
WP (C) No. 499/91 dismissed.
C.A. No. 4794/92 dismissed.
C.A. No. 4788/92 allowed.
| IN-Abs | On 19.1.1984, the Association [petitioner No. 1 in W.P. (C) No. 499 of 1991] requested the Union Government (Respondent) to remove the disparity prevailing in different states of promotional avenues from State Civil Services to All India Administrative Service.
A Committee of Senior Secretaries, constituted by the Union Government, recommended an equitable principle of comparable seniority from different States for promotion to the Indian Administrative Service.
The I.A.S. (Regulation of Seniority) Rules, 1987 came into force with effect from 6.11.1987, repealing the old Rules.
In a Circular dated 9.9.1986 issued by the respondent Union Government directed the State Governments to give weightage over and above four years the assignment of year of allotment as per the existing rules, namely, four years for the first 12 years State service with additional weightage one year for every two to the years completed service subject to a maximum of five years.
Union Government amended and published the New Seniority Rules, 1987, after considering the suggestions from the State Governments.
The First Amendment Rules was published in the Gazette of India on 32.1989 which was given prospective operation from 3.2.1989.
The appellants in C.I. No. 4794 of 1992 questioned Rule 3(3) (ii) proviso of the First Amendment Rules, in an application before the CAT.
at Patna.
They contended that though they were found to be entitled to the total weightage of 9 years since the juniors were given 1983 as the year of allotment by operation of proviso to Rule 3(3)(ii) of the First Amendment Rules, were given 1983 as the year of allotment and thereby the appellants were denied the 3 years weightage.
The Tribunal upheld the Rules and dismissed the application, against which appeal C.A. No. 4794 of 1992 was filed in this Court.
The appellants in C.A. No. 4788 of 1992, some members of the Association petitioner No. 1 of the W.P. (C) No. 499 of 1991 filed an application before the Central Administrative Tribunal at Lucknow contending that they were promoted in 1980 onwards, and they were discriminated in fixation of their seniority.
The Tribunal held that the prospective operation of the 1987 Rules discriminated the Senior State Civil Service Officers, but refused to direct the Union Government to amend the Rules but retrospective effect.
However, it requested the Government of India to reconsider the matter and to give retrospective operation to the First Amendment Rules.
This decision was questioned hl an appeal C.A. No. 4788 of 1992.
In WP(C)No. of 499 of 1991, Petitioner No. 1 An Association representing the officers of the U.P. State Civil Service and petitioners 2 17, its members filed the writ petition under Article 32 of the Constitution to quash the order of the respondent Union Government dated 12.12.1990, and for a direction to extend the benefit flowing from the First Amendment Rules to its members promoted prior to January 1988.
It was contended that the First Amendment Rules operated with effect from 1992, whereas the promotee Officers were promoted between 1988 to 1991 and that they would get only partial benefit.
As these cases raised common questions of law, they were heard together.
Dismissing WP(C)No.
499/1991 and CA No. 4794 of 1992, and allowing C.A No. 4788 of 1992, this Court, HELD: 1.01.
The entry into the service is from different streams and predominantly by direct recruitment and promotion.
The direct recruit gets his year of allotment from the succeeding year of his recruitment.
The direct recruit officers appointed earlier to 1988 also would be adversely affected in their seniority.
[403 D] 1.02.
Rule 3(31 manifests the Central Govt 's intention that the year of allotment of a direct recruit officer shall be the year following the year in which the competitive examination was held.
If any such officer was permitted to join probationary training with direct recruit officers of a subsequent year of allotment then he shall be assigned that subsequent year as the year of allotment.
[400 G H] 1.03.
In determining the seniority of a promotee officer in assigning year of allotment, the service rendered in the State Civil Service upto 12 years as Dy.
Collector, or equivalent posts, weightage of 4 years shall be given.
In addition he/she shall also be given, further benefit of one year weightage of every completed 3 years of service.
beyond the period of 12 years, subject to a maximum weightage of 5 years.
In its calculations fractions are to be ignored.
The weightage shall be computed from the year G of appointment of the officer to the service.
[402 E] 1.04.
The offending proviso limits the operation of Rule 3(3) (ii) (a) and (b) that such an officer shall not be assigned an year of allotment earlier than the year of allotment assigned to the officer senior to him in that select list or appointed on the basis of an earlier select list.
[1402 F] 105.
The proviso aims that the State Civil Service senior officer ' though had varied length of services, but because of late promotion to Indian Administrative Service, would receive and forego proportionate weightage of past service for a short period till the rules fully become operational.
[406 B] 1.06.
The first amendment rules doubtless provided the remedy to remove existing discriminatory results by giving graded weightage to a maximum of 9 years and would track back the year of allotment anterior to the date of inclusion in the select list under the Recruitment Rules read with Promotion Regulations.
[406 C] 1.07.
The Proviso intended to protect the seniority of the officers promoted/appointed earlier than the appellants and its effect would be that till rule 3 (3) (ii) fully becomes operational graded weightage was given to the promotees.
In other words it prevented to get seniority earlier to the date of his/her appointment to the Indian Administrative Service.
Equally it in tended not to let endless chain reaction occur to unsettle the settled interests in seniority.
These compulsive circumstances denied the benefits of full 9 years weightage to officers promoted during 1987 to 1992.
The discrimination, though is discernible, but inevitable to ensure just results.
In other words the proviso prevented unequals to become equals.
[406 D E] 1.08.
The new Seniority Rules were to be operative from November 6, 1987 and the First Amendment Rules from February 3, 1989 with the result that in assigning the year of allotment, full weightage of 9 years ' eligible service was given to the promotee State Civil Service Officers.
However, the senior officer to him/her appointed from the State Civil Service earlier in the same select list or one above him in the previous select list shall remain senior to him.
Thereby the proviso averted the effect of pushing an officer who gained entry into IAS service by application of rule of weightage in Rule 3(3) (ii) of the Rules down in seniority.
[402 H, 403 A B] 1.09.
By dint of merit, ability and suitability junior officer could steal a march over the senior officers in the State Civil Service and get entry into the Indian Administrative Service earlier to the senior officers and thus becomes a member of the Indian Administrative Service.
Thereby he becomes senior in service.
The senior State Civil Service officer, who was superseded and subsequently became qualified tor inclusion in the select list, after the new Seniority Rules or the First Amendment Rules came into force, indisputably would be junior in I.A.S. cadre to his erstwhile junior officers in State Civil Service.
If he gets the benefit of the free play of the First Amendment Rules, it would have the inevitable effect of depriving the promoted erstwhile junior officer of the benefit of early promotion and he would be pushed down and would again become junior to him in the Indian Administrative Service.
[405 G H; 406 A B] 1.10.
A junior officer who superseded a senior State Civil Officer became entitled to carry his year of allotment and became senior to him in the cadre of I.A.S. But for the proviso, the operation of Rule 3(3)(ii), the senior officer would have been saddled with the disability to be pushed down in seniority which would have nullified and frustrated the hard earned earlier promotion and consequential effect on seniority earned by dint of merit and ability.
[403 E] 2.01.
No statute shall be construed so as to have retrospective operation unless its language is such as plainly to require such a construction.
The legislature, as its policy, give effect to the statute or statutory rule from a specified time or from the date of its publication in the State Gazette.
1404 A] 2.02.
Court would issue no mandamus to the legislature to make law much less retrospectively.
It is the settled cannons of construction that every word, E phrase or sentence in the statute and all the provisions read together shall be given full force and effect and no provision shall be rendered surplusage or nugatory.
[404 B] 2.04.
The mere fact that the result of a statute may be unjust, does not entitle the court to refuse to give effect to it.
However, if two reasonable interpretations are possible, the Court would adopt that construction which is just, reasonable or sensible.
Courts cannot substitute the words or phrases or supply casus omissus.
The court could in an appropriate case iron out the creases to remove ambiguity to give full force and effect to the legislative intention.
But the intention must be gathered by putting up fair construction of all the provisions reading together.
This endeavour would be to avoid absurdity or unintended unjust results by applying the doctrine or purposive construction.
1404 C D] 2.05.
Where the intention of statutory amendment is clear and expressive, words cannot be interpolated.
In the first place they are not, in the ease, needed.
If they should be added, the statute would more than likely fail to carry out the legislative intent.
The words are the skin of the language which the legislature intended to convey.
[405 B] 2.06.
Where the meaning of the statute is clear and sensible, either with or without omitting the words or adding one, interpolation is improper, since the primary purpose of the legislative intent is what the statute says to be so.
If the language is plain, clear and explicit, it must be given effect and the question of interpretation does not arise.
[405 C] 2.07.
If found ambiguous or unintended, the court can at best iron out the creases.
Any wrong order or defective legislation cannot be righted merely because it is wrong.
At best the court can quash it, if it violates the fundamental rights or is ultra vires of the power or manifestly illegal vitiated by fundamental laws or gross miscarriage of justice.
[405 D] 2.08.
The Legislature intended that the First Amendment Rules would operate prospectively from February 3, 1989, the date of their publication in the Gazette of India.
Its policy is explicit and unambiguous, Rule 3(3)(ii) intended to remedy the imbalances while at the same time the proviso intended to operate prospectively to avert injustice to the officers recruited/promoted earlier than the officer promoted later to that date.
The proviso carved out an exception to ward off injustice to the officers that became members of I.A.S. earlier to those dates.
[405 E] Smt.
Hire Devi & Ors.
vs District Board, Shahjahanpur, ; Nalinakhaya Bysck vs Shyam Sunder Haldar & Ors., ; at 545 and Commissioner of Sales Tax, U.P. vs Auriya Chamber of Commerce, Allahabad, 119861 2 SCR 430 at 438, referred to. 3.01.
The application of the First Amendment Rules has the inevitable and insiduous effect of doing injustice to the direct recruit promotee officer or officers promoted earlier to Feb. 3, 1989 and the proviso avoided such unjust results.
Giving retrospective effect or directing to apply the rule to all the seniors irrespective of the date of promotion to I.A.S. cadre would land in or lead to inequitous or unjust results which itself is unfair, arbitrary and unjust.
offending article 14 of the Constitution.
To avoid such unconstitutional consequences the proviso to Rule 3(3)(ii) of the First Amendment Rules was made.
[407 C] 3.02.
But for the proviso the operation of Rule 3(3)(ii) would be inconsistent with Sec. 3(1A) of the Act.
Equally though the doctrine 'Reading down ' is a settled principle of law, its application to the facts of the case would lead to injustice to the officers promoted earlier to the appellants.
A writ of mandamus commanding the respondents to give full benefit of weightage of Rule 3(3)(ii)(a)&(b) of the First Amendment Rules would amount to direct the executive to disobey the proviso which is now held to be intra vires of the Constitutions.
[407 D] 3.03.
The proviso to Rule 3(3)(ii) of the First Amendment Rules is consistent with section 3(1A) of the Act and it is not ultra vires of the power the Central Govt.
nor it offends articles 14 and 16(1) of the Constitution.
[409 A] 3.04.
There is a distinction between right and interest.
No one has a vested right to promotion or seniority, but an officer has an interest to seniority acquired by working out the rule.
Of course, it could be taken away only by operation of valid law.
[408 E] 3.05.
Law itself may protect the legitimate interest in seniority while granting relief to persons similarly circumstanced like the one under sec.
3(1A) of the Act read with proviso to Rule 3(3) (ii) & (iii) of the First Amendment Rules.
It was neither void nor ultra vires offending articles 14 and 16(1) of the Constitution.
[410 C] State of Jammu & Kashmir vs T.N. Khosa, ; at 779; J. Kumar vs Union of India, ; at 463 and Union of India vs P.K Roy, 11968] 2 SCR 186 at 201 202, distinguished.
D.S. Nakara vs Union of India,.
; ; B. Prabhakar Rao vs State of A.P., [1985] 2 Supp.
SCR 379 and A.K Bhatnagar vs Union of India, [1991] 1 SCC 544, referred to.
Consultation is a process which requires meeting of minds between the parties involved in the process of consultation on the material facts and points involved to evolve a correct or at least satisfactory solution.
There should be meeting of minds between the proposer and the persons to be consulted on the subject of consultation.
There must be definite facts which constitute foundation and source for final decision.
[415 E] 4.02.
The object of the consultation is to render consultation meaningful to serve the intended purpose.
Prior consultation in that behalf is mandatory.
[415 E] 4.03.
When the offending action effects fundamental rights or to effectuate built in insulation, as fair procedure, consultation is mandatory and non consultation renders the action ultra vires or invalid or 4.04.
When the opinion or advice binds the proposer, consultation is mandatory and its infraction renders the action or order illegal.
1415 F] 4.05.
When the opinion or advice or view does not bind the person or authority, any action or decision taken contrary to the advice is not illegal, nor becomes void.
[415 G] 4.06.
When the object of the consultation is only to apprise of the proposed action and when the opinion or advice is not binding on the authorities or person and is not bound to be accepted, the prior consultation is only directory.
The authority proposing to take action should make known the general scheme or outlines of the actions proposed to be taken, be put to notice of the authority or the persons to be consulted, have the views or objections, taken them into consideration, and there after, the authority or person would be entitled or has/have authority to pass appropriate orders or take decision thereon.
In such circumstances it amounts to an action "after consultation".
[415 H, 416 A B] 4.07.
No hard and fast rule could be laid, no useful purpose would be served by formulating words or definitions nor would it be appropriate or lay down the manner in which consultation must take place.
It is for the Court to determine in each case in the light of its facts and cir cumstances whether the action is "after consultation", "was in fact consulted" or was it a "sufficient consultation".
[416 C] 4.08.
Where any action is legislative in character, the consultation envisages like one under Sec.
3 (1) of the Act, that the Central Govt.
is to intimate to the State Governments concerned of the proposed action in general outlines and on receiving the objections or suggestions, the Central Govt.
or Legislature is free to evolve its policy decision, make appropriate legislation with necessary additions or modification or omit the proposed one in draft bill or rules.
The revised draft bill or rules, amendments or additions in the altered or modified from need not again be communicated to all the concerned State Governments nor have prior fresh consultation.
Rules or Regulations being legislative in character, would tacitly receive the approval of the State Governments through the people 's representatives when laid on the floor of each House of Parliament.
The Act or the Rule made at the final shape is not rendered void or ultra vires or invalid for non consultation.
[416 D F] 4.09 The proposal for amending the new Seniority Rules in the draft was only for inviting discussion and suggestions on the scope and ambit of the proposed law and the effect of the operation of the First Amendment Rules.
Keeping the operational effect in view the proposed amendment could be modified or deleted or altered.
[416 G] 4.10 The Central Govt.
is not bound to accept all or every proposal or counter proposal.
Consultation with the Ministry of Law would be sufficient.
Thereby the Central Govt.
is not precluded to revise the draft rules in the light of the consultation and advice.
[416 H] 4.11 The general consultation had by the Central Govt.
with the State Govts.
and Union Territories was sufficient and it was not necessary to have prior consultation again to bring the proviso on statutes as part of the First Amendment Rules.
[417 B] 4.12 By operation of sub sec.
(2) of Sec. 3 the rules were laid on the floor of each House of the Parliament.
There were no suggestions or alterations made by either House of Parliaments.
Thus the First Amendment Rules stood approved by the Parliament.
[417 C] 4.13 The failure to consult all the State Governments or Union Territories on the proviso to Rule 3(3) (ii) or (iii) of the First Amendment Rules does not render the proviso ultra vires, invalid or void.
[417 D] Union of India vs Sankalchand Himatlal Sheth & Anr., ; ; R. Pushpam vs State of Madras, AIR 1953 Madras 392; State of U.P. vs Manmohan Lal Srivastava, ; at 542; U.R. Bhatt vs Union of India, AIR 1962 SC 1344; Ram Gopal Chaturvedi vs State of Madhya Pradesh, ; ; N. Raghavendra Rao vs Dy.
Commissioner, South Kanara, Mangalore, ; ; Mohd. Sujat Ali & Ors.
vs Union of India, ; at 469 471; Chandramouleshwar Prasad vs Patna High Court & Ors., ; at 674 675; Narain Sankaran Mooss vs State of Kerala & Anr, ; ; Naraindas Indurkhya vs State of M.P. & Ors., ; Hindustan Zinc Ltd. vs A.P. Electricity Board, Ors.; , ; Rollo & Anr.
vs Minister of Town & Country Planning, [1948] 1 All Eng.
Reports 13; Electher & Ors.
vs Minister of Town & Country Planning, [1947] 2 All.
Reports 496; Sinfield & Ors.
vs London Transport Executive, Law Reports 1970 Chancery Divn., Derham & Anr.
vs Church Commissioners for England, 1954 Appeal Cases 245 and Port Louis Corporation vs Attorney General of Mauritius, 1965 Appeal Cases 1111, referred to.
Union of India & Ors.
vs Dr. section Krishna Murthy & Ors.,[1989] 4 SCC 689, distinguished.
|
Civil Appeal No. 2736 of 1991.
From the Judgment and Order dated 5.10.1990 of the Central Administrative Tribunal, New Delhi in O.A. No. 1510 of 1990.
M.K. Ramamurthy, Raj Kumar Mehta and Ms. Mona Chakraborty for the Appellants.
R.K. Jain, Arun Jaitley, Mahesh Srivastava, Vishnu Mathur, A.K. Sikri and Ms. Madhu Sikri for the Respondents.
The Judgment of the Court was delivered by KASLIWAL, J.
The appellants who are Scientists working in various Institutes under Indian Council of Agricultural Research (in short 'ICAR ') throughout the country have filed this appeal against the order of the Central Administrative Tribunal, New Delhi dated 5.10.1990.
Some of the appellants had filed a Writ Petition No. 550 of 1990 before this Court under Article 32 of the Constitution challenging the notification issued by the ICAR dated 9.3.1989 and for other connected reliefs.
This Court disposed of the said Writ Petition by order dated 3.5.1990 in the following manner: "The main relief which the petitioners ask for in this writ petition is about revision of pay scale and other connected service benefits.
When we suggested to learned counsel that the matter should go before the Central Administrative Tribunal, he has indicated certain difficulties which are like the officers being spread over in different parts of the country and the difficulty in coordinating the cases for disposal, in case they are required to go before the Tribunal and the fact that there may be inordinate delay in disposal and in obtaining the relief.
We are of the view that the matter can be appropriately considered by the Tribunal for overcoming the difficulties indicated by Mr. Sanghi, we direct the Central Administrative Tribunal to treat the petition that is going to be filed at the Principal Bench at Delhi as the representative petition and dispose of the same within six months from the date it is filed.
This petition is allowed to be withdrawn." In pursuance to the above order dated 3.5.1990 some of the appellants filed an application No. 1510 of 1990 under Section 19 of the Administrative Tribunals Act before the Central Administrative Tribunal, Principal Bench, Delhi.
The Tribunal treated the aforesaid application as having been filed in representative capacity of S 2 and S 3 Officers of the ICAR, pursuant to the directions of the Supreme Court in its order dated 3.5.1990.
In order to appreciate the controversy, we shall state the facts in brief.
The Imperial Council of Agricultural Research, a Society established under the Societies Registration Act in the year 1929 was redesignated as the Indian Council of Agricultural Research after the advent of independence.
Till 1965, the ICAR was largely functioning as a coordinating agency and apex body for financing research project.
With effect from 1966, administrative control over the Indian Agricultural Research Institute (IARI) and other such Institutes was transferred to ICAR simultaneously placing the staff of such Institutes at the disposal of the ICAR.
A department of Agricultural Research and Education was set up in the Ministry of Agriculture and the said department came into existence on 15.12.1973.
The ICAR is fully financed by the Department of Agricultural Research and Education (DARE), Ministry of Agriculture and Cooperation, Government of India.
ICAR follows the rules of Government of India Mutatis Mutandis.
The ICAR has been held to be `State ' within the meaning Article 12 of the Constitution as per the judgement of this Court in the case of P.K. Iyer & Others vs Union of Indian & Others, reported in ; The ICAR started an Agricultural Research Service (in short 'ARS ') with effect from 1.10.1975 and the relevant grades and pay scales as on 31.12.1985 are given as under : "Grades Pay scales Scientist S Rs. 550 990 Scientist S 1 Rs. 700 1300 Scientist S 2 Rs. 1100 1600 Scientist S 3 Rs. 1500 2000" The Scientists of the ICAR who were earlier covered by the Third Pay Commission pay scales had been demanding parity in pay scales with the employees of the Agricultural Universities who were also financed by the ICAR.
After persistent demand, the ICAR agreed to revise the pay scales with effect from 1.1.1986 vide notification No.1 14/87 Per.
IV dated 9th March, 1989.
According to the appellants, the aforesaid notification though benefited some of the Scientists, but was denying the principle of 'Equal Pay for Equal Work ' in the case of the appellants and the like and the said notification had further placed persons much junior to many of the appellants in a higher scale of pay resulting in violation of the fun damental rights of the appellants guaranteed under Article 14 and 16 of the Constitution.
In order to appreciate the grievances of the appellants the pay scales as revised by the ICAR vide the impugned notification dated 9.3.1989 are given as under : "S.No.
Grade Existing New Revised pay pay scale designation scale 1.
Scientist S 2 Rs.1100 50 Scientist Rs. 3000 100 (with total ser 1600 (Senior 3500 125 5000 vice in the scale) ARS as on 31.12.1985 upto 8 years) 2.
Scientist S 2 Rs. 1100 50 Scientist Rs. 3700 125 (with total 1600 (Selection 4950 150 5700 service in the Grade) ARS as on 31.12.85 exceeding 8 years) 3.
Scientist S 3 Rs. 1500 60 Scientist Rs. 3700 125 (with total ser 1800 100 2000 (Selection 4950 150 5700 vice in the Grade) ARS as on 31.12.85 upto 16 years) 4.
Scientist S 3 Rs. 1500 50 Principal Rs. 4500 150 (with total 1800 100 2000 Scientist 5700 200 7300 service in the ARS or equivalent grades as on 31.12.85 exceeding 16 years) Certain clarifications were issued to the above notification vide letter No. 1 14/87 Per.
IV (Vol.
III) dated 31.3.1989, order No. 1 7/89 Per.
IV (Vol.
III) dated 14.6.1989, order No. 1 7/89 per.
IV dated 6.11.1989 (Vol. III) and order No. 1 7/89 Per.
IV dated 6.7.1990.
The case of the appellants is that according to the impugned notification dated 9.3.1989 together with subsequent clarifications, Scientists S 3 in pre revised scale of Rs. 1500 2000 having completed total service in the ARS as on 31.12.1985 exceeding 16 years had been placed in the scale of Rs. 4500 7300, whereas Scientists S 3 who were in the same pre revised scale of Rs. 1500 2000 but had put in total service in the ARS as on 31.12.1985 upto 16 years have been placed in the scale of Rs. 3700 5700.
Similarly, Scientists S 2 who were in the pre revised scale of Rs.1100 1600 and had completed total service of more than 8 years than in the ARS as on 31.12.1985 have been put in the scale of Rs. 3700 5700, but those having completed total service upto 8 years as on 31.12.1985 had been put in the scale of Rs. 3000 5000.
According to the appellants, by the impugned notification dated 9.3.1989, in the guise of revision of pay scales, altogether new grades/designations have also been created as under : "S Grade Existing designation New designation No. 1.
Scientist S 2 (with Scientist S 2 Scientist (Senior total service in Scale) ARS as on 31.12.1985 upto 8 years) 2.
Scientist S 2 (with Scientist S 2 Scientist (Selection total service in Grade) ARS as on 31.12.1985 exceeding 8 years) 3.
Scientist S 3 (with Scientist S 3 Scientist (Selection total service in Grade) ARS as on 31.12.1985 upto 16 years) 4.
Scientist S 3 (with Scientist S 3 Principal Scientist" total service in ARS or equivalent Grades as on 31.12.1985 exceeding 16 years) It has been further submitted by the appellants that in the ICAR there were two streams for career advancement of the Scientists.
The slower stream is the five yearly assessment and the faster one is the direct selection through advertisement to various posts at All India level.
In the direct selection, the existing Scientists can also compete with the other.
Scientists from non lCAR Institutions.
The requirements for assessment and direct selection are different as illustrated below by the appellants : "Suppose a Scientist with Ph. D qualification joins as S 1, it will take for him at least 11 years to become S 3 through assessment, whereas if he had only 7 years ' experience and good merit, he could be directly selected as S 3.
So, it takes 4 years less for a Scientist to become directly recruited S 3 as compared to his counterparts who got S 3 through assessment scheme.
This fact has been completely ignored by the ICAR while revising the pay scale in which the requirement of total length of service was kept same for Scientists of both the streams.
This is the reason why many of the Scientists who were selected directly as S 2/S 3, taking lesser time to attain higher grades, have been denied their due in the impugned revision of pay scales.
" It has been further submitted on behalf of the appellants that the criterion of eight years of qualifying service for getting the scale of Rs.3700 5700 and 16 years of qualifying service for getting the scale of Rs. 4500 7300 completely ignores the period of service put in the grade of S 2 or S 3 respectively.
This clearly shows the utter disregard for merit and competence of the Scientists working on these posts of S 2 or S 3.
The impugned notification is not only unreasonable and discriminatory, but has resulted in grave injustice to the Scientists directly selected as Scientists S 2 and S 3 by taking into consideration the total length of service in the ARS as the only criterion thereby giving a complete go bye to merit and competence.
It has been further submitted that before the issuance of the impugned notification Scientists S 2 who had put in upto 8 years service and those who had put in exceeding 8 years service had the same designation namely, Scientist S 2 and were performing the same nature of work and duties.
After the impugned notification, they have been reclassified in two categories, namely Scientist (Senior Scale) and Scientist (Selection Grade), and have been put in different pay scales, though their nature of work and duties still continue to remain the same.
It has been similarly pointed out that prior to the issuance of the impugned notification Scientists S 3 who had put in upto 16 years of service and those having put in more than 16 years had the same designation of Scientist S 3 and their nature of work and duties were also the same.
Now, by virtue of the impugned notification Scientists S 3 have been reclassified into two categories, namely, Scientist (Selection Grade) and Principal Scientist and have been given different scales of pay, though their nature of work and duties still continue to remain the same.
It has thus been submitted that as a result of the impugned notification juniors and less meritorious Scientists and who were also drawing lesser basic pay as on 31.12.1985 than the appellants have been placed in higher pay scales causing great resentment amongst a large number of Scientists including the appellants.
The appellants have further illustrated the injustice and arbirtrainess in the application of the impugned notification in the following manner : "ILLUSTRATION I DATE OF Scale Scale APPOINTMENT Class II Scien Scien Scien as as on (Gaze tist tist tist on 1.1.1986 tted) S 1 S 2 S 3 31.12.85 as per the impugned Notification Scientist A 30.4.65 9.10.
1.7.76 1.1.85 Rs. Rs.
Dr. G.C. 74 1500 4500 Sharma 2000 7300 Scientist B 1.7.76 24.3.79 6.12.79 Rs. Rs. Dr. Sheo 5700 It would thus be seen that although Scientist B got the S 3 grade much before Scientist A and both were in the same scale as on 31.12.1985, by the impugned notification Scientist A has been given the higher scale of Rs 4500 7300 with effect from 1.1.1986 whereas Scientist B has been put in the lower scale of Rs. 3700 5700.
ILLUSTRATION II DATE OF APPOINTMENT Scale Scale Scientist S 1 1 Scientist 1 S 2 as on as per 31.12.85 impugned Notification Scientist A 1.9.76 1.7.1985 Rs. Rs. Ms. Pratibha 1100 3700 Shukla 1600 5700 Scientist B 22.7.78 Rs.
Rs. Shri B.S. (joined 1100 3000 Modi directly as S 2) 1600 5000 The above illustration would show that while Scientist B got the S 2 grade much earlier than Scientist A and both were in the same scale as on 31.12.1985, by the impugned notification Scientist A has been placed in the higher scale of Rs. 3700 5700 w.e.f.
1.1.1986 and Scientist B has been given lower scale of Rs 3000 5000.
" On the other hand, it has been contended on behalf of the respondents.
that on persistent demand of the appellants and other Scientists for giving them better pay scales than those recommended by the Fourth Pay Commission, the Government introduced University Grants Commission (in short 'UGC ') pay package for them.
The designations of Scientists on various grounds have been suitably amended so as to conform to their respective level of responsibility.
In the UGC revised scales, there is no single/uniform revised scale for servicing S 2 and S 3 Scientists.
However there is provision for specific placement of Scientists S 2 and S 3 in the UGC scales by virtue of their length of service as on 31.12.1985.
Thus, as per the scheme concurred in by the Ministry of Finance, Scientist S 2 having less than 8 years of service as on 31.12.1985 have been placed in the revised scale of Rs. 3000 5000, whereas those having more than 8 years Of prescribed service as on 31.12.1985 have been placed in the scale of Rs. 3700 5700.
Similarly, in case of S 3 Scientists, the period of service as on 31.12.1985 has been taken as 16 years and as such those having more than 16 years of service as on 31.12.1985 have been put in the scale of Rs. 4500 7300 and those upto 16 years have been placed in the scale of Rs. 3700 5700.
Thus, prescribing the aforesaid pay scales on the pattern of UGC as per the demand of the Scientists themselves, the above fixation of pay scales is perfectly valid and proper.
It has been further submitted that injustice done to some of the incumbents in introducing a new scheme cannot be a reason for setting aside the whole scheme.
It has been further submitted that they have formulated model recruitment rules on the pattern of UGC.
Some difficulties have been experienced while prescribing the experience of 3, 5, 6 years as Principal Scientists for recruitment to the higher posts.
Efforts are being made to devise means by which the affected Scientists may be able to take their chance for appointment to higher management positions.
We have considered the arguments advanced by learned counsel for both the parties and have thoroughly perused the record.
It is no doubt correct that while introducing a new scheme of pay scales and fixing new grades of posts, some of the incumbents may have to put to less advantageous position than others, but at the same time the granting of new pay scales cannot be allowed to act arbitrarily and cannot create a situation in which the juniors may become senior of vice versa.
Admittedly, the Scientists working in the ICAR had made a grievance for the revision of their pay scales and the Government being satisfied with their grievances had appointed various expert Committees such as, M.V. Rao Committee, N.G.P. Rao Committee, Menon Committee and G.V.R. Rao Committee for improvement of service conditions of the Scientists working in the ICAR.
Government had notified a set of pay scales for the Universities in 1988 known as 'UGC Scales.
M.V. Rao Committee which was set up by the Government to go into the pay scales of ARS Scientists had recommended the application of the UGC Scales to the ARS Scientists.
So far as the recommendations of the aforementioned expert Committees are concerned, learned counsel for the appellants pointed out that none of the recommendations made by such Committees laid down any criteria of 8 years or 16 years of service for giving higher pay scales in the case of incumbents holding the same S 2 or S 3 grade in the ICAR.
The respondents in their counter affidavit have admitted that S 1, S 2 and S 3 are equivalent to that of Lecturer, Reader and Professor respectively.
Dr. M.V.Rao Committee after considering the facts that the ICAR has the role of UGC in agricultural education recommended that the ICAR being an apex organisation in the country for agricultural education, research and extension should have the pay scales at least at par with the State Agricultural Universities.
Dr. M.V. Rao Committee 's recommendations were accepted by the Central Government and a policy decision was taken on 13.10.1988 to the effect that UGC package may be extended to ICAR Scientists engaged in teaching, research and extension.
It may be further noted that prior to the impugned notification dated 9.3.1989, there were four grades of Scientists namely, Scientist S, S 1, S 2 and S 3 apart from other higher grades with which we are not presently concerned.
So far as the lowest grade of Scientist is concerned which has been named as Experimental Scientist in the impugned notification is a dying cadre.
Now, so far as 8 Scientist S 1 is concerned, he has been given the revised pay scale of Rs.2200 4000 and there is no controversy about it.
The controversy is about Scientists S 2 and S 3.
All Scientists S 2 were in the same pay scale of Rs. 1100 1600 prior to the introduction of the revised pay scales by the impugned notification dated 9.3.1989.
By the impugned notification, post of Scientist S 2 has been bifurcated in two grades as Scientist (Senior Scale) in the pay scale of Rs. 3000 5000 and Scientist (Selection Grade) in the pay scale of Rs. 3700 5700.
Similarly, in the case of Scientist S 3 which had a common pay scale of Rs. 1500 2000 has now been bifurcated as Scientist (Selection Grade) in the pay scale of Rs. 3700 5700 and Principal Scientist in the pay scale of Rs. 4500 7300.
The basis for giving higher pay scales has been taken as period of total service in ARS as 8 years in the case of Scientist S 2 and 16 years in the case of Scientist S 3.
It would have been correct in case the recruitment to such posts of S 2 and S 3 had been made purely on the basis of seniority and length of service in ARS.
But the admitted position is that such posts of Scientists S 2 and S 3 were also filled by direct recruitment from public as well as by merit cum seniority from amongst the members of the Agricultural Research Service.
Thus, the anomalous situation created is amply illustrated by the examples of Dr. G.C. Sharma and Dr. Sheo Raj in the case of S 3 and the case of Ms. Pratibha Shukla and Shri B.S. Modi in the case of Scientist S 2.
Dr. Sheo Raj came to be appointed as a Scientist S 3 on 6.12.1979 while Dr. G.C. Sharma came to be appointed as Scientist S 3 as late as on 1.1.1985.
Admittedly, on 31.12.1985 both were in the scale of Rs. 1500 2000.
Now, on the basis of the impugned notification Dr. G.C. Sharma gets the pay scale of Rs. 4500 7300 as Principal Scientist while Dr. Sheo Raj is fixed in the pay scale of Rs. 3700 5700 as Scientist (Selection Grade).
Similar is the case of Shri B.S. Modi and Ms. Pratibha Shukla in S 2.
Shri Arun Jaitley Leaned senior counsel appearing for the ICAR which tried hard but in vain to justify such disparity which is totally arbitrary and unreasonable.
It does not stand to reason that Dr. Sheo Raj having been appointed as Scientist S 3 on merit as back as on 6.12.1979 is fixed in the new pay scale of Rs. 3700 5700 while Dr. G.C. Sharma who became Scientist S 3 as late as on 1.1.1985 is fixed in the pay scale of Rs. 4500 7300.
Similarly, in the case of the incumbents on the post of Scientist S 2 Shri N.S. Modi having appointed by direct recruitment on 22.7.1975 has been fixed in the new pay scale of Rs. 3000 5000 as Scientist (Senior Scale) while Ms. Pratibha Shukla who came to be appointed as Scieutist S 2 on 1.7.1985 has been fixed in the revised pay scale of Rs. 2700 5700 as Scientist (Selection Grade).
In our view, the appellants are justified in their submission that they were also entitled to the higher pay scale on the post of Scientist S 2 as well as S 3 specially when they were recruited on these posts much earlier to those who have now become entitled to higher pay scales under the impugned notification.
They are also right in their submission that it also mars their future chances of promotion on the higher posts.
The following observations made by the Tribunal itself shows the justification of the demand made by the appellants : "The respondents have admitted in their counter affidavit that certain anomalies have been created by the new scheme and that they are trying to rectify the same.
They have issued orders allowing directly recruited S 2 and S 3 Scientists certain wetihtage for a period of service rendered by them for placement in the higher scale as on 1.1.1986.
They have also stated that they are devising means by which the affected Scientists may be able to take their chance for appointment to higher management positions . . . . .
In the instant case, by applying the principle of length of service in the ARS irrespective of the grades in which the officers were hitherto working a large number of erstwhile seniors will be rendered juniors and they will now be entitled to only lower pay scales than their erstwhile juniors.
This would also adversely affect their eligibility for promotion from 1.1.1986.
In case they were eligible to be considered for promotion to the next higher grade under the old dispensation, it will be unjust and inequitable to render them ineligible for such promotion against the existing vacancies proposed to be filled up.
It is, however, for the respondents to devise suitable steps, including grant of one time relaxation and/or appropriate weightage to the applicants and those similarly situated, so as to make them eligible to appear before the Selection Board for the various posts already advertised.
" It may be noted that the Tribunal itself had found force and justification in the grievances made by the appellants and had granted 6 month 's time to the respondents to take appropriate action.
We had also granted opportunities to the respondents to come with a scheme granting appropriate relief to the appellants in the facts and circumstances of the case, but till the matter was finally heard by us, the respondents were unable to come out with any concrete proposal or scheme redressing the grievances of the appellants.
The appellants are Scientists who are rendering great service to the nation and we find no justification as to why the appellants or any other Scientists in ICAR placed in similar position like the appellants should be deprived the benefit of the revised pay scales on the higher post of S 2 or S 3, in case they were appointed by direct recruitment or by selection on merit cum seniority on the post of Scientist S 2 or S 3 prior to those who have now become entitled to higher pay scale under the impugned notification dated 9.3.1989.
We, therefore, allow this appeal and direct the respondents to issue appropriate orders so that any of the appellants or the like working as Scientist S 2 or S 3 on or before 31.12.1985 earlier to anyone of the Scientists getting benefit of the revised pay scales under the impugned notification dated 9.3.1989 also get a similar benefit of revised pay scale of Rs.4500 7300 in the case of S 3 and pay scale of Rs.3700 5700 in the case of S 2.
Such revised pay scales shall be given from 1.1.]986 as given to S 2 and S 3 Scientists under the impugned notification.
The respondents are directed to take suitable action in this regard and to pay the entire amount within six months from the date of this order.
In the facts and circumstances of the case, we pass no order as to costs.
N.V.K. Appeal allowed.
| IN-Abs | The Imperial Council of Agricultural Research, a Society established under the Societies Registration Act in the year 1929 was redesignated as the Indian Council of Agricultural Research after the advent of Independence.
Till 1965, the ICAR was largely functioning as a coordinating agency and apex body for financing research projects, but with effect from 1966 the administrative control over the Indian Agriculture Research Institute (IARI) and other such Institutes were transferred to ICAR, simultaneously placing the staff of such Institutes at the disposal of the ICAR A department of Agricultural Research and Education was set up in the Ministry of Agriculture and the said department came into existence on 15.12.1973.
The ICAR was fully financed by the Department of Agricultural Research and Education of the Government of India.
ICAR started an Agricultural Research Service with effect from 1.10.1975, and the relevant grades and pay scales as on 31.12.1985 were: Grade of Scientist S in pay scale Rs. 550 900, Scientist S I in Rs. 700 1300, Scientist S 2 in Rs. 1100 1600, and Scientist S 3 in Rs. 1500 2000.
The Scientists of the ICAR who were earlier covered by the Third Pay Commission pay scales had been demanding parity in pay scales with the employees of the Agricultural Universities who were also financed by the ICAR After persistent demand, the ICAR agreed to revise the pay scales with effect from 1.1.1986 by notification dated 9th March, 1989.
This notification benefited some of the Scientists, but was denying the principles of 'Equal Pay for Equal Work ' in the case of the appellants and the like, and the said notification had further placed persons much junior to many of the appellants in a higher scale of pay, resulting in violation of the fundamental rights of the appellants guaranteed under Articles 14 and 16 of the Constitution.
Some of the appellants in this appeal had earlier filed a Writ Petition before this Court under Article 32 challenging the aforesaid notification and for other connected reliefs, which was disposed of on 3rd May, 1990, directing the appellants to approach the Central Administrative Tribunal, and a further declaration was made that the Tribunal shall treat the petition as a Representative Petition.
Certain clarifications were issued by the ICAR by its letter dated 31st March, 1989 and by orders dated 14th June, 1989, 6.11.1989 and 6.7.1989.
These orders not only revised the pay scales but also gave new designations to the various posts held by the appellants.
Existing Grade Existing New Revised Pay scale designation pay scale 1.
Scientist,S 2 Rs.1100 50 1600 Scientist Rs. 3000 100 with service (Senior 3500 125 5000 upto eight scale) years.
Scientist,S 2 Rs.1100 50 Scientist Rs. 3700 125 with service 1600 (Selection 4950 150 5700 exceeding grade) eight years 3.
Scientist,S 3 Rs.1500 60 Scientist Rs. 3700 125 with service 1800 100 2000 (Selection 4950 150.5700.
upto 16 years Grade) 4.
Scientist,S 3 Rs.1500 50 Principal Rs. 4500 l50 with service 1800 100 2000 Scientist 5700 200 7300 exceeding 16 years The appellants filed an application under Section 19 of the Administrative Tribunal 's Act before the Principal Bench of the Central Administrative Tribunal, Delhi and contended that according to the notification dated 9.3.1989 together with the subsequent clarifications, juniors and less meritorious Scientists and who were drawing lesser basic pay as on 31.12.1985 than the appellants had been placed in higher pay scales causing great resentment amongst a large number of Scientists including the appellants.
Not being successful before the Tribunal, the appellants appealed to this Court and contended that Scientists S 3 in pre revised scale of Rs. 1500 2000 having completed total service in the ARS as on 31.12.1985 exceeding 16 years had been placed in the scale of Rs. 4500 7300, whereas Scientists S 3 who were in the same pre revised scale of Rs. 1500 2000 but had put in total service in the ARS as on 31.12.1985 upto 16 years have been placed in the scale of Rs. 3700 5700.
Similarly, Scientists S 2 who were in the pre revised scale of Rs. 1100 1600 and had completed total service of more than 8 years in the ARS as on 31.12.1985 had been put in the scale of Rs. 3700 5700, but those having completed total service upto 8 years as on 31.12.1985 had been put in the scale of Rs. 3000 5000.
It was further submitted by the appellant that in the ICAR there were two streams for career advancement of the Scientists.
The slower stream is the five yearly assessment, and the faster one is the direct selection through advertisement to various posts at All India level, and that in the direct selection, the existing Scientists can also compete with the other Scientists from non lCAR Institutions, that the criterion of eight years of qualifying service for getting the scale of Rs. 3700 5700, and 16 years of qualifying service for getting the scale of Rs. 4500 7300 completed ignores the period of service put in the grades of S 2 or S 3 respectively, and that this clearly shows the utter disregard for merit and competence of the Scientists working on these posts of S 2 or S 3.
It was also submitted that the impugned notification was not only unreasonable and discriminatory, but had resulted in grave injustice to the Scientists directly selected as Scientists S 2 and S 3 by taking into consideration the total length of service in the ARS as the only criterion thereby giving a complete go bye to merit and competence.
The respondents opposed the appeal by contending that on persistent demand of the appellants and other scientists for giving them better pay scales than those recommended by the Fourth Pay Commission, the Government introduced University Grant Commission pay package for them.
The designations of Scientists on various grounds had been suitably amended so as to conform to their respective level of responsibility.
Scientist S 2 having less than 8 years of service as on 31.12.1985 were placed in the revised scale of Rs. 3000 5000, whereas those having more than 8 years of prescribed service as on 31.12.1985 were placed in the scale of Rs. 3700 5700.
It was further contended that efforts were being made to devise means by which the affected Scientists may be able to take their chance for appointment to higher management positions.
Allowing the appeal, this Court, HELD :1.
While introducing a new scheme of pay scales and fixing new grades of posts, some of the incumbents may have to be put to less advantageous position than others, but at the same time the granting Of new pay scales cannot be allowed to act arbitrarily and cannot create a situation in which the juniors may become senior or vice versa.
[450 B] 2.
The appellants are justified in their submission that they were also entitled to the higher pay scale on the post of Scientists S 2 as well as S 3 specially when they were recruited on those posts much earlier to those who have now become entitled to higher pay scales under the impugned notification.
They are also right in their submission that it also mars their future chances of promotion on the higher posts.
[452 A B] 3.
The appellants are Scientists who are rendering great service to the nation and no justification is found as to why the appellants or any other Scientists in ICAR placed in similar position like the appellants should be deprived the benefit of the revised pay scales on the higher post of S 2 or S 3, in case they were appointed by direct recruitment or by selection on merit cum seniority on the post of Scientists S 2 or S 3 prior to those who have now become entitled to higher pay scale under the impugned notification dated 93.1989.
[453 B C] 4.
The Tribunal itself had found force and justification in grievances made by the appellants and had granted six months time to the respondents to take appropriate action.
Opportunities were granted to the respondents to come with a scheme granting appropriate relief to the appellants, but they were unable to come out with any concrete proposal or scheme redressing the grievances of the appellants.
[452 H; 453 Al 5.
The respondents to issue appropriate orders so that any of the appellants or the like working as Scientist S 2 or S 3 on or before 31.12.1985 earlier to anyone of the Scientists getting benefit of the revised pay scales under the impugned notification dated 9.3.1989 also get a similar benefit of revised pay scale of Rs. 4500 7300 in the case of S 3 and pay scale of Rs. 3700 5700 in the case of S 2.
Such revised pay scales shall a be given from 1.1.1986 as given to S 2 and S 3 Scientists under the impugned notification.
Suitable action in this regard to be taken and the entire amount to be paid within six months.
[453 D E] P.K Iyer & Ors.
vs Union of India & Ors.
, ; , referred to.
|
Civil Appeal No. 4090 of 1991.
From the Order dated 7.2.1991 of the Central Administrative Tribunal, Bangalore in Original Application No. 11 of 1991.
K.K. Venugopal, B.R.L. Iyengar, E.C. Vidyasagar, D.N. Nanjunda Reddy, L.R. Singh and Shahid Rizvi for the Appellant.
G. Ramaswamy, Attorney General, P.P. Muthanna (for the State of Karnataka), Subramanian, M. Verrappa, Kh.
Nobin Singh and section Walia for the Respondents.
The Judgment of the Court was delivered by G.N. RAY, J.
This appeal is directed against the decision of the Central Administrative Tribunal, Bangalore, dated February 7, 1991 passed in Original Application No. 11 of 1991.
The appellant, Shri M. Sankaranarayanan, made an application before the Central Administrative Tribunal, Bangalore, for quashing the order dated January 4, 1991 transferring and posting him as Secretary High Power Committee for development of Hyderabad, Karnataka area, Bangalore (hereinafter referred to as High Power Committee) as contained in Annexure A 4 to the application made before the Central Administrative Tribunal, and for a direction to allow the applicant, Shri Sankaranarayanan, to continue as the (Chief Secretary, Government of Karnataka.
The aforesaid order of transferring and posting the appellant as Secretary, High Power Committee was challenged mainly on two grounds, namely, that such order was not passed bona fide for the exigencies of the administration but the same was passed mala fide by the Chief Minister of Karnataka who became displeased with the appellant on account of his unfavourable attitude and resistance to some of the proposals of the Chief Minister in the matter of posting of senior officers of the State to different key posts.
It was also contended that his transfer order is vitiated because of the non compliance of the procedural formalities for a valid transfer of the appellant to the said post of Secretary, High Power Committee inasmuch as there was no declaration under Rule 9 (1) of IAS (Pay) Rules, 1954 that the post of Secretary, High Power Committee, was equivalent to the post of Chief Secretary and in the absence of such declaration the transfer of the appellant from the post of Chief Secretary to the Secretary, High Power Committee, was illegal and void.
To appreciate the relevant contentions made by the appellant and the respondents before the Central Administrative Tribunal and also before this Court at the hearing of the appeal, the backdrop of the events resulting in the impugned order of transfer and posting of the appellant and consequential challenge of such order by the appellant, requires to be indicated in short.
The appellant, Shri Sankaranarayanan, was appointed to the Indian Administrative Service (Karnataka Cadre) in 1957 and on May 5,1990 he was holding the post of Additional Chief Secretary to the Government of Karnataka.
By Notification dated May 5, 1990, he was appointed as Chief Secretary to the Karnataka Government until further orders.
In the State of Karnataka, there was originally one post of Chief Secretary to the Government.
By an Order dated October 17, 1980, and ex cadre post of Additional Chief Secretary was created with a declaration under Rule 9(1) of IAS (Pay) Rules that the status and responsibilities of the said post were equivalent to the cadre post of Chief Secretary.
The post of Additional Chief Secretary was thereafter en cadred by Notification dated January A(), 1987 with the same pay as of the post of Chief Secretary.
The post of Secretary, High Power Committee, was created by the State Government of Karnataka in 1989 with the designation Chairman, Hyderabad, Karnataka Development Board by order dated September 27, 1989.
The said post was declared equivalent to the status and responsibilities to the cadre post of Additional Chief Secretary under Rule 9 of IAS (Pay) Rules.
The posts of Chief Secretary, Secretary, High Power Committee and Additional Chief Secretary carry equal pay.
On January 3, 1991, the Cabinet Government of Karnataka took a decision to the effect that a change of the Chief Secretary should be effected.
Pursuant to such cabinet decision, the Chief Minister, on January 4, 1991, had taken the following three decisions and passed consequential orders namely (i) declaring that the post of Secretary, High Power Committee, was equivalent in status and responsibilities to the post of Chief Secretary of the Government, (ii) transferring the appellant, Shri Sankaranarayanan, to the post of Secretary, High Power Committee with immediate effect and (iii) appointing the 4th respondent, Shri N.K. Prabhakar Rao, who was holding the post of Chief Secretary to the Government.
It may be noted in this connection that Shri Prabhakar Rao is senior to Shri Sankaranarayanan as a member of the Indian Administrative Service.
The Notification giving effect to the above orders of transfer was issued on January 4, 1991 but the authenticated Government order declaring the equivalent of two posts under Rule 9 of IAS (Pay) Rules, was issued on the next day, namely, January 5, 1991.
The appellant, Shri Sankaranarayanan, contended in his application before the Central Administrative Tribunal that the appellant was in the office of Chief Secretary when Shri Veerendra Patil was the Chief Minister of Karnataka.
There was an intensive anti corruption drive against the senior bureaucrats including the 4th respondent through the instrumentality of Lok Ayukta.
One such Officer was Shri J. Alexender, IAS, who was suspended while he was holding the post of the Chairman and Managing Director of the Mangalore Chemicals and Fertilisers Ltd. but when Shri Alexender obtained a stay order from the Central Administrative Tribunal, the appellant, in the best interest of administration suggested that Shri Alexender should not be given the post of Secretary of the Department of Industry and Commerce but he should be given a posting in a Less sensitive post hut such suggestion of the appellant was not accepted by the third respondent, namely, the present Chief Minister of Government of Karnataka, Shri section Bangarappa.
Similarly, when a proposal to replace Shri Sangameswar, IAS, from the post of Managing Director of the Mysore Sales International Ltd. and post one Shri Madhu in Place of Shri Sangameswar came up for consideration, the appellant pointed out to the Chief Minister about the propriety in making such a change particularly when Shri Sangameswar was keen in defending the cases filed against the Government in the Supreme Court and his other actions were also appreciated by his superiors and Shri Madhu had indicated his reluctance to accept the post in his letter to the Government in view of the fact some of his relatives happened to be excise contractors.
But the third respondent did not like his suggestion and directed the posting of Shri Madhu as Managing Director, Mysore Sales International Ltd. The third respondent also did not like to pass orders on the files containing the irregularities committed by the fourth respondent while holding high offices in the State during the period between 1983 and 1989.
These files contained 41st report of the Public Undertaking Committee recommending enquiry into tile imprudent decisions taken by the 4th respondent as Chairman and Managing Director of the New Government Electric Factory, Bangalore.
Accordingly, at the instance of the then Minister of Industries and Commerce an enquiry had been undertaken through Lok Ayukta.
The Report submitted after the enquiry indicated prima facie case against the 4th respondent warranting further departmental actions.
The former Chief Minister made enquiries about these matters and the appellant also furnished further necessary information to the then Chief Minister who referred the matter to the Personnel Department of Administrative Reforms.
The Secretary, Department of Personnel and Administrative Reforms suggested for initiation of departmental action against the fourth respondent.
The fourth respondent made a suggestion to the Government seeking permission for voluntary retirement.
But after the Ministry headed by the then Chief Minister, Shri Veerendra Patil, was dismissed and the President 's rule was imposed in the State, the fourth respondent withdrew his letter seeking voluntary retirement.
The appellant put up all the files before the third respondent for appropriate orders in view of the fact that the previous Chief Minister did not take any final decision regarding the proposal to initiate disciplinary action against the fourth respondent.
But the third respondent keep the files without passing any orders.
It was contended by the appellant that since the appellant was not prepared to lies and to compromise with the desires of the Chief Minister, the Chief Minister, namely, the respondent No. 3, became displeased with him and opposed some of his suggestions relating to the posting of senior bureaucratic officers.
The appellant has contended that he was sought to be transferred with undue haste from the post of Chief Secretary to the post of Secretary, High Power Committee, although such post was inferior to the post of Chief Secretary and no declaration under Rule 9 (1) of IAS (Pay) Rules for the equivalence of the said post had been made.
The respondents, namely, the State of Karnataka and the Chief Minister of Karnataka and also the said respondent No. 4 denied the allegations relating to the malice of facts and contended that the allegations relating to the malice of facts were mischievous, malicious, scandalous and vexatious and such allegations were deliberately made to malign the respondents.
The respondents also contended that the post of Secretary, High Power Committee, was equivalent to the post of Additional Chief Secretary and such declaration had been made long back and the post of Additional Chief Secretary and the post of Chief Secretary were also equivalent and inter changeable.
In any event, before giving effect to the order of transfer of the appellant, further declaration was made by the Chief Minister that the post of Secretary, High Power Committee was equivalent to the post of Chief Secretary so that in any event the appellant had no occasion to feel stifled.
Accordingly, there was no occasion to contend that the declaration, required as under Rule 9 (1) of IAS (Pay) Rules, had not been made and the order of transfer was accordingly vitiated for non compliance with the statutory rules.
The Central Administrative Tribunal, after considering the facts and circumstances of the case and hearing the submissions made on behalf of the respective parties, inter alia came to the finding that the freedom to choose a person as the Chief Secretary to the liking of the Chief Minister and the Cabinet on whom there is absolute confidence, is undisputed prerogative and such decision becomes unassailable when it is made in bona fide manner following the statutory formalities applicable to such selection and appointment.
Referring to the decision of this Court made in the case of E.P. Royappa vs State of Tamil Nadu, ; and referring to various observations made in the said decision at length, the Central Administrative Tribunal came to the finding that the appellant had no subsisting right to remain as Chief Secretary and it was the prerogative of the Chief Minister and the Cabinet to take a decision to appoint a person to the post of Chief A Secretary in place of the appellant to whom the Cabinet and the Chief Minister had confidence.
It was held by the Central Administrative Tribunal that the appellant had failed to establish that he had been transferred with the ulterior motive of placing the appellant in a lower post and thereby permanently preventing him from continuing in the position and status of Chief Secretary.
The Administrative Tribunal inter alia held that it is an admitted position that there was a difference of opinion between the appellant and the Chief Minister and such difference had been developing ever since the new Chief Minister had assumed Office.
The Tribunal had also noted that the appellant was also not promoted and posted as Chief Secretary permanently but he was appointed to the post of Chief Secretary until further orders and he continued in that capacity only for eight months without being regularised or confirmed in that post.
The Central Administrative Tribunal also held that there had been only casual collateral challenge by the appellant against the appointment of fourth respondent as the Chief Secretary raising some allegations which could at best be grouped in the category of vague and indefinite allegations.
The Central Administrative Tribunal held inter alia that the applicant had not laid down any firm foundation to hold that the appointment of the 4th respondent as Chief Secretary was bad and unsustainable.
It has been held by the Central Administrative Tribunal that the fourth respondent had already assumed the office of the Chief Secretary and except in making some vague allegations, his appointment as Chief Secretary was not challenged on the score of violation of rules governing the matter.
As such, the Central Administrative Tribunal held that there was no occasion to go into the legality of the posting of fourth respondent as the Chief Secretary of the State.
So far as the other contention made by the appellant, namely, that the transfer order is vitiated in view of the fact that the appellant was sought to be reverted to a lower post in violation of the procedure in Rule 9 (l) of IAS (Pay) Rules and Rule 4 of IAS (Cadre) Rules in concerned, it has been contended by the appellant that a Notification issued on January 5, 1991 declaring the post of Secretary, High Power Committee, as equivalent to the post of Chief Secretary, was of no consequence and could not cure the initial defect inasmuch as prior to such Notification issued on January 5, 1991 declaring equivalence of the said posts, the impugned order of transfer was sought to be effected and the respondent No. 4 was allowed to join the post of Chief Secretary pursuant to the order of transfer of the appellant.
The Central Administrative Tribunal referred to four documents being Annexures 7, 8, 9 & 10 to the application made by the appellant and also the affidavits filed by the parties and accepted the contention of the respondents that the post of the Secretary was declared equivalent to the post of Additional Chief Secretary and the post of Additional Chief Secretary was also declared equivalent to the post of (Chief Secretary, and such declarations had been made ever since 1980 and the appellant was fully aware of the said position.
The Central Administrative Tribunal also accepted the contention of the respondents that in order to avoid any embarrassment and complication, the State Government had also made a declaration on January 4, 1991 prior to the transfer of the appellant that the post of the Secretary, High Power Committee, was equivalent to the post of Chief Secretary but the formal authenticated order declaring the said equivalence was issued next day i.e. January 5, 1991.
There was no delay in issuing the declaration and even assuming that there was a delay of one day in making the formal declaration of equivalence, such delay had not nullified and invalidated the decision of the Government.
Referring to the various decisions of this Court including the decision made in the case of Babulal vs M/s Hazari Lal Kishori Lal and others, [19821 2 SCC p.525, the Central Administrative Tribunal indicated that a deviation from the strict procedure prescribed by law would not vitiate an action taken by the Government or public authority in the interest of public unless it could be shown that such an act had resulted in gross injustice to the affected party.
The Central Administrative Tribunal held that the appellant could not establish that impugned order had caused any serious injury to him.
The Central Administrative Tribunal further held that the appellant had submitted that because of the delay in issuing the declaration strictly in accordance with the Rule 9(1) of IAS (Pay) Rules, the appellant was in dark as to the nature and duties of the post of Secretary, High Power Committee, to which he had been transferred under the impugned order.
The Central Administrative Tribunal held that the form and procedure in Rule 9(1) of IAS (Pay) Rules do not make it obligatory to approach the issue in a judicial or quasi judicial manner and the violation, if any, of Rule 9(1) was only a mere technicality and it did not cause any legal injury or injustice to the appellant.
Such violation, even if any, was not so serious that it required a judicial scrutiny by the Central Administrative Tribunal in the facts and circumstances of the case.
The Central Administrative Tribunal also held that after going through the files leading to the declaration under Rule 9(1) since placed before the Tribunal, the Tribunal was satisfied that the Government had considered the question in detail and sufficiently in advance and had taken a decision to issue the declaration of equivalence on January 4, 1991 and it was a valid decision satisfying the requirement of Rule 9 (1) of IAS (Pay) Rules, 1954.
Referring to the allegations of mala fides, the Central Administrative Tribunal came to the finding that the facts were narrated in paragraphs (1) to (w) of paragraph 6 of the application of the appellant.
The Tribunal categorically came to the finding that there was no firm foundation to find on facts that the impugned order was vitiated by any mala fide.
In that view of the matter, the Central Administrative Tribunal dismissed the application made by the appellant.
As aforesaid, the said decision is under challenge in this appeal.
Mr. Venugopal the learned counsel for the appellant has strenuously contended that declaration of equivalence under Rule 9 (1) of IAS (Pay) Rules, 1954 is an essential statutory requirement and without such declaration of equivalence no member in the cadre of IAS can be transferred to a non cadre post.
He has contended that the declaration of equivalence of the posts of Chief Secretary and Additional Chief Secretary made in 1980 has been highlighted beyond proportion before the Central Administrative Tribunal by the respondents and the Administrative Tribunal was also influenced because of such declaration of equivalence made in 1980.
But such declaration of equivalence is of no consequence and the legal requirement of declaration of equivalence was still there and noncompliance with the requirement of declaration of equivalence has rendered the impugned order of transfer illegal and void.
Mr. Venugopal has contended that previously there was only one post of Chief Secretary in the administrative hierarchy in the State of Karnataka.
It was felt necessary that a post of Additional Chief Secretary should be created and the recommendation to that effect was made when the post of Additional Chief Secretary was not encadred.
A declaration of equivalence was also made by the State Government so that a cadre officer belonging to the Indian Administrative Service may be transferred to the non cadred post of Additional Chief Secretary but later on, the post of Additional Chief Secretary was encadred on the basis of triennial review.
After such encadrement of the post of Additional Chief Secretary, the declaration of equivalence which was made earlier lost its force.
Mr. Venugopal has submitted that the question of equivalence comes in when one post is outside the cadre post of Indian Administrative Service.
Mr. Venugopal has contended that equivalence is referable only to an ex cadre post and ex hypothesi dedaration of equivalence cannot come inter se posts within the cadre.
Accordingly, all the previous exercises made in declaration of equivalence when the post of Additional Chief Secretary was not a cadre post are of little consequence.
Mr. Venugopal has also contended that the posts of Additional Chief Secretary and Chief Secretary are not equivalent in reality.
The post of Chief Secretary is the highest post in the administrative set up in the State.
Mr. Venugopal has referred to the Office Memorandum dated September 2, 1988 at page No. 127 of Volume Il A of the Paper Book of this appeal, for the purpose of showing that the post of Chief Secretary is superior post because Additional Chief Secretary is to report to the Chief Secretary.
He also made reference to the Karnataka Government (Transfer of Business) Rules, 1977 and contended that reference to various provisions of the Rules would indicate that the post of Chief Secretary is the highest post and the reports of different Secretaries including Additional Chief Secretary are required to be routed through Chief Secretary but no Report of the Chief Secretary is ever required to be routed through Additional Chief Secretary or any other Officer.
He has submitted that a mere dedaration that the post of Additional Chief Secretary is equivalent to the post of Chief Secretary will not make both the said posts equivalent.
Mr. Venugopal has also contended that as a matter of fact, the respondents felt difficulty in transferring the appellant lo the post of Secretary, High Power Committee, because the said post was declared equivalent to the post of Additional Chief Secretary and not to the post of Chief Secretary.
Precisely for the said reason, after the impugned order of transfer, an attempt was made to publish a declaration on January 5, 1991 to the effect that the post of Chief Secretary is equivalent to the post of Secretary, High Power Committee.
Mr. Venugopal has contended that the post of Secretary, High Power Committee, cannot be equivalent to the post of Chief Secretary of the State which is highest post and in any event the post facto declaration of equivalence on January 5, 1991 cannot cure the initial defect of not declaring equivalence of the post in question prior to the order of transfer made on January 4, 1991.
Mr. Venugopal has submitted that the appellant may not have an absolute right to remain in the post of Chief Secretary and for good administrative reasons the Cabinet and the Chief Minister may have a prerogative to select a person of their confidence to the post of Chief Secretary but the appellant having been appointed as Chief Secretary can only be removed from the said post for good administrative reasons but not for any oblique purpose.
The appellant could have been transferred from the post of Chief Secretary to a suitable post which was equivalent to the post of Chief Secretary only in accordance with law and a declaration of equivalence under Rule 9 (1) of IAS (Pay) Rules was an essential sine qua non for transferring an incumbent holding the post of chief Secretary to any other ex cadre post.
Mr. Venugopal has contended that declaration of equivalence of a cadre post with a non cadre post is a statutory requirement under Rule 9(1) of IAS (Pay) Rules.
Such statutory requirement must be strictly complied with.
So long the declaration of equivalence made by the competent authority is not published in accordance with the procedure under Rule 9(1), no equivalence takes place and in the absence of equivalence, no cadre officer can be posted to a non cadre post.
Admittedly, the impugned order of transfer of the appellant was made on January 4, 1991 and the respondent No. 4 purported to assume the office of the Chief Secretary on January 4, 1991.
But the declaration of equivalence was made on 5.1.1991 i.e. after the impugned order of transfer.
Hence, the impugned order of transfer of the appellant is illegal on the face of it and subsequent declaration of equivalence cannot cure the invalidity of the order of transfer.
On this score alone the impugned order is liable to be quashed.
Mr. Venugopal has further contended that the Central Administrative Tribunal failed to appreciate that in reality the posts of Chief Secretary and Additional Chief Secretary were not inter changeable and declaration of equivalence made earlier had lost its force after the encadrement of the post of Additional Chief Secretary.
Mr. Venugopal has also submitted that it is not always possible and practicable to precisely establish mala fide in fact but the Court should draw reasonable inference from the pleadings whether there was any foundation of mala fide action.
Mr. Venugopal has contended that the appellant has given instances how he gradually incurred displeasure of the present Chief Minister when his suggestions for posting senior bureaucratic officers of the State G in key and sensitive positions, contrary to the desire of the Chief Minister, were not liked by the Chief Minister.
Mr. Venugopal has contended that the respondent No. 4 was found prima facie guilty of various administrative lapses of serious nature over the years.
During the regime of the previous Chief Minister of the State, Shri Veerendra Patil, enquiries had been conducted at a high level and recommendations were made for initiating departmental proceedings.
Unfortunately, before any formal order could be passed by the then Chief Minister, Shri Veerendra Patil, the Ministry was dissolved and the President 's rule was imposed.
Thereafter, the present Chief Minister came to head the Cabinet of the State.
The appellant as a Chief Secretary of the State was duty bound to place all the relevant files for appropriate directions of the Chief Minister so far as the respondent No. 4 is concerned.
When the appellant placed all the relevant files, it was only reasonably expected that the present Chief Minister would pass formal orders for initiating departmental proceedings against the respondent No. 4 but for inexplicable reasons, the present Chief Minister held back the files without passing any order.
Even in the matter of posting of Shri Alexander, Sri Sangmeswar and Sri Madhu, the appellant indicated cogent reasons relating to the posting; desired by the Chief Minister and normally reasonings indicated by the appellant were not expected to be over ruled by the Chief Minister in the interest of purity in administration.
But, unfortunately, such suggestions had been overruled by the Chief Minister.
Mr. Venugopal has contended that in the backdrop of the events disclosed in various subparagraphs, namely, paragraphs 6(1) to 6(q) of the petition made before the Tribunal it should have come to the finding that a case of malice in fact had been established prima facie and the respondents were under an obligation to dispel the reasonable inferences to be drawn by the Tribunal about the existence of malice in facts.
Unfortunately, the Tribunal has not considered the question in the proper perspective.
Mr. Venugopal has submitted that since the posting of respondent No. 4 as Chief Secretary was not directly challenged by the appellant and infraction of any statutory provisions could not be established by the appellant so far as the posting of respondent No. 4 is concerned, the Tribunal has proceeded on the footing that such posting, therefore, is not required to be interfered with and consequently the challenge to the transfer and posting of the appellant cannot also be sustained.
Mr. Venugopal has contended that such approach, to say the least, is unsatisfactory and requires a re thinking.
Mr. Venugopal has contended that when the former Chief Secretary went on leave prior to his retirement, the appellant 's case was considered and in view of his excellent track record over the past 33 years as a member of the Indian Administrative Service in the Karnataka cadre, the appellant was found to be most suitable candidate to hold the post of Chief Secretary and he was made the Chief Secretary.
Simply because the appellant was appointed as the Chief Secretary until further orders, such appointment and posting do not necessarily mean that he was holding the said post only as a stop gap measure.
Mr. Venugopal has contended that it is nobody 's case that the Government of Karnataka did not intend to appoint and post the appellant as Chief Secretary of the State and such posting was made only by way of a stop gap measure until suitable person could be selected and later on the respondent No. 4 was posted as Chief Secretary on appropriate consideration of the cases of all the eligible officers of the State.
Mr. Venugopal has contended that the order of transfer of the appellant and also the order of posting of respondent No. 4 had taken place simultaneously in undue haste even without making declaration of equivalence.
It only indicates that there had not been any bona fide and proper exercise to find out the most suitable person for the post of Chief Secretary in the normal way.
He has submitted that although no specific pleading was made by the appellant before the Tribunal that in order to find a berth for the respondent No. 4, the appellant was moved out against the interest of the administration and the respondent No. 4 was appointed as Chief Secretary of the State, there is sufficient material to indicate that the Chief Minister was bent upon to move out the appellant from the post of Chief Secretary who had always resisted improper suggestions of the Chief Minister in the better interest of the administration and to give effect to such improper decision not on the score of administrative exigencies or for public interest, the impugned order of transfer was made.
On the face of the adverse materials on record and the recommendations made by the appropriate Committee to initiate disciplinary proceedings against the respondent No. 4, there could not have been any administrative exigency to place the respondent No. 4 incharge of the highest Administrative office in the State.
Mr. Venugopal has submitted that mala fide in fact needs to be considered from the totality of the facts and circumstances by drawing reasonable inferences.
There cannot be a straight jacket formula to which every case of malice of fact can fit in.
Mr. Attorney General appearing with the Advocate General of the State of Karnataka for the respondents Nos. 1 and 3, namely, the State of Karnataka and the Chief Minister of Karnataka, has submitted that the post of Chairman, Karnataka Hyderabad Development Board was created on September 1, 1989 and the respondent No. 4 who was holding a very high and responsible office at the relevant time.
The respondent No. 4 is a very senior member of the Indian Administrative Service in the Karnataka cadre and admittedly senior to the appellant as a member of the Indian Administrative Service.
The said respondent No. 4 was appointed to the post of Chairman, Karnataka Hyderabad Development Board.
The said post was declared as equivalent to the post of Additional Chief Secretary on September 27,1989 when the said post was created.
Later on, on October 11, 1989, the said post of Chairman was re designated as Secretary, High Power Committee and ex officio Additional Chief Secretary to the Government of Karnataka.
Mr. Attorney General has contended that simply because adverse comments were made on the functioning of the respondent No. 4 when he was holding the post of Chairman of some other organisation or the Secretary, High Power Committee, there was no compelling necessity of by passing a very senior officer in the Indian Administrative Service cadre in the State.
Since the Cabinet and the Chief Minister had taken a decision to relieve the appellant from the post of Chief Secretary, there had been a necessity to find out a competent senior officer in the Indian Administrative Service Cadre in the State.
As no departmental proceedings had been pending against him, the Cabinet and the Chief Minister had taken a decision that Mr. Rao, respondent No. 4, being the senior most person in the Indian Administrative Service cadre in the State, having a long experience in different administrative set up and conversant with the problems of the State should be posted as Chief Secretary.
Such decision is not ex facie perverse and unjustified.
He has contended that even if it is assumed that instead of respondent No. 4, some other officer would have been selected for the post of Chief Secretary, such selection being a prerogative of the Cabinet and the Chief Minister, the appellant cannot question the correctness and propriety of the same.
The Central Administrative Tribunal is justified in its finding that there has not been any direct challenge to the appointment of the respondent No. 4 to the post of Chief Secretary and the appellant could not establish that any statutory rule has been violated in giving appointment to the respondent No.4 to the post of Chief Secretary.
Mr. Attorney General has also contended that the law is well settled after the decision of this Court in E.P. Royappa (supra) that it is the prerogative of the State Cabinet and the Chief Minister to select a person of their confidence to man the key post G of Chief Secretary in the State.
The only exercise which is required to be made by Court of law or a Tribunal is to find out whether in removing the holder of the post of Chief Secretary, any mala fide action has been taken.
The Tribunal, according to the learned Attorney General, is justified in holding that except making some vague allegations, no firm foundation has been laid by the appellant to warrant a finding that the impugned order of transfer Or the appellant is actuated by a malice in fact or malice in law.
A Mr. Attorney General has submitted that the Tribunal has indicated that the Chief Secretary had not been pulling on well with the Chief Minister of the State, and there had been differences of opinion on a number of matters from before.
If on such account, the Government and the Chief Minister felt that a man of their confidence should be posted as the Chief Secretary of the State so that there was a good rapport between the Chief Secretary and the Chief Minister and the Cabinet, no exception can be made and such decision being squarely within the prerogative of the Chief Minister and the Cabinet as indicated by this Court in no uncertain terms in Royappa 's decision, the Central Administrative Tribunal was justified in declining to interfere against the impugned orders.
Mr. Attorney General has contended that allegations of mala fide action on the part of the Chief Minister or the Cabinet must be substantiated by cogent materials and not by vague insinuations.
In the pleadings, the appellant has only indicated several instances showing how he assessed the facts in giving suggestions in the matter of posting of different top bureaucratic officers including respondent No. 4 and how his suggestions had not been ultimately accepted by the Chief Minister.
Such facts by no stretch of imagination establish a case of mala fide action of the State Government in transferring the appellant from the post of Chief Secretary.
Mr. Attorney General has contended that in order to overcome the decision of the Tribunal, on the pleadings made before the Tribunals, the appellant has attempted to introduce a new case in paragraph 20 of the special leave petition by setting up the appointment of respondent No. 4 as both proof and result of the 4 Chief Minister 's mala fides.
To make it a triable issue, ground 'k ' has been taken in the special leave petition.
But introduction of a new case for the first time before this Court by way of embellishment cannot be permitted.
He has contended that the said new case is far from truth and is an after thought deserving outright rejection.
Mr. Attorney General has also contended that by virtue of holding a particular administrative position, an incumbent of the post may have the privilege to have the reports of other senior bureaucratic officers routed through him under the prevalent rules of business.
Such facts alone do not establish that such post is superior to other post.
If there has been a declaration of equivalence under Rule 9(1) of IAS (Pay) Rules, the post must be held to be equivalent irrespective of the fact that because of the rules of business one of the two equivalent posts enjoys some advantage or privilege.
Mr. Attorney General has contended that the declaration in 1980 was made under Rule 9(1) of IAS (Pay) Rules to the effect that the post of Additional Chief Secretary which was then an ex cadre post was equivalent to the post of Chief Secretary.
Although, subsequently the post of Additional Chief Secretary was encadred, the declaration of equivalence has not lost its force as sought to be contended by Mr. Venugopal.
Mr. Attorney General has contended that even assuming that after the encadrement there was no further scope of declaring equivalence, the fact remains that there had been appreciation and understanding of the State Government about the importance of the two posts and factual assessment of equivalence of the two posts.
He has contended that in any event, such question has become academic in the instant case because pursuant to the Cabinet decision, an exercise was made on January 4, 1991 to declare the post of Secretary, High Power Committee, as equivalent to the post of Chief Secretary itself so that there may not be any occasion for the appellant to feel stifled.
Such decision had taken place prior to the impugned order of transfer but the publication could not be made on the same day, namely, January 4, 1991 but such publication of equivalence under Rule 9 (1) was made on the very next day, namely, on January 5, 1991.
Mr. Attorney General has contended that publication on the next day docs not invalidate the factum of declaration made on January 4, 1991.
Such publication being a requirement of statute has been complied with and the publication has been made in order to give effect to the decision of declaring equivalence already taken.
Mr. Attorney General has contended that it has been specifically stated by the Chief Minister in his affidavit in opposition that declaration of equivalence was made on January 4, 1991 prior to the impugned order.
Mr. Attorney General, has also submitted that even if it is assumed that the publication of declaration of equivalence was made on January 5, 1991 but the impugned order of transfer was made on January 4, 1991, and by that process there has been violation of Rule 9(1) of IAS (Pay) Rules, such violation is a mere technical violation for which no interference by this Court is called for.
He has submitted that Central Administrative Tribunal was justified in coming to the finding that no real injury was caused to the appellant for such technical violation, even if any, and as such no interference was called for by the Tribunal against the impugned order of transfer.
Mr. Attorney General has contended that interference under Article 136 of the Constitution is not a matter of course.
Such interference is required to be made if it conforms both to equity and law.
In the facts and circumstances of the case, the appellant has not been able to make out any case for such interference within the discretionary remedy of this Court and the appeal should, therefore, be dismissed.
Mr. Attorney General has also submitted that the appellant is guilty of suppression of material facts.
After the impugned order of transfer, in view of some statements made by the appellant to the Press against Chief Minister, a decision was taken to initiate disciplinary proceeding against the appellant and he was placed under suspension.
Such suspension was challenged by the appellant before the Central Administrative Tribunal, Bangalore, in Application No. 78 of 1991 and an interim order of stay of the order of suspension was passed in the said proceeding, but subsequent to the filing of the instant special leave petition before this Court, the interim order of stay was vacated by the Administrative Tribunal.
In the aforesaid facts, the factum of suspension was required to be disclosed by the appellant.
Mr. Attorney General has contended that for suppression of material facts, this Court should refuse to interfere in this appeal and should dismiss the same.
He has also contended that in view of order of suspension, the appellant, in any event, cannot be permitted to hold or continue to hold the post of Chief Secretary.
After considering the respective contentions of the learned counsels appearing for the parties, it appears to us that the appellant has not been able to lay any firm foundation warranting a finding that the impugned order Of transfer was passed mala fide and/or for an oblique purpose in order to punish the appellant and/or to humiliate him.
The pleadings of the appellant before the Central Administrative Tribunal only indicate that some of his suggestions in the matter of posting of senior bureaucratic officers of the State had not been accepted by the present Chief Minister of the State.
Such facts alone do not constitute any foundation for a finding that because the appellant was not agreeable to oblige the Chief Minister by accepting all his suggestions and putting up notes to that effect, he had incurred the displeasure of the Chief Minister and the impugned orders had been passed not on administrative exigencies but only to malign the appellant and to humiliate him.
It may not always be possible to demonstrate malice in fact with full and G elaborate particulars and it may be permissible in an appropriate case to draw reasonable inference of mala fide from the facts pleaded and established.
But such inference must be based on factual matrix and such factual matrix cannot remain in the realm of insinuation, surmise or conjecture.
In the instance case, we are unable to find that there are sufficient materials from which a reasonable inference of malice in fact for passing the impugned order of transfer can be drawn.
It is an admitted position that the Chief Secretary and the Chief Minister had differences of opinion on a number of sensitive matters.
If on that score, the Cabinet and the Chief Minister had taken a decision to relieve the appellant from the post of Chief Secretary and post a very senior officer of their confidence to the post of Chief Secretary, it cannot be held that such decision is per se illegal or beyond the administrative authority.
The position in this regard has been well explained in Royappa 's case by this Court.
So far as the other contention of the appellant, namely, invalidity of the impugned order of transfer for want of declaration of equivalence under Rule 9(1) of IAS (Pay) Rules is concerned, it may be indicated that there had already been a declaration when the re designated post of Secretary, High Power Committee, was established that the said post was equivalent to the post of Additional Chief Secretary.
It is the positive stand of the State Government that the posts of Chief Secretary and the Additional Chief Secretary are equivalent.
But in the instant case, it is also not necessary to decide the question in detail as to whether in reality both the said posts are not equivalent as sought to be contended by Mr. Venugopal.
It appears to us that prior to the impugned orders, a decision to declare the post of Secretary, High Power Committee, equivalent to the post of Chief Secretary of the State had been taken.
Since the impugned order of transfer was implemented with immediate effect, the formal publication could not be made on the very same day but was made on January 5, 1991, namely, on the very next day.
It appears from the records that the decision to declare equivalence was taken prior to the impugned order of transfer and the formal publication by way of statutory requirement was made in order to give effect to the decision to declare equivalence already taken.
In such circumstances, we do not think that the formal declaration made on January S, 1991 invalidates the impugned order of transfer.
The Tribunal is justified in holding that infraction, even if any, in making publication formally on January S, 1991, is only a technical violation for which no interference is called for.
In the result, we do not find any reason to interfere with the impugned decision of the Central Administrative Tribunal and the appeal, therefore, fails and is dismissed but without any order as to costs.
| IN-Abs | The appellant was appointed to the Indian Administrative Service (KARNATAKA Cadre) in 1957, and on May 5, 1990 he was holding the post of Additional Chief Secretary to the Government of KARNATAKA, and by a Notification dated May 5, 1990 was appointed a Chief Secretary to the KARNATAKA Government until further orders.
In the State of KARNATAKA there was originally one post of Chief Secretary to the Government.
An ex cadre post of Additional Chief Secretary was created with a declaration under Rule 9(1) of IAS (Pay) Rules that the status and responsibilities of the said post were equivalent to the cadre post of Chief Secretary, and this post was thereafter encadred by Notification dated January 30, 1987 with the same pay as of the post of Chief Secretary.
The post of Secretary, High Power Committee, was created by the State Government of Karnataka in 1989 with the designation Chairman, Hyderabad, Karnataka Development Board by order dated September 27, 1989, and was declared equivalent to the status and responsibilities to the cadre post of Additional Chief Secretary under Rule 9 of IAS (Pay) Rules.
The posts of Chief Secretary, Secretary, High Power Committee and Additional Chief Secretary thus carried equal pay.
On January 3, 1991, the Cabinet Government of Karnataka took a decision to the effect that a change of the Chief Secretary should be effected, and pursuant thereto, the Chief Minister on January 4,1991 took the following three decisions, and passed consequential orders viz; (i) declaring that the post of Secretary, High Power Committee, was equivalent in status and responsibilities to the post of Chief Secretary to the Government, (ii) transferring the appellant, to the post of Secretary, High Power Committee with immediate effect, and (iii) appointing the 4th respondent, who was senior to the appellant to the post of Chief Secretary to the Government.
The Notification giving effect to the above orders of transfer was issued on January 4, 1991 but the authenticated Government order declaring the equivalent of the two posts under Rule 9 of lAS (Pay) Rules, was issued on the next day, viz; January 5, 1991.
The appellant made an application before the Central Administrative Tribunal, Bangalore for quashing the order dated January 4, 1991 transferring and posting him as Secretary, High Power Committee for Development of Hyderabad, Karnataka area, Bangalore, and for a direction to allow him to continue as the Chief Secretary.
The order was challenged mainly on two grounds: (1) that such order was not passed bona fide for the exigencies of the administration but the same was passed mala fide by the Chief Minister of Karnataka who became displeased with the appellant on account of his unfavourable attitude and resistance to some of the proposals of the Chief Minister in the matter of posting of senior officers of the State to different posts, and (2) that the transfer order was vitiated because of non compliance of the procedural formalities for a valid transfer of the appellant as there was no declaration under Rule 9(1) of IAS (Pay) Rules, 1954 that the post of Secretary, High Power Committee was equivalent to the post of Chief Secretary.
The respondents viz; State of Karnataka, the Chief Minister as also respondent No. 4 denied the allegations relating to the malice of facts and contended that they were mischievous, malicious, scandalous and vexatious and such allegations were deliberately made to malign the respondents, and contended that the post of Secretary, High Power Committee, was equivalent to the post of Additional Chief Secretary and such declaration had been made long back, and the post of Additional Chief Secretary and the post of Chief Secretary were also equivalent and interchangeable, and that the appellant can have no grievance against the said orders of transfer, and that there is also no occasion to contend that the declaration, required as under Rule 9(1) of IAS (Pay) Rules had not been made.
The Central Administrative Tribunal after considering the facts and circumstances came to the finding that the freedom to choose a person as the Chief Secretary to the liking of the Chief Minister and the Cabinet on whom there is absolute confidence, is undisputed prerogative, and such decision becomes unassailable when it is made in bona fide manner following the statutory formalities applicable to such selection and appointment, and that the appellant had no subsisting right to remain as Chief Secretary and it was the prerogative of the Chief Minister and the Cabinet to take a decision to appoint a person to the post of Chief Secretary.
The Tribunal also held that the appellant had failed to establish that he had been transferred with the ulterior motive of placing him in a lower post and thereby permanently preventing him from continuing in the position and status of Chief Secretary.
The application was accordingly dismissed.
Aggrieved by the aforesaid order of dismissal the appellant appealed to this Court by Special leave and contended that the declaration of equivalence under Rule 9(1) of IAS (Pay) Rules, 1954 is an essential statutory requirement and without such declaration of equivalence no member in the cadre of IAS can be transferred to a non cadre post, and after encadrement of the post of Additional Chief Secretary the declaration of equivalence which was made earlier lost its force, and that equivalence is referable only to an ex cadre post and ex hypothesi declaration of equivalence cannot come in inter se posts within the cadre.
It was also submitted that the order of transfer of the appellant and also the order of posting of respondent No. 4 had taken place simultaneously in undue haste even without making a declaration of equivalence and this only indicates that there had not been any bona fide and proper exercise to find out the most suitable person for the post of Chief Secretary in the normal way.
The Attorney General appearing with the Advocate General of the State of Karnataka for respondent Nos. 1 and 3, namely, the State of Karnataka and the Chief Minister of Karnataka, opposed the appeal and submitted that the post of Chairman, Karnataka Hyderabad Development Board was created on September 1, 1989 and respondent No. 4 was holding a very high and responsible office at the relevant time, and senior to the appellant as a member of the Indian Administrative Service, and that since the Cabinet and the Chief Minister had taken a decision to relieve the appellant from the post of Chief Secretary, there had been a necessity to find out a competent senior officer in the Indian Administrative Service Cadre in the State, that as no departmental proceedings had been pending against him the Cabinet and the Chief Minister had taken a decision to appoint Respondent No. 4 being the seniormost person in the Indian Administrative Service cadre in the State, having a long experience in different administrative set up and conversant with the problems of the State as Chief Secretary, and such decision is not ex facie perverse and unjustified.
Dismissing the appeal, this Court, HELD: 1.
The appellant has not been able to lay any firm foundation warranting a finding that the impugned order of transfer was passed mala fide and/or an oblique purpose in order to punish the appellant and/or to humiliate him.
[387 E] In the instant case, the pleadings of the appellant before the Central Administrative Tribunal only indicate that some of his suggestions in the matter of posting of senior bureaucratic officers of the State had not been accepted by the present Chief Minister of the State.
Such facts alone do not constitute any foundation for a finding that because the appellant was not agreeable to oblige the Chief Minister, he had incurred the displeasure of the Chief Minister and the impugned orders had been passed not on administrative exigencies but only to malign the appellant and to humiliate him.[387 F] 2.
It is an admitted position that the Chief Secretary and the Chief Minister had differences of opinion on a number of sensitive matters.
If on that score, the Cabinet and the Chief Minister had taken a decision to relieve the appellant from the post of Chief Secretary and post a very senior officer of their confidence to the post of Chief Secretary, it cannot be held that such decision is per se illegal or beyond the administrative authority.
[388 B] 3.
It may not always be possible to demonstrate malice in fact with full and elaborate particulars and it may be permissible in an appropriate case to draw reasonable inference of mala fide from the facts pleaded and established.
But such inference must be based on factual matrix and such factual matrix cannot remain in the realm of insinuation, surmise or conjecture.
[387 G] 4.
So far invalidity of the impugned order of transfer for want of declaration or equivalence under Rule 9(1) of IAS (Pay) Rules is concerned, it is indicated that here had already been a declaration when the re designated post of Secretary, High Power Committee, was established that the said post was equivalent to the post of Additional Chief Secretary.
It is the positive stand of the State Government that the post of Chief Secretary and the Additional Chief Secretary are equivalent.
[388 C D] 5.
Prior to the impugned orders, a decision to declare the post of Secretary, High Power Committee equivalent to the post of Chief Secretary of the State had been taken.
Since the impugned order of transfer was implemented with immediate effect, the formal publication could not be made on the very same day but was made on January 5,1991, viz., on the very next day.
In such circumstances the formal declaration made on January 5,1991 does not invalidate the impugned order of transfer.
[388 E Fl E.P. Royappa vs State of Tamil Nadu, AIR 1974 S.C. 555, relied on.
|
ion would meet the re quirement and at the end of such period the scheme is ex pected to become effectively operative.
The Tamil Nadu Board may undertake the supervision from January 1992, and it is directed that the State Government and the said Board to coordinate the implementation.
The Secretary of the Tamil Nadu Board who would be mainly in charge of the field job shall be paid by the State Government a sum of Rs.1,500 per month from January 1992, as an allowance to meet out of pocket expenses for the period he does the work as Secretary of the Board.
[362 G, H, 363 A] & ORIGINAL JURISDICTION: Writ Petition (Civil) No. 1262 of 1987 WITH Writ Petition (Civil) No. 13064 of 1983.
(Under Article 32 of the Constitution of India).
Har Dev Singh and R.K. Agnihotri for the Petitioners.
Raju Ramachandran, R.Mohan, Ms Shanta Vasudeva, P.K.Manohar, K.Swamy, Ms.
A.Subhashini and R.C.Kohli for the respondents.
360 The Judgment of the Court was delivered by RANGANATH MISRA, CJ.
A letter petition received from the District Beedi Worker 's Union, Tirunelveli in the State of Tamil Nadu was treated as an application under Article 32 of the Constitution and notice was ordered intially to three factories referred to in the said letter and later to other beedi manufacturing units within the State.
In the letter, complaint was made about manipulation of records regarding employees, non payment of appropriate dues for work taken, failure to implement the provisions of the labour laws, prevalence of contract labour system etc.
There is a connected petition also relating to the same subject matter with different ancillary reliefs covering employment of child labour and the non implementation of the Beedi and Cigar Workers (Conditions of Employment) Act, 1956.
We have considered it appropriate to deal with both the applications together.
This Court by an Order dated 24th October, 1989 appointed a social organisation by name 'Society for Community Organisa tion Trust (SOCCO) ganisation for making appropriate investigation and circuated the State to the court.
After the Report was received an were given time to file their respones Tamil Nadu and the manu facturers were given time to file their response by way of affidavits.
This Court then directed that a scheme should be formulated for for consideration of the Court.
This court made an Order on 24th July, 1991 to the following effect.
"We gather from the submissions made at the bar that in the meantime some exercise has been undertaken for the purpose of finalising the Scheme.
Initially the state of Tamil Nadu has taken the lead but later Union of India has also go interested and meeting on a bigger ,scale for the purpose of finalising the Scheme is being arranged.
The attorney General is present in Court today.
We have also suggested to him that he may par ticipate in the proceedings to help the schem to be finalised as quickly as possible.
" Then came two Schemes, one by the petitioners and the other by the State of r Thamil Nadu.
By order dated October 8, 1991, the Court directedon the basis of consent of counsel that at a conference the terms should be settled for one Scheme to be adopted by the Court.
On 10 th October, 1991, on the representation of the parties, the Court made the following Order: "Pursuant to our earlier direction, the em ployers, employees and the State Government through their representatives met 361 and have sorted out, some of the differences.
Matters which are agreed to by all.
and as pects which are not agred to by the employers have been seperately shown.
A copy of this may be served on counsel for the Union of India present in the court today and he is given three weeks ' time to indicate the responses.
The appropriate Ministry of the Government of india to respond to the relevant aspects.
" Pursuant to this Order, the Under Secretary in the Minis try of Labour of the Union Government has filed an affidavit which we have examined.
The objection which have.
been especially refered to in the affidavit of the Central Government do not really surive after the matter is heard inasmuch as these are questions with which the union Government in not concerned and Under the constitutional scheme they relate to the power of the State Government.
w,e would like ' to dispose of these petitions with the following directions taken from the scheme as formulated by the petitioners and the State Government, 1.
The Beedi and Cigar Workers (Conditions of Employment) Rules 1969 should be strictly implemented ,and once that is done the evil of not furnishing the books to the home workers would be eradicated.
An establishment of the Regional Provident Fund Commissioner with full 'equipment for the purpopose of implementation of the Statute should be located within the area and the Regional Provident Fund commissioner should have directionS to enforce the Act in all aspects.
This establishment should start functioning within three months from now.
The labour laws as also the Beedi and Cigar Workers (Conditions of Employment) Act should be strictly enforced so that the workers get their legitimate dues and the conditions of employment improve.
Tobacco manufacturing has indeed health hazards.
Child labour in this grade should theirfore be prohibited as far as possible and employment of child labour should be stopped either immediately or in a phased manner to be decided by the State GovernmeAts Out within a perioed not exceeding three years from now.
The provisions of Child Labour Abolition Act, 1986 should be strictly imple mented.
362 5.
Contract labour system, it is alleged, is indispensable this trade.
The Union Government is directed look into this aspect of the matter and take its final decision one way or the other within six months from now.
Beedi trade is a flourishmg one.
Exploi tation of labour is rampant in this trade.
A governmental labour establishment should be located in the area with full complement to answer the requirements of the matter.
Since beedi manufacturing process is carried more outside the factory than within, the system of maintaining the registers as a regulating practice has become necessary.
Great care should, therefore, be taken to ensure the maintenance of the register system as the bulk of the employees outside the factories can be regulated only through the record maintained in the registers.
The and the which contain beneficial provisions should be implemented in the true spirit and since they are legislations of the Central Government, the machinery of the Central Government should be made operational in the area.
Grievance has been made that the pass books are not maintained in the names of actual workers.
This should be ensured.
The Welfare Fund should be properly administered after and in the case of death of a workman appropriate assistance should be extended out of the Fund quickly.
In view of the health hazard involved in the manufacturing process, every worker in cluding children, if employed, should be insured for a minimum amount of Rs.50,000 and the premium should be paid by the employer and the incidence should not be passed on to the workman.
We are of the view that the implementation of the scheme within the state in an effective manner would require to be supervised by an independent external agency.
The Tamil Nadu State Legal Aid & Advice Board can be entrusted with this responsibility.
A three year period of such supervision, in our opinion, would meet the requirement and at the end of such period the scheme is expected to become effectively operative.
We, therefore, require the Tamil Nadu Board to undertake the super. 363 vision from January, 1992 and we direct the Tamil Nadu Government and the said Board to coordinate the implementa tion.
The Secretary of the Tamil Nadu Board Mr. Raja, who would be mainly in charge of the field job shall be paid a sum of Rs. 1,500 (fifteen) per month from January 1992, as an allowance to meet out of pocket expenses by the State Government for the period he does the work as Secretary of the Board.
We dispose of these cases with the directions indicated above and hope and trust that the authorities as also the employers and the employees would try to implement the directions in true spirit.
Liberty to apply.
G.N. Petitions disposed of.
| IN-Abs | These petitions relate to child employment, prevalence of contract labour system and the non implementation of .
This Court considered the petitions and appointed a Trust viz., Society for Community Organisation Trust for conducting appropriate investigation and to submit a report.
The Trust submitted its report, which was then circulated to the Respondent State Government and the beedi manufacturers.
On the direction of this Court for formulating a scheme, two Schemes cameto be formulated, one by the State Govern ment and the other by the petitioners.
This Court directed that the terms should be settled for one Scheme to be accept ed by the Court, and given time to the Union of India to respond to the same.
Union of India filed certain objec tions.
Rejecting the objections and disposing of the petitions, this Court, 358 HELD: 1.1 The Beedi and Cigar Workers (Condition of Employment) Rules, 1968 should be strictly implemented and once that is done the evil of not furnishing the books to the home workers would be eradicated.
[361 D, E] 2.
An establishment of the Regional Provident Fund Commissioner with full equipment for the purpose of imple mentation of the Statute should be located within the area and the Regional provident Fund Commissioner should have directions to enforce the Act in all aspects.
This estab lishment should start functioning within three months from now.
[361 E, F] 3.
The labour laws as also the should be strictly enforced so that the workers get their legitimate dues and the conditions of employment improve.
[361 F G] 4.
Tobacco manufacturing has indeed health hazards.
Child labour in this trade should therefore be prohibited as far as possible and employment of child labour should be stopped either immediately or in a phased manner to be decided by the State Government but within a period not exceeding three years from now.
The provisions of Child Labour Abolition Act, 1986 should be strictly implemented.
[361 G, 11] 5.
The Union Government is directed to look into the aspect whether contract labour system is indispensable in this trade and take its final decision one way or the other within six months from now.
[362 A] 6.
Beedi trade is a flourishing one and exploitation of labour is rampant in this trade.
A governmental labour establishment should he located in the area with full com plement to answer the requiretenants of the matter.
[362 F] 7.
Sincc Beedi manufacturing process is carried more out side the factory than within, the system of maintaining the registers as a regulating practice has become necessary.
Great care should, there fore be taken to ensure the maintenance of the register system as the bulk of the employees outside the factories can be regulated through the record maintained in the registers.
[362 C] 8.
The and the Beedi 359 Workers Welfare Fund Act, 1976 which contain beneficial provision should be implemented in the true spirit and since they are legislations of the Central Government, the machin ery of the Central Government should be made operational in the area.
[362 D] 9.
It should be ensured that pass hooks are maintained in the names of actual workers.
[362 E] 10.
The Welfare Fund should be properly administered and in the case of death of workman appropriate assistance should be extended out of the Fund quickly.
[362 E, F] 11.
In view of the health hazard involved in the manu facturing process, every worker including children, if employed should be insured for a minimum amount of Rs.50,000 and the premium should be paid by the employer and the incidence should not be passed on to the workman.
[362 F] 12.
The implementation of the scheme within the State in an effective manner would require to be supervised by an independent external agency.
The Tamil Nadu State Legal Aid
|
Civil Appeal No. 8244 of 1983.
From the Judgment and Order dated 22.7.1980 of the Kerala High Court in Second Appeal No. 171 of 1976.
E.M.S. Anam of the Appellants N. Sudhakaran for the Respondents.
The Judgment of the Court was delivered by R.M. SAHAI, J.
Whether a junior member of the Tarwad, in Kerala, who redeems the mortgage and is in possession for more than 50 years is a `mortgagee holding the land comprised in a mortgage ' so as to acquire rights of tenant of tenant under Section 4(A) of the Kerala Land Reforms Act, is the legal issue that arises for consideration in this appeal, by successors of other members of the Tarwad who suit for partition was dismissed in second appeal by the High Court.
In the year 1045 (1870) a mortgage was executed by the Karnavan (akin to Manager) of the Tarwad, (somewhat like a joint family).
Two junior members, of the Tarwad, paid the amount in the year 1061 (1886), got the property released, obtained possession and they or their descendants continued in possession as such.
In 1967 a suit for partition was filed by sucessors, of other member of the Tarwad, in whose favour equity of redemption, of the land in suit, was transferred in a family partition in 1962.
The suit was resisted amongst others on acquisition of right of tenant under Section 4(1)(a) of the Land Reforms Act.
Since there was no dispute on basic facts, namely, redemption of mortgage by two junior members and their continuance in possession for more than fifty years on the date Section 4(1)(a) was added to the Land Reforms Act the rights of parties were decided, more, as a matter of law.
According to the trial court and first appellate court the junior members, as a result of getting the property released, were holder of special right under Marumakkathayam Law.
They could not be held to be mortgagee, therefore, they did not acquire any right under the Land Reforms Act.
But the High Court held otherwise, mainly because in 1962 when the Tarwad was partitioned the property was treated as under mortgage since equity of redemption for the same was given to the plaintiff appellant.
It was found that, even, in the plaint it was averred that in consequence of release the mortgagee right vested in the predecessor of defendants who were junior members of the Tarwad.
The High Court, therefore, held that the defendants being assignee of mortgage in possession for fifty years, on the date the Land Reforms Act was amended and Section 4(1)(a) was added by Act XXXV of 1969, were entitled to rights as tenants.
The High Court, thus, accepted the claim of defendants because the member of the Tarwad treated the mortgage to be continuing on the date the suit was filed.
This, apart, it was held that junior member of the Tarwad paying off the debt of Tarwad becomes a mortgagee of the excess share in his own right.
But this enunciation, of law, was not accepted, as correct by a division bench of the Kerala High Court itself in Raghavan Nair vs Anandavally Amma, The question, therefore, is if a junior member of the Tarwad who redeems the properly, and gets release, is holder of special right only or he steps into the shoes of mortgagee.
Nature of right of a junior member in the Tarwad, a family corporation, in which every member male or female possesses equal right has been explained by this Court in Kochuni vs States of Madras & Kerala, ; at 1099, thus: " The incidents of a tarwad are so well settled that it is not necessary to consider the case law, but it would be enough if the relevant passages from the book "Malabar and Aliyasanthana Law" by Sundara Aiyar are cited.
The learned author says at p.7 thus: "The joint family in a Marumakkathayam Nayar tarwad consists of a mother and her male and female children, and the children of those female children, and so on.
The issue of the male children do not belong to their tarwad but to the tarwad of their consorts.
The property belonging to the tarwad is the property of all the males and females that compose it.
Its affairs are administered by one of those persons, usually the eldest male, called the karnavan.
The individual members are not entitled to enforce partition, but a partition may be effected by common consent.
The rights of the junior members are stated to be (1) if males, to succeed to management in their turn, (2) to be maintained at the family house, (3) to object to an improper alienation or administration of the family property, (4) to see that the property is duly conserved, (5) to bar an adoption, and (6) to get a share at any partition that may take place.
These are what may be called effective rights.
Otherwise everyone is a proprietor and has equal rights.
" One of the rights according to this decision which vests in the junior member is to see that the property is duly conserved.
Such a right, obviously, includes a right to redeem the property by paying the debts outstanding against the Tarwad.
It is an incidence of co ownership or co proprietorship which flows from the nature of Tarwad.
But whether the person who thus conserves the property steps into shoes of mortgagee and holds the same rights and interests or he is a surety holding the property on behalf of the Tarwad subject to right of contribution has to be decided on general principles of mortgage as the customary law of Tarwad does not throw any light on it.
Mortgage has been defined in Section 58 of the as transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced.
The definition brings out clearly the nature of mortgage.
It was understood and followed in same sense, even, before the Act came into force.
In Gopal vs Parsotam 1883 5 All. 121.
137 F.B. it was observed : "Mortgage as understood in this country cannot be defined better than by the definition adopted by the Legislature in section 58 of the (IV of 1882).
That definition has not in any way altered the law, but, on the contrary, has only formulated in clear language the notions of mortgage as understood by all the writers of text books on Indian mortgages.
Every word of the definition is borne out by the decisions of lndian Courts of Justice.
" It was not different where customary law prevailed.
Even in customary Marumakkathayam Law, governing section of people inhabiting the West Coast, the law of mortgage was understood in no different sense.
Since the transfer in a mortgage is, only, of interest and not of the entire right and title, as takes place in sale, the mortgagor and the mortgagee can transfer or assign their interest.
A mortgagor may assign or transfer the equity of redemption or may even create second mortgage.
Similarly a mortgagee may assign his interest or create another mortgage.
What happens when a mortgagee assigns his interest in favour of another person? Since an assignor can pass interest that he has, the assignee becomes holder of the same interest that a mortgagee has.
In other words, he steps into the shoes of the mortgagee.
Can the same be said where a co mortgagor or anyone on behalf of mortgagor authorised under law, pays the amount and brings to an end the interest the mortgagee had? Mortgage is creation of an interest in the property for payment of debt.
Once the mortgage debt is discharged by a person beneficially interested in equity of redemption the mortgage comes to an end by operation of law.
Consequently the relationship of mortgagor and mortgagee cannot subsist.
What then is the status of a person paying off debt to secure the property either with consent of others or on own volition? In law he becomes the owner, entitled to hold and possess the property.
But in equity the right is to hold the property till he is reimbursed.
In other words, he may hold the property in surety or he may bring the claim for contribution.
In Ganeshi Lal vs Joti Pershad, ; , it was held; ".
Equity insists on the ultimate payment of a debt by one who in justice and good conscience is bound to pay it and it is well recognised that where there are several joint debtors, the person making the payment is a principal debtor as regards the part of the liability he is to discharge and a surety in respect of the shares of the rest of the debtors. " Similarly the co mortgagor whose share has been got redeemed is entitled, in equity, to get possession over his share of property on payment of the amount of his share.
In Valliamma Champaka Pillay vs Sivathanu Pillay & Ors., [1980] I SCR 354 the principle was explained thus: "From what has been said above it was clear that where the is not in force and a mortgage with possession is made by two persons, one of whom only redeems discharging the whole of the common mortgage debt, he will, in equity, have two distinct rights: Firstly, to be subrogated to the rights of the mortgagee discharged, vis a vis the non redeeming co mortgagor, including the right to get into possession of the latters portion or share of the hypotheca.
Secondly, to recover contribution towards the excess paid by him on the security of that portion or share of the hypotheca, which belonged not to him but to the other co mortgagor.
It follows that where one co mortgagor gets the right to contribution against the other co mortgagor by paying off the entire mortgage debt, a co related right also accrues to the latter to redeem his share of the property and get its possession on payment of his share of the liability to the former.
This corresponding right of the ' non redeeming ' co mortgagor, to pay his share of the liability and get possession of his property from the redeeming co mortgagor, subsists as long as the latter 's right to contribution subsists " But these rights in equity, either in favour of the person 2who discharges the debt or the person whose debt has been discharged, do not result in resumption of relationship of mortgagor and mortgagee.
Even under subrogation, a legal concept, meaning substitution, applied, on English Law principle, even earlier, inserted now as Section 92 in since 1929, the rights that are created in favour of a co mortgagor as a result of discharge of debt are 'so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems '.
What is the meaning of expression 'right as mortgagee '? Does a person who, in equity, gets subrogated becomes mortgagee? Or his rights are confined to foreclosure or sale? A plain reading of the section does not warrant a construction that the substitutee becomes a mortgagee.
The expression is, 'right as the mortgagee ' and not right of mortgagee.
The legislative purpose was statutory recognition of the equitable right to hold the property till the co mortgagor was reimbursed.
And not to create relationship of mortgagor and mortgagee.
The section confers certain rights on co mortgagor and provides for the manner of its exercise as well.
The rights are of redemption, foreclosure and sale.
And the manner of exercise is as mortgagee.
The word, 'as ' according to Black 's Legal Dictionary means, 'in the manner prescribed '.
Thus a co mortgagor in possession, of excess share redeemed by him, can enforce his claim against non redeeming mortgagor by exercising rights of foreclosure or sale as is exercised by mortgagee under section 67 of the .
But that does not make him mortgagee.
Therefore, a co mortgagor or a Junior member of the Tarwad who continued in possession over the excess share, got redeemed by him, could not be deemed to be mortgagee so as to acquire right under Section 4A(1)(a) of the Kerala Land Reforms Act.
Legal position explained above does not alter either because during partition equity of redemption in respect of property redeemed by junior members was transferred or because in the plaint it was claimed that mortgage subsisted.
None of these actions could effect the operation of law.
In the result this appeal succeeds and is allowed.
The judgment and order of the High Court is set aside and the order of the trial court decreeing the suit for partition is restored.
Parties shall bear their own costs.
N.P.V. Appeals allowed.
STATE bank of india and anr.
vs V. PARTHASARATHY ETC.
NOVEMBER 9, 1992 [KULDIP SINGH AND P.B. SAWANT, JJ.] Civil Services: State Bank of India Promotion to the post of Head Clerk Circular No. 42 Clause Three options Outside the city within city and within the same office Debarment on refusal of third and final offer Local Head Office and five other offfices to be considered as one Unit Final offer made in one such office Whether valid and debars the optees permanently on refusal to accept.
The appellant Bank issued Circular No. 42 containing an understanding reached with the Staff union laying down the policy for promotion of clerks to the post of Head Clerks.
As per clause 1(d) of the Circular the employees who decline to accept Head Clerk s post at a branch office outside the city in which they work, will have a further option when a vacancy arises at any one of the Bank 's offices within that city.
However, this was subject to the condition that at the material time there was no other senior employee who had similarly declined the post outside his branch office, in which case the senior most would have the first choice.
It was further provided that if an employee declines to accept the post of Head Clerk at an office within the same city, his case would be considered only when a vacancy arises at his office.
This was also subject to the condition that there was no senior employee similarly situated at the material time.
If the third and final offer is declined, there would be a permanent debarment of promotion.
Since there were six offices at the Madras Local Head Office, a common seniority was maintained and all the six offices were considered as one office, viz. local Head Office of which the other five offices were only parts.
The Respondents declined their first, second and final offers, though indisputably the final offer was made to them for being posted in an office forming part of the local Head Office.
Both the Respondents moved the High Court by way of Writ Petitions and the High Court took the view that the final offer made was not in the same office and so they were entitled to be posted as Head Clerks in the same office.
Being aggrieved by the said two decisions of the High Court, the appellant Bank preferred the present appeals.
On the question of interpretation of clause 1(d) of the circular in question: Allowing the appeals, this Court, HELD :1.
The High Court 's interpretation of cl. 1(d) of the Circular that the third offer made was not in the office where the Respondents were working and therefore their refusal to accept the post did not exhaust the third option and they were entitled to be posted as Head Clerks in the Office where they were working is incorrect in view of the fact that the local Head Office was split into six different offices which together constituted one unit.
By refusing to accept the third and final offer, the Respondents had clearly exhausted all the three options and had become permanently debarred from seeking promotion to the post of Head Clerk.
[366 E G] 2.
This Court does not intend to interfere with the appointment of the respondents to the post of Head Clerk in the Regional Office in the facts and circumstances of these matters which show that in one case a fortuitous appointment had arisen due to death of an employee within almost a month of the Respondent 's refusal to accept the offer, and in the other case, the Respondent has already been accommodated in the post of Head Clerk in the Regional Office itself.
However, this would not be treated as a precedent and this would not affect the interpretation of clause 1(d) of the Circular, placed by this Court.
[366 H; 367 A] CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
4799 4800 of 1992.
From the Judgments dated 4.3.1992 and 8.4.1992 in Madras High Court in W.P. No. 246/92 and W.A. No. 349 of 1992.
G. Ramaswamy Attorney General, K. Sankaran, A. Rangananthan and A.V. Rangam for the Appellants.
M.K. Ramamurthi, M.A. Krishnmoorthy, M.A. Chinnaswamy, H. Subramaniam and Ms. C. Ramamurthi for the Respondents.
Rajendra Sachhar, Ambrish Kumar and M.D. Pandey for the Inter vener.
The Order of the Court was delivered: Intervention application is allowed.
Leave granted.
Civil Appeal No. 4799 of 1992.
The controversy in this case is in a narrow compass.
The appellant Bank issued Staff Circular No. 42 containing an understanding reached with the Bank staff union laying down the policy for promotion of clerks to the post of Head Clerks.
Clause 1(d) of the said circular states as follows: Employees who decline to accept Head Clerk 's post at a Branch Office outside their place of service, i.e., outside their city, will again be offered the appointment only when a vacancy arises at any one of the offices within that city, provided that at the material time there is no other senior employees at that office who had earlier declined a posting outside his Branch, as a Head Clerk in which case the senior most employee will first be offered the appointment.
Also, if an employee declines to accept the post of a Head Clerk at an office within the same city, his case for appointment as Head Clerk will be considered only when a vacancy arises at his office, in the order of his seniority.
His case cannot be considered for a vacancy at any of the other offices in the city.
It will be apparent from the above provision of the said clause that those employees who decline to accept the Head Clerk 's post at a branch office which is outside the city in which they work will have a further option.
Such employees would be offered the post of Head Clerk again but only when a vacancy arises at any one of the Bank 's offices within that city.
This is of course subject to the condition that at the material time, there is no other senior employee who had similarly declined the post outside his branch office, in which case, the senior most would have the first choice.
The further provision of this rule and with which we are concerned in the present case is as follows.
If an employee declines to accept the post of Head Clerk at an office within the same city his case for appointment as Head Clerk would be considered only when a vacancy arises at his office.
This is also subject to the condition that there is no senior employee similarly situated at the material time.
If the third and the final offer for the post of Head Clerk is declined, there is a permanent debarment of the promotion.
One more thing necessary to be stated before we come to the facts of the present case is that the appellant Bank has a local Head Office at Madras.
In 1972, it was split into two the local Head Office and Madras Main Branch.
In 1976 77, there was a further splitting up of the local Head Office and the Main Branch and ultimately in 1979, the Madras Local Head Office was divided into following six offices as part of the same Head Office: "(i) Local Head Office (ii) Madras Main Branch (iii) Overseas Branch (iv) Regional Office, which is called Zonal Office (v) The Commercial Branch (vi) Siruthozhil Branch" 4.
There is no dispute that as far as the Clerks and the Head Clerks in all the six parts of the same local Head Office are concerned, a common seniority list is maintained.
The effect of the aforesaid arrangements for the purposes of the clause 1(d) is that "the employees" in the said clause means the employees in all the said six parts of the local Head Office.
In other words, if a vacancy for a Head Clerk occurred at any of the said six offices, it was considered to be a vacancy in one office, viz.
,the local Head Office of which the other five offices were only parts.
It appears that respondent Parthasarathy was working as a clerk in the Madras Regional Office (now called Zonal Office) which is, as will be clear from above, a part of the Local Head Office itself.
On 21st August, 1973, he was offered the post of Head Clerk at Deva Kottain which is outside Madras city.
This offer was declined by him.
On 1st July, 1980, he was offered the post of Head Clerk in the Sowkarpet branch office in the same city which was less than 2 kms, from his Regional office where he was working.
He declined the said offer too.
He was then entitled to be considered for posting as Head Clerk only in his office which meant in any of the six parts of the local Head Office, that being the third and the final offer that could be made to him.
The third offer was made to him for the post of Head Clerk at the Overseas branch, and that being part of the same local Head Office, he was bound to accept it.
However, he declined the third and the final offer also, and issued a lawyer 's notice to the Bank contending that the Overseas branch was different from the Regional office where he was working and, therefore, the offer given to him was contrary to the said clause 1(d).
The allegations made in the notice were of course denied by the bank.
On 6th September, 1983, one A. Nizamuddin who was working as Head Clerk in the Regional office passed away and that post became vacant.
On 24th September, 1983, the respondent filed a writ petition before the High Court for quashing the third and the final offer made to him on 4th August 1983, and for a direction for posting him in the Regional office where the vacancy had occurred.
The High Court took the view that the third offer made was not for the post of the Head Clerk in the same office where the respondent was working and, therefore, his refusal to accept the post did not exhaust the third option and he was entitled to the vacancy created by Nizamuddin 's death in the Regional office where the respondent was working.
We are afraid this interpretation is incorrect in view of the position explained above with regard to the local Head Office which was split into six different offices which together constituted one unit.
The respondent, when he was offered the third option in the Overseas branch, was offered the post in the same office where he was working, the Regional office being as much a part of the Head Office as the Overseas branch.
By refusing to accept the said third and the final offer, the respondent had clearly exhausted all his three options and had become permanently debarred from seeking promotion to the post of Head Clerk.
We, however, do not interfere with the appointment of the respondent to the post of Head Clerk in the Regional office in the facts and circumstances of the case which show that a fortuitous appointment had arisen within almost a month of his refusal to accept the offer.
This, however, will not be treated as a precedent nor does it affect the interpretation that we have placed on the clause 1(d) as above.
Civil Appeal No. 4800 of 1992 In this case also, the respondent Sampath was working as a Clerk in Madras Regional Office.
The first offer of the post of Head Clerk was made to him on 6th August, 1973 at Mudukulathur branch which is in Madras city.
This was declined by him.
On 12th May, 1980, he was given the second offer for the post of Head Clerk at Air Force Station branch, Tambaram which was in Madras city.
The third and final offer was made to him on 4th August, 1983 to the post of Head Clerk in the Stationery department of the Madras Local Head Office.
There is no dispute that Stationery department of the Local Head Offfice and the Regional Office form part of one unit, viz., Madras Local Head Office.
The respondent declined this offer as well, and on 23rd January, 1984 filed a writ petition in the High Court for quashing the third offer and for posting him in his office, viz., Regional Office as the Head Clerk.
The learned Single Judge of the High Court quashed the order making the third offer and allowed the petition following the earlier decision in Parthasarathy 's case with which we have dealt with earlier.
The Division Bench of the High Court also confirmed the order.
For the reasons we have given in C.A.No. 4799 of 1992, we are unable to accept the interpretation given by the High Court on clause 1(d) of Staff Circular No. 42.
However, if in the present case, the respondent has already been accommodated in the post of Head Clerk in the Regional Office itself, we do not intend to interfere with the same.
It is nonetheless made clear that it is the interpretation that we have placed on the said clause that will prevail and not the interpretation placed by the High Court.
With these observations, the appeals are allowed only to the extent that the interpretation placed by the appellant Bank on clause l(d) of the Staff Circular No. 42 is correct and the decision of the High Court on the point is incorrect.
There will be no order as to costs.
| IN-Abs | Two junior member of a Tarwad (somewhat like a joint family) redeemed a mortgage executed in 1870 by the Karnavan (akin to Manager) of the Tarwad.
They paid the amount in 1886, got the property released, obtained possession and they or their descendants continued in possession as such.
In 1967 a suit for partition was filed by sucessors, of other members of the Tarwad, in whose favour equity of redemption, of the suit land was transferred in a family partition in 1962.
The suit was resisted amongst others on acquisition of right of tenant under section 4A(1)(a) of the Kerala Land Reforms Act, 1964.
The trial court and first appellate court held that the junior members, as a result of getting the property released, were holders of special right under Marumakkathayam Law and they could not be held to be mortgages and, therefore, they did not acquire any right under the Land Reform Act.
The High Court, however, held that the junior member being assignee of mortgage in possession for fifty years, on the date the Kerala Land Reform Act, 1964, was amended and Section 4(1)(a) was added by Amendment Act of 1969, were entitled to rights as tenants, and thus, accepted the claim of junior members, because the members of the Tarwad treated the mortgage to be continuing on the date the suit was filed.
It also held that a junior member of the Tarwad, paying off the debt of Tarwad, became a mortgagee of the excess share in his own right.
Allowing the appeals of the sucessors of other members of Tarwad, this Court, HELD: 1.
A co mortgagor or a junior member of the Tarwad who continued in possession over the excess share, got redeemed by him, could not be deemed to be mortgagee so as to acquire right under Section 4A(1)(a) of the Kerala Land Reform Act, 1964.
This position does not alter either because during partition equity of redemption in respect of property redeemed by junior members was transferred or because in the plaint it was claimed that mortgages subsisted.
None of these actions could affect the operation of law.
[425 D E] 2.1 Mortgage is creation of an interest in the property for payment of debt.
Once the mortgage debt is discharged by a person beneficially interested in equity of redemption, the mortgage comes to an end by operation of law.
Consequently, the relationship of mortgagor and mortgagee cannot subsist.
[423 E, F] 2.2 In law, the status of a person paying off debt to secure the property either with consent of others or on own volition is that the becomes the owner, entitle to hold and possess the property.
But, in equity the right is to hold the property till he is reimbursed.
In other words, the may hold the property in surety or he may bring the claim for contribution.
Similarly, the co mortgagor whose share has been got redeemed is entitled, in equity, to get possession over his share of property on payment of the amount of his share.
But these rights in equity, either in favour of the person who discharge the debt or the person whose debt has been discharged, do not result in resumption of relationship of mortgagor and mortgagee.
[423 F, G; 424 B] 2.3 A plain reading of Section 92 of the does not warrant a construction that the substitutee become a mortgagee.
The expression is `right as the mortgagee ' and not right of mortgagee.
The legislative purpose was statutory recognition of the equitable right to hold the property till the co mortgagor was reimbursed.
And not to create relationship of mortgagor and mortgagee.
The section confers certain rights on co mortgagor and provides for the manner of its exercise as well.
The rights are of redemption, foreclosure and sale.
And the manner of exercise is as mortgagee.
The word, `as ' means, `in the manner prescribed '.
[425 B C] 2.4 A co mortgagor in possession of excess share redeemed by him can thus enforce his claim against non redeeming mortgagor by exercising rights or foreclosure or sale as is exercised by mortgagee under section 67 of the .
But that does not make him mortgagee.
[426 C D] Raghavan Nair vs Anandavally Amma, , approved.
Kochuni vs State of Madras Kerala, A.I.R. 1960 S.C. 1080; Ganeshi Lal vs Joti Pershad, ; and Valliamma Champaka Pillay vs Sivathanu Pillay & Ors.
, ; , referred to .
|
minal Appeal No. 667 of 1980.
From the Judgment and Order dated 31.7.1980 of the Allahabad High Court in Crl.
Appln.
No. 5296 of 1979.
M.V. Goswami for the Appellants.
Vishnu Mathur, A.S. Pundir and R.C. Verma for the Respondents.
The Judgment of the Court was delivered by SAWANT, J.
The admitted facts in the present case are as follows.
The suit property consists of house No. 336 of village Khonda, District Mathura.
The dispute with regard to the possession of the property arose between the appellants and the respondent Ramshri.
She filed an application under Section 145 of Criminal Procedure Code [Code] before the Sub Divisional Magistrate, Sadabad in which she claimed ownership of the suit property.
On 31st May, 1976, the learned Magistrate passed a preliminary order under Section 145 of the Code and thereafter on 22nd April, 1977 made an order of attachment under Section 146 directing that the attachment would continue till the competent civil court determined the rights of the parties with regard to the said property.
Against this order, a Revision being Cr.
Revision No. 27/1977 was filed by the appellants before the Sessions Judge who by his interim order dated 23rd April, 1977 stayed operation of the learned Magistrate 's order.
However, before the interim stay order could be communicated, the attachment had already been effected.
The learned Sessions Judge, therefore, again, by another interim dated 26th April, 1977 directed the police to restore the possession the property to the appellants from whom allegedly the possession of the property was taken.
The possession was restored to the appellants on 28th April, 1977.
The said Revision application was dismissed on 18th August, 1977.
Though, on account of the dismissal of the Revision, the order of attachment passed by the Magistrate revived, the learned Magistrate passed a fresh order dated 31st January, 1978 under Section 146 attaching the property in dispute.
Against the said order, once more a revision being Cr.
19/1978 was preferred by the appellants to the 5 Sessions Judge who on 2nd February, 1978 passed an order staying the fresh order of attachment passed by the Magistrate.
Thereafter, the appellants filed a suit for permanent injunction against the 1st Respondent and her husband, and in that claimed an interim injunction against them.
The trial court dismissed the application for interim injunction.
Against the order of dismissal, the appellant filed an appeal to the District Court, and the appellate court by its order dated 18th May, 1978, allowed the appeal and issued an interim injunction against 1st respondent and her husband.
Thereafter Cr.
Revision No. 19/1978 preferred by the appellant before the Sessions Judge was dismissed on 15th June, 1978 also on the ground that the civil suit was preferred by the Appellant.
Again, although the order of attachment stood revived and the order of interim injunction by the Civil Court still continued, the Magistrate on 25th July, 1978 passed another order attaching the property.
Against this third order of attachment passed by the Magistrate, a revision was filed by the Appellants before the Sessions Judge and the Sessions Judge by his order dated 26th July, 1978 stayed the order of attachment issued on 25th July, 1978, upto 10th August, 1978.
On 26th July, 1978, the appellant filed an application before the Magistrate for withdrawal of attachment on the ground that there was no apprehension of a breach of the peace.
On this application, on 17th October 1978, the Magistrate ordered withdrawal of attachment.
Against this order, the 1st Respondent filed revision being Cr.
180/78 before the Sessions Judge who dismissed the same on 14th May, 1979.
Respondent No. 1 thereafter, preferred an application under Section 482 of the Code before the High Court for quashing the order withdrawing the attachment and directing the attachment to continue.
The High Court by the impugned order took the view that it was not open to the learned Magistrate to withdraw the attachment till the competent Court had decided the matter finally and restored the attachment.
On these facts, two questions arise in this appeal viz. whether the High Court could entertain the second revision application in exercise of its inherent powers under Section 482 of the Code and whether the interpretation placed by the High Court on the provisions of Sections 145 and 146 of the Code is correct.
There is no doubt that the learned Magistrate had committed an error in passing the subsequent orders of attachment when the first attachment was never finally vacated and had revived the moment the revision application filed against it was dismissed by the learned Sessions Judge.
It appears that none of the parties including the Sessions Judge realised this error on the part of the Magistrate.
The learned Sessions Judge had also committed a patent mistake in entertaining revision application against the fresh orders of attachment and granting interim stays when he had dismissed revision application against the order of attachment earlier.
Let that be as it is.
The question that falls for our consideration now is whether the High Court could have utilised the powers under Section 482 of the Code and entertained a second revision application at the instance of the 1st respondent.
Admittedly the 1st respondent had preferred a Criminal Application being Cr.
180/78 to the Sessions Court against the order passed by the Magistrate on 17th October, 1978 withdrawing the attachment.
The Sessions Judge had dismissed the said application on 14th May, 1979.
Section 397 (3) bars a second revision application by the same party.
It is now well settled that the inherent powers under Section 482 of the Code cannot be utilised for exercising powers which are expressly barred by the Code.
Hence the High Court had clearly erred in entertaining the second revision at the instance of 1st respondent.
On this short ground itself, the impugned order of the High Court can be set aside.
However, since the High Court has also proceeded to interpret the provisions of Sections 145 and 146 of the Code, it has become necessary to set things right on that score as well.
We are afraid that the High Court has erred in holding that the order passed by the Sub Divisional Magistrate on 17th October, 1978 [17.9.78 (sic.)] withdrawing attachment, was without jurisdiction.
The provisions of Section 146 of the Code are clear in this respect.
The Section reads as follows: "146.
Power to attach subject of dispute and to appoint receiver.
(1) If the Magistrate at any time after making the order under sub section (1) of Section 145 considers the case to be one of emergency, or if he decides that none of the parties was then in such possession as is referred to in Section 145, or if he is unable to satisfy himself as to which of them was then in such 7 possession of the subject of dispute, he may attach the subject of dispute until a competent Court has determined the rights of the parties thereto with regard to the person entitled to the possession thereof: Provided that such Magistrate may withdraw the attachment at any time if he is satisfied that there is no longer any likelihood of breach of the peace with regard to the subject of dispute.
(2) When the Magistrate attaches the subject of dispute, he may, if no receiver in relation to such subject of dispute has been appointed by any Civil Court, make such arrangements as he considers proper for looking after the property or if he thinks fit, appoint a receiver thereof, who shall have, subject to the control of the Magistrate, all the powers of a receiver appointed under the Code of Civil Procedure, 1908 (5 of 1908): Provided that in the event of a receiver being subsequently appointed in relation to the subject of dispute by any Civil Court, the Magistrate [a] shall order the receiver appointed by him to hand over the possession of the subject of dispute to the receiver appointed by the Civil Court and shall thereafter discharge the receiver appointed by him: [b] may make such other incidental or consequential orders as may be just.
" It is obvious from sub section (1) of Section 146, that the Magistrate is given power to attach the subject of dispute "until the competent Court has determined the rights of the parties thereto with regard to the person entitled to the possession there or.
The determination by a competent Court of the rights of the parties spoken of there has not necessarily to be a final determination.
The determination may be even tentative at the interim stage when the competent Court passes an order of interim injunction or appoints a receiver in respect of the subject matter of the dispute pending the final decision in the suit.
The moment the competent Court does so, even at the interim stage, the order of attachment passed by the Magistrate has to come to an end.
Otherwise, there will be inconsistency 8 between the order passed by the civil court and the order of attachment passed by the Magistrate.
The proviso to sub section (1) of Section 146 itself takes cognizance of such a situation when it states that "Magistrate may withdraw the attachment at any time if he is satisfied that there is no longer any likelihood of any breach of peace with regard to the subject of dispute '.
When a civil Court passes an order of injunction or receiver, it is the civil Court which is seized of the matter and any breach of its order can be punished by it according to law.
Hence on the passing of the interlocutory order by the civil Court, it can legitimately be said that there is no longer any likelihood of the breach of the peace with regard to the subject of dispute.
The fact that the Magistrate can withdraw the order of attachment passed by him even during the pendency of the dispute in the civil Court is made further clear by the provisions of sub section (2) of Section 146.
When the civil Court appoints a receiver, the order of attachment passed by the Magistrate necessarily gives way to the order of the Civil Court appointing the receiver.
It is only when the civil Court does not appoint the receiver that the Magistrate may make arrangements for looking after the property or even appoint a receiver himself However, even when such a receiver is appointed and the civil Court subsequently appoints a receiver of its own, the Magistrate has to order the receiver appointed by him to hand over the possession of the subject in dispute to the receiver appointed by the civil Court and discharge the receiver appointed by him.
He has also to pass such other incidental or consequential orders as he thinks just.
Such order may include an order of withdrawal of the attachment in view of the seizure of the matter by the civil Court and the consequent want of apprehension of breach of the peace.
It is, therefore, not correct to say as held by the High Court that the property continues to remain under attachment of the Magisterial order till the rights of the parties are decided finally by the competent Court of law.
That appears to be the purport of the High Court 's order since in the present case the appellate civil Court has already passed an order of injunction against the 1st Respondent and her husband by virtue of which the possession continues to be with the appellants.
In this view of the matter, the Magistrate had not erred in withdrawing the attachment by his order dated 17th October, 1978.
For both these reasons, the appeal is allowed and the impugned order of the High Court is set aside.
It is necessary to add that the suit as filed by the Appellants is only for a permanent injunction.
The appellants must amend the plaint for claiming also the declaration of their title to the property in question.
N.P.V. Apppeal allowed.
| IN-Abs | There was a dispute between the appellants and the first respondent, regarding the possession of a house.
On an application filed by the respondent under Section 145 of Criminal Procedure Code, 1973, before the Sub Divisional Magistrate, claiming ownership of the suit property, the Magistrate passed a preliminary order under Section 145 of the Code, and thereafter, made an order of attachment under Section 146 directing that the attachment would continue till the competent civil court determined the rights of the parties.
On a revision riled by the appellants, the Sessions Judge granted an interim stay of Magistrate 's order.
Subsequently, the Revision application was dismissed.
Ile Magistrate passed a fresh attachment order under Section 146.
Once more in revision the Sessions Judge passed an order staying the fresh order of attachment.
Thereafter, the appellants riled a suit for permanent injuction and also an interim injunction.
The trial court dismissed the application for interim injunction.
On appeal, the District Court issued an interim injunction against 1st respondent and her husband.
Subsequently, the 2 Criminal Revision preferred by the appellant was dismissed by the Sessions Judge also on the ground that the civil suit was preferred by the appellant.
Once again, the Magistrate passed another order attaching the property but this third order of attachment was stayed by the Sessions Judge for a period of 15 days.
Thereafter, on an application by the appellants for withdrawal of attachment on the ground that there was no apprehension of a breach of the peace, the Magistrate order withdrawal of attachment.
The Revision filed by the 1st respondent against the Magistrate 's order was dismissed by the Sessions Judge.
On an application under Section 482 of the Code filed by Respondent No.1 for quashing the order withdrawing the attachment and for directing the attachment to continue, the High Court held that it was not open to the Magistrate to withdraw the attachment till the competent court had decided the matter finally and restored the attachment.
Hence the appeal.
Allowing the appeal, this Court HELD : 1.1.
The determination by a competent court of the rights of the parties spoken in Section 146(1) of the Criminal Procedure Code, 1973, has not necessarily to be a final determination.
The determination may be even tentative at the interim stage when the competent court passes an order of interim injunction or appoints a receiver in respect of the subject matter of the dispute pending the final decision in the suit.
The moment the competent court does so, even at the interim stage, the order of attachment passed by the Magistrate has to come to an end.
Otherwise, there will be inconsistency between the order passed by the civil court and the order of attachment passed by the Magistrate.
The proviso to sub section (1) of Section 146 itself takes cognizance of such a situation.
When a civil court passes an order of injunction of receiver, it is the civil court which is seized of the matter and any breach of its order can be punished by it according to law.
Hence, on the passing of the interlocutory order by the civil court, there is no longer any likelihood of the breach of the peace with regard to the subject of dispute.
Under Section 146(2) the Magistrate can withdraw the order of attachment passed by him even during the pendency of the dispute in the civil court.
When the civil court appoints a receiver, the order of attachment passed by the Magistrate, necessarily 3 gives way to the order of the civil court appointing the receiver.
It is only when the civil court does not appoint the receiver that the Magistrate may make arrangements for looking after the property or even appoint a receiver himself However, even when such a receiver is appointed and the civil court subsequently appoints a receiver of its own, the Magistrate has to order the receiver appointed by him to hand over the possession of the subject in dispute to the receiver appointed by the civil court and discharge the receiver appointed by him.
He has also to pass such other incidental or consequential orders as he thinks just.
Such order may include an order of withdrawal of the attachment, in view of the seizure of the matter by the civil court and the consequent want of apprehension of breach of the peace.
It is, therefore, not correct to say that the property continues to remain under attachment of the Magisterial order till the rights of the parties are decided finally by the competent court of law.
[7G H, 8A C, D F] 1,2.
In tic present case, the Appellate Civil Court has already passed an order of injunction against the 1st respondent and her husband by virtue of which the possession continues to be with the appellants.
Therefore, the Magistrate had not erred in withdrawing the attachment.
The High Court has erred in holding that the order passed by the Sub Divisional Magistrate withdrawing attachment was without jurisdiction.
[8G H, 6E] 2.1.
Section 397 (3) bars a second revision application by the same party.
It is now well settled that the inherent powers under Section 482 of the Code cannot be utilised for exercising powers which are expressly barred by the Code.
[6D] 2.2.
In the instant case, admittedly, the 1st respondent had preferred a Criminal Application to the Sessions Court against the order passed by the Magistrate, withdrawing the attachment.
The Sessions Judge had dismissed the said application.
Hence, the High Court had clearly erred in entertaining the second revision at the instance of 1st respondent.
[6C,E] 3.
The Magistrate had committed an error in passing the subsequent orders of attachment when the first attachment was never finally vacated and had revived the moment the revision application flied against It was dismissed by the Sessions Judge.
None of the parties, including the Sessions Judge, realised this error on the part of the Magistrate.
The Sessions Judge had also committed a patent mistake in entertaining 4 revision application against the fresh orders of attachment and granting interim stays when he had dismissed revision application against the order of attachment earlier.
[6A B]
|
ppeals Nos. 125 and 164 of 1958.
Appeals by special leave from the Award dated August 26, 1957, of the Fifth Industrial Tribunal at West Bengal in Case No. VIII 264/56.
section C. Issacs and section N. Mukherjee, for the Appellants in C. A. No. 125/58 and Respondents in C. A. No. 164/58.
N. C. Chatterjee and Dipak Datta Choudhri, for the.
Respondents in C. A. No. 125/58 and Appellants in C. A. No. 164/58.
January 28.
The Judgment of the Court was delivered by SUBBA RAO, J.
These appeals are by Special Leave from the Award by Shri G. Palit, Judge, Fifth Industrial Tribunal, West Bengal, in the matter of a dispute between Messrs. Bengal Chemical & Pharmaceutical Works Limited, Calcutta, and their employees, represented by Bengal Chemical Mazdoor Union, Calcutta.
The Government of West Bengal by its order dated September 13, 1956, referred the following dispute between the parties referred to above to the Second Industrial Tribunal under section 10 of the (Act 14 of 1947), hereinafter referred to as the Act.
" Is the demand of the employees for increase in Dearness Allowance justified ? If so, at what rate?".
The said Act was amended by the 139 Industrial Disputes (Amendment & Miscellaneous Provisions) Act, 1956 (36 of 1956), which came into force on August 28, 1956.
On April 9, 1956, the ' Government made ail order transferring the said dispute from the file of the Second Industrial Tribunal to that of the Fifth Industrial Tribunal.
The Fifth Industrial Tribunal, after making the necessary inquiry, made the award on August 26,1957, and it was duly notified in the Calcutta Gazette on September 26, 1957.
As a mistake had crept in, the award was modified by the Tribunal by its order dated the 29th November, 1957; and the modified award was published in the Calcutta Gazette on the 29th November, 1957.
Under the award the Tribunal held that there was a rise in the cost of living index and that to neutralise the said rise the employees should get an increase of Rs. 7 in dearness allowance on the pay scale up to Rs. 50 and Rs. 5 on the pay scale above Rs. 50.
On that basis the dearness allowance payable to the employees was worked out and awarded.
The correctness of the award is questioned in these appeals.
The Company preferred Civil Appeal No. 125 of 1958 against the award in so far it was against it and the Union preferred Civil Appeal No. 164 of 1958 in so far it went against the employees.
For convenience of reference, the parties will be referred to in the course of the judgment as the Company and the Union.
Learned Counsel for the Company raised before us the following points: (1) The order dated April 9, 1957, made by the Government transferring the dispute from the file of the Second Industrial Tribunal to that of the Fifth Industrial Tribunal was illegal; (2) the previous award made by the Tribunal between the same parties on April 26, 1951, and confirmed by the Labour Appellate Tribunal by its order dated August 30, 1951, had not been terminated in accordance with the provisions of section 19(6) of the Act and therefore the present reference was bad in law and without jurisdiction; (3) there was no change in the circumstances obtaining at the time the previous award was made and those prevailing at the time of the present reference as to justify making out a new award; (4) the Tribunal 140 went wrong in taking the rise in the cost of living index between the years 1954 and 1957 instead of taking the fluctuating rate in the index between the date of the earlier award, i.e., August 30, 1951, and the date of the present reference in the year 1957 ; (5) the Tribunal went wrong in so far as it based its decision on the Second Engineering Award of 1950 which was already considered by the Tribunal in its earlier award of the year 1951; and (6) in any event, in computing the amount, the Tribunal applied wrong criteria.
We shall consider the above contentions seriatim.
But before doing so, it will be convenient to refer briefly to the scope of jurisdiction of this Court under article 136 of the Constitution vis a vis the awards of Tribunals.
Article 136 of the Constitution does not confer a right of appeal to any party from the decision of any tribunal, but it confers a discretionary power on the Supreme Court to grant special leave to appeal from the order of any tribunal in the.
territory of India.
It is implicit in the discretionary reserve power that it cannot be exhaustively defined.
It cannot obviously be so construed as to confer a right to a party where he has none under the law.
The is intended to be a self contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration.
Awards are given on circumstances peculiar to each dispute and the tribunals are, to a large extent, free from the restrictions of technical considerations imposed on courts.
A free and liberal exercise of the power under article 136 may materially affect the fundamental basis of such decisions, namely, quick solution to such disputes to achieve industrial peace.
Though article 136 is couched in widest terms, it is necessary for this Court to exercise its discretionary jurisdiction only in cases where awards are made in violation of the principles of natural justice, causing substantial and grave injustice to parties or raises an important principle of industrial law requiring elucidation, and final decision by this Court or discloses such other exceptional or special circumstances which merit the consideration of this Court.
The points raised by the 141 learned Counsel, except perhaps the first point , do not stand the test of any one of those principles.
Learned Counsel for the Company, however, says that, though the ' said principles might be applied at the time of granting leave, once leave is given no such restrictions could be imposed or applied at the time of the final disposal of the appeal.
The limits to the exercise of the power under article 136 cannot be made to depend upon the appellant obtaining the special leave of this Court, for two reasons, viz., (i) at that stage the Court may not be in full possession Of all material circumstances to make up its mind and (ii) the order is only an ex parte one made in the absence of the respondent.
The same principle should, therefore, be applied in exercising the power of interference with the awards of tribunals irrespective of the fact that the question arises at the time of granting special leave or at the time the appeal is disposed of.
It would be illogical to apply two different standards at two different stages of the same case.
The same view was expressed by this Court in Pritam Singh vs The State of Madras (1), Hem Raj vs State of Ajmer(1) and sadhu Singh vs State of Pepsu(3) The first question turns upon the construction of the relevant provisions of the Act as amended by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956.
The relevant provisions inserted by the Amending Act read as follows: "Section 2(r) : I Tribunal ' means an Industrial Tribunal constituted under section 7A." " 7 A. Tribunals. (1) The appropriate Government may, by notification in the official Gazette, constitute one or more Industrial Tribunals for the adjudication of industrial disputes relating to any matter, whether specified in the Second Schedule or the Third Schedule.
(2) A Tribunal shall consist of one person only to be appointed by the appropriate Government.
(3) A person shall not be qualified for appointment as the presiding officer of a Tribunal unless (1) ; (2) (3) A.I.R. 1954 S.C. 271.
142 (a) he is, or has been, a Judge of a High Court; or (b) he has held the office of the Chairman or any other member of the Labour Appellate Tribunal constituted under the Industial Disputes (Appellate Tribunal) Act, 1950 (48 of 1950), or of any Tribunal, for a period of not less than two years.
(4) The appropriate Government may, if it so thinks fit, appoint two persons as assessors to advise the Tribunal in the proceeding before it." "33B. (1) The appropriate Government may, by order in writing and for reasons to be stated therein, withdraw any proceeding under this Act pending before a Labour Court, Tribunal, or National Tribunal, ' as the case may be, for the disposal of the proceeding and the Labour Court, Tribunal or National Tribunal to which the proceeding is so transferred may, subject to special directions in the order of transfer, proceed either de novo or from the stage at which it was so transferred : Provided that where a proceeding under section 33 or section 33A is pending before a Tribunal or National Tribunal, the proceeding may also be transferred to a Labour Court.
" Section 30 of the Amending Act reads: " If immediately before the commencement of this Act, there is pending any proceeding in relation to an industrial dispute before a Tribunal constituted under the (14 of 1947), as in force before such commencement, the dispute may be adjudicated and the proceeding disposed of by the Tribunal after such commencement, as if this Act has not been passed." Section 7, before the Amendment ran thus: " The appropriate Government may constitute one or more Industrial Tribunals for the adjudication of industrial disputes in accordance with the provisions of this Act.
(2) A Tribunal shall consist of such number of members as the appropriate Government thinks fit.
Where the Tribunal consists of two or more members, one of them shall be appointed as chairman.
143 (3) Every member of the Tribunal shall be an independent person, (a) who is or has been a Judge of a High Court or a District Judge, or (b) is qualified for appointment as a Judge of a High Court: Provided that the appointment to a Tribunal of any person not qualified under part (a) shall be made in consultation with the High Court of the Province in which the Tribunal has or is intended to have, its usual place of sitting.
" It will be seen from the aforesaid provisions that the Amending Act, which came into force on August 28, 1956, changed the constitution of a tribunal to some extent and conferred a power for the first time on the Government to transfer a proceeding pending before a tribunal to another tribunal; or in the case of a proceeding under section 33 or 33A pending before a tribunal to another tribunal or to a Labour Court.
Section 30 of the Amending Act expressly saves a pending proceeding before a tribunal constituted under the Act before the Amending Act came into force and directs that such dispute shall be adjudicated and the proceeding disposed of by that tribunal after the commencement of the Amending Act as if that Act had not been passed.
A combined and fair reading of the aforesaid provisions, it is argued, was that section 33B, inserted in the Act by the Amending Act, was prospective in operations i.e., it would apply only to proceedings initiated in the tribunal constituted Under the amended Act and that proceedings pending before the tribunals constituted under the Act before the commencement of the Amending Act would be disposed of as if the Amending Act had not been passed.
The Parliament, presumably to clarify the position, brought out another Amending Act styled the Industrial Disputes (Amendment) Act, 1957 (18 of 1957), whereunder among other things, a new definition of " Tribunal " was given in substitution of that in section 2(r) of the Act.
The substituted definition reads: " 'Tribunal ' means an Industrial Tribunal constituted under section 7A and includes an Industrial 144 Tribunal constituted before the 10th day of March, 1957, under this Act.
" Sub section (2) of section I of the Amending Act 18 of 1957 says that section 2 shall be deemed to have come into force on the 10th day of March, 1957.
The result is that section 33B should be read along with the definition of a " Tribunal " inserted by the Amendment Act 18 of 1957, as if that definition was in the Act from March 10, 1957.
If that definition of a " Tribunal " 'be read in place of the word ,Tribunal" in section 33B, the relevant part of that section reads: " (1) The appropriate Government may, by order in writing and for reasons to be stated therein, withdraw any proceeding under this Act pending before a Tribunal constituted before the 10th day of March, 1957, and transfer the same to another Tribunal constituted under section 7A of the Act." So construed it follows that in respect of proceedings pending in a tribunal constituted before the 10th day of March, 1957, the Government has the power to transfer them from that date to any other tribunal.
It is said that this construction would make section 30 of the Amending Act 36 of 1956 otiose or nugatory.
That section contained only a saving clause and it was not inserted in the Act; it served its purpose, and even if it ceased to have any operative force after the Amendment of 1957, that circumstance cannot have any bearing on the impact of the amendment of the definition of " Tribunal " on the provisions of section 33B of the Act.
In the present case, the Government made the order of transfer on April 9, 1957, i.e., after section 2 of Amendment Act 18 of 1957 was deemed to have come into force.
It must, therefore, be held that the Government acted well within its powers in transferring the dispute pending before the Second Industrial Tribunal, to the Fifth Industrial Tribunal.
The second contention, namely, that the Award of 1951 was not terminated in accordance with law, does not appear to have been pressed before the Tribunal.
The governing section is section 19(6) which says: " Notwithstanding the expiry of the period of operation under sub section (3), the award shall 145 continue to be binding on the parties until a period of two months has elapsed from the date on which notice is given by any party bound by the award to the other party or parties intimating its intention to terminate the award '.
" In the first written statement filed by the Company before the Tribunal, no plea was taken based upon section 19(6) of the Act.
In the second written statement filed by the Company on December 20, 1956, a contention was raised to the effect that the award dated June 21, 1951, was not terminated under section 19(6) of the Act, that the said award was binding between the parties and therefore the reference was bad in law.
Notwithstanding the said allegation, the award dis closes that no issue was raised on that count and no argument was advanced in support thereof.
This attitude might have been adopted by the Company either because it did not think fit to rely upon a technical point but had chosen to get a decision of the Tribunal on merits, or it might be that there was no basis for the contention, as the company might have received notice under the said section.
Though it may not be quite relevant, it may be mentioned that even in 1951 when the dispute between the parties was referred to the Industrial Tribunal, though a similar contention was open to the Company and indeed was suggested by the Tribunal, it moved the Tribunal to give an award on the merits of the matter.
If this plea had been seriously pressed, the Tribunal would have raised a separate issue and the Union would have been in a position to establish that notice had been served on the Company as required by section 19(6) of the Act.
As the question raised depends upon elucidation of further facts, we do not think that we would be justified in allowing the Company to raise the plea before us, and we, therefore, do not permit them to do so.
The fourth point turns on the construction of the terms of the agreement entered into between the parties on September 15, 1954.
The dispute between the parties had an earlier origin and apart from the 19 146 present reference, there were as many as four references and four awards, and the last of them was dated April 3, 1951.
The Company preferred an appeal against that award to the Labour Appellate Tribunal , Calcutta, which, with some modification, confirmed the award of the Tribunal on August 30, 1957.
That award as modified by the Appellate Tribunal fixed the basic wages and the rate of dearness allowance payable to the employees.
The employees were not satisfied with the award and they placed before the.
Company a new charter of demands claiming higher rates of dearness allowance and wages, but the dispute was compromised and the parties entered into an agreement dated September 15, 1954, by virtue of which, the Company introduced the incremental scale in the wage structure.
As regards the dearness allowance, it was stated in cl. 1 1 of the agreement as follows: "The existing rate of D. A. will prevail unless there is a substantial change in the working class cost of living index,in which case the rate will be suitably adjusted." On the construction of this clause depends the question of the Union 's right to claim enhanced dearness allowance.
It is common case that if the cost of living index in the year 1951 was taken as the basis, there was a fall in the rate of working class cost, of living index in 1957.
On the other hand, if the cost of living index in 1954 was the criterion, there was a substantial increase in the cost of living index in 1957.
The question, therefore, is what did the parties intend to agree by the aforesaid clause in the agreement.
To ascertain the intention of the parties, we should con sider the circumstances under which the said agreement was entered into between the parties.
Exhibit 6 is the said agreement.
The preamble to the agreement reads : " The Company and the Union came to a settlement in respect of the Pay Scales and Grades in the Charter of Demands dated 25th June, 1953, at the intervention of Shri A. R. Ghosh, Asstt.
Labour Commissioner during the Conciliation proceedings ending on the 30th August, 1954.
" 147 The preamble indicates that the entire situation obtaining on the date of the agreement was reviewed and the parties agreed to the terms of the settlement mentioned therein.
Under clause (1) of the agreement, pay scale and grade as given in annexure B was agreed upon for the time being for a period of three years as an experimental measure, to be reviewed, modified or suspended or withdrawn after three years, depending upon the Company 's business and financial condition.
By el.
(2), the employees agreed not to raise any dispute involving any further financial burden on the Company during the next three years in respect of pay scale and grade.
Clauses (3) to (5) deal with increments and the age of retirement.
Clause (6) provides for the piece rated (contract) workers in respect of their increments.
Clause (7) is in respect of increment for the daily rated workers.
Clause (8) is in respect of the grade and scale of pay and increments of Chemists, Engineers and Doctors, etc.
Clause (9) is to the effect that the employees who would be made permanent thence forward would be grouped under two divisions for the purposes of giving effect to the scale of pay.
Clause (11) which we have already extracted above relates to the dearness allowance.
Clause (12) says " barring the question of bonus for 1358 and 1359 B. S.the Union withdraws its claim in respect of other items in the Charter of Demands dated 25th June, 1953.
" We have given the agreement in extenso only for the purpose of showing that all the disputes between the parties arising out of the charter of demands dated June, 25, 1953, were settled between them and reduced to writing.
The agreement was self contained and started a new chapter regulating the relationship of the parties to the dispute in respect of matters covered by it.
The award must be deemed to have been superseded by the new agreement.
In this context the crucial words " existing rate of D. A. ", on which both the learned Counsel relied, could have only one meaning.
Do the words " existing rate " refer to the date of the agreement or to the date of the award ? It is true that the existing rate of D. A. had its origin in the award and was made to prevail 148 under the agreement, that is to say that the rate was accepted by the parties as reasonable on the date of "the agreement, till there was a substantial change in the working class cost of living index.
If the contention of the learned Counsel for the Company should prevail, the agreement would not be self contained, but only to be construed as modifying the earlier award to some extent.
We are satisfied that in regard to matters covered by it, the agreement replaced the earlier award and therefore the date of the agreement is the crucial one for ascertaining whether there was substantial change in the working class cost of living index in the year 1957.
We, therefore, reject this contention.
Contentions 3, 5 and 6 raise pure questions of fact.
The Tribunal, on the consideration of the entire material placed before it, came to the conclusion that there was change of circumstances which entitled the employees to claim an increase in their dearness allowance.
It has also fixed the rate of increase in the dearness allowance on the basis of the rise in the cost of living index.
In doing so, it also took into consideration the difficulties facing the industry and the repercussion of the rise in the dearness allowance on the consumers in general.
Having regard to the overall picture, it came to the conclusion that full neutralisation of the deficiency as a result of rise in the cost of living index by dearness allowance could not be permitted and therefore allowed them only 75 per cent.
of the increase in the dearness allowance to which they would have otherwise been entitled on the basis of the rise in the cost of living index.
The finding given by the Tribunal is one on fact and we do not see any permissible ground for interference with it in this appeal by special leave.
Before closing, one point strenuously pressed upon us by the learned Counsel for the Company which is really another attempt to attack the finding of fact given by the Tribunal from different angle must be mentioned; it was that the Tribunal wrongly relied upon Exhibit 3, corrected on the basis of the information given by the State Statistical Bureau, West Bengal, for ascertaining the working class cost of living index since August 1954 up to March 1957.
On the 149 basis of Exhibit 3, the Tribunal held that the working class cost of living index stood at 344.1 in August 1954 and it rose to 400.6 in May 1957, with the result that there was a rise of 56 points, a substantial rise in the cost of living index.
Exhibit 3 certainly supports the finding of the Tribunal.
The learned Counsel for the Company points out with reference to the relevant entries in the Monthly Statistical Digest, West Bengal, that the said figures relate only to working class menials and the corresponding entries in regard to the working class cost of living index do not indicate so much increase as in the case of the menial class.
Learned Counsel has also taken us through the relevant figures.
The relevant entries in the Monthly Statistical Digest were not filed before the Tribunal.
Indeed when the Union 's witness, Shri Satyaranjan Sen, was examined before the Tribunal, he was not cross examined with a view to elicit information that Exhibit 3 did not relate to the working class cost of living index.
When Shri Chatterjee, the Assistant Manager of the Company, who was examined after Shri Sen, gave evidence, he not only did not object to the entries in Exhibit 3 but stated that he was not aware of any substantial increase in the working class cost of living index and complained that similar entries for all the relevant years had not been produced.
Even before the Tribunal it does not appear that any argument was advanced contesting the relevancy of Exhibit 3 on the ground that it did not refer to the working class cost of living index.
In the circumstances, we do not think that we are justified to allow the learned Counsel for the Company to make out a new case for the first time before us, upsetting the Tribunal 's basis for calculation and involving further and different calculations.
In the result, we confirm the award of the Tribunal and dismiss the appeal with costs.
The learned Counsel, appearing for the Union, did not press the appeal No. 164 of 1958, filed by the Union, and therefore it is also dismissed with costs.
Appeals dismissed.
| IN-Abs | Aggrieved by an Award of 195, the employees placed before the Company a fresh charter of demands which was mutually settled by a written agreement which provided, inter alia, that the existing rate of dearness allowance should prevail which was adjustable to any future substantial change in the cost of living index of the working class.
As the cost of living increased disputes arose, and in spite of the said Award of 1951, 137 which was not terminated according to law, the dispute arising out of the said written agreement was referred for adjudication by the Government to the Second Industrial Tribunal, Calcutta, in September, 1956.
In April 1957, the Government transferred the dispute from the Second Industrial Tribunal to the Fifth Industrial Tribunal.
The Company, inter alia, contended that the Government had no power to transfer the dispute from one Tribunal to another and that the reference was bad as the 1951 Award had not been duly terminated.
The Industrial Disputes (Amendment and Miscellaneous Provisions) Act (36 of 1956) amending the Industrial Disputes Act (14 Of 1947) came into force on August 28, 1956, giving authority to the Government to transfer a reference from one Tribunal to another, which was followed by a further amending Act, being Industrial Disputes (Amendment) Act (18 of 1957) whereunder among other things a new definition of 'Tribunal ' was given, whereby the Industrial Tribunal constituted prior to March 10, 1957, under section 7A of Act 14 Of 1947 was included.
Held, that as a result of the amendments to the , the Government had authority to transfer a case from one Tribunal to another. 'Tribunal ' as defined by section 2(r) of the , as amended by Act 36 of 1956, read with amending Act 18 of 1957, empowers the Government to transfer a reference from one Tribunal to another.
Where, in spite of a previous award, the employees after raising fresh demands entered into a new agreement with the employer which started a fresh chapter regulating the relationship of the parties, the previous award, though not terminated in accordance with the provisions of law, must be deemed to have been superseded.
Held, further, that though article 136 of the Constitution is couched in the widest terms and confers a discretionary power, (which cannot exhaustively be defined) on the Supreme Court to grant special leave to appeal from the order of a tribunal, but it is necessary for the Supreme Court to exercise its said discretionary jurisdiction only in cases (a) where there is a violation of the principle of natural justice, (b) raises an important principle of industrial law requiring elucidation and final decision by the Supreme Court, or (c) discloses such other exceptional or special circumstances which merit the final decision by the Supreme Court.
Such discretionary reserve power cannot obviously be so construed as to confer a right of appeal to any party from the decision of a Tribunal, where he has none under the law.
is intended to be a self contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration.
Awards are given on circumstances peculiar to each dispute and the Tribunals are to a 18 138 large extent free from restrictions of technical considerations imposed on courts.
A free and liberal exercise of the discretionary powers by the Supreme Court may materially affect the fundamental basis of the decision, namely, quick solution to such disputes to achieve industrial peace.
Where an Industrial Tribunal on the consideration of the entire material placed before it and having regard to the overall picture, came to a conclusion of facts, the Supreme Court will not interfere with such finding of fact nor will it be justified to allow to make a new case for the first time before it.
Pritam Singh vs State of Madras, ; ; Hem Raj vs State of Ajmer, and Sadhu Singh vs State of PEPSU, A.I.R. 1954 S.C. 272, referred to.
|
iminal Appeal No. 32 of 1982.
From the Judgment and Order dated 1.10.1981 of the Delhi High Court in Criminal Misc.
(Main) No. 304 of 1980.
S.L. Chowdhary and Pradeep Misra for the Appellant.
Rakesh K. Khanna and R.P. Singh for the Respondent.
The following order of the Court is delivered: Even though the dispute between the parties came to this Court from an initial order passed under Section 145 of the Code of Criminal Procedure, this Court realising that the dispute was between close relatives in respect of their interests in certain properties which were also the subject matter in a Civil Suit No. 434/78 (Remand) of the Court of Sub Judge, First Class, Delhi, advised the parties to have the same resolved through an Arbitrator.
On the parties agreeing, this Court passed an order on September 5, 1986 recording the agreement to refer the dispute to arbitration and appointed Mr. Justice V.D. Misra, retired Chief Justice of the High Court of Himachal Pradesh, as the Sole Arbitrator.
The parties had agreed to deposit a sum of Rs. 3,000 each with the Arbitrator to meet with his expenses and remuneration subject to further directions that may be made in that behalf.
It was further directed that the learned Arbitrator will render a speaking award within four months.
In view of the said agreement, the appeal was allowed and the High Court 's impugned order was set aside.
It appears that thereafter one of the parties, namely, Jagdish Chander Bhatia, did not deposit the expenses with the Arbitrator and raised objection in regard to the arbitration proceedings on the plea that the property in dispute was proposed to be resumed by the Union of India.
In the meantime, it appears that the sole Arbitrator passed away and in his place Mr. Justice M.S. Gujral retired Chief Justice of the High Court of Sikkim, was appointed the Sole Arbitrator.
This Court did not approve of the conduct of Jagdish Chander Bhatia in not depositing the amount and 'in trying to avoid adjudication of the dispute through arbitration.
After this 54 order was passed on October 12, 1990 by which a further sum of Rs. 8,000 was directed to be deposited with the Arbitrator, subject to the Arbitrator deciding who should bear the cost, the newly appointed Arbitrator entered upon the reference and submitted his award on November 14, 1991.
This concluding part of his Award reads as under: "House No. 17 would entirely belong to Lachhman Das Bhatia whereas House No.18 would be jointly owned by Lachhman Das and Jagdish Chander.
Lachhman Das would have 76.50% share whereas Jagdish Chander would have 23.50% share in House No.18.
As House No.17 has entirely been given to Lachhman Das Bhatia in all fairness, Jagdish Chander Bhatia should give vacant possession of House No.17 to Lachhman Das Bhatia.
" The parties were directed to bear their own costs of the arbitration proceedings except that Jagdish Chander Bhatia had to pay Rs. 4,000 to Lachhman Das Bhatia as his share of the Arbitrator 's fees which he had initially failed to deposit.
Against this award, Jagdish Chander Bhatia (hereinafter called 'the objector ') has filed objections under Section 30 of the which provision reads as under: "An award shall not be set aside except on one or more of the following grounds, namely (a) that an arbitrator or umpire has misconducted himself or the proceedings; (b) that an award has been made after the issue of an order by the Court superseding the arbitration proceedings have become invalid under Section 35; (c) that an award has been improperly procured or is otherwise invalid.
" It was conceded by the learned counsel for the Objector that clause (b) would not be attracted.
His main submission was that the Arbitrator had misconducted himself, in that, he did not take into consideration several documents which were placed on record before him which support the Objector 's case and hence the Award was invalid.
He, therefore, partly relied on clauses (a) and (c) for setting aside the Award.
55 The documents to which the learned counsel for the objector invited our attention, are to be found in Vol.2 of the paper book placed before us.
These documents are 31 in number and they mainly relate to the rights and interests of the parties in properties situate in that part which now belongs to the Dominion of Pakistan.
Since they were refugees they had made certain claims under the law governing rehabilitation of displaced persons in respect of the properties left behind by them.
These documents show that the claim was sanctioned in the name of Punnu Ram Lachhman Das in respect of the properties left behind by the family.
On the strength of that claim, House No.18 was purchased in the said name.
The Arbitrator, however, came to the conclusion, as is evident from the discussion from paragraph 26 and onwards of the Award, that the property in question was purchased for Rs. 12,850 from the funds contributed by Punnu Ram and Lachhman Das, the former paying Rs. 9,233 and the latter Rs. 3,617.
This is the conclusion reached by the Arbitrator as is evident from paragraph 37 of the Award.
The share of the Objector was held to be 1/7th in the share of Punnu Ram, since deceased.
It was on this finding recorded by the Arbitrator that he passed the ultimate order extracted above.
The arbitrator has made a speaking award setting out his reasons for the conclusions reached by him.
He has thus complied with the direction of this Court given earlier.
On a perusal of the award, it becomes clear that the Arbitrator did not go into the rights and interests of the parties including the HUF in the properties left behind in the Dominion of Pakistan.
That was, in our opinion, not necessary because the fact that the claim was sanctioned in the name to the Punnu Ram Lachhman Das was never in dispute.
The short question, which the Arbitrator was required to consider, was as regards the title of the properties which were the subject matter of the reference which included the property purchased for Rs. 12,850 on the strength of that claim.
In dealing with that question the Arbitrator came to the conclusion that Punnu Ram and Lachhman Das had contributed the entire consideration of Rs. 12,850 and hence they were the owners of the property and on the death of Punnu Ram inheritance opened insofar as his share in the property was concerned and the Arbitrator came to the conclusion that the Objector was entitled to 1/7th out of the share of the deceased.
Since the contribution made for payment of the price was not equal, the Arbitrator allotted a larger share to Punnu Ram and consequently the Objector has got a share on the basis thereof.
Practically, all the documents included in Vol.2 relate to the interest of the 56 parties and their HUF in the properties left behind in the Dominion of Pakistan.
The learned counsel for the Objector then tried to take us into the rights and interests of the parties in those properties, but we declined to go into the same as we thought that the Arbitrator was right that he was called upon to decide the interest of the parties in Houses Nos. 17 and 18 alone which were the subject matter of the reference.
We are, therefore, of the opinion that the Arbitrator had not misconducted himself by refusing to enumerate those documents in Vol.2 in his award because he was bound by the scope of the reference which was limited to Houses Nos. 17 and 18 and not the properties left behind in the Dominion of Pakistan by the parties.
For this reason, we are of the opinion that there is no infirmity on the face of the award which would entitle us to exercise jurisdiction under Section 30 of the .
This Court pointed out in Food Corporation of India vs Joginderpal Mohinderpal & Anr., [1989] 2 SCC 347 that an award of an Arbitrator can only be interfered with or set aside or modified within the four comers of the procedure provided by the statute.
The Court must find out whether the Arbitrator has misconducted himself or there was any infirmity in the procedure, such as, the Arbitrator having travelled beyond the terms of the reference or there being an error apparent on the face of the award.
It is not misconduct on the part of an Arbitrator to come to an erroneous conclusion on a disputed issue.
In case of error apparent on the face of the award, the award can be set aside only if there is any proposition of law on which the award is based which is in conflict with law.
It must be demonstrated to the Court that the reasons given by the Arbitrator are so palpably erroneous in law that they have resulted in the Arbitrator taking a view which cannot be sustained in law.
To put it differently the Court does not sit in appeal and does not re assess the evidence.
Even if the Court feels that had it been left to it, it would have assessed the evidence differently that would not be a valid ground for setting aside the award.
In Hind Builders vs Union of India, [1990] 3 SCC 338, this Court pointed out that where on an interpretation of any contract or document, two views are possible and the Arbitrator accepts one view while the other view is more appealing it would not be open to the Court to interfere with the Award.
We, therefore, in the facts and circumstances of this case, see so reason to interfere with the award of the Arbitrator.
The Suit No. 434/78 pending in the Court of the Sub Judge, Delhi 57 was disposed of by that Court, and an appeal, being Civil Appeal No. 211 of 1979 (Jagdish Chander Bhatia vs Lachhman Das Bhatia) preferred on April 23, 1979 against that decree, is pending in the Court of the District Judge, Delhi.
We transfer that appeal to our file and make the Arbitrator 's award the rule of the Court.
The decree of the trial court is set aside and a decree in terms of the award will be drawn up in the appeal proceedings arising out of Suit No. 434/78.
We, however, do not make any order as to costs in the present proceedings.
N.P.V. Appeal disposed of.
| IN-Abs | The dispute between the appellant and the respondent in respect of their Interests In certain properties, was referred to arbitration by this Court and a retired Chief Justice of a High Court was appointed as the sole Arbitrator with direction to make a speaking award, and the Arbitrator submitted his Award.
Against this award the appellant objector filed objections under Section 30 of the , contending that the Arbitrator had misconducted himself in that he did not take into consideration several documents which were placed on record before him to support the objector 's case and, hence, the award was invalid under clauses (a) and (c) of Section 30.
Disposing of the Appeal, this Court HELD : 1.1.
There is no infirmity on the face of the award which would entitle this Court to exercise jurisdiction under Section 30 of the .
The Arbitrator has made a speaking award setting out his reasons for the conclusions reached by him and has thus complied with the direction of this Court given earlier.
[56D, 55E] 12.
The documents in question mainly relate to the rights and interests of the parties In the properties situate in that part which now belongs to the Dominion of Pakistan.
Since they were refugees they had made certain claims under the law governing rehabilitation of displaced persons in respect of the properties left behind by them.
The claim was sanctioned in the joint same of the objector 's predecessor in Interest and the respondent in respect of the properties left behind by the family.
On the strength of that 52 claim, one of the houses was purchased in the said name.
The Arbitrator, however, came to the conclusion, that the property in question was purchased from the funds contributed by the objector 's predecessor in interest and the respondent.
The share of the objector was held to be 1/7th in the share of the predecessor in interest, since deceased.
Since the contribution made for payment of the price was not equal, the Arbitrator allotted a larger share to objector 's predecessor in interest and consequently, the objector has got a share on the basis thereof, when inheritance opened on the death of the predecessor in interest.
[55B D.H, 56A] 1.3.
It is clear from the award that the Arbitrator did not go into the rights and interests of the parties including the HUF in the properties left behind in the Dominion of Pakistan.
That was not necessary because the fact that the claim was sanctioned in the joint name of the Objector 's predecessor in interest and the respondent was never in dispute.
The short question, which the Arbitrator was required to consider, was as regards the title of the properties, which were the subject matter of the reference, which included a house purchased on the strength of that claim.
It is not necessary for the Court to go into the question of the rights and interests of the parties in the properties left behind in the Dominion of Pakistan since the Arbitrator was right that he was called upon to decide the interest of the parties in respect of two houses alone, which were the subject matter of the reference.
Therefore, the Arbitrator had not misconducted himself by refusing to enumerate all those documents in question in his award because he was bound by the scope of the reference which was limited to the two houses and not the properties left behind in the Dominion of Pakistan by the parties.
[55F, 56B C] 2.
In order to interfere with an award, the Court must rind out whether the Arbitrator has misconducted himself or there was any infirmity in the procedure, such as, the Arbitrator having travelled beyond the terms of the reference or there being an error apparent on the face of the award.
It is not misconduct on the part of an Arbitrator to come to an erroneous conclusion on a disputed issue.
The Court does not sit in appeal and does not reassess the evidence.
Even if the Court feels that had it been left to it, it would have assessed the evidence differently that would not be a valid ground for setting aside the award.
[56E, G] 3.
Therefore, in the facts and circumstances of the case, there is no reason to interfere with the award, which is made the rule of the 53 Court.
[56H, 57A B] Food Corporation of India vs
Joginder pal Mohinderpal & Anr., [1989]2 S.C.C. 347 and Hind Builders vs Union of India, [1990] 3 S.C.C. 338, relied on.
|
iminal Appeal No. 24 of 1993.
From the Judgment and Order dated 6.8.1991 of the Patna High Court in Criminal Rev. No. 307 of 1991.
Uday Sinha and M.P. Jha for the Appellants.
B.B. Singh Adv.
for the Respondent.
The Judgment of the Court was delivered by AHMADI, J.
Special leave granted.
Whether a Court of Session to which a case is committed for trial by a Magistrate can, without itself recording evidence, summon a person not named in the Police Report presented under Section 173 of the Code of Criminal Procedure, 1973 ( 'The Code ' for short) to stand trial along with those already named therein, in exercise of power conferred by Section 319 of the Code? This neat question of law arises in the backdrop of the following allegations.
On the evening of 27th February, 1990 Umakant Thakur, younger brother of the informant, was attacked by twenty persons including the present two appellants with sticks, etc.
A First Information Report was lodged at about 9.30 p.m. on the same day in which all the twenty persons were named as the assailants.
The injured Umakant Thakur died in the Patna Hospital on the next day.
In the course of investigation statements of the informant as well as others came to be recorded and a charge sheet dated 10th June, 1990 was forwarded to the Court of the learned Magistrate on 17th June, 1990 wherein eighteen persons other than the two appellants were shown as the offenders.
The names of the present two appellants were not included in the said report as in the opinion of the investigating officer their involvement in the commission of the crime was not established.
A final report to that effect was submitted on 4th September, 1990 to the Chief Judicial Magistrate on which no orders were passed.
The concerned Magistrate committed the eighteen persons named in the report to the Court of Session, Dharbanga, under Section 209 of the Code to stand trial.
When the matter came up before the learned Sessions Judge, Dharbanga, an application was presented under Section 319 of the Code praying that the material on record annexed to the report under Section 173 of the Code 37 revealed the involvement of the two appellants also and hence they should be summoned and arraigned before the Court as accused persons along with the eighteen already named in the charge sheet.
Thereupon a show cause notice was issued to the present two appellants in response whereto they contended that though they were not present at the place of occurrence, they were falsely named in the First Information Report and the investigating officer had rightly omitted their names from the charge sheet filed in Court.
The learned Sessions Judge rejected.
the plea put forth by the appellants and exercised the discretion vested in him under Section 319 of the Code by impleading the appellants as co accused along with the eighteen others.
Indisputably this was done before any evidence was recorded i.e. before the commencement of the actual trial.
The appellants thereupon filed a Criminal Revision Application before the High Court of Patna assailing the order passed by the learned Sessions Judge taking cognizance against them.
The High Court after hearing counsel for the parties dismissed the Revision Application relying on the ratio of the Full Bench decision of that Court in S.K Laytfur Rahman & Ors.
vs The State, [(1985) PLJR 640 = (1985)] Criminal Law Journal 12381.
It is against this order passed by the learned Single Judge of the High Court that the appellants have moved this Court by special leave under Article 136 of the Constitution of India.
The learned counsel for the appellants contended that unless evidence was recorded during the course of trial.
The Sessions Judge had no jurisdiction under Section 319 of the Code to take cognizance and implead the appellants as co accused solely on the basis of the material collected in the course of investigation and appended to the report forwarded under Section 173 of the Code in view of the clear mandate of Section 193 of the Code.
The question which arises for consideration in the backdrop of the aforestated facts is whether the learned Sessions Judge was justified in law in invoking Section 319 of the Code at the stage at which the proceedings were pending before him solely on the basis of the documents including statements recorded under Section 161 of the Code during investigation without commencing trial and recording evidence therein? Section 319 corresponds to Section 351 of the repealed Code of Criminal Procedure, 1898 (hereinafter called 'the old Code ').
That Section must be read in juxtaposition with Section 319 of the Code.
Before we do so it is necessary to state that Section 319 of the Code as it presently stands is the recast version of Section 351 of the old Code based on the recommendations 38 made by the Law Commission in its 41st Report as under: "It happens sometimes, though not very often, that a Magistrate hearing a case against certain accused finds from the evidence that some person, other than the accused before him, is also concerned.
in that very offence or in a connected offence.
It is only proper that the Magistrate should "have the power to call and join him in the proceedings '.
Section 351 provides for such a situation, but only if that person happens to be attending the Court.
He can then be detained and proceeded against.
There is no express provision in section 351 for summoning such a person if he is not present in Court.
Such a provision would made section 351 fairly comprehensive, and we think it proper to expressly provide for that situation.
(para 24.80) About the true position under the existing law, there has been difference of opinion, and we think it should be made clear.
It seems to us that the main purpose of this particular provision is, that the whole case against all known suspects should be proceeded with expeditiously, and convenience requires that cognizance against the newly added accused should be taken in the same manner as against the other accused.
We, therefore, propose to recast section 351 making it comprehensive and providing that there will be no difference in the mode of taking cognizance if a new person is added as an accused during the proceedings." (para 24.81) It will be seen from the above paragraphs that the Law Commission suggested that section 351 should be recast with a view to (i) empowering the court to summon a person not present in court to stand trial along with the named accused and (ii) enabling the court to take cognizance against the newly added accused by making it explicit that there will be no difference in the mode of taking cognizance against the added accused.
Pursuant to the said recommendations made by the Law Commission Section 351 of the old Code was replaced by Section 319 in the present Code.
We may now read the two provisions in juxtaposition "Old Code Section 351 (1) Any person attending a Criminal Court, 39 although not under arrest or upon a summons, may be detained by such Court for the purpose of inquiry into or trial of any offence of which such Court can take cognizance and which, from the evidence, may appear to have been committed, and may be proceeded against as though he had been arrested or summoned.
(2) When the detention takes place in the course of an inquiry under Chapter XVIII or after a trial has been begun, the proceedings in respect of such person shall be commenced afresh, and the witnesses re heard.
New Code Section 319 (1) Where, in the course of any inquiry into or trial of an offence, it appears from the evidence that any person not being the accused has committed any offence for which such person should be tried together with the accused, the Court may proceed against such person for the offence which he appears to have committed.
(2) Where such person is not attending the Court, he may be arrested or summoned, as the circumstances of the case may require, for the purpose aforesaid.
(3) Any person attending the Court, although not under arrest, or upon a summons, may be detained by such Court for the purpose of the inquiry into, or trial of, the offence which he appears to have committed.
(4) Where the Court proceeds against any person under subsection (1), then (a) the proceedings in respect of such Person shall be commenced afresh and the witnesses re heard; (b) subject to the provisions of Cl.(a), the case may proceed as if such person had been an accused person when the Court took cognizance of the offence upon which the inquiry or trial was commenced.
" 40 Section 351 of the old Code empowered detention of any person attending a Criminal Court, although not under arrest or upon a summon, for the purpose of inquiry into or trial of any offence of which such Court could take cognizance, if it appeared from the evidence so recorded that he may have committed an offence along with others.
Sub section (2) of section 319 came to be inserted in response to the Law Commission 's recommendation in paragraph 24.80 of its report to enlarge the Court 's power to arrest or summon any person who appears to be involved in the commission of the crime along with others but who is not present in court.
Next, it is significant to note that the words 'of which such Court can take cognizance ' have been omitted by the Legislature.
Instead the newly added sub section 4(b) expressly states that the case against the added accused may proceed as if such person had been an accused person when the court took cognizance of the offence.
This takes care of the Law Commission 's recommendation found in paragraph 24.81 extracted earlier.
It is, therefore, manifest that Section 319 of the Code is an improved version of Section 351 of the old Code; the changes having been introduced therein on the suggestion of the Law Commission to make it comprehensive so that even persons not attending the Court can be arrested or summoned as the circumstances of the case may require and by deleting the words 'of which such Court can take cognizance ' and by adding clause (b) it is clarified that the impleadment of a new person as an accused in the pending proceedings will not make any difference insofar as taking of cognizance is concerned.
In other words it is made clear that cognizance against the added person would be deemed to have been taken as originally against the other co accused.
It is thus clear that the difficulty in regard to taking of cognizance which would have been experienced by the Court has been done away with.
The section comes into operation at the post cognizance stage when it appears to the court from the evidence recorded at the trial that any person other than those named as offenders appears to have com mitted any offence in relation to the incident for which the co accused are on trial.
But counsel for the appellants contended that section 319 being a self contained provision, the power thereunder can be exercised strictly in terms of the section which permits the exercise of power only if 'it appears from the evidence ' in the course of the inquiry or trial of an offence, that any person, besides the accused already put up for trial, has committed any offence arising from the incident in question.
Counsel submitted that the 41 power cannot be exercised before 'evidence ' is led as the involvement of the person must appear from the evidence tendered at the trial because it is at that stage that the court must apply its mind about the complicity of the person not arraigned before it in the commission of the crime.
He, therefore, submitted that in the present case since the trial had not commenced and the prosecution had not led any evidence, the stage for the exercise of the power had not reached.
In order to appreciate the contention urged before us, it is necessary to notice a few provisions.
Section 190 of the Code sets out the different ways in which a Magistrate can take cognizance of an offence, that is to say, take notice of an allegation disclosing commission of a crime with a view to setting the law in motion to bring the offender to book.
Under this provision cognizance can be taken in three ways enumerated in clauses (a), (b) & (c) of the offence alleged to have been committed.
The object is to ensure the safety of a citizen against the vagaries of the police by giving him the right to approach the Magistrate directly if the police does not take action or he has reason to believe that no such action will be taken by the police.
Even though the expression 'take cognizance ' is not defined, it is well settled by a catena of decisions of this Court that when the Magistrate takes notice of the accusations and applies his mind to the allegations made in the complaint or police report or information and on being satisfied that the allegations, if proved, would constitute an offence decides to initiate judicial proceedings against the alleged offender he is said to have taken cognizance of the offence.
It is essential to bear in mind the fact that cognizance is in regard to the offence and not the offender.
Mere application of mind does not amount to taking cognizance unless the magistrate does so for proceeding under Section 200/204 of the Code /See Jamuna Singh & Ors.
vs Bhadai Sah, ; at 40 41.
It is, therefore, obvious that if on receipt of a complaint under Section 154 of the Code in regard to a cognizable offence, an offence is registered and the concerned Police Officer embarks on an investigation and ultimately submits a police report under Section 173 of the Code, the Magistrate may take cognizance and if the offence is exclusively triable by a Court of Sessions, he must follow the procedure set out in Section 209.
That section provides that when in a case instituted on a police report, as defined in section 2(r), or otherwise, the accused appears or is brought before the Magistrate and it appears to the Magistrate that the offence is triable 42 exclusively by the Court of Session, he shall commit the case to the Court of Session and remand the accused to custody.
Section 193 of the Old Code and as it presently stands have a bearing and may be extracted at this stage: "Old Code Section 193 Cognizance of offences by Courts of Session (1) Except as othewise expressly provided by this Code or by any other law for the time being in force, no Court of Session shall take cognizance of any offence as a Court of original jurisdiction unless the accused has been committed to it by a Magistrate duly empowered in that behalf.
New Code Section 193 Cognizance of offences by Court of Sessions Except as otherwise expressly provided by this Code or by any other law for the time being in force, no Court of Session shall take cognizance of any offence as a Court of original jurisdiction unless the case has been committed to it by a Magistrate under this Code.
" It may immediately be noticed that under the old provision a Court of Session could not take cognizance of an offence as a Court of original jurisdiction unless the accused was committed to it whereas under the recast section as it presently stands the expression the accused has been replaced by the words the case.
As has been pointed out earlier.
Under section 190 cognizance has to be taken for the offence and not the offender: so also under section 193 the emphasis now is to the committal of the case and no more on the offender.
So also section 209 speaks of committing the case to the Court of Session.
On a conjoint reading of these provisions it becomes clear that while under the Old Code in view of the language of section 193 unless an accused was committed to the Court of Session the said court not take cognizance of an offence as a court of original jurisdiction; now under section 193 as it presently stands once the case is committed the restriction disappears.
More of it later but first the case law.
Section 193 of the Old Code placed an embargo on the Court of Session from taking cognizance of any offence as a Court of original jurisdiction unless the accused was committed to it by a Magistrate or there 43 was express provision in the Code or any other law to the contrary.
In the context of the said provision this Court in P.C Gulati vs L.R. Kapur, [1966] I SCR 560 at p.568 observed as under; "When a case is committed to the Court of Session, the Court of Session has first to determine whether the commitment of the case is proper.
If it be of opinion that the commitment is bad on a point of law, it has to refer the case to the High Court which is competent to quash the proceeding under section 215 of the Code.
It is only, when the Sessions Court considers the commitment to be good in law that it proceeds with the trial of the case.
It is in this context that the Sessions Court has to I take cognizance of the offence as a Court or original jurisdiction and it is such a cognizance which is referred to in section 193 of the Code.
" In Joginder Singh vs State of Punjab, ; = ; the facts were that a criminal case was registered against Joginder Singh and four others on the allegation that they had committed house tresspass and had caused injuries to two persons.
During the investigation the police found Joginder Singh and Ram Singh (the appellants in the case) to be innocent and submitted a charge sheet against the remaining three persons only.
The learned Magistrate who held a preliminary inquiry committed the three accused to the Court of Session whereupon the Additional Sessions Judge, Ludhiana, framed charges against them.
At the trial evidence of two witnesses came to be recorded during the course of which the complicity of the two appellants came to light.
Thereupon, at the instance of the informant the Public Prosecutor moved an application for summoning and trying the two appellants along with the three accused who were already arraigned before the court.
The application was opposed principally on the ground that the Sessions Judge had no jurisdiction or power to summon the two appellants and direct them to stand their trial along with the three persons already named in the police report.
This objection was negatived and the learned Additional Sessions Judge passed G an order, presumably under section 319 of the Code, directing the attendance of the two appellants and further directing that they stand trial together with the three accused arraigned before the court.
The High Court dismissed the Revision Application whereupon the appellants approached this Court by special leave.
The real question centered round the 44 scope and ambit of section 319 of the Code.
This Court after considering the relevant provisions of the Old Code in juxtaposition with similar provisions in the New Code observed as under : "It will thus appear clear that under Section 193 read with Section 209 of the Code when a case is committed to the Court of Session in respect of an offence the Court of Session takes cognizance of the offence and not of the accused and once the Sessions Court is properly seized of the case as a result of the committal order against some accused the power under Section 319(1) can come into play and such Court can add any person, not an accused before it, as an accused and direct him to be tried along with the other accused for the offence which such added accused appears to have committed from the evidence recorded at the trial. ' This view came to be reiterated in a recent decision of this Court in Sohan Lal & Ors.
vs State of Rajasthan, ; That was a case in which a First Information Report was lodged against the appellants.
On completion of the investigation the police forwarded a charge sheet under section 173 of the Code.
The Judicial Magistrate after taking cognizance ordered discharge of appellants 4 and 5 and directed that the remaining 3 appellants be charged only under section 427 IPC and not under Sections 147, 323, 325 and 336 in respect whereof the charge sheet was forwarded.
The Additional Public Prosecutor, therefore, submitted an application signed by one of the victims praying that on the basis of the entire evidence a prima facie case was made out under sections 147, 325 and 336, IPC and requested that the charge be amended and the accused persons be charged accordingly.
After recording the plea of the accused the prosecution led evidence and examined witnesses.
The learned Magistrate after hearing the Additional Public Prosecutor and counsel for the defence and after discussing the evidence took cognizance of the other offences against the appellants.
The Revision Application preferred to the High Court was dismissed.
This Court after considering the relevant provisions of the Code concluded as under : "Section 319 empowers the court to proceed against persons not being the accused appearing to be guilty of offence.
Sub sections (1) and (2) of this section provide for a situation when 45 a court hearing a case against certain accused person finds from A the evidence that some person or persons, other than the accused before it, is or are also connected in this very offence or any connected offence; and it empowers the court to proceed against such person or persons for the offence which he or they appears or appear to have committed and issue process for the purpose.
It provides that the cognizance against newly added accused is deemed to have been taken in the same manner in which cognizance was first taken of the offence against the earlier accused.
It naturally deals with a matter arising from the course of the proceeding already initiated.
The scope of the section is wide enough to include cases instituted on private complaint. ' The learned counsel for the appellants submitted that once a Court of Session takes cognizance in the limited sense explained in Gulati 's case, the power to summon or arrest a person not named in the police report can be exercised under Section 319 of the Code only if the condition precedent, namely, the commencement of the trial and recording of evidence, is satisfied.
This, he contends, is manifest from the last mentioned two cases in which the power was exercised only after the condition precedent was satisfied and the complicity of a person not shown as an offender in the police report surfaced from the evidence recorded in the course of the trial.
That prima facie appears to be so but it must at the same time be remembered that in both the cases the Court was not called upon to consider whether a Court of Session to which a case is committed for trial under Section 209 of the Code can, while taking cognizance, summon a person to stand trial along with others even though he is not shown as an offender in the police report if the court on a perusal of the case papers prima facie finds his complicity in the commission of the crime and the omission of his name as an offender by the investigating officer not proper.
On a plain reading of sub section (1) of Section 319 there can be no doubt that it must appear from the evidence tendered in the course of any inquiry or trial that any person not being the accused has committed any offence for which he could be tried together with the accused.
This power, it seems clear to us, can be exercised only if it so appears from the evidence at the trial and not otherwise.
Therefore, this sub section contemplates 46 existence of some evidence appearing in the course of trial wherefrom the Court can prima facie conclude that the person not arraigned before it is also involved in the commission of the crime for which he can be tried with those already named by the police.
Even a person who has earlier been discharged would fall within the sweep of the power conferred by Section 319 of the Code.
Therefore, stricto sensu, Section 319 of the Code cannot be invoked in a case like the present one where no evidence has been led at a trial wherefrom it can be said that the appellants appear to have been involved in the commission of the crime along with those already sent up for trial by the prosecution.
But then it must be conceded that Section 319 covers the postcognizance stage where in the course of an inquiry or trial the involvement or complicity of a person or persons not named by the investigating agency has surfaced which necessitates the exercise of the discretionary power conferred by the said provision.
Section 319 can be invoked both by the Court having original jurisdiction as well as the Court to which the case has been committed or transferred for trial.
The sweep of Section 319 is, therefore, limited, in that, it is an enabling provision which can be invoked only if evidence surfaces in the course of an inquiry or a trial disclosing the complicity of a person or persons other than the person or persons already arraigned before it.
If this is the true scope and ambit of Section 319 of the Code, the question is whether there is any other provision in the Code which would entitle the Court to pass a similar order in similar circumstances.
The search for such a provision would be justified only on the premiss that Section 319 is not exhaustive of all post cognizance stituations.
Now as pointed out earlier Section 319 deals with only one situation, namely, the complicity coming to light from the evidence taken and recorded in the course of an inquiry or trial.
This may happen not merely in cases where despite the name of a person figuring in the course of investigation the investigating agency does not send him up for trial but even in cases where the complicity of such a person comes to light for the first time in the course of evidence recorded at the inquiry or trial.
Once the purport of Section 319 is so understood it is obvious that the scope of its operation or the area of its play would also be limited to cases where after cognizance the involvement of any person or persons in the commission of the crime comes to light in the course of evidence recorded at the Inquiry or trial.
Thus the Section does not apply to all situations and cannot be interpreted to be repository of all power for summoning such person or 47 persons to stand trial along with others arraigned before the Court.
The question then is whether dehors Section 319 the Code, can similar power be traced to any other provision in the Code or can such power be implied from the scheme of the Code? We have already pointed out earlier the two alternative modes in which the Criminal Law can be set in motion: by the filing of information with the police under Section 154 of the Code or upon receipt of a complaint or information by a Magistrate.
The former would lead to investigation by the police and may culminate in a police report under Section 173 of the Code on the basis whereof cognizance may be taken by the Magistrate under Section 190(1)(b) of the Code.
In the latter case, the Magistrate may either order investigation by the police under Section 156(3) of the Code or himself hold an inquiry under Section 202 before taking cognizance of the offence under Section 190(1)(a) or (c), as the case may be, read with Section 204 of the Code.
Once the Magistrate takes cognizance of the offence he may proceed to try the offender (except where the case is transferred under Section 191) or commit him for trial under Section 209 of the Code if the offence is triable exclusively by a Court of Session.
As pointed out earlier cognizance is taken of the offence and not the offender.
This Court in Raghubans Dubey vs State of Bihar, ; = ; stated that once cognizance of an offence is taken it becomes the Court 's duty 'to find out who the offenders really are ' and if the Court finds 'that apart from the persons sent up by the police some other person are involved, it is his duty to proceed against those persons ' by summoning them because 'the summoning of the additional accused is part of the proceeding initiated by his taking cognizance of an offence '.
Even after the present Code came into force, the legal position has not undergone a change; on the contrary the ratio of Dubey 's case was affirmed in Hariram Satpathy vs Tikaram Agarwala ; = ; Thus far there is no difficulty.
We have now reached the crucial point in our journey.
After cognizance is taken under section 190(1) of the Code, in warrant cases the Court is required to frame a charge containing particulars as to the time and place of the alleged offence and the person (if any) against whom, or the thing (if any) in respect of which, it was committed.
But before framing the charge section 227 of the Code provides that if, upon a consideration of the record of the case and the documents submitted therewith, the 48 Sessions Judge considers that there is not sufficient ground for proceeding against the accused, he shalt for reasons to be recorded, discharge the accused.
It is only when the Judge is of opinion that there is ground for presuming that the accused has committed an offence that he will proceed to frame a charge and record the plea of the accused (vide, section 228).
It becomes immediately clear that for the limited purpose of deciding whether or not to frame a charge against the accused, the judge would be required to examine the record of the case and the documents submitted therewith, which would comprise the police report, the statements of witnesses recorded under section 161 of the Code, the seizure memoranda, etc., etc.
If, on application of mind for this limited purpose, the Judge finds that besides the accused arraigned before the him the complicity or involvement of others in the commission of the crime prima facie surfaces from the material placed before him, what course of action should he adopt? The learned counsel for the State, therefore, argued that even if two views are possible, this being a matter of procedure not likely to cause prejudice to the person or persons proposed to be summoned, the court should accept the view which would advance the cause of justice, namely, to bring the real offender to book.
If such an approach is not adopted, the matter will slip into the hands of the investigation officer who may or may not send up for trial an offender even if prima facie evidence exists, which may in a given situation cause avoidable difficulties to the trial court.
Take for example a case where two persons A and B attach and kill X and it is found from the material placed before the Judge that the fatal blow was given by A whereas the blow inflicted by B had fallen on a non vital part of the body of x.
If A is not challenge by the police, the Judge may find it difficult to charge B for the murder of X with the aid of section 34, IPC.
If he cannot summon A, how does he frame the charge against B? In such a case he may have to wait till evidence is laid at the trial to enable him to invoke section 319 of the Code.
Then he would have to commence the proceedings afresh in respect of the added accused and recall the witnesses.
This, submitted counsel for the State, would result in avoidable waste of public time.
He, therefore, submitted that this Court should place a construction which would advance the cause of justice rather than stiffle it.
We have already indicated earlier from the ratio of this Court 's decisions in the cases of Raghubans Dubey and Hariram that once the court 49 takes cognizance of the offence (not the offender) it becomes the court 's duty to find out the real offenders and if it comes to the conclusion that besides the persons put up for trial by the police some others are also involved in the commission of the crime, it is the court 's duty to summon them to stand trial along with those already named, since summoning them would only be a part of the process of taking cognizance.
We have also pointed out the difference in the language of section 193 of the two Codes; under the old Code the Court of Session was precluded from taking cognizance of any offence as a Court of original jurisdiction unless the accused was committed to it whereas under the present Code the embargo is diluted by the replacement of the words the accused by the words the case.
Thus, on a plain reading of section 193 as it presently stands once the case is committed to the Court of Session by a magistrate under the Code, the restriction placed on the power of the Court of Session to take cognizance of an offence as a court of original jurisdiction gets lifted.
On the magistrate committing the case under section 209 to the Court of Session the bar of section 193 is lifted thereby investing the Court of Session complete and unfettered jurisdiction of the Court of original jurisdiction to take cognizance of the offence which would include the Summoning of the person or persons whose complicity in the commission of the crime can prima pacic be gathered from the material available on record.
The Full Bench of the High Court of Patna rightly appreciated the shift in section 193 of the Code from that under the old Code in the case of S.K Lutfur Rahman (supra) as under : "Therefore, what the law under section 193 seeks to visualise and provide for now is that the whole of the incident constituting the offence is to be taken cognizance of by the Court of Session on commitment and not that every individual offender must be so committed or that in case it is not so done then the Court of Session would be powerless to proceed against persons regarding whom it may be fully convinced at the very threshold of the trial that they are prima facie guilty of the crime as well.
*** *** *** *** Once the case has been committed, the bar of section 193 is removed or, to put it in other words, the condition therefore 50 stands satisfied vesting the Court of Session with the fullest jurisdiction to summon and individual accused of the crime.
" We are in respectful agreement with the distinction brought out between the old section 193 and the provision as it now stands.
For the reasons stated above while as are in agreement with the submission of the learned counsel for the appellants that the stage for tile exercise of power under section 319 of the Code had not reached, inasmuch as, the trial had not commenced and evidence was not led, since the Court of Session had the power under section 193 of the Code to summon the appellants as their involvement in the commission of the crime prima facie appeared from the record of the case, we see no reason to interfere with the impugned order as it is well settled that once under it is found that the power exists the exercise of power under a wrong provision will not render the order illegal or invalid.
We, therefore, dismiss this appeal.
V.P.R. Appeal dismissed.
| IN-Abs | On the evening of 27th February, 1990, informant 's younger brother was attacked by twenty persons including the present two appellants with sticks, etc.
First Information Report was lodged at about 9.30 pm.
on the same day in which all the twenty persons were named as the assailants.
The injured died in the hospital on the next day.
In course of investigation statements of the informant and others were recorded and a charge sheet was forwarded to the Court of the Magistrate wherein eighteen persons, were shown as the offenders.
The names of the present two appellants were not included In the report, as In the opinion of the investigating officer their involvement in the commission of the crime was not established.
The eighteen persons named in the report were committed to the Court of Session under Section 209 of the Code of Criminal Procedure to stand trial.
When the matter came up before the Sessions Judge, an application was presented under Section 319 of the Code praying to implead the appellants also as accused persons.
To the show cause notice issued to the appellants, they submitted that though they were not present at the place of occurrence, they falsely named in the First Information Report and the investigating officer had rightly omitted their names from the charge sheet filed in Court 32 The Sessions Judge rejected the plea of the appellants and impleaded them as co accused along with the eighteen others.
This was done before the commencement of the actual trial.
The appellants ' revision flied before the High Court was dismissed.
The appellants moved this Court by special leave under Article 136 of the Constitution of India, against the High Court 's order contending that unless evidence was recorded during the course of trial, the Sessions Judge had no jurisdiction under Section 319 of the Code of Criminal Procedure to take cognizance and implead the appellants as co accused solely on the basis of the material collected in the course of investigation and appended to the report forwarded under Section 173 of the Code in view of the clear mandate of Section 193 of the Code; that since the trial had not commenced and the prosecution had not led any evidence, the stage for the exercise of the power had not reached.
Dismissing the appeal, this Court HELD : 1.01.
On a plain reading of sub section (1) of Section 319 there can be no doubt that it must appear from the evidence tendered in the course of any Inquiry or trial that any person not being the accused has committed any offence for which he could be tried together with the accused.
This power, can be exercised only if it so appears from the evidence at the trial and not otherwise.
Therefore, the sub section contemplates existence of some evidence appearing in the course of trial wherefrom the Court can prima facie conclude that the person not arraigned before It Is also involved in the commission of the crime for which he can be tried with those already named by the police.
Even a person who has earlier been discharged would fall within the sweep of the power conferred by Section 319 of the Code.
Therefore, stricto sensu Section 319 of the Code cannot be invoked in a case where.
no evidence has been led at a trial wherefrom It can be said that the appellants appear to have been involved In the commission of the crime along with these already sent up for trial by the prosecution.
Section 319 covers the post congnizance stage where in the course of an inquiry or trial the involvement or complicity of a person or 33 persons not named by the investigating agency has surfaced which necessitates the exercise of the discretionary power conferred by the said provision. 1.05.
Section 319 can be invoked both by the Court having original jurisdiction as well as the Court to which the case has been committed or transferred for trial.
The sweep of Section 319 is, therefore, limited in that, it is an enabling provision which can be invoked only if evidence surfaces in the course of an inquiry or a trial disclosing the complicity of a person or persons other than the person or persons already arraigned before it 1.06.
Section 319 deals with only one situation, namely, the complicity coming to light from the evidence taken and recorded In the course of an Inquiry or trial.
This may happen not merely In cases where despite the name of a person figuring in the course of investigation the investigatIng agency does not send him up for trial but even in cases where the complicity of such a person comes to light for the first time in the course of evidence recorded at the inquiry or trial.
The scope of Its operation or the area of its play would also be limited to cases where after cognizance the involvement of any person or persons in the commission of the crime comes to light in the course of evidence recorded at the Inquiry or trial.
Thus the Section does not apply to all situations and cannot be Interpreted to be the repository of all power for summoning such person or persons to stand trial along with others arraigned before the Court 1.08.
Once the case is committed to the Court of Session by a magistrate under the Code, the restriction placed on the power of the Court of Session to take cognizance of an offence as a court of original jurisdiction gets lifted.
On the magistrate committing the case under Section 209 to the Court of Session the bar of section 193 is lifted thereby investing the Court of Session complete and unfettered jurisdiction of the court of original jurisdiction to take cognizance of the offence which would include the summoning of the person or persons whose complicity in the commission of the crime can prima facie by gathered from the material available on record.
The stage for the exercise of power under section 319 of the Code had not reached, inasmuch as, the trial had not commenced and 34 evidence was not led.
The Court of Session bad, however, the power under Section 193 of the Code to summon the appellants as their involvement in the commission of the crime prima facie appeared from the record of the case.
Once It is found that the power exists the exercise of power under a wrong provision will not render the order illegal or invalid.
Joginder Singh vs State of Punjab, ; and Sohan Lal & Ors.
vs State of Rajasthan; ; referred to.
2.01.The two alternative modes In which the Criminal Law cm be set in motion are: by the filing of information with the police under Section 154 of the Code or upon receipt of a complaint or information by a Magistrate.
The former would lead to investigation by the police and may culminate In a police report under Section 173 of the Code on the basis whereof cognizance may be taken by the Magistrate under Section 190(1)(b) of the Code.
In the latter case, the Magistrate may either order investigation by the police under Section 156(3) of the Code or himself hold an inquiry under Section 202 before taking cognizance of the offence under Section 190(1) (a) or (c), as the case may be, mad with Section 204 of the Code.
Once the Magistrate takes cognizance of the offence he may proceed to try the offender (except where the case is transferred under section 191 or commit him for trial under Section 209 of the Code if the offence Is triable exclusively by a Court of Session.
Once cognizance of an offence is taken It becomes the Courts duty to find out who the offenders really am and if the Court finds that apart from the persons sent up by the police some other persons am involved, It Is his duty to proceed against those persons by summoning then because 'the summoning of the additional accused Is part of the proceeding initiated by his taking cognizance of an offence,.
2.03.After cognizance is taken under Section 190(1) of the Code, in warrant cases the Court is required to frame a charge containing particulars as to the time and place of the alleged offence and the person (if any) against whom, or the thing (if any) in respect of which, it was committed.
But before framing the charge section 227 of the Code provides that if, upon a consideration of the record of the case and the documents submitted therewith, the Sessions Judge considers that them 35 is not sufficient ground for proceeding against the accused, he shall, for reasons to be recorded, discharge the accused.
It Is only when the Judge is of opinion that there is ground for presuming that the accused was committed an offence that he will proceed to frame a charge and record the plea of the accused (vide, section 228).
R becomes Immediately clear that for the limited purpose of deciding whether or not to frame a charge against the accused, the judge would be required to examine the record of the case and the documents submitted therewith, which would comprise the police report, the statements of witnesses recorded under Section 161 of the Code, the seizure memoranda, etc.
etc. 2.05.
Once the court takes cognizance of the offence (not the offender) it becomes the court 's duty to rind out the real offenders and if it comes to the conclusion that besides the persons put up for trial by the police some others are also Involved in the commission of the crime, it is the court 's duty to summon them to stand trial along with those already named, since summoning them would only be a part of the process of taking cognizance.
Even though the expression 'take cognizance ' is not defined, it is well settled that when the Magistrate takes notice of the accusations and applies his mind to the allegations made In the complaint or police report or information and on being satisfied that the allegations, if proved, would constitute an offence decides to initiate judicial proceedings against the alleged offender he Is said to have taken cognizance of the offence.
It is essential to bear in mind the fact that cognizance is in regard to the offence and not the offender.
Mere application of mind does not amount to taking cognizance unless the magistrate does so for proceeding under Section 200/204 of the Code.
Jamuna Singh & Ors.
vs Bhadai Sak ; at 4041; Raghubans Dubey vs State of Bihar ; and Hariram Satpathy vs Tikaram Agarwala, ; AIR 1978 SC 1S68, referred to.
S.K Latfur Rahman & Ors.
vs The State, (1985) PLJR 640 (1985) Criminal Law Journal 1238, approved.
|
(Civil) No. 3 of 1983.
(Under Article 32 of the Constitution of India).
WITH W.P. Nos.
4OO 402, 425, 492, 2493 2495, 2526 2528 of 1983 and 1256 of 1987.
Soli J. Sorabjee, Ravinder Narain, DA.
Dave and P.H. Parekh, for the Petitioners.
A.K. Ganguli, T.V.S.N. Chari Ms. Radha Rangaswamy and P. Parmeshwaran for the Respondents.
The Judgment of the Court was delivered by YOGESHWAR DAYAL J.
This order will dispose of the aforesaid writ petitions under Article 32 of the Constitution of India.
All these cases come under Item 18.1 and/or 18 III and/or 18E of the Tariff contained in the schedule attached to the Central Excise and Salt Act 1944 (hereinafter referred to as 'the Act ').
For facility of reference we are giving the facts of the case of Civil Writ Petition No. 3 of 1983.
144 This Writ Petition is stated to be covered by the decision of this Court in J.K Cotton Spinning and Weaving Mills Ltd. & another vs Union of India and others; , and the surviving prayer in the writ petition is to declare that the duty of excise in respect of Tariff Item Nos. 18 (A) (a), 18 (III) (ii) and 18E is to be levied and collected on the weight of the unsized yarn and not on the basis of the weight of the sized yarn".
Before we deal with the objections of the learned counsel for the respondents, it would be useful to examine the points which were involved in the aforesaid case of J.K Cotton Mills.
The appellants in the said case had a composite mill wherein it manufactured fabrics of different types.
In order to manufacture the said fabrics, yarn was obtained at an intermediate stage.
The yarn so obtained was further processed in an integrated process in the said composite mill for weaving the same into fabrics.
The appellants did not dispute that the different kinds of fabrics which were manufactured in the miff were liable to payment of excise duty on their removal from the factory.
They also did not dispute their liability in respect of yarn which was also removed from the factory.
It was the contention of the appellants therein that no duty of excise could be levied and collected in respect of yam which was obtained at an intermediate stage and, thereafter subjected to an integrated process for the manufacture of different fabrics.
On a writ petition, by those appellants, the Delhi High Court by its judgment dated 16th October, 1980 held that yarn obtained and further processed within the factory for the manufacture of fabrics could not be subjected to duty of excise.
It was the case of the appellants that in spite of the said decision of the Delhi High Court, the Central Board of Excise had wrongly issued a circular dated 24th September, 1980 purporting to interpret Rules 9 and 49 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules ') and directing the subordinate excise authorities to levy and collect duty of excise in accordance therewith.
In the said circular, the Board had directed the subordinate excise authorities that use of goods in manufacture of another commodity even within the place/premises that have been specified in this behalf by the Central Excise Officers in terms of the powers conferred under Rule 9 of the Rules, will attract duty".
As the said circular was being implemented to the prejudice of the appellants, they filed the writ petition before the Delhi High Court, inter alia, challenging the validity of the said circular.
During the pendency of the writ petition in the Delhi High Court, the 145 Central Government by Notification No. 20/82 C.E. dated 20th February, 1982 amended Rules 9 and 49 of the Rules.
Section 51 of the Finance Act provides that the amendments in Rules 9 and 49 of the Rules shall be deemed to have, and to have always had the effect on and from the date on which the Rules came into force i.e. 28th February, 1944.
After the said amendments of the Rules with retrospective effect, the appellants amended the Writ petition and challenged the constitutional validity of Section 51 of the Finance Act, 1982 and of the amendments to Rules 9 and 49 of the Rules.
The High Court came to the conclusion that section 51 of the Finance Act, 1982 and Rules 9 and 49 of the Rules, as amended, were valid.
It was further held that the retrospective effect given by Section 51 of the Finance Act, 1982 will be subject to the provisions of Sections 11A and 11B of the Act.
It was further held that the yam which is produced at an intermediate stage in the mill of the appellants therein and subjected to the integrated process of weaving the same into fabrics, will be liable to payment of excise duty in view of the amended provisions of Rules 9 and 49 of the Rules.
But the sized yam which is actually put into the integrated process will not again be subjected to payment of excise duty for, the unsized yarn, which is sized for the purpose, does not change the nature of the commodity as yarn.
The Writ Petition was accordingly allowed in part, as stated aforesaid, and it was this decision which came up in appeal before this Court.
This Court agreed with the Delhi High Court and upheld the vires of Rules 9 and 49 of the Rules as well as Section 51 of the Finance Act, 1982.
This Court also agreed with the High Court that the retrospective effect given by section 51 of the Finance Act, 1982 will be subject to the Provisions of Sections 11A and 11B of the Act.
This Court also agreed with the view of the High Court that the yarn which is produced at an intermediate stage in the mill of the appellants and subjected to integrated process of weaving the same into fabrics, would be liable to payment of excise duty in view of the amended provisions of the Rules, But, this Court further agreed with the High Court, the sized yarn which is actually put into the integrated process will not again be subjected to payment of excise duty for, the unsized yarn, which is sized for the purpose does not change the nature of the commodity as yarn.
This Court observed at pages 720 and 721 of the report as under: "In the instant case, the appellants are liable to pay excise duty on the yarn which is obtained at an intermediate stage and, thereafter, further processed in an integrated process for weav 146 ing the same into fabrics.
Although it has been alleged that the yam is obtained at an intermediate stage of an integrated process of manufacture of fabrics, it appears to be not so.
After the yarn is produced it is sized and, thereafter, subjected to a process of weaving the same into fabrics.
Be that as it may, as we have held that the commodity which is obtained at an intermediate stage of an integrated process of manufacture of another commodity, is liable to the payment of excise duty, the yarn that is produced by the appellants is also liable to payment of excise duty.
In our view, the High Court by the impugned judgment has rightly held that the appellants are not liable to pay any excise duty on the yarn after it is sized for the purpose of weaving the same into fabrics.
No distinction can be made between unsized yarn and sized yarn, for the unsized yarn when converted into sized yarn does not lose its character as yarn.
" The petitioner herein on the other hand approached the Gujarat High Court and the Gujarat High Court by its judgment dated 30th July, 1981 had, before the issuance of the impugned circular dated 24th May, 1982, taken the view that no duty can be levied on the weight of sizing material contained in yarn, falling under Tariff Item No. 18 111 or 18 E and directed that the duty levied should be refunded because the duty has been levied not on the basis of yam at the spindle stage, but on the weight of the sized yarn.
After the decision of the Gujarat High Court the Central Government had amended Rules 9 and 49 of the Rules and Section 51 of the Finance Act, 1982, had made them effective retrospectively.
The present writ petition filled in this Court had inter alia pleaded that the retrospective amendment of Rules 9 and 49 of the Rules as well as Section 51 of the Finance Act, 1982 be declared as ultra vires of the Constitution.
This Court upheld the validity of the Section as well as the retrospective applicability of the Rules but took the view that this would be subjected to the provisions of Sections 11A and 11B of the Act and at the same time declared that the appellants were not liable to pay excise duty on the yarn after it is sized for a purpose of weaving the same into fabrics.
It will be noticed that under items 18.1, 18.III and 18E the measure is "per kilogram".
At this stage items 18.1, 18.111 and 18E of the Tariff may be noticed 147 "18.
I. Man made fibres, other than mineral fibres : (i) Non cellulosic Eighty five rupees per kilogram (ii) Cellulosic Ten rupees per kilogram '18.III.
Cellulosic spun yarn: Yam, in which man made fibre of cellulosic origin predomi nates in weight and, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power (i) not containing, any manmade fibres of non cellulosic origin.
six paise per count per kilogram (ii) containing man made fibres of non cellulosic origin.
Eighteen Rupees per kilogram.
Explanation 1: "Count" means the size of grey yarn (excluding any sizing material) expressed in English Count.
Eighteen Rupees per kilogram "18E.
Non cellulosic Spun Yam: Spun (discontinuous) yarn, in which man made fibres of noncellulosic origin, other than acrylic fibre, predominate in weight and, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power.
Twenty four rupees per kilogram.
148 Explanation : Explanation III under sub item III of item No. 18 shall, so far as may be, apply in relation to this item as it applies in relation to that item.
" It will be noticed from the aforesaid items that the measure for imposition of excise duty is by weight "per kilogram" in all the three items, namely 18.1, 18.111 and 18E. Therefore, the aforesaid decision in J.K. Couon Mills will be applicable to all types of cases under Items 18.1, 18.111 and 18E. After the decision of the Gujarat High Court, instead of granting the refund, the Superintendent of Central Excise, Range IV, Division V, Ahmedabad, issued impugned notices, collectively annexed as Annexures 'B ' and 'C ' to the present writ petition in pursuance of the directives dated 24th May, 1982 which are subject matter of challenge in the present writ petition.
On behalf of the respondents Mr. Ganguly learned counsel submitted that this Hon 'ble Court ought not to entertain the present writ petition under Article 32 of the Constitution.
He, however, could not dispute that the matter is directly covered by the decision of this Court in the aforesaid case of J.K Cotton Mills.
These petitions were admitted to hearing in view of the pendency of the aforesaid appeal in the case of J.K Cotton Mills and in view of the decision of the Delhi High Court which was appealed against in the aforesaid case of J.K Couon Mills.
Practically nine years have gone by now and the impugned show cause notices have been issued by virtue of the same directives which were subject matter of the aforesaid case of J.K.cotton Mills.
In view of this peculiar fact it would not be in the interest of justice if the parties are directed to contest the individual show cause notices issued by the respondents in view of the aforesaid directives.
In order to avoid multiplicity of proceedings involving time and expense, we quash the impugned notices in all the cases.
The result is that all the aforesaid writ petitions are accepted and the impugned show cause notices are quashed.
There will be no order as to costs.
G.N. Petitions allowed.
| IN-Abs | The petitioners challenged before the High Court the levy of excise duty on the weight of the yarn sized for the purpose of weaving them into fabrics.
The High Court held that no duty could be levied on the weight of the sizing material contained in yarn, and directed that the duty should be refunded since it has been levied not on the basis of yarn at the spindle stage, but on the weight of the sized yarn.
After the said judgment, the Central Government by Notification dated 20.2.1982 amended Rules 9 and 49 of the and Section 51 of the Finance Act, 1982 with retrospective effect.
In accordance with the said Notification, Central Excise Department issued show cause notices to the petitioners.
The constitutional validity of these amendments are challenged by the petitioners in the present Writ Petitions filed before this Court.
On behalf of the petitioners, it was contended that their cases were covered by the decision of this Court in J.K. Cotton Spinning and Weaving Mills Ltd. & Anr.
vs Union of India and Ors., ; and that excise duty could be levied on the weight of the unsized yarn and not on the basis of the weight of the sized yarn.
Allowing the petitions, this Court HELD: 1.1.
The Vires of Rules 9 and 49 of the Central Excise Rules, 1944 as well as section 51 of the Finance Act, 1982 and the retrospective 143 application of the same has already been upheld by this Court.
[145E] 1.2.
The sized yam which is actually put into the integrated process will not again be subjected to payment of excise duty, for the unsized yam which is sized for the purpose, does not change the nature of commodity as yarn.
Thus excise duty cannot be levied on the weight of the yarn after the yarn is sized for the purpose of weaving the same into fabrics.
[145G] 13.
Practically nine years have gone by since the show cause notices were issued by virtue of the same directives which were subject matter of J.K Cotton Mills case.
In view of this peculiar fact it would not be in the interest of justice if the petitioners are directed to contest the individual show cause notices issued by the respondents.
In order to avoid multiplicity of proceedings involving time and expense, the show cause notices in all these cases are quashed.
[148F G] J.K Cotton Spinning and Weaving Mills Ltd & Anr.
vs Union of India & Ors.
, ; , applied.
|
Appeal No. 5434 of 1985.
From the Judgment and Order dated 11.8.1987 of the Punjab and Haryana High Court in Civil Revision No. 1048 of 1986, A.K Gupta for the Appellants.
Vikram Mahajan, Gopi Chand and K.K. Gupta for the Respondent.
The Judgment of the Court was delivered by VERMA, J.
The suit premises in Chandigarh was let out by the appellant to the respondent, Smt.
Satya Bhalla on 1.11.1974 on a monthly rent of Rs. 550 solely for residential purpose.
However, the respondent 's husband, a lawyer established his office in a part of the suit premises and started using the same for that purpose.
The appellant landlord filed a petition before the Rent Controller in February, 1983 seeking eviction of the respondent tenant on several grounds including the ground contained in section 13(2) (ii) (b) of the East Punjab Urban Rent Restriction Act, 1949 i.e. the use of the building for a purpose other than that for which it was leased.
The Rent Controller made an order of eviction of the respondent tenant on the ground of change of user contained in section 13(2)(ii) (b).
The tenant 's appeal was dismissed by the appellate authority which affirmed the order of eviction made by the Rent Controller.
A further revision to the High Court has been allowed by the learned single Judge and the order of eviction has been set aside.
The High Court has held that the building let out as a 'residential building became a 'scheduled building by use of a part thereof as lawyer 's office by the tenant 's husband; and therefore, the ground of eviction was not available.
The order of eviction made in the landlord 's favour was, therefore, set aside.
Hence this appeal by the landlord by special leave.
The learned counsel for the appellant contended that the ground of change of user contained in section 13(2) (ii) (b) is clearly made out from the facts and the High Court has erred in setting aside the order of eviction.
174 In reply Shri V.C. Mahajan, learned counsel for the respondent tenant, advanced several arguments.
He submitted that the landlord had waived the ground of change of user by acquiescence to use of a part of the premises as lawyer 's office.
His next submission is that the ground in section 13(3) (ii) (b) is not available unless the change of user is of substantial if not the entire building and, therefore, mere use of a small part of the residential building as lawyer 's office does not constitute such change, learned counsel also submitted that this is not a fit case for interference with the High Court 's order under Article 136 of the Constitution.
Having heard both sides, we are satisfied that this appeal has to be allowed.
The High Court 's interference in revision with the order of eviction made by the Rent Controller and affirmed by the appellate authority, was wholly unjustified.
There is no merit in Shri Mahajan 's argument of waiver or acquiescence by the landlord.
Before the Rent Controller the tenant had pleaded estoppel against the landlord, which after due consideration was rightly rejected by the Rent Controller.
That finding of the Rent Controller was not assailed by the tenant either before the appellate authority or in the High Court.
On merits also, this plea is untenable since no such conduct of the landlord is shown.
The argument is, therefore, rejected.
We also do not find any substance in the contention that interference under Article 136 is not warranted, in case it is found that the High Court set aside the order of eviction on a misconstruction of the law applicable in the present case.
The only question, therefore, is whether on the proved facts, no longer in controversy, the ground in section 13(2) (ii) (b) is made out.
The material provisions in the East Punjab Urban Rent Restrictions Act, 1949 with reference to which the contention of Shri Mahajan has to be considered, are the following "2.
Definitions. . . . (a) 'building ' means any building or part of a building let for any purpose whether being actually used for that purpose or not, including any land, godowns, outhouses, or furniture let therewith but does not include a room in a hotel, hostel or 175 boarding house; xxx xxx xxx (d) 'non residential building" means a building being used solely for the purpose of business or trade: Provided that residence in a building only for the purpose of guarding it shall not be deemed to convert a "non residential ' building ' to a 'residential building": xxx xxx xxx (g) 'residential building" means any building which is not a non residential building; (h) 'scheduled building" means a residential building which is being used by a person engaged in one or more of the professions specified in the Schedule to this act, partly for his business and partly for his residence; xxx xxx xxx 13.
Eviction of tenant (1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decree passed before or after the commencemen t of this Act or otherwise and whether before or after the termination of the tenancy, except in accordance with the provisions of this sec tion.
(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf.
If the Controller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (ii) that the tenant has after the commencement of this Act without the written consent of the landlord (a) transferred his right under the lease or sublet the entire building or rented land or any portion thereof; or 176 (b) used the building or rented land for a purpose other than that for which it was leased, or the Controller may make an order directing the tenant to put the landlord in possession of the building or rented land and if the Controller is not so satisfied he shall make an order rejecting the application: Provided that the Controller may give 'the tenant a reasonable time for putting the landlord in possession of the building or rented land and may extend such time so as not to exceed three months in the aggregate." Shri Mahajan contended that to constitute the ground under section 13(2) (ii) (b), the change in user should be in respect of at least a substantial part of the building if not the entire building.
The comparison of sub clause (b) with sub clause (a) shows that the omission of the word 'entire ' before the word 'building ' in sub clause (b) when the word 'entire ' has been used before the word 'building ' in sub clause (a) is deliberate.
For this reason, the change in user of the building required to constitute the ground under sub clause (b) need not be of the entire building, the word 'entire ' being deliberately omitted in sub clause (b).
Faced with this difficulty, Shri Mahajan submitted that the change of user should be of a substantial part of the building let out even though not of the entire building.
This argument also cannot be accepted in this context.
The definitions in section 2 of the Act show that even though a 'scheduled building ' continues to be a residential building as defined in section 2(g), a residential building of which even a part is used for a scheduled purpose, becomes and is called a 'scheduled building ' when user of the building is significant or the criterion.
Thus, where user of a building is of significance, a distinction is made in the Act between residential building which is not a scheduled building and that which is a scheduled building.
This is so in section 4 of the Act dealing with determination of fair rent wherein fixation of rent is made on the basis of user and for that purpose a 'scheduled building ' is treated differently from a residential building which is not a scheduled building.
Same is the position with regard to the ground of eviction contained in section 13(2) (ii) (b) wherein change in user of the building is alone significant for constituting the ground.
177 Accordingly, use of the building for a purpose other than that for which it was leased, without the written consent of the landlord is a ground of eviction.
The object clearly is that the parties must remain bound by the terms on which the building is let out, including the condition relating to its use for the purpose for which it was leased.
In other words, breach of the covenant regarding the kind of user of the building let out is the ground of eviction contained in section 13(2) (ii) (b).
It is clear that if the change in user of the building is of the kind that it makes the residential building let out for residential purpose alone change its character and become a 'scheduled building ' as defined in section 2(h) of the Act without the written consent of the landlord, the ground of eviction under section 13(2) (ii) (b) is made out.
This test is fully satisfied in the present case and the order of eviction was made by the Rent Controller and affirmed by the appellate authority on this basis. 'The High Court misconstrued the provisions to take the contrary view.
A Division Bench of the Punjab and Haryana High Court in Telu Ram vs Om Parkash Garg while dealing with section 13(i) (ii) (b) at the Act mentioned one of its conclusion in para 21 as under '(b) that if the result of the use of even a small portion of a building is such that the category of the premises is changed from residential, non residential and scheduled, and it becomes a category different from the one for which the same had been let, the clause would be attracted;" This is how this provision appears to have been understood at least eversince than and the people in the State have arranged their affairs on that basis.
Apart from the fact that this view commends to us as the correct view, the desirability of continuing the settled view is also a reason in its favour.
Shri Mahajan referred to the decision of this Court in Sant Ram vs Rajinder Lal and Ors., 1978(2) RCR 601.
That case is distinguishable.
In that decision the purpose of the lease was not spelt out precisely while letting out a small premises to a cobbler for his business where he sometimes stayed overnight after the day 's work while he went to his home on 178 holidays.
It was on these facts that the tenant staying overnight in the shop on some working days was not found to constitute the ground of change of user under section 13(2) (ii) (b) of the Act.
That decision does not assist the respondent tenant in this case.
Reference was also made to Dr. Sewa Singh vs Smt.
Ravinder Kaur and another, [1971] '3 SCC 981.
That judgment did not consider this question as it was not raised.
The ground therein was that the High Court was not justified in taking the view in revision for the first time that the user of a part of the premises for a particular purpose was casual.
No doubt, the user of a part of the residential building for the profession of a medical practitioner was involved and the definition of 'scheduled building ' in section 2(h) of the Act was referred, but this point was neither raised nor considered.
The decision in Dr. Sewa Singh cannot be treated as an authority for the view that change of user of a part of a residential building let out for use solely as a residence, for a scheduled purpose without the written consent of the landlord does not constitute the ground for eviction under section 13(2) (ii) (b) or that the ground of eviction based on personal need of the landlord contained in section 13(3) (i) (a) is not available to the landlord for that reason.
If the logical inference from Dr. Sewa Singh appears to be that, then, with respect, we are unable to agree with the same.
As a result of the above discussion, this appeal is allowed and the impugned order passed by the High Court is set aside resulting in restoration of the order of eviction made by the Rent Controller and affirmed by the appellate authority.
The respondent will also pay cost to the appellant.
Counsel 's fee Rs. 3,000.
V.P.R. Appeal allowed.
| IN-Abs | The suit premises was let out by the appellant landlord to the respondent on a monthly rent of Rs. 550 solely for residential purpose.
In a part of the premises, the respondent 's husband, a lawyer established his office and started using the same for that purpose.
Teh appellant landlord riled a petition before the Rent Controller seeking eviction of the respondent tenant.
The Rent Controller made an order of eviction of the respondent tenant on the ground of change of user under section 13(2) (II) (b), of the East Punjab Urban Rent Restriction Act, 1940.
The tenant 's appeal was dismissed by the appellate authority, against which a revision to the High Court was preferred.
The Single Judge of the High Court allowed the revision and set aside the eviction order, holding that the building let out as a 'residential building became a 'scheduled building ' by use of a part thereof as lawyer 's office by the tenants husband; and therefore, the ground of eviction was not available.
Hence this appeal by the landlord by special leave, contending that the ground of change of user contained in section 13(2) (II) (b) was clearly made out from the facts and the High Court erred In setting aside the order of eviction.
172 The respondent tenant submitted that the landlord waived the ground of change of user by acquiescence to use of a part of the premises as lawyer 's office; that the ground in section 13(2)(ii)(b) was not available unless the change of user was of substantial, if not the entire building and, therefore, mere use of a small part of the residential building as lawyer 's office does not constitute such change.
Allowing the appeal of the landlord, this court, HELD : 1.01.
Use of the building for a purpose other than that for which it was leased, without the written consent of the landlord is a ground of eviction.
Ile object dearly is that the parties must remain bound by the terms on which the building is let out, including the condition relating to Its use for the purpose for which it was leased.
In other words, breach of the covenant regarding the kind of user of the building let out is the ground of eviction contained in section 13(2) (ii) (b) of the East Punjab Urban Rent Restriction Act.
[177A B] 1.02.
If the change in user of the building is of the kind that it makes the residential building let out for residential purpose alone change its character and become a 'scheduled building ' as defined in section 2(h) of the Act without the written consent of the landlord, the ground of eviction under section 13(2) (ii) (b) is made out.
[177C] 1.03.
This test is fully satisfied In the present case and the order of eviction was made by the Rent Controller and affirmed by the appellate authority on this basis.
The High Court misconstrued the provisions to take the contrary view.
[177D] Telu Ram vs Om Parkash Garg , approved.
Sant Ram vs Rajinder Lal and Ors., ; Dr. Sewa Singh vs Smt.
Ravinder Kaur and another, , distinguished.
Even though a 'scheduled building continues to be a residential building as defined in section 2(g), a residential building of which even a part is used for a scheduled purpose, becomes and is called a 'schedule building when user of the building is significant or the criterion.
[176F] 2.02 Where user of a building is of significance, a distinction is made In the Act between a residential building which is not a scheduled building and 173 that which is a scheduled building.
This is so in section 4 of the Act dealing with determination of fair rent wherein fixation of rent is made on the basis of user and for that purpose a 'scheduled building ' is treated differently from a residential building which is not a scheduled building.
[176G]
|
Appeal No. 131 of 1993.
From the Judgment and Order dated 17.12.1991 of the Himachal Pradesh High Court in Civil Revision No. 210 of 1990.
P.P. Rao and Ashok K. Mahajan for the Appellants.
D.D. Thakur, N.N. Bhat, E.C. Agrawala, A.V. Palli and Ms. Purnima Bhat for the Respondent.
The Judgment of the Court was delivered by YOGESHWAR DAYAL J.
Special leave granted.
With the consent of learned counsel for the parties, the appeal itself was heard.
The respondent is a tenant at the rate of Rs. 183.33 per month in the premises in dispute i.e. Shop No. 50, The Mall Shimla.
On 7th March, 1983, late Smt.
Dhani Devi, Predecessor in interest of appellant No. 2 and Shri Madan Mohan, appellant No.1, filed an application for eviction of the respondent on various grounds.
One of the grounds on which the eviction was claimed was non payment of rent.
It was stated in eviction petition that the respondent was in arrears of rent with effect from 1.3.1980 to 28.2.1983.
The Rent Controller on 29.7.1986 passed an order of eviction on the ground of non payment of arrears of rent.
The operative part of the said order is as under: "In the tight of my finding on issue No.1 above, the application is allowed on the ground of non payment of arrears of rent and the petition fails on other grounds.
However, the respondent shall not be evicted from the premises in question if he pays to the petitioner or deposit in this court a sum of Rs. 6,600, being arrears of rent from 1.3.1980 to 28.2.1983 @ 2,200 p.a. plus interest thereon @ 6% p.a.
amounting to Rs. 609.39, upto 28.2.1983and further interest on Rs. 6,600/ @ 6% p.a.
from 1.3.1983 till 28.8.1986 plus costs assessed at Rs. 100 within a period of 30 days from today. ' On 13.8.1986 the respondent deposited a sum of Rs. 8,500 in the court of the Rent Controller, Shimla.
According to the appellants, decree holders, the amount due inclusive of interest and costs upto 29.7.1986 was Rs. 8,661.29 and till the date of deposit it worked out to Rs. 8,677.79 if the 113 interest was to be calculated at the ordered rate till 13.8.1986.
According to the appellants the amount deposited was not in accordance with the order of the ejectment dated 29th July, 1986 and was short, and they filed the execution petition before the Rent Controller seeking possession of the suit premises.
On the execution petition being opposed, the Rent Controller framed the following two issues: "(a) Whether the tender made by the respondent of the rent amount is short as alleged? (b) Relief" By an order dated 18.5.1990 the Rent Controller while deciding issue No. 1 held that the tender made by the respondent was short to the tune of Rs. 161.29.
However, while deciding issue No.2, the Rent Controller allowed 15 days ' time from the date of the order for deposit of the said amount.
The appellants being aggrieved by the order of the Rent Controller dated 18.5.1990 filed revision petition in the High Court.
It was submitted on behalf of the appellants that the executing court had no jurisdiction to extend the time for making good the deficiency of.
161.29 inasmuch as since period of 30 days has been fixed by the Himachal Pradesh Urban Rent Control Act, 1987 (hereinafter referred to as 'the Act ') itself, the court could not either enlarge or abridge this period.
By the impugned judgment dated 17.12.1991, the High Court dismissed the revision petition.
The High Court while interpreting the words "amount due" occurring in the third proviso to Section 14(2) (i) of the Act held that these words referred to arrears of rent only and do not include interest and costs.
It will be noticed that neither of the parties had challenged the order 29.7.1986 by which the order of eviction was passed on the ground of non payment of rent against the respondent but the respondent had been given the liberty of avoiding eviction provided he deposited the amounts as stated in the order within the period of 30days from the date of the said order.
Before the High Court it was submitted on behalf of the appellants 114 that the executing court had no jurisdiction to extend the time to make good the deficiency in the amount as directed by the order dated 29.7.1986.
It was submitted on behalf of the appellants that since the period of 30 days had been fixed in the Act itself the court could not enlarge or abridge this period.
The High Court agreed with this submission but posed a question for itself, whether short fall of Rs. 161.29 which had been ordered to be deposited constitutes arrears of rent or interest and costs.
While following an earlier decision of the same High Court reported as Om Parkash vs Sarla Kumari & Ors., 1991 (1) Sim.
L.C. 45 interpreted the word "amount due" occurring in the third proviso to Section 14(2)(i) of the Act wherein it had been held that in order to save eviction the tenant is required to deposit only arrears of rent due at the time of filing application for eviction and not arrears of rent together with interest and costs within the statutory period of 30 days from the date of eviction order.
After answering the question the High Court took the view that the deficiency of Rs. 161.29 pertains to interest and costs.
So far as the arrears of rent which amountedto Rs. 6,600 for the period in question i.e. from 1.3.1980 to 28.3.1983 at the rate of Rs. 2,200 p.a. is concerned, it had been deposited within 30days.
In view of this finding the High Court was of the view that the respondent was not liable to be evicted.
High Court also held that the order of the executing court extending time to deposit Rs. 161.29 in pursuance of its order dated 29.7.1986 is of no consequence.
The relevant part of Section 14 of the Act may be noticed: '14.
Eviction of tenant (1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decre passed before or after the commencement of this Act or otherwise, whether before or after the termination of the tenancy, except in accordance with the provisions of this Act.
(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf.
If the Controller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (i) that the tenant has not paid or tendered the rent due from him in respect of the building or rented land within fifteen days 115 after the expiry of the time fixed in the agreement of tenancy with his landlord or in the absence of any such agreement by the last day of the month next following that for which the rent is payable: Provided that if the tenant on the first hearing of the application for ejectment after due service pays or tenders the arrears of rent and interest at the rate of 9 per cent per annum on such arrears together with the cost of application assessed by the Controller, the tenant shall be deemed to have duly paid or tendered the rent within time aforesaid: Provided further that if the arrears pertain to the period prior to the appointed day, the rate of interest shall be calculated at the rate of 6 per cent per annum: Provided further that the tenant against whom the Controller has made an order for eviction on the ground of non payment of rent due from him, shall not be evicted as a result of his order, if the tenant pays the amount due within a period of 30 days from the date of order; or (ii).
; or (iii) . ; or (iV).
; or (v). ; the Controller may make an order directing the tenant to put the landlord in possession of the building or rented land and if the Controller is not so satisfied he shall make an order rejecting the application:" A reading of the aforesaid relevant part of the Section shows that sub section (1) of Section 14 creates a ban against the eviction of a tenant except in accordance with the provisions of the Act.
The ban is liable to be lifted.
Sub section (2) of Section 14 provides the circumstances in which the ban is partially lifted.
It contemplates that where an eviction petition is filed, inter alia, on the ground of non payment of rent by the landlord, 116 the Controller has to be satisfied that the tenant has neither paid nor tendered the rent in the circumstances mentioned in clause (i) of sub section (2) of Section 14.
He has to arrive at this satisfaction after giving a reasonable opportunity of showing cause against it to the tenant.
But there may be cases where the tenant, on being given notice of such an application for eviction, may like to contest or not to contest the application.
The tenant is given the first chance to save himself from eviction as provided in the first proviso to clause (i) of sub section (2) of Section 14.
This first proviso contemplates that the tenant may on the first hearing of the application for ejectment pay or tender in court the rent and interest at the rate mentioned in the proviso on such arrears together with the cost of application assessed by the Controller and in that case, the tenant is deemed to have duly paid or tendered the rent within the time as contemplated by clause (i) of sub section (2) of Section 14.
Where the tenant does not avail of this opportunity of depositing as contemplated by the first proviso and waits for an ultimate decision of the application for eviction on the ground of non payment of rent, the Controller has to decide it and while deciding, the Controller has to find whether the ground contained in clause (i) of sub section (2) of Section 14 has been made out or not.
If the Controller finds that the ground as contemplated by clause (i) of sub section (2) of Section 14 is made out, he is required to pass an order of eviction on the ground of non payment of rent due from him.
A second opportunity to avoid eviction is provided by the third proviso to clause (i) of sub section (2) of Section 14.
But the second opportunity is provided after the order of eviction.
The benefit of avoiding eviction arises if the tenant pays the "amount due ' within the period of 30 days of the date of order.
The question is what is the meaning of the words 'amount due" occurring in the third proviso to clause (i) of sub section (2) of Section 14 of the Act.
It will be noticed that there is no provision in the Act for giving powers to the Controller to direct payment or deposit of 'Pendente lite" rent for each month during the pendency of the petition for eviction of the meant.
First Proviso to sub section (2) of section 14 shows that in order to show payment or valid tender as contemplated by clause (i) of sub section (2) of Section 14 by a tenant in default, he has to pay on the first date of hearing the arrears of rent alongwith interest and costs of the application 117 which are to be assessed by the Controller.
Surely where a tenant does not avail of the first opportunity and contests the eviction petition on the ground of non payment of arrears of rent and fails to show that he was not in default and court finds that the ground has been made out, an order of eviction has to follow.
Therefore, it does not stand to reason that such a tenant who contests a claim and fails to avoid order of eviction can still avoid it by merely paying the rent due till the date of the filing of the application for ejectment.
The third proviso to clause (i) of sub section (2) of Section 14 should also receive an interpretation which will safeguard the rights of both the landlord and tenant.
The "amount due" occurring in the third proviso in the context will mean the amount due on and upto the date of the order of eviction.
It will take into account not merely the arrears of rent which gave cause of action to file a petition for eviction but also include the rent which accumulated during the pendency of eviction peti tion as well.
If the tenant has been paying the rent during the pendency of the eviction petition to the landlord, the "amount due" will be only arrears which have not been paid.
The landlord, as per the scheme of the section, cannot be worse off vis a vis a tenant who was good enough to deposit in court the arrears of rent together with interest and costs on the first date of hearing.
If the interpretation given by the High Court is accepted the result would be that the tenant will be better off by avoiding to pay the arrears of rent with interest and costs on the first date of hearing and prefer suffering order of ejectment after contest and then merely offer the amount due as mentioned in the application for ejectment to avoid eviction.
This could not be the intention of the legislature.
In such cases it will be advisable if the Controller while passing the order of eviction on the ground specified in clause (i) of sub section (2) of Section 14 of the Act specifies the "amount due" till the date of the order and not merely leave it to the parties to contest it after passing of the order of eviction as to what was the amount due.
Surely the Rent Control Acts, no doubt, are measures to protect tenants from eviction except on certain specified grounds if found established.
the grounds are made out and subject to any further condition which may be provided in the Act, the tenants would suffer ejectment.
Again the protection given in the Acts is not to give licence for continuous litigation and bad blood.
118 Surely the legislature which made the Act could not have envisaged that after the parties finish off one round of litigation, the party should be relegated to another round of litigation for recovery of rent which accrued pendente lite.
Whatever protection Rent Acts give they do not give blanket protection for "non payment of rent".
This basic minimum has to be complied with by the tenants.
Rent Acts do not contemplate that if one takes a house on rent, he can continue to enjoy the same without payment of rent.
The order which the Controller passed was a composite order of eviction in the sense that if the tenant wanted to save himself from eviction, he had to comply with the order.
The order which was passed by the Controller cannot be said to be an order without jurisdiction.
It may be a right order; it may have been a wrong order.
It was not a nullity that the executing court will ignore it.
But at the stage when the execution application was filed, the rent Controller could not go behind its own order dated 29.7.1986.
If the Controller could not go behind its own order in execution proceedings, surely the High Court could not also go behind the order in revision against the order of Controller refusing execution.
It was not the appropriate stage for the High Court to examine what order ought to have been passed or to limit the efficacy of the order to its interpretation of the words "amount due" as mentioned in the third proviso to clause (i) of sub section (2) of Section 14.
The question which the High Court posed never arose.
Mr., Thakur, who appeared on behalf of the respondent submitted: (1)that sub section (2) of Section 14 gives discretion to the Controller to pass an order of eviction or not to pass an order of eviction even if the ground mentioned in clauses (i) to (v) of sub section (2) of Section 14 are made out; (2)that the order of eviction which was passed is not the final order in the sense that it is an interim order.
The final order is passed only after the expiry of 30 days if the tenant fails to avail of the second opportunity provided by the third proviso to clause (i) of sub section (2) of Section 14.
With due respect to learned counsel for the respondent we are not able to persuade ourselves to agree with either of his submissions.
It is true that sub section (2) uses the expression "the Controller may make an order 119 directing the tenant to put the landlord in possession of the building or rented land and if the Controller is not so satisfied he shall make an order rejecting the application".
It will be noticed that the Controller is required to dismiss the eviction application if he is not satisfied to the existence of any ground mentioned in clauses (i) to (v) of sub section (2) of Section 14 of the Act but where the Controller is satisfied with existence of any of the grounds mentioned in clauses (i) to (v) of sub section (2) of Section 14 the Controller has no discretion to decline to pass the order of eviction.
In the context in which the expression "may" is used it means "shall '.
Otherwise the section would read that "not only the Controller can reject an application when he is not satisfied with the ground but is also entitled to dismiss the application when he is so satisfied".
Such an intention cannot be attributed to the legislature particularly when the consequences of non satisfaction is expressly mentioned.
Even if the consequences of non satisfaction was not mentioned, we are of the view that the expression "may" occurring would still mean "shall" and all that would mean is that if the grounds are not made out, he will be bound to dismiss the application and if the grounds are made out, he is bound to pass the order of eviction.
If any other interpretation is given to the word "may" the section may itself become subject matter of challenge under Article 14 of the Constitution of India.
The Court shall avoid interpretation which make the provisions violative of the Constitution, if possible.
Coming to the second submission, as we have noticed earlier, subclause (i) of sub section (2) of Section 14 gives two opportunities to the tenant to avoid eviction.
The first opportunity to avoid eviction is if the tenant avails of the benefit of first proviso.
This opportunity is before the passing of the order of eviction.
The second opportunity is after the order of eviction.
The order, which is passed for eviction, is final in the sense as it is not an interim order.
If the tenant avails of the second opportunity as provided in the third proviso then the order of eviction becomes inexecutable and he saves himself from eviction.
Having found that the question posed and answered by the High Court was not relevant at the stage it was posed, namely during the execution proceedings and, therefore, the order is bad.
The validity of the order of the executing court dated 18th May, 1990 120 now needs to be considered.
The executing court, on consideration of the evidence recorded during the execution proceedings held that the judgment debtor, respondent, himself calculated the interest for the period 1.3.1983 to 28.2.1986 with the result that Rs. 161.29 ps. was deposited less by the judgment debtor and thought that it had power to extend the time for making up the deficiency and accordingly extended the time.
So far as the Himachal Pradesh High Court is concerned it has consistently taken the view that the executing court has no such power since the time is fixed by the statute.
R.S. Pathak, CJ.
(As His Lordship then was) in Shri Krishan Kumar vs Shri Gurbux Singh, while interpreting the third proviso to Section 14(2) (i) of the Act took the view thus: "It is apparent that the statute itself provides a period of 30 days from the date of the order for payment of rental arrears by the tenant.
On such payment, the statute declares, effect will not be given to the order of eviction.
The statute does not leave the determination of the period to the Rent Controller.
It is not open to the Rent Controller, when disposing of the petition for eviction, to make an order either abridging or enlarging the period of 30 days.
Indeed, the period having been determined by the statute itself, no order was necessary by the Rent Controller.
There being no power in the Rent Controller to vary the period mentioned in the statute, it is apparent that the order made by him in the execution proceedings is a nullity.
The Appellate Authority is right in the view taken by it." Mr. Thakur, learned counsel for the respondent, referred us to Shyamcharan Sharma vs Dharamdas, ; ; Miss Santosh Mehta vs Om Prakash and others; , ; Ram Murti vs Bhola Nath and another, and Ganesh Prasad Sah Kesari and another vs Lakshmi Narayan Guptta ; and submitted that this Court had, in spite of there being no express provisions to extend time taken the view that the Court has inherent powers to extended time for deposit of rent.
We are of the view that the reliance placed on these cases is wholly misplaced.
It may be noticed that the case of Shyamcharan Sharma (supra) related to the powers of the Court under Section 13(6) of the Madhya 121 Pradesh Accommodation Control Act, 1961.
This Act contemplated an eviction petition being filed under Section 12 and one of the grounds for eviction was for failure of the tenant to pay or tender within two months from the date of service of notice of demand of rent and Section 12 (3) thereof provided that the order of eviction will not be passed on this ground if the tenant makes the payment of deposit as required by Section 13.
Section 13(1) contemplated that when a suit has been instituted on any of the grounds against the tenant for his eviction, the tenant shall, within one month of the service of summons on him or within such further time as the court may, allow in this behalf, deposit in the court or pay to the landlord the arrears of rent and shall also continue to pay, month by month, the future rent as well.
Sub section (5) of Section 13 contemplated that if the deposit was made as contemplated by sub section (1) of Section 13 no order for recovery of possession should be made on the ground of default in the payment of rent.
Sub section (6) of Section 13 provide that if the tenant fails to pay any amount as required by Section 13 the court had the power to strike out the defence and proceed with the hearing of the suit.
While dealing with the powers under Section 13(6) of the said Act this Court took the view that the court had discretion to strike off the defence or not even if there is delay in depositing rent falling due after institution of suit for eviction.
The Court held : "In case of non deposit or non payment of rent by the tenant, Section 13(6) vests a discretion in the Court to order striking off the tenant 's defence against eviction; it neither clothes the landlord with an automatic right to an eviction decree nor visits the tenant with the penalty of such a decree being automatically passed.
If the court has the discretion to strike off or not to strike off the defence, it has further discretion to condone the default and extend the time for making the payment or deposit.
Such a discretion is a necessary implication of the discretion not to strike off the defence.
A different construction might lead to perversion of an object of the Act, namely 'adequate protection of the tenant '.
" An express provision for extending time for deposit or payment was not made in Section 13(1) because the consequences of non payment was proposed to be dealt with separately by Section 13(6) and the discretion to extend time is incidental to the discretion in the said section to strike 122 off or not to strike off the defence.
This view in Shyamcharan Sharma 's case (supra) was followed by this Court in Miss Santosh Mehta 's case (supra) and Ram Murti 's case (supra), which were the cases under the Delhi Rent Control Act, 1958, which also had the provisions similar to the Madhya Pradesh Accommodation Control Act, 1961 contemplating direction by the court to direct the tenant to pay the pendente lite rents which have become due and consequences for not complying with such directions.
Again the case of Genesh Prasad Sah Kesari (supra) related to the provisions for striking out the defence for failure of the tenant to deposit arrears of rent within 15 days of date of the courts 's order and this court again followed the decision in the case of Shyamcharan Sharma.
These cases have no application where the final orders were passed after satisfaction of the Controller for entitling the landlord to seek eviction on the grounds specified in the Act.
Mr. Thakur then submitted that this Court should not exercise its powers under Section 136 of the Constitution of India as the rent laws are meant for protection of the tenants.
Rent Control Acts are necessary social measures for protection of tenants.
The Rent Control Laws have tried to balance the equity.
Landlord is duty bound to satisfy the ground of eviction mentioned in various Rent Acts and if he does not satisfy, he cannot get the order of eviction merely because the Act restricts his rights.
There are certain Rent Acts which, even when a ground of eviction is satisfied, still confer powers on the Rent Controllers to consider the question of comparative hardship and it is only in those types of cases, if the Controller is satisfied, he can decline passing orders of eviction.
But if there is no such limitations, the Rent Controllers.
after the ground of eviction specified in the Act is made out, have no discretion to reject the application.
Once the order of eviction is passed, in the circumstances like the present, the executing court is duty bound to execute its orders.
No question of equity or hardship arises at that stage.
We are in complete agreement with the view expressed by R.S. Pathak, CJ (as His Lordship then was ) in the aforesaid case of Shri Krishan Kumar.
123 In the present case the tenant spared no efforts to harass the landlords.
After the order of eviction dated 29th July, 1986 the matter did not rest there.
The tenant again failed to pay the rent and the landlord was forced to file another eviction petition on the ground of non payment of rent for the period from 1.3.1983 to 30.11.1986 and it was only after the filing of the said eviction petition and in order to avoid eviction he deposited the rent.
The matter did not rest there even and it was only after the notice of the Special Leave Petition was issued in the present case that the tenant chose to pay the rent from 1.12.1986 after keeping it in arrears for practically six years.
In view of the aforesaid facts and circumstances of the case we set aside the impugned order of the High Court dated 17th May, 1991 and the order of the Rent Controller dated 18th May, 1990 and direct the Rent Controller, Shimla, to issue the warrants of possession for ejectment of the respondent from the premises in dispute and place the landlords/appellants in possession.
V.P.R. Appeal allowed.
| IN-Abs | The respondent was a tenant at the rate of Rs. 183.33 per month In the suit premises.
The respondent was in arrears of rent with effect from 13.1980 to 28.2.1983.
On 7th March, 1983, predecessor in interest of appellant No.2 and appellant No.1, flied an application for eviction of the respondent on the ground of non payment of rent.
The Rent Controller on 29.7.1986 passed an order of eviction.
On 13.8.1986 the respondent deposited a sum of Rs. 9,500 In the court of the Rent Controller.
According to the appellant the account deposited was not In according with the order dated 29th July 1986.
They filed the execution petition before the Rent Controller seeking possession of the suit premises.
The Rent Controller framed two Issues: (a) whether the tender made by the respondent of the rent amount was short as alleged , (b) Relief.
108 The Rent Controller held that the tender made by the respondent was short of Rs. 161.29.
While deciding issue No. 2, the Rent Controller allowed 15 days ' time to deposit the said amount.
The appellants being aggrieved by the order of the Rent Controller riled a revision petition in the High Court.
Before the High Court the appellants submitted that the executing court had no jurisdiction to extend the time for making good the deficiency of Rs. 161.29 inasmuch as since period of 30 days was fixed by the Himachal Pradesh Urban Rent Control Act, 1987 itself, the court could not either enlarge or abridge this period.
The High Court dismissed the revision petition, holding that the respondent was not liable to be evicted and also held that the order of the executing court extending time to deposit Rs. 161.29 in pursuance of its order dated 29.7.1986 was of no consequence.
The landlord riled this appeal by special leave against the High Court 's judgment.
The respondent tenant submitted that sub section (2) of Section 14 gave discretion to the Controller to pass an order of eviction or not to pass an order of eviction, even if the ground mentioned in clauses (i) to (v) of Sub section (2) of Section 14 were made out; that the order of eviction which was passed was not the final order in the sense that it was an interim order and the final order was passed only after the expiry of 30 days if the tenant failed to avail of the second opportunity provided by the third proviso to clause (i) of sub section (2) of Section 14.
Allowing the appeal of the landlord, this Court HELD:1.01.
The Rent Control Acts are measures to protect tenants from eviction except on certain specified grounds if found established.
Once the grounds are made out and subject to any further condition which may be provided in the Act, the tenants would suffer ejectment.
Again the protection given in the Acts is not to give licence for continuous litigation and bad blood.
[117H] 1.02.The legislature which made the Act could not have envisaged that after the parties finish of one round of litigation, the party should be 109 relegated to another round of litigation for recovery of rent which accrued pendente lite.
Whatever protection Rent Acts give, they do not give blanket protection for "non payment of rent '.
This basic minimum has to be complied with by the tenants.
Rent Acts do not contemplate that if one takes a house on rent, he can continue to enjoy the same without payment of rent.
[118A B] 1.03.Rent Control Acts are necessary social measures for protection of tenants.
The Rent Control Laws have tried to balance the equity.
Landlord is duty bound to satisfy the ground of eviction mentioned in various Rent Acts and if he does not satisfy, he cannot get the order of eviction merely because the Act restricts his rights.
[122E] 1.04.There are certain Rent Acts which, even when a ground of eviction is satisfied, still confer powers on the Rent Controller to consider the question of comparative hardship and it is only in those types of cases, if the Controller is satisfied, he cap decline passing orders of eviction.
But if there is no such limitations, the Rent Controllers after the ground of eviction specified in the Act is made out, have no discretion to reject the application.
Once the order of eviction is passed the executing court is duty bound to execute its orders.
No question of equity or hardship arises at that stage.
[122F G] 2.01.There is no provision in the Act for giving powers to the Controller to direct payment or deposit of "pendente lite" rent for each month during the pendency of the petition for eviction of the tenant.
First Proviso to sub section (2) of Section 14 shows that in order to show payment or valid tender as contemplated by clause (i) of sub section (2) of Section 14 by a tenant in default, he has to pay on the first date of bearing the arrears of rent alongwith interest and costs of the application which are to be assessed by the Controller.
[116G H] 2.02.Sub clause (i) of sub section (2) of Section 14 gives two opportunities to the tenant to avoid eviction.
Ile first opportunity to avoid eviction is if the tenant avails of the benefit of first proviso.
This opportunity is before the passing of the order of eviction.
The second opportunity is after the order of eviction.
The order which is passed for eviction, is final in the sense as it is not an interim order.
If the tenant avails of the second opportunity as provided in the third proviso then the order of eviction becomes inexecutable and he saves himself from eviction.
[119G] 110 2.03.The Controller is required to dismiss the eviction application if he is not satisfied to the existence of any ground mentioned in clauses (i) to (v) of sub section (2) of Section 14 of the Act but where the Controller is satisfied with existence of any of the grounds mentioned in clauses (1) to (v) of sub section (2) of Section 14 the Controller has no discretion to decline to pass the order of eviction.
[119B] 2.04.The order which the Controller passed was a composite order of eviction in the sense that if the tenant wanted to save himself from eviction, he had to comply with the order.
The order which was passed by the Controller cannot be said to be an order without jurisdiction.
It may be a right order, it may have been a wrong order.
It was not a nullity that the executing court will ignore it.
But at the stage when the execution application was riled, the Rent Controller could not go behind its own order dated 29.7.1986.
[118C] 2.05.If the Controller could not go behind Its own order in execution proceedings, the High Court could not also go behind the order in revision against the order of Controller refusing execution.
It was not the appropriate stage for the High Court to examine what order ought to have been passed or to limit the efficacy of the order to its interpretation of the words "amount due" as mentioned in the third proviso to clause (i) of subsection (2) of Section 14.
[118D E] 2.06.The landlord, as per the scheme of the section, cannot be worse off vis a vis a tenant who was good enough to deposit in court the arrears of rent together with interest and costs on the first date of hearing.
[117D] 2.07.In the present case the tenant spared no efforts to harass the landlords.
After the order of eviction dated 29th July, 1986 the matter did not rest there.
The tenant again failed to pay the rent and the landlord was forced to file another eviction petition on the ground of non payment of rent for the period from 1.3.1983 to 30.11.1986 and it was only after the filing of the said eviction petition and in order to avoid eviction he deposited the rent.
It was only after the notice of the Special Leave Petition was issued, the tenant chose to pay the rent from 1.12.1986 after keeping it in arrears for practically six years.
[123A B] Om Parkash vs Sarla Kumari & Ors., 1991 (1) Sim.
L.C. 45, referred to.
111 Shri Krishnan Kumar vs Shri Gurbux Singh, , approved.
Shyamcharan Sharma vs Daramdas, ; ; Miss Santosh Mehta vs Om Prakash and others; , ; Ram Murti vs Bhola Nath and another, [1984] 3 SCC Ill and Ganesh Prasad Sah Kesari and another vs Lakshmi Naryan Gupta; , , distinguished.
3.01.The 'amount due" occurring in the third proviso in the context will mean the amount due on and upto the date of the order of eviction.
It will take into account not merely the arrears of rent which gave cause of action to file a petition for eviction but also include the rent which accumulated during the pendency of eviction petition as well.
If the tenant has been paying the rent during the pendency of the eviction petition to the landlord, the 'amount due" will be only arrears which have not been paid.
[117C D] 3.02.It will be advisable if the Controller while passing the order of eviction on the ground specified in clause (1) of sub section (2) of Section 14 of the Act specifies the 'amount due" till the date of the order and not merely leave it to the parties to contest it after passing of the order of eviction as to what was the amount due.
[117F] 3.03.In the context in which the expression "may ' is used it means .shall".
Otherwise the section would read that 'got only the Controller can reject an application when he is not satisfied with the ground but is also entitled to dismiss the application when he is so satisfied.
" Such an intention cannot be attributed to the legislature particularly when the consequences of non satisfaction is expressly mentioned.
Even if the consequences of non satisfaction was not mentioned, the expression .may ' occurring would still mean "shall" and all that would mean Is that if the grounds are not made out, he will be bound to dismiss the application and If the grounds are made out, he is bound to pass the order of eviction.
If any other interpretation Is given to the word "may" the section may itself become subject matter of challenge under Article 14 of the Constitution of India.
The Court shall avoid interpretation which make the provisions violative of the Constitution if possible.
[117C F] 112
|
Appeal No. 5086 of 1985.
From the Judgment and Order dated 31.1.1985 of the Punjab and Haryana High Court in Civil Revision No. 1847 of 1984.
A.B. Rohtagi, R.C. Mishra and Dr. Meera Aggarwal for the Appellant.
M.S. Gujaral and R.S. Sodhi for the Respondents.
The Judgment of the Court was delivered by ' VERMA, J.
The appellant, Gulraj Singh Grewal, took the suit premises situate in Ludhiana on monthly rent of Rs. 800 from respondent No. 1, Dr. Harbans Singh, in March 1980.
Respondent No. 2, Dr. Ravinder Singh, is son of respondent No. 1, Dr. Harbans Singh.
Both the respondents are medical practitioners.
The respondents filed a petition for eviction of the appellant tenant on three grounds, namely, personal need of the respondents under Section 13(3) (a) (i) (a), change of user under section 13(2) (ii) (b) and impairment of value and utility of the rented building under section 13(2) (iii) of the East Punjab Urban Rent Restriction Act, 1948.
The appellant contested the petition denying the existence of any of these grounds for eviction.
The Rent Controller dismissed the petition holding that none of the three grounds had been proved.
On appeal by the respondents, the appellate authority held that the personal need of respondent No. 2, Dr. Ravinder Singh, one of the landlords, was proved and the ground of change of user of the rented building by the appellant had also been proved.
The third ground relating to impairment of value and utility of the rented building was rejected.
The appellate authority further held that the building though let out for residential purpose was used by the appellant, a consultant engineer, partly for his profession on account of which it had become 153 a 'scheduled building ' as defined in Section 2(h) of the Act and, therefore, the ground for eviction based on personal need was not available for evicting the tenant from a 'scheduled building.
However, an order of eviction was made on the ground of change of user of the rented building.
The appellant then preferred a revision to the High Court which has been dismissed the findings and order of eviction made by the appellate authority.
Hence, this appeal by special leave.
The submissions of Shri Avadh Behari, learned counsel for the appellant are several.
The first contention is that there was no change of user by the appellant tenant to justify the order of eviction on that ground.
The second submission is that the finding on the question of personal need of the landlord is erroneous.
The last submission is that no order of eviction can be made on the ground of personal need contained in section 13(3) (a) (i) (a) in respect of a 'scheduled building ' since that ground is available for eviction only from a 'residential building ' as defined in section 2(g) of the Act, a 'scheduled building ' defined in section 2(h) of the Act being a different kind of building.
In reply, Shri M.S. Gujral, learned counsel for the respondents submitted that the order of eviction is justified and there is no ground to interfere in this appeal.
His submission is that a 'scheduled building ' defined in section 2(h) continues to be a 'residential building ' as defined in section 2(g), so that the ground for eviction based on personal need contained in section 13(3) (a) (i) (a) is available in the present case.
He also submitted that the finding of fact relating to personal need of the landlord is not open to challenge.
His submission in the alternative is that in case a 'scheduled building ' is not 'residential building ', then the ground of change of user is available since the building was let out for residential purpose and its user has been changed unilaterally by the tenant without the consent of the landlord.
The first question for our decision is: whether learned counsel for the appellant is right in contending that a 'scheduled building ' is not a "residential building ' for the purpose of the ground of eviction contained in section 13(3) (a) (i) (a) ? In case it is held that this ground for eviction of the tenant is available in the present case and the finding of fact on the question of personal need of the landlord is not open to challenge, the order of eviction can be sustained on this ground alone and it is unnecessary to decide the question relating to the ground of change of user contained in section 13(2) (ii) (b) of the Act.
We would, therefore, consider 154 this question first.
Admittedly, the appellant is a consultant engineer and the suit premises, a 'building as defined in section ' '(a) of the Act, was let out to him solely for residential purpose.
He has been using it as his residence while a part thereof is used by him as his professional office without the consent of the landlord.
It is on the basis of use of a part of the building as appellant 's office that the appellant claims it to be a 'scheduled building ' as defined in section 2(h) of the Act.
Apart from the question of change of user which is a separate ground for eviction, the question is whether the suit premises being treated as a 'scheduled building, the ground for eviction contained in section 13(3) (a) (i) (a) is not available, that ground being available only in respect of a 'residential building ' as defined in section 2(g) of the Act.
The contention of learned counsel for the appellant is that the word 'scheduled ' which occurred along with 'residential ' in section 13(3) (a) (i) of the Act having been omitted by the amendment made in the principal Act in 1956, the obvious legislative intent is to exclude a 'scheduled building ' from the scope of that provision with the result that the grounds for eviction contained in section 13(3) (a) (i), of which personal need of the landlord is one, are not available for eviction of a tenant from ,scheduled building ' thereunder after that amendment.
To buttress this argument, learned counsel referred to section 4 of the principal Act and Section 13A, inserted therein by an amendment made in 1985, wherein the expression 'scheduled building ' is expressly used in addition to the expression 'residential building ' and the separate definition of 'scheduled building ' in section 2(h) while defining 'residential building ' in section 2(g) in the principal Act from the very inception.
The question is whether this contention can be accepted.
Before dealing with the above question, it would be appropriate to dispose of the challenge made to the finding of fact of landlord 's personal need, on which this question arises.
The finding on this question of fact recorded by the appellate authority has been affirmed by the High Court.
Can this finding be reopended now? Learned counsel for the appellant submitted that the personal need found proved is only of respondent No. 2, son of respondent No. 1, who did not enter the witness box and, as stated in an affidavit filed in this 155 Court, even he is carrying on his profession at a place about 25 kms, away from Ludhiana.
In our opinion, this finding of fact is unassailable.
The High Court has clearly observed that no meaningful argument could be advanced on behalf of the appellant to challenge this finding of the appellate authority.
Respondent No. 1 who is the father of respondent No. 2, has supported and proved the need of respondent No. 2, who also is a landlord.
The fact that for want of suitable accommodation in the city of Ludhiana, respondent No. 2 is at present carrying on his profession at some distance from Ludhiana is not sufficient to negative the landlord 's need.
In these circumstances, the non examination of respondent No. 2 also, when respondent No. 1 has examined himself and proved the need of the landlord, is immaterial and, at best, a matter relating only to appreciation of evidence, on which ground this finding of fact cannot be reopened.
This is more so when no serious challenge to this finding was made in the High Court.
We must, therefore, proceed on the basis that the personal need of the landlord is proved to make out the ground of eviction contained in section 13(3)(a)(i)(a) of the Act in case that ground of eviction is applicable to the suit premises treating it as a 'scheduled building.
In order to fully appreciate the arguments of learned counsel for the appellant, the legislative history would be useful.
The Punjab Urban Rent Restriction Act, 1941 was enacted to restrict the increase of rents on certain premises situated within the limits of urban areas in the Punjab.
That Act was primarily to control the increase of rents and did not relate to eviction of tenants.
Then came the Punjab Urban Rent Restriction Act, 1947 which was enacted to restrict the increase of rent of certain premises situated within the limits of urban areas and the eviction of tenants therefrom.
Provision was made in Section 4 of the Act for determination of fair rent, for which purpose 'non residential building ', 'residential building ' and 'scheduled building ' were treated as three different categories prescribing different formula for each of these three categories.
For this reason, separate definition of each of them was given in section 2 containing the definitions.
However, for the purpose of eviction, in section 13 (3), a 'residential building or a 'scheduled building ' were clubbed together and treated similarly by providing the same grounds for eviction while a 'non. residential building ' or 'rented land ' were clubbed together and provided for separately.
The scheme of the Act clearly shows that a 'residential building ' and a 'scheduled building ' were treated as different categories only for the determination of fair rent but were treated alike while prescrib 156 ing the grounds for eviction of a tenant therefrom.
The definition of 'scheduled building ' in section 2(h) of that Act also took care to provide that a 'scheduled building ' means a residential building which was being used partly for a specified purpose.
In this manner, the definition of a 'scheduled building ' given in the Act was in consonance with the scheme of the Act treating it differently from a 'residential building ' for the purpose of determination of fair rent and similarly for eviction of the tenant.
Then came the East Punjab Urban Rent Restriction Act, 1948 which repealed the 1947 Act and replaced it.
The same scheme was retained in the 1949 Act which is the principal Act for our purpose.
It is the relevant provisions of this Act, as amended from time to time, which are material for deciding the point raised by the appellant.
The East Punjab Urban Rent Restriction Act, 1948 (East Punjab Act No. 111 of 1948) was amended by the Amendment Acts of 1956, 1957, 1966 and 1985 whereby section 13 of the principal Act was amended and in 1985 the new section 13A was inserted.
It is the amendments made in section 13 at the principal Act providing for eviction of tenants which are material for our purpose.
The material provisions of the Act, including the amendments made in section 13 from time to time are mentioned hereafter.
In the principal Act as originally enacted, the material provisions are as under : '2.
Definitions.
In this Act, unless there is anything repugnant in the subject o r context, (a) 'building ' means any building or part of a building let for any purpose whether being actually used for that purpose or not, including any land, godowns out houses or furniture let therewith, but does not include a room in a hotel, hostel or boarding house; xxx xxx xxx (d) 'non residential building means a building being used solely for the purpose of business or trade; xxx xxx xxx (g) "residential building" means any building which is not a 157 non residential building; (h) "scheduled building means a residential building which is being used by a person engaged in one or more of the professions specified in the Schedule to this Act, partly for his business and partly for his residence; xxx xxx xxx "4.
Determination of fair rent. (1) The Controller shall on application by the tenant or landlord of a building or rented land fix the fair rent for such building or rented land after holding such inquiry as the Controller thinks fit.
(2) In fixing the fair rent under this section, the Controller may first fix a basic rent taking into consideration xxx xxx xxx (3) In fixing the fair rent of a residential building the Controller may allow.
If the basic rent xxx xxx xxx (4) In fixing the fair rent of a scheduled building the Controller may allow, if the basic rent xxx xxx xxx (5) In fixing the fair rent of a non residential building or rented land the Controller may allow, if the basic rent xxx xxx xxx '11.
Conversion of a residential building into a nonresidential building No person shall convert a residential building into a non residential building except with the permission in writing of the Controller." "13.
Eviction of tenants.
(1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decree passed before or after the commencement 158 of this Act or otherwise and whether before or after the termination of the tenancy, except in accordance with the provisions of this section.
(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf.
If the Controller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (i). . . (ii)that the tenant has after the commencement of this Act without the written consent of the landlord (a). . . (b) used the building or rented land for a purpose other than that for which it was leased.
or (iii)that the tenant has committed such acts as are likely to impair materially the value or utility of the building or rented land, or the Controller may make an order directing the tenant to put the landlord in possession of the building or rented land and if the Controller is not so satisfied he shall make an order rejecting the application : Provided that the Controller may give the tenant a reasonable time for putting the landlord in possession of the building or rented land and may extend such time so as not to exceed three months in the aggregate.
(3) (a) A landlord may apply to the Controller for an order directing tenant to put the landlord in possession (i) in the case of a residential or a scheduled building if (a) he requires it for his own occupation; 159 (b) he is not occupying another residential or a scheduled building, as the case may be, in the urban area concerned; and (c) he has not vacated such a building without sufficient cause after the commencement of this Act in the said urban area: (ii) in the case of a non residential building or rented land, if (a) he requires it for his own use; (b) he is not occupying in the urban area concerned for the purpose of his business any other such building or rented land, as the case may be, and xxx xxx xxx "19.
Penalties.
(1) If any person contravenes any of the provisions of sub section (2) of section 9, sub section (1) of section 10, section 11 or section 18, he shall be punishable with fine which may extend to one thousand rupees. ' The East Punjab Urban Rent Restriction (Amendment) Act, 1956 (Punjab Act No. 29 of 1956) amended section 13 in the following manner: 2.
Amendment of section 13 of East Punjab Act III of 1949.
In clause (a) of sub section (3) of section 13 of the East Punjab Urban Rent Restriction Act, 1949, hereinafter referred to as the principal Act (i) (a) In sub clause (i), the words 'or a scheduled" shall be omitted.
(b) In sub paragraph (b), the words "or a scheduled" and the words "as the case may be" shall be omitted.
(ii) (a) In sub clause (ii) the words 'a non residential building or ' shall be omitted.
(b) In sub paragaph (b), the words "building or" and the words Was the case may be ' shall be omitted" 160 (c) In sub paragraph (c), the words 'a building or" shall be omitted.
(iii)For sub clause (iii), the following shall be substituted, namely: (iii)In the case of any building or rented land, if he requires it to carry out any building work at the instance of the Govern ment or local authority or any improvement Trust under some improvement of development scheme or if it has become unsafe or unfit for the human habitation. (iv) In sub clause (iv), for the words 'any building", where they first occur, the words 'any residential building shall be sub stituted.
(v) In the second proviso, for the words "a residential a scheduled or non residential building or rented land ', the words "a residential building or rented land" shall be substituted.
Section 13 was again amended by the Punjab Urban Rent Restriction ,Amendment) Act, 1957 (Punjab Act No. 21 of 1957) as under '2.
Amendment of section 13 of the East Punjab Act No. 111 of 1949.
After clause (c) of sub paragraph (i) of paragraph (a) of sub section (3) of section 13 of the East Punjab Urban Rent Restriction Act, 1949, the following shall be added, namely : "(d) it was let to the tenant for use as a residence by reason of his being in the service or employment of the landlord, and the tenant has ceased, whether before or after the commencement of this Act, to be in such service or employment: Provided that where the tenant is a workman who has been discharged or dismissed by the landlord from his service or employment in contravention of the provisions of the Industrial Disputes Ad, 1947, he shall not be liable to be evicted until the competent authority under that Act confirms the order of discharge or made against him by the landlord." 161 Thereafter, the East Punjab Urban Rent Restriction (Amendment) Act, 1966 (Punjab Act No. 6 of 1966) further amended section 13 of the principal Act as under "2.
Amendment of section 13 of punjab Act 3 of 1949.
In section 13 of the East Punjab Urban Rent Restriction Act, 1949, (i) in sub section (3), (a) after sub paragraph (i) of paragraph.(a), the following sub paragraph shall be inserted, namely : "(i a) In the case of a residential building, if the landlord is a member of the armed forces of the Union of India and requires it for the occupation of his family and if he produces a certificate of the prescribed authority, referred to in section 7 of the , that he is serving under special conditions within the meaning of section 3 of that Act.
Explanation.
For the purposes of this sub paragraph (1) the certificate of the prescribed authority shall be conclusive evidence that the landlord is serving under special conditions; and (2) "family ' means such relations of the landlord as ordinarily five with him and are dependent upon him;"; (c) in the first proviso in paragraph (a), for the words "shall not be entitled, the words 'shall not, except under sub paragraph (i a), be entitled ' shall be substituted; and (c) after paragraph (b), the following new paragraph shall be added, namely : '(c) where an application is made under sub paragraph (i a) of paragraph (a), it shall be disposed of, as far as may be, within a period of one month and if the claim of the landlord is accepted, the Controller shall make an order 162 directing the tenant to put the landlord in possession of the building on a date to be specified in the order and such date shall not be later than fifteen days from the date of the order."; and (2)In sub section (4), for the words 'does not himself occupy it or, if possession, the words 'does not himself occupy it or, if possession was obtained by him for his family in pursuance of an order under sub paragraph (i a) of paragraph (a) of sub section (3), his family does not occupy the residential building, or, if possession" shall be substituted." Then the East Punjab Urban Rent Restriction (Amendment) Act, 1985 (Punjab Act No. 2 of 1985) further amended section 13 and inserted new section 13A in the principal Act as under 'Amendment of section 13 of Punjab Act 3 of 1949.
In the principal Act, in section 13, after sub section (4), the following sub section shall be inserted, namely : '(4 A) Where a tenant is evicted from a residential or scheduled building in pursuance of an order made under section 13 A and the specified landlord or, as the case may be, the widow, widower, child, grandchild or widowed daughter in law of such specified landlord : (a) does not occupy it for a continuous period of three months from the date of such eviction; or (b) within a period of three years from the date of such eviction of the tenant, lets out the whole or any part of such building, from which the tenant was evicted, to any person other than the tenant; such evicted tenant may apply to the Controller, for an order directing that the possession of the building shall be restored to him and the Controller shall make an order accordingly. ' Insertion of new section 13 A in Punjab Act 3 of 1949.
In the principal Act, after section 13, the following section shall 163 be inserted, namely: Right to recover immediate possession of residential or scheduled building to accrue to certain persons.
"13 A.
Where a specified landlord at any time, within one year prior to or within one yea 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 alongwith a certificate from the authority competent to remove him from service indicating the date of his retirement and his affidavit to the affect that he does not own and possess any other suitable accommodation in the local area in which he intends to reside to recover possession 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 on of such residential building or scheduled building or any part or parts of such building if it is let out in part or parts : Provided that in case of death of the specified landlord, the widow or widower of such specified landlord and in the case of death of such widow or widower, a child or a grandchild or a widowed daughter in law who was dependent upon such specified landlord at the time of his death shall be entitled to make an application under this section to the Controller, (a)in the case of death of such specified landlord, before the commencement of the East Punjab Urban Rent Restriction (Amendment) Act, 1985 within one year of such commencement: (b)In this case of death of such specified landlord, after such commencement, but before the date of his retirement, within one yew of the date of his death; 164 (c)in the case of death of such specified landlord, after such commencement and the date of his retirement, within one year of the date of such retirement; and on the date of such application the right to recover the possession of the residential building or scheduled building, as the case may be, which belonged to such specified landlord at the time of his death shall accrue to the applicant: Provided further that nothing in this section shall be so construed a. , conferring a right on any person to recover possession of more than one residential or scheduled building inclusive of any part or parts thereof if it is let out in part or parts: Provided further that the controller may give the tenant a reasonable period for putting the specified landlord or, as the case may be, the widow, widower, child, grandchild or widowed daughter in law in possession of the residential building or scheduled building, as the case may be, and may extend such time so as not to exceed three months in the aggregate.
Explanation.
For the purpose of this section the expression "retirement" means termination of service of a specified landlord otherwise than by resignation." Further by this Amendment Act of 1985, special procedure for disposal of applications under section 13A was prescribed and some other ancillary amendments were also made.
The definitions in clauses (a), (d), (g) and (h) of Section 2 and the material part of section 4 quoted above remain the same in the principal Act as originally enacted even after these amendments, section 13, in so far as it is material for the present case, as it stands amended in the above manner now reads as under: "13.
Eviction of tenants (1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decree passed before or after the commencement of this Act or otherwise and whether before or after the termination of the tenancy, except in accordance with the 165 provisions of this section, or in pursuance of an order made under section 13 of the Punjab Urban Rent Restriction Act, 1947, as subsequently amended.
(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf.
If the Controller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (i). . . (ii) that the tenant has after the commencement of this Act without the written consent of the landlord (a). . . (b) used the building or rented land for a purpose other than that for which it was leased, or (iii) that the tenant has committed such acts as are likely to impair materially the value or utility of the building or rented land, or xxx XXK xxx (3) (a) A landlord may apply to the controller for an order directing the tenant to put the landlord in possession (i) in the case of a residential building if (a) he requires it for his own occupation; (b) he is not occupying an other residential building, in the urban area concerned; and xxx xxx xxx (i a) in the case of a residential building, if the landlord is a member of the armed forces of the Union of India and requires it for the occupation of his family and if he produces a certificate of the prescribed authority, referred to in section 7 of the , that he is serving under 166 special conditions within the meaning of section 3 of that Act.
XXK xxx xxx (ii) in the case of rented land, if (a) he requires it for his own use: (b) he is not occupying in the urban area concerned for the purpose of his business any other such rented land; and (c) he has not vacated such rented land without sufficient cause after the commencement of this Act, in the urban area concerned: xxx xxx xxx (iv) in the case of any residential building, if he requires it for use as an office, or consulting room by his son who intends to start practice as a lawyer or as a "registered practitioner" within the meaning of that expression as used in the Punjab Medical Registration Act, 1916, or for the residence of his son who is married, if (a) his son as aforesaid is not occupying in the urban area concerned any other building for use as office, consulting room or residence, as the case may be; and (b) his son as aforesaid has not vacated such a building without sufficient cause after the commencement of this Act, in the urban area concerned xxx xxx xxx The main argument of learned counsel for the appellant is that omission of the words "or a scheduled ' after the word 'residential ' in section 13(3) (a) (i) by the 1956 Amendment while using those words in addition to the word 'residential in section 13A, subsequently inserted in 1985, is a clear indication that the ground of eviction contained in section 13(3) (A) (i) (a) of _personal need of the landlord.is no longer available to landlords in general after the 1956 Amendment, awn though a more expeditious remedy on that ground has been provided by 13A from 167 1985 to the category of specified landlords alone.
The retention of the separate definition of 'scheduled building ' in section 2(h) and use of that expression elsewhere in the Act, including section 4 and section 13, is referred in support of this submission.
The question is whether this construction is proper.
In section 2 which contains the definitions, clause (a) defines 'building '.
Clause (d) then defines 'non residential building ' to mean a building being used solely for the purpose of business or trade.
Thus, to be a non residential building, it must be used solely for the purpose of business or trade.
Clause (g) defines 'residential building ' to mean any building which is not a non residential building.
These definitions make it clear that all buildings are divided into two categories : 'non residential ' and 'residential '.
Buildings used solely for the purpose of business or trade are 'non residential ' and the remaining buildings are all 'residential '.
Accordingly, no building to which the Act applies is outside the classification of 'non residential ' and 'residential '.
Then comes clause (h) which defines 'scheduled building ' to mean a residential building which is being used partly for a scheduled purpose.
The definition of 'scheduled building ' in clause (h) itself makes it clear that it is a residential building as defined in clause (g) with the qualification that such a residential building is one which is used partly for a specified purpose.
In other words, 'scheduled building ' as defined in clause (h) is merely a kind of 'residential building ' as defined in clause (g), its characteristic being its part user for a scheduled purpose.
The reason to defined 'scheduled building ' separately in clause (h) is also evident from some provisions of the Act itself.
The Act makes a distinction for the purpose of determination of fair rent between a residential building which is being used partly for a scheduled purpose and is, therefore, treated as a 'scheduled building ' and the remaining residential buildings which are not so used.
This is clear from the scheme of section 4 itself providing for determination of fair rent.
This is also clear from the fact that from the definition of 'building ' given in section 2(a), the only category excluded is a 'non residential building ' as defined in section 2(d) for the purpose of section 2(g) and not also 'scheduled building ' defined in section 2(h) and in section 2(h), a 'scheduled building" is defined to mean a residential building used partly for a scheduled purpose.
A separate definition of 'scheduled building ' in clause (h) while making it 168 clear therein that it means a residential building used partly for a specified purpose does not, therefore, indicate that a scheduled building ceases to be a residential building or is a category of building separate from a residential building for the purpose of eviction of tenants in the scheme of section 13 of the Act.
This is the only manner in which a harmonious construction can be made of these provisions.
The question now is of the effect of the 1956 Amendment which omitted the words 'or a scheduled ' in section 13(3) as indicated earlier.
The Statement of Objects and Reasons of the Amendment Act of 1956 clearly says that the provision allowing eviction on the ground of personal need has been misused by certain landlords and according to the Act applicable to Delhi the tenants of industrial and commercial premises cannot be ejected on the ground of personal need, while in the Punjab, such tenants can be evicted therefrom also on the ground of personal need.
To avoid hardship to such tenants, it was considered necessary that the tenants of non residential property in the Punjab should be placed at par with tenants of such property in Delhi.
Thus, the object of this enactment was to equate the Punjab tenants with Delhi tenants and exclude the ground of landlord 's personal need for eviction of tenants of non residential property.
To achieve this object deletion was made of the words other than 'residential ' from section 13(3) providing for eviction of tenants from buildings on the ground of landlord 's personal need.
Obviously, in view of the definition of 'scheduled building ' in section 2(h) being clear to indicate that 'scheduled building ' is a 'residential building, retention of the words ,or a scheduled ' after 'residential ' was considered superfluous while omitting the words 'non residential building ' in other parts of section 13(3) relating to the ground of personal need for eviction of the tenants from buildings.
Subsequently, in section 13A, when inserted by 1985 Amendment, the word 'scheduled ' was also used after 'residential ', may be, in view of the controversy like the present raised on the basis of the 1956 Amendment, to avoid any such controversy therein.
That does not, however, mean that section 13 which must be construed in the manner indicated by us should be read differently for that reason.
In fact, insertion of section 13A further reinforces the view we have taken.
There would be no occasion to provide an expeditious remedy for eviction of tenants of a category of 169 landlords and to also provide for a special summary procedure for them unless the remedy of eviction on the ground of personal need was already available generally to the landlords in section 13.
It is significant that section 13 was also amended by the 1985 Amendment by inserting sub section (4 A) therein as a result of insertion of the new section 13A in the principal Act.
Thus, the 1985 Amendment itself shows that section 13A is not a separate and distinct provision but has to be read along with section 13 of the principal Act forming a part of the general scheme contained in section 13 for eviction of tenants on the ground of personal need from buildings which are not non residential.
The construction we have made of section 13(3)(a)(i), as it stood after the 1956 Amendment, is the only construction which can be made to harmonise with the definitions in section 2 which continue to remain as originally enacted and the other provisions of the Act which have been referred.
The contention of learned counsel for the appellant on this point is, therefore, rejected.
The result of the above discussion is that the respondent landlord 's personal need being found proved, the ground of eviction contained in section 13(3) (a) (i) (a) is available and the order of eviction passed against the appellant can be sustained on this ground alone.
The construction made by the High Court of Section 13(3) (a) (i) that it does not apply to a scheduled building is, therefore, erroneous.
The only surviving question is the availability of the ground of change of user contained in section 13(2) (ii) (b) on which the order of eviction has been passed by the High Court.
In view of the above conclusion reached by us that the ground in section 13(3)(a)(i)(a) is made out, the consideration of this question in the present case appears unnecessary.
We have considered and decided that question in a connected matter Bishamber Das Kohli (Dead) by Lrs.
vs Smt.
Satya Bhalla.
However, a brief reference to the general principle may be apposite.
If the express terms of lease restrict the user solely for purpose of residence, then use of any part thereof for even a scheduled purpose without the written consent of the landlord may amount to use of the building for a purpose other than that for which it was leased.
That, however, is a question of fact in each case.
In that case while the ground of eviction in section 13(3)(a)(i)(a) would remain available to the landlord 170 for eviction of the tanant, in view of the express covenant against user of any part of the residential building even for a scheduled purpose.
It may make available also the ground of change of user under section 13(2) (ii) (b) of the Act.
In the present case, it is unnecessary to go into this further question since the order of eviction can be sustained on the ground contained in section 13(3)(a)(i)(a) alone as already indicated.
Consequently, the appeal is dismissed with costs.
Counsel 's fee Rs. 3,000.
U.R. Appeal dismissed.
| IN-Abs | The appellant took the suit premises situate in Ludhiana on a monthly rent of Rs. 800 from respondent 1.
Both the respondents are medical practitioners.
The respondent riled a petition for eviction of the appellant tenant on three grounds: their personal need under Section 13(3)(a)(i)(a); change of user under Section 13(2)(ii)(b) and impairment of the value and utility of the rented building under Section 13(2) (iii) of the East Punjab Urban Rent Restriction Act 1948.
The Rent Controller dismissed the petition.
The appellate authority held that the personal need of the respondents and the ground of change of user was proved.
Since the building though let out to the tenant for a residential purpose was used partly for his profession and had become a 'scheduled building ' under Section 2(h), he could not be evicted on the ground of personal need.
The order of eviction was, however, made on the ground of change of user of the building.
Ile High Court on revision affirmed the finding and order of eviction made by the appellate authority.
150 In the Supreme Court, it was argued for the appellant that there was no change of user to justify the order of eviction on that ground and that the finding on the question of personal need was erroneous.
Relying on legislative intent evidenced in amendments to the Act, it was further contended that no order of eviction can be made on the ground of personal need contained in Section 13(3)(a)(i)(a) in respect of a 'scheduled building ' since that ground is available for eviction only from a residential building.
The omission of the words 'or a scheduled ' after the word 'residential ' in Section 13 (3) (a) (i) (a) in 1956 and their addition in Section 13A in 1985 were referred to advance the argument The respondents submitted that there was no ground to interfere with the order of eviction; that 'scheduled building ' In section 2(h) continues to be a 'residential building ' in section 2(g) and that personal need in section 13(3) (a) (i) (a) is available as a ground for eviction; and that the finding of fact relating to personal need of the landlord in not open to challenge.
In the alternative, if a "scheduled building ' is not a "residential building" then the ground of change of user, unilaterally was available.
Dismissing the appeal, this Court HELD: 1.
The finding of fact of personal need is unassailable.
That respondent 2 is carrying on his profession at some distance from Ludhiana is not sufficient to negative the landlords ' need.
[155B] Non examination of respondent 2 is immaterial when respondent 1 has examined himself and proved the need of the landlord; it Is at best a matter relating to appreciation of evidence, on which ground this finding of fact cannot be assailed particularly when it was not seriously challenged in the High Court.
(pp.6/7) [155C] 2.
All buildings are divided into two categories: "non residential" and "residential".
Building, * used for the purpose of business or trade are " non residential" and the remaining buildings are all 'residential '.
This is clear from the definitions in section 2(a), (d) and (g).
(pp.23/24) [167D] 3. 'Scheduled building as defined in section 2(h) is merely a kind of 'residential building, as defined in section 2(g), its characteristic being its part user for a scheduled purpose.
(p.24) [167E] 151 4. 'The Act makes a distinction between a residential building which is being partly used for a scheduled purpose, i.e. a scheduled building, for the purpose of determination of fair rent.
A separate definition of 'scheduled building ' in clause (h) while making it clear therein that it means a residential building used partly for a specific purpose does not, therefore indicate that a scheduled building ceases to be a residential building or is a category of building separate from a residential building for the purpose of eviction of tenants in the scheme of section 13 of the Act This is the only manner in which a harmonious construction can be made of these provisions.
(pp.24/25) [167H, 168A] 5.
The object of the 1956 amendment was to equate the Punjab tenants with the Delhi tenants and exclude the ground of landlord 's personal need for eviction of tenants of non residential property.
Obviously the definition of 'scheduled building ' in section 2(h) clearly indicating that scheduled building is residential building, the words 'or a Scheduled" after "residential" were considered superfluous.
The use of the word "scheduled" after "residential ' in section 13A inserted in 1985 may have been used to avoid any controversy like the present raised on the basis of the 1956 Amendment.
(p.26) [168D E] 6.
Section 13A which provides for an expeditious remedy is not a separate distinct provision but has to be read along with section 13 of the principal Act forming a part of the general scheme contained in section 13 for eviction of tenants on the ground of personal need from buildings which are not non residential.
(p.27) [168H] 7.
This construction of section 13(3) (a) (i) as it stood after the 1956 amendment, is the only construction which can be made to harmonise with the definitions in section 2.
(p.27) [169C] 8.
The question of change of user is not necessary to be considered.
However, the general principle is that if the express terms of lease restrict the user solely for purpose of residence, then use of any part thereof for even a scheduled purpose without the written consent of the landlord may amount to use of the building for a purpose other than that for which it was leased.
That, however, is a question of fact in each case.
In that case while the ground of eviction in section 13 (3) (a) (i) (a) would remain available to the landlord for eviction of the tenant, in view of the express 152 covenant against user of any part of the residential building even for a scheduled purpose, it may make available also the ground of change of user under section 13(2) (ii) (b) of the Act.
(pp.28/29) [169G 170A] Bishamber Dass Kohli (dead) by L.rs.
vs Smt.
Satya Bhalla, referred to.
|
rsity/Selection Committee must mention in its proceedings of selection the reasons for making relaxations, if any, in respect of each of the candidates in whose favour relaxation is made.
[197D] 189 (v) The minutes of the meetings of the Selection Committee should be preserved for a sufficiently long time, and if the selection process is challenged until the challenge is finally disposed of An adverse inference is liable to be drawn if the minutes are destroyed or a plea is taken that they are not available.
[197E F] & CIVIL APPELLATE JURISDICTION: Special Leave Petition (C) No. 6324 of 1992.
From the Judgment and Order dated 20.11.1991 of the Rajasthan High Court in D.B. Civil Spl.
Appeal No. 226 of 1991.
S.K. Jain for the Petitioner.
Manoj Swarup, Ms. Lallta Kohli (For M/s Manoj Swarup & Co.) and S.K. Bhattacharya for the Respondents.
The following Order of the Court was delivered: By this petition, the petitioner has challenged the appointment of six respondents from General Category as Assistant Professors (Lecturers) in the Department of History in the University of Rajasthan.
The University invited applications by its advertisement dated 12.10.1983 for appointment to 10 posts of Assistant Professors (Lecturers).
The last date for submitting applications was 14.11.1983.
Out of 112 ap plications received, the Scrutiny Committee of the University on 25.4.1984 recommended 106 candidates for being interviewed, the remaining six being found ineligible for the posts.
Out of the 106 candidates so recommended, only 65 candidates appeared for interview, out of which the Scrutiny Committee selected 8 candidates who are respondents 5 to 12 before us.
Out of the 8, two were earmarked for the reserved posts.
We are not concerned with the selection of the said two candidates under the reserved category.
The Scrutiny Committee also placed five other candidates including the present petitioner on the waiting list.
The minimum qualifications for appointment to the post of Assistant Professor (Lecturer) as laid down by Ordinance 149 B of the Handbook of the University of Rajasthan, Part II, Volume I are as follows: 190 "141 B The following shall be the minimum qualifications for University teachers in the Faculties of articles Fine Arts, Social Sciences, Commerce and Science : A. Minimum qualifications for Lecturers/Research Associates in the Faculties of Arts, Social Sciences, Science and Commerce : [Except in the subjects of English, Modern European Languages, Physical Education, Health Education & Sports Journalism and Home Science]; a. A Doctorate degree or research work of an equally high standard; and b. Good academic record with at least a second class (C in the seven point scale) Master 's degree in a relevant subject from an Indian University or an equivalent degree from a foreign University having regard to the need for developing interdisciplinary programmes, the degree in (a) and (b) above may be in relevant subjects.
Provided that if the Selection Committee is of the view that the research work of a candidate as evident either from his thesis or from his published work is of a very high standard, it may relax any of the qualifications prescribed in (b) above: Provided further that if a candidate possessing a Doctorate degree or equivalent research work is not available or is not considered suitable, a person possessing a good academic record (weightage being given to M.Phil. or equivalent degree or research work of quality) may be appointed provided he has done research work for at least two years or has practical experience in a research laboratory/organisation on the condition that he will have to obtain a Doctorate degree or give evidence of research of high standard within eight years of his appointment, failing which he will not be able to earn future increments until he fulfills these requirements.
" Although these were the qualifications required by the University Ordinance, the advertisement inviting applications stated the following 191 qualifications as necessary for being eligible to the posts : "ASSISTANT PROFESSORS (LECTURERS): (Except in the subject of Drawing & Painting and Dramatics, Education, Management studies and English).
(a) A Doctorate 's degree or research work of an equally high standard and (b) Good academic record with at least second class (C in the seven point scale) Master 's degree in a relevant subject from an Indian University or/equivalent degree from a foreign University.
Having regard to the need for developing interdisciplinary programmes, the degrees in (a) and (b) above, may be in relevant subjects: Provided that if the selection committee is of the view that the research work of a candidate as evident either from his thesis or from his published work is of very high standard, it may relax any of qualifications prescribed in (b) above. ' Provided further that if a candidate possessing a Doctor 's degree of equivalent research work is not available or is not considered suitable, a person possessing a good academic record, (weightage being given to M.Phil. or equivalent degree or research work of quality) may be appointed provided he has done research work for at least two years or has practical experience in a research laboratory/organisation on the condition that he will have to obtain a Doctor 's degree or give evidence of research of high standard within eight years of his appointment failing which he will not be able to earn future increment until he fulfils these requirements.
EXPLANATION For determining 'good academic record ' the following criteria shall be adopted : (i) A candidate, holding a Ph.D. degree should possess at least 192 a second class Master 's degree; or (ii) A candidate without a Ph.D. degree should possess a high second class Master 's degree and second class in the Bachelor 's degree; or (iii)a candidate not.
possessing Ph. D. degree but possessing second class Master 's degree should have obtained first class in the Bachelor 's degree.
Persons having secured marks more than the mid point of the prescribed minimum marks for passing an examination in the second division and the prescribed minimum marks for passing an examination in the first division by a university shall be deemed to have passed that examination in the high second class '.
It will be apparent that there was a divergence in the qualifications as per the University Ordinance (as quoted in the written submissions on behalf of respondent No. 5) and the qualifications as per the advertisement as stated in the rejoinder of the petitioner since in particular the Explana tion does not find place in the Ordinance.
The University itself has produced before us neither the Ordinance nor the advertisement issued.
In the absence of a copy of the relevant Ordinance, however, it is not possible to say as to whether the qualifications mentioned in the advertisement were at variance with those mentioned in the advertisement.
Be that as it may.
It will thus be obvious from the requirement of the aforesaid qualifications, that on the last date for submitting the applications, a candidate applying for the said posts should have had (a) doctorate Degree (in the relevant subject), or research work of an equally high standard (in the relevant subject), and (b) good academic record with at least a second class Master 's Degree (in the relevant subject).
However, if the Selection Committee was of the view that the research work of a candidate as evident either from his thesis or from his published work was of a very.
high standard, the Scrutiny Committee could relax the qualification that the candidate should have had at least a doctorate Degree or research work of an equally high standard and good academic record with at least a second class Master 's Degree.
Secondly, if the candidate possessing a doctorate degree or 193 equivalent research work was not available or even if available, was not suitable, the candidate possessing a good academic record (preferably M.Phil or equivalent Degree or research work of quality) could also be appointed provied he had done research work for at least two years or had practical experience in a research Laboratory/Organisation.
However, this relaxation could be given on the condition that the candidate would obtain a doctorate Degree or give evidence of research of high standard within eight years of his appointment.
If he did not satisfy the second requirement, all that he could be visited with was a handicap that he would not be able to earn future increments until he fulfilled the said requirement.
It is, therefore, obvious that a doctorate Degree was not a must and the lack of doctorate Degree could be made up by either of the qualifications laid down above.
None of the candidates except respondent No.10 who had applied and appeared for interview (including the petitioner) possessed the doctorate Degree by the last date of submitting the applications for the posts.
The six candidates from the general category whose appointment is challenged before us and who are respondents 5, 6, 7, 8, 10 and 11 before us had on the relevant date the following qualifications according to the Scrutiny Committee: S.I Name Respon Doctorate Published Good Good 2year No. dent No. Degree works of Record Record research high No. No. Standard 1.
Dr.(Miss) 11 No. No. Yes Yes No. santosh Sharma (Awarded on 4.1.85) 2.Shri Krishna 6 No. No. Yes Yes No. Gopal Sharma 3.
Dr.(Mrs.
) 10 Yes No. Yes Yes Yes Vibha Updhyaya 4.(Miss)Saroj 7 No. No. Yes Yes No. Sharma 5.Dr.
Shyam 5 No.
Yes Yes No. Yes Singh (Awarded Ratnawat on 14.12.84) 6.(Miss) 8 No. No. Yes Yes No. Pramila (Passed Sharma M.A in 1982) 194 It is apparent that respondent No. 5 had no doctorate Degree.
He had good academic record in M.A. but did not have good record in B.A.
He had published work of high standard and also two years ' research work to his credit.
Respondent No.6 had no doctorate Degree.
He had, however, good academic record both in M.A. and B.A.; but had neither any published work of high standard nor two years research experience, to his credit.
Respondent No.7 had no doctorate Degree.
She had, however, good academic record both in M.A. and R.A. She had not published work of high standard nor had she two years ' research work to her credit.
Respondent No. 8 had no doctorate Degree.
She had, however, good academic record both in MA.
and B.A. though she did not have to her credit published work of high standard nor two research work.
Respondent No.10 had doctorate Degree and also a good academic record both in M.A. and BA.
She had also experience of two years research work though there was no published work of high standard to her credit.
Respondent No.11 had no doctorate Degree.
She had, however, good academic record both in M.A. and B.A. She had no published work of high standard or two years ' research work to her credit.
It is on record that respondent Nos. 5 and 11 were awarded doctorate Degree on 14.12.1984 and 4.1.1985 respectively which is of course irrelevant since the qualifications had to be judged with reference to the last date for submitting the applications for the posts.
Thus except in the case of respondent No.10, the qualifications of the other selected candidates had to be relaxed by the scrutiny Committee.
However, there is no record of the minutes of the meetings of the Scrutiny Committee to show whether and in what manner the Scrutiny Committee had applied its mind and relaxed their qualifications.
The affidavit filed on behalf of the University shows that the minutes, if kept, were destroyed.
It was sought to be argued by Shri Manoj Swarup on behalf of the University that since at the time of the selection, respondent Nos. 5 and 11 had obtained their doctorate Degrees they could be said to have fulfilled the qualifications.
He also argued that since respondent Nos. 6 and 7 were registered for Ph.D. on 22.1.1982 and 26.5.1982 respectively, by the time of the selection they had put in research work connected with their thesis and in February 1985, viz., the date of selection, they had about 3 years ' experience in research work.
As regards respondent No. 8, she had good 195 acadamic record both in M.A. and BA.
and the Scrutiny Committee could under the Ordinance relax the qualifications as admittedly sufficient number of candidates with the doctorate Degree were not available.
He also urged in this connection that even the petitioner did not have the doctorate Degree.
He further submitted that it was open to the Scrutiny Committee to weigh the over all qualifications of the candidates and relax the required qualifications in favour of the deserving and suitable candidates which the Scrutiny Committee did or should be deemed to have done.
The Scrutiny Committee was a high power Committee and after interviewing 65 candidates, it had selected only 8 candidates and had placed them in the order of merit.
The Court should not, therefore, interfere with the said selection.
He further pointed out that the candidates had already been appointed in February 1985 and they have been working eversince till date.
Some of them are also due for promotion to the higher posts in the near future.
Their record of teaching so far has been excellent and unblemished.
Whatever may be the defects in the selections, this Court may not interfere with the said process of selection at this late stage.
5.The contention that the required qualifications of the candidates should be examined with reference to the date of selection and not with reference to the last date for making applications has only to be stated to be rejected.
The date of selection is invariably uncertain.
In the absence of knowledge of such date the candidates who apply for the posts would be unable to state whether they are qualified for the posts in question or not, if they are yet to acquire the qualifications.
Unless the advertisement mentions a fixed date with reference to which the qualifications are to be judged, whether the said date is of selection or otherwise, it would not be possible for the candidates who do not possess the requisite qualifications in praesenti even to make applications for the posts.
The uncertainty of the date may also lead to a contrary consequence, viz., even those candidates who do not have the qualifications in praesenti and are likely to acquire them at an uncertain future date, may apply for the posts thus swelling the number of applications.
But a still worse consequence may follow, in that it may leave open a scope for malpractices.
The date of selection may be so fixed or manipulated as to entertain some applicants and reject others, arbitrarily.
Hence, in the absence of a fixed date indicated in the advertisement/notification inviting applications with reference to which the requisite qualifications should be judged, the only certain date for the scrutiny of the qualifications will be the last date for making the applications.
We have, 196 therefore, no hesitation in holding that when the selection Committee in the present case, as argued by Shri Manoj Swarup, took into consideration the requisite qualifications as on the date of selection rather than on the last date of preferring applications, it acted with patent illegality, and on this ground itself the selections in question are liable to be quashed.
Reference in this connection may also be made to two recent decisions of this Court in A.P. Public Service Commission, Hyderabad & Anr.
vs B. Sarat Chandra & Ors., and The District Collector & Chairman, Vizianagaram (Social Welfare Residential School Society) Vidanagaran & Anr.
vs M. Tripura Sundari Devi, (1990) 4 SLR 237.
6.However, for the reasons which follow, we are not inclined to set aside the selections in spite of the said illegality.
The selected candidates have been working in the respective posts since February 1985.
We are now in January 1993.
Almost eight years have elapsed.
There is also no record before us to show as to how the Selection Committee had proceeded to weigh the respective merits of the candidates and to relax the minimum qualifications in favour of some in exercise of the discretionary powers vested in it under the University Ordinance.
If the considerations which weighed with the Committee in relaxing the requisite qualifications were valid, 'it would result in injustice to those who have been selected.
We, however, feel it necessary to emphasise and bring to the notice of the University that the illegal practices in the selection of candidates which have come to light and which seem to be followed usually at its end must stop forthwith.
it is for this purpose that we lay down the following guidelines for the future selection process: A. The University must note that the qualifications it advertises for the posts should not be at variance with those prescribed by its ordinance/Statutes.
B. The candidates selected must be qualified as on the last date for making applications for the posts in question, or on the date to be specifically mentioned in the advertisement/notification for the purpose.
The qualifications acquired by the candidates after the said date should not be taken into consideration, as that would be arbitrary and result in discrimination.
It must be remembered that when the advertisement/notification represents that the candidates must have the qualifications in ques 197 tion, with reference to the last date for making the applications or with reference to the specific date mentioned for the purpose, those who do not have such qualifications do not apply for the posts even though they are likely to acquire such qualifications and do acquire them after the said date.
In the circumstances, many who would otherwise be entitled to be considered and may even be better then those who apply, can have a legitimate grievance since they are left out of consideration.
When the University or its Selection Committee relaxes the minimum required qualifications, unless it is specifically stated in the advertisement/notification both that the qualifications will be relaxed and also the conditions on which they will be relaxed, the relaxation will be illegal.
D. The University/Selection Committee must mention in its proceedings of selection the reasons for making relaxations, if any, in respect of each of the candidates in whose favour relaxation is made.
The minutes of the meetings of the Selection Committee should be preserved for a sufficiently long time, and if the selection process is challenged until the challenge is finally disposed of.
An adverse inference is liable to be drawn if the minutes are destroyed or a plea is taken that they are not available.
7.Although, therefore, for reasons stated above, we deem it inadvisable to interfere in the selections made in the present case, we direct that the University and its Selection Committee should observe the above norms in all future selections.
The Special Leave Petition is dismissed subject to the above directions.
G.N. Petition dismissed.
| IN-Abs | The Respondent University invited applications for appointment to 10 posts of Assistant Professors.
Out of 112 applications received, the Screening Committee recommended 106 candidates for being Interviewed and found the remaining 6 applicants ineligible.
However, only 65 candidates appeared for the interview.
6 candidates were selected from the general category , and 2 from the Reserved Category.
5 candidates Including the petitioner were placed on the waiting list.
As per the advertisement, a candidate should have a doctorate degree or research work of equally high standard, and good academic record with atleast a Second Class Master 's Degree.
The lack of doctorate degree could be made up by either research work of equally high standard or M.Phil with two years research work.
Except in the case of Respondent No.10, who had a doctorate degree as on the last date for submission of applications, the qualifications of other selected candidates had to be relaxed by the Scrutiny Committee.
The petitioner challenged the appointment of the six selected candidates from the general category, before the High Court, but was not successful.
Being aggrieved by the High Court 's judgment, the petitioner preferred the present Special Leave Petition.
On behalf of the Respondent University it was contended that since at the time of selection Respondent Nos. 5 and 4 had obtained their doctorate degrees they could be said to have fulfilled the qualifications; 187 that since respondent Nos. 6 and 7 were registered for Ph. D. in 1982, by the time of the selection they had put in research work connected with their thesis and on the date of selection, they had about 3 years ' experience in research work; that respondent No.8 had good academic record both in MA and B.A. and the Scrutiny Committee could under the Ordinance relax the qualifications as admittedly sufficient number of candidates with doctorate degrees were not available; and that even the petitioner did not have the doctorate degree; that the candidates had already been appointed in February 1985 and they have been working since then and some of them were also due for promotion to the higher posts in the near future; and that their record of teaching so far has been excellent and unblemished and so their selection need not be interfered with at this late stage.
Dismissing the Special Leave Petition and laying down the guidelines for future selection process, this Court, HELD : 1.
In the absence of a fixed date indicated in the advertisement/notification inviting applications with reference to which the requisite qualifications should be judged, the only certain date for the scrutiny of the qualifications will be the last date for making the applications.
Therefore, when the Selection Committee took into consideration the requisite qualifications as on the date of selection rather than on the last date for preferring applications, it acted with patent illegality, and on this ground itself the selections in question are liable to be quashed.
However, the selected candidates have been working in the respective posts since February 1985.
Almost eight years have elapsed. 'Mere is also no record to show as to how the Selection Committee had proceeded to weigh the respective merits of the candidates and to relax the minimum qualifications in favour of some candidates in exercise of the discretionary powers vested in it under the University Ordinance.
If the considerations which weighed with the Committee in relaxing the requisite qualifications were valid, it would result in injustice to those who have been selected.
For these reasons, this Court is not inclined to set aside the selections made by the Screening Committee.
[195H, 196A E] A.P. Public Service Commission, Hyderabad & Anr.
vs B. Sarat Chandra & Ors., and The District Collector Society) Vizianagaram & Anr.
vs M. Tripura Sundari Devi, (1990) 4 SLR 237, relied on.
188 2.
It is necessary to emphasise and bring to the notice of the Respondent University that the illegal practices in the selection of candidates which have come to light and which seem to be followed usually at its end must stop forthwith.
For this purpose the following guidelines are laid down for the future selection process: (i) The University must note that the qualifications it advertises for the posts should not be at variance with those prescribed by its Ordinance/Statutes.
[196F] (ii) The candidates selected must be qualified as on the last date for making applications for the posts in question or on the date to be specifically mentioned in the advertisement/notification for the purpose.
The qualifications acquired by the candidates after the said date should not be taken into consideration, as that would be arbitrary and result in discrimination.
It must be remembered that when the advertisement/notification represents that the candidates must have the qualifications in question, with reference to the last date for making the applications or with reference to the specific date mentioned for the purpose, those who do not have such qualifications do not apply for the posts even though they are likely to acquire such qualifications and do acquire them after the said date.
In the circumstances, many who would otherwise be entitled to be considered and may even be better than those who apply, can have a legitimate grievance since they are left our of consideration.
[196G,H, 197A B] (iii) When the University or its Selection Committee relaxes the minimum required qualifications, unless it is specifically stated in the advertisement/notification both that the qualifications will be relaxed and also the conditions on which they will be relaxed, the relaxation will be illegal.
|
l Appeal Nos.
89 91 of 1993.
From the Judgment and Order dated 30.9.1992 of the Delhi High Court in W.P. No. 1872 of 1992.
K Parsaran, Kapil Sibal, L.P. Agarwalla, N.P. Agarwalla, Anil Agarwalia, Gopal Subramanium, Fazal ul Quaidir, P.H. Parekh, Ms. Nina Gupta and Vineet Kumar for the Appellant.
K.K. Venugopal, P. Chidambaram, Anil P. Diwan, Harish N. Salve, Vijay Narain, P.P. Tripathi and P.P. Singh for the Respondents.
R.N. Keshwani for the Intervener.
The following Judgment of the Court was delivered by N.P. SINGH.
J. Leave granted.
Three appeals have been filed against the same judgment of the High Court by which the Writ Petition filed on behalf of the petitioners/respondents (hereinafter referred to as "the writ petitioners") was allowed.
The dispute relates to the publication of the telephone directories of Mahanagar Telephone Nigam Limited, a Government of India Undertaking (hereinafter referred to as "the MTNL").
A new concept of yellow pages in the telephone directories was introduced by the MTNL/Department of Telecommunications.
The yellow pages were to contain advertisements under different headings.
The contractor who was to be awarded the contract for printing such directories was to collect the revenue from the advertisements in the yellow pages as well as in white pages of the telephone directory.
The contractor was to print the directories and supply the same free of cost to the MTNL for its 88 subscribers and had to pay royalty to the MTNL in connection with printing of such directories.
Tenders for publication of the directories for Delhi and Bombay were invited.
Tender of the United India Periodicals Pvt.
Ltd. (hereinafter referred to as 'the UlP, the 2nd respondent to the Writ Petition and appellant in one of the appeals) was accepted and an agreement dated 14th March, 1987 was executed.
United Database (India) Pvt. Ltd. (hereinafter referred to as 'the UDI ', the 3rd respondent to the Writ Petition and appellant in one of the appeals) is a subsidiary of UIP.
Under the original agreement UIP was to publish directories every year for a period of five years from 1987 to 1991 for Delhi and Bombay separately and was to payan amount of Rs. 20.16 crores as royalty to the MTNL and to supply the MTNL directories free of cost with reference to the number of subscribers.
UIP also furnished a performance guarantee for a sum of Rs. one crore.
UIP was also to supply the same number of supplementary directories which were to be published six months after the publication of the annual issue.
The annual issue of the directory was to be published in November/December every year.
UIP was given the exclusive right for procurement of the advertisements in the yellow pages as well as strips, bold and extra entries in the white pages.
The rates of such advertisements were to be fixed by the UIP for each issue of the directory and such rates had to be printed for general information.
It was also stipulated that if UIP committed any default or breach of the terms and conditions of the agreement or failed in the due performance thereof within the time fixed (which was the essence of the contract), the MTNL shall be entitled to recover from the UIP by way of compensation or liquidated damages an amount calculated at the rate of Rs. one lakh for every day or part thereof for the delay beyond the stipulated date in respect of the item which was not completed or finished and delivered completely to the MTNL on the stipulated date as mentioned in the contract.
In view of clause 22 of the agreement, the MTNL without prejudice to other rights could by notice in writing determine the contract.
It is an admitted position that UIP defaulted and committed breach of the terms of the agreement inasmuch as directories for Delhi were published only for the years 1987 and 1988 and for Bombay only for the year 1987.
For the year 1987, Delhi issue was published after a delay of 89 seven months and that of Bombay after six months.
So far Delhi issue of the directory for the year 1988 is concerned, it was published only in August, 1990 after a delay of two years.
Under the agreement UIP was to publish directories every year for Delhi and Bombay separately during the period of contract from 1987 to 1991.
They were also required to publish supplementary directory each year for Delhi as well as Bombay.
But there was no publication of directories for Delhi for the years 1989, 1990 and 1991.
Similarly there was no publication of directories in respect of Bombay for the years 1988, 1989, 1990 and 1991.
On 26th September, 1991 a supplemental agreement was entered between UIP, UDI, MTNL and Sterling Computers Ltd. (hereinafter referred to as "Sterline" appellant in one of the appeals).
Sterling by this agreement was introduced to carry out the unexecuted portion of the agreement with UIP.
It may be mentioned that by this date the period of the original agreement dated 14th March, 1987 between the MTNL and the UIP had expired, still the supplemental agreement states that "subject to UIP/UDI and Sterling successfully completing the unexecuted job relating to printing of Bombay and Delhi telephone directories within the stipulated time frame and other stipulations in the agreement MTNL shall extend the original contract for three more issues each for Delhi and Bombay, i.e., seven main issues of Bombay and six main issues of Delhi of the said directories to be brought out hereafter".
The agreement further stipulated that all terms and conditions contained in the original agreement and the memorandum of understanding would be the integral part of the supplemental agreement and all obligations of UIP/UDI and rights and privileges and powers provided for MTNL thereunder and under the law shall be applicable and available to and binding on the parties to the supplemental agreement as if the same were the part of the supplemental agreement.
It was also said that if there was any inconsistency or contradictions vis a vis the original agreement, the memorandum of understanding read with supplemental agreement shall prevail and would have overriding effect.
By the supplemental agreement Sterling was to print and publish 13 main issues of Delhi and Bombay directories within a period of seven years including the year 1991 on payment of additional royalty of only Rs. 10 crores to the MTNL over and above the royalty stipulated in the original agreement by the UIP.
As mentioned above the original royalty which was payable under the agreement dated 14th March, 1987 was Rs. 20.16 crores for the period 1987 to 1991 but under the supplemental agreement Sterling 90 was given the contract to publish 13 main issues of the Delhi and Bombay directories upto 1997 and 1998, but for the extended period it had to pay royalty only for an amount of Rs. 10 crores.
It was left to the UIP/UDI to receive all revenue earnings on account (cast and future) from the advertisements and MTNL was to be only informed about the prices as fixed.
The Writ Petition aforesaid was filed questioning the validity and legality of the supplemental agreement on different grounds including on ground of mala fide.
According to the writ petitioners under the garb of a supplemental agreement a fresh contract was awarded to Sterling for a fresh period from 1991 to 1997 on fresh terms and conditions to publish the directories every year for Delhi and Bombay without inviting tenders or affording an opportunity to others, to submit tenders so that they may be also considered for award of the said contract.
It was asserted by the petitioners that in the process of entering into the supplemental agreement the MTNL, which is a public undertaking and a State within the meaning of Article 12 of the Constitution, has suffered a loss of more than Rs. 60 crores without any corresponding benefit accruing to the MTNL or to the public in general.
Before the High Court the stand of the MTNL was that the supplemental agreement was a result of a bonafide commercial decision free from any bris or malice.
The original contract for years 1987 to 1991 had been awarded to UIP after inviting tenders but UIP, having gone bankrupt, no money could have been realised from it.
The termination of original contract was no remedy although repeated contraventions and breaches had been committed by the UIP inasmuch as there was no publication of directory for Bombay for the years 1988, 1989, 1990 and 1991 and for Delhi for the years 1989, 1990 and 1991.
It was stated on behalf of the MTNL before the High Court that in order to salvage Rs. 20.16 crores which was payable to the MTNL under the original agreement dated 14th March, 1987 by the UIP and which had not been paid, a decision was taken by the MTNL to enter into a supplemental agreement and to allow the UIP/UDI/Sterling to publish the thirteen issues of directories, six main issues for Delhi and seven main issues for Bombay upto years 1997 98 apart from the supplementary directories.
The High Court came to the conclusion that supplemental agreement dated 26th September, 1991 cannot be held to be the extension of the 91 original agreement dated 14th March, 1987.
According to the High Court the supplemental agreement was tainted with malice the object being to provide unjust enrichment to UIP/UDI/Sterling.
The most interesting part of the controversy is that the MTNL having fully supported the supplemental agreement before the High Court has filed an affidavit before this Court saying that "MTNL has decided to accept the High Court judgment in so far as that the procedure for the grant of contract dated 26.9.1991 to the petitioner M/s Sterling Computers Ltd.
Was not in keeping with the requirement of Article 14 of the Constitution and is not filing any petition for Special Leave against the said judgment.
However, as far as aspersions are concerned, MTNL does not accept the same and the same are matters of investigation and enquiry by an independent Central Agency at present.
" It has been further stated that subsequent events have shown that the Sterling has collected Rs. 19.59 crores approximately for advertisements in yellow pages without delivering the goods.
They have also uncashed the letter of credit issued by the 'MTNL ' prematurely.
This collection is apart from the collection of Rs. 14 crores against the yellow pages advertisements made by UDI and UIP during the years 1987 1991.
It has been further stated that the Board of 'MTNL ' had in fact even decided to terminate the contract for lapse in the performance of the obligations under the 26th September, 1991 agreement but as the High Court has quashed the said supplemental agreement no further step was considered necessary.
Ultimately it has been said in the said affidavit that MTNL ' has started the process for inviting fresh public tenders and for that purpose advertisement has already been issued.
Mr. Venugopal, appearing for the writ petitioners before us, stated on behalf of the writ petitioners that they are prepared to pay to the 'MTNL ' an amount of Rs. 60 crores for the period 1991 to 1997/1998 the period covered by the supplemental agreement for which the UIP/UDI/ Sterling have undertaken to pay only Rs. 10 crores as royalty.
At times it is said that public authorities must have the same liberty as they have in framing the policies, even while entering into contracts because many contracts amount to implementation or projection of policies of the Government.
But it cannot be overlooked that unlike policies, contracts are legally binding commitments and they commit the authority which may be held to be a State within the meaning of Article 12 of the 92 Constitution in many cases for years.
That is why the Courts have impressed that even in contractual matters the public authority should not have unfettered discretion.
In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue.
But even in such matters they have to follow the norms recognised by Courts while dealing with public property.
It is not possible for Courts to question and adjudicate every decision taken by an authority, because many of the Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi judicial authority while awarding contracts.
Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms.
If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by justice Holmes, that Courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of "play in the joints" to the executive.
But in normal course some rules must exist to regulate the selection of persons for awarding contracts.
In such matters always a defence cannot be entertained that contract has been awarded without observing the well settled norms and rules prescribed, on basis of the doctrine of "executive necessity".
The norms and procedures prescribed by Government and indicated by Courts have to be more strictly followed while awarding contracts which have along with a commercial element a public purpose as in the present case.
The publication of directories by the MTNL is not just a commercial venture; the primary object is to provide service to the people.
The action or the procedure adopted by the authorities which can be held to be State within the meaning of Article 12 of the Constitution, while awarding contracts in respect of properties belonging to the State can be judged and tested in the light of Article 14 of the Constitution, is settled by the judgments of this court in the cases of Raman Dayaram Shetty vs The International Airport Authority of India, ; ; M/s. Kasturi 93 Lal Lakshmi Reddy vs The State of Jammu & kashmir; , ; Fertilizer Corporation Kamagar Union (Regd.) Sindri vs Union of India, ; ; Ram and Shyam Company vs State of Haryana; , ; Haji T.M. Hasan Rawther vs Kerala Financial Corporation, AIR 1988 SC 157; Mahabir Auto Stores vs Indian Oil Corporation, ; and Kumari Shrilekha Vidyarthi vs State of U.P., it has been said by this Court : "It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State: such an action would be both unreasonable and contrary to public interest.
The Government, therefore, cannot for example give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so." [M/s. Kasturi Lal Lakshmi Reddy vs The State of Jammu & Kashmir.] There is nothing paradoxical in imposing legal limits on such authorities by Courts even in contractual matters because the whole conception of unfettered discretion is inappropriate to a public authority, who is expected to exercise such powers only for public good.
According to the appellants, the supplemental agreement was entered into by the MTNL taking into consideration the circumstances then existing which had been examined at the highest level and as such a Court should not examine the discretion exercised by the public authority as a court of appeal because the decision to enter into supplemental agreement also involved a question of policy.
It was pointed out that the contract had been awarded in the year 1987 to UIP on an experimental basis on such terms and conditions on which in past directories had not ever been published.
The real experiment was as to how the directories could be published without incurring any cost by the MTNL.
The publisher being given the right not only to reimburse itself from the advertisements published in the yellow and white pages but was also to pay royalty to the MTNL.
It was further pointed out that from the resolutions of the MTNL.
It shall appear that the authorities 'were concerned that the experiment 94 aforesaid must succeed.
With that object in view, another opportunity was given to UIP/UDI/Sterling through the supplemental agreement to publish the directories for Delhi and Bombay.
That decision should not be examined by this Court like a court of appeal.
It is true that by way of judicial review the Court is not expected to act as a court of appeal while examining an administrative decision and to record a finding whether such decision could have been taken otherwise in the facts and circumstances of the case.
In the book Administrative Law, Prof. Wade has said: "The doctrine that powers must be exercised reasonably has to be reconciled with the no less important doctrine that the court must not usurp the discretion of the public authority which parliament appointed to take the decision.
Within the bounds of legal reasonableness is the area in which the deciding authority has genuinely free discretion.
If it passes those bounds, it acts ultra vires.
The court must therefore resist the temptation to draw the bounds too tightly, merely according to its own opinion.
It must strive to apply an objective standard which leaves to the deciding authority the full range of choices which legislature is presumed to have intended.
The decisions which are extravagant or capricious cannot be legitimate.
But if the decision is within the confines of reasonableness, it is no part of the court 's function to look further into its merits.
With the question whether a particular policy is wise or foolish the court is not concerned; it can only interfere if to pursue it is beyond the powers of the authority.
" But in the same book Prof. Wade has also said: "The powers of public authorities are therefore 'essentially different from those of private persons.
A man making his will may, subject to any rights of the dependents, dispose of his property just as he may wish.
He may act out of malice or a spirit of revenge, but in law this does not affect his exercise of his power.
In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives.
This is unfettered discretion.
But a public 95 authority may do none of these things unless it acts reasonably and in good faith and upon lawful and relevant grounds of public interest.
There are many cases in which a public authority has been held to have acted from improper motives or upon irrelevant con siderations, or to have failed to take account.
of relevant considerations, so that its action is ultra vires and void.
" While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the "decision making process".
In this connection reference may be made to the case of Chief Constable of the North Wales Police vs Evans, ; , where it was said that 'The purpose of judicial review ". is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorized or enjoined by law to decide for itself a conclusion which is correct in the eyes of the court.
" By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the state.
Courts have inherent limitations on the scope of any such enquiry.
But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police vs Evans (supra), the Courts can certainly examine whether 'decision making process" was reasonable, rational not arbitrary and violative of Article 14 of the Constitution.
If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then Court cannot act as an appellate authority by substituting its opinion in respect of selection made for entering into such contract.
But, once the procedure adopted by an authority for purpose of entering into a contract is held to be against the mandate of Article 14 of the Constitution, the Courts cannot ignore such action saying that the authorities concerned must have some latitude or liberty in contractual matters and any interference by court amounts to encroachment on the 96 exclusive right of the executive to take such decision.
In support of the stand that it was open to the MTNL to negotiate with the UIP/UDI/Sterling for purpose of publication of the directories for Delhi and Bombay without inviting tenders, reliance was placed on behalf of the appellants on the judgments of this Court in the cases of Kasturi Lal Lakshmi Reddy vs State of Jammu and Kashmir, ; ; State of Madhya Pradesh vs Nandlal Jaiswal, [1987] 1 SCR; Sachidanand Pandey vs State of West Bengal, ; and G.B. Mahajan vs Jalgaon Municipal Council, ; From the facts of the case of Kasturi Lal Lakshmi Reddy (Supra) it shall appear that every year the State used to auction the blazes in different forests.
Most of the contractors bidding at the auction had their factories outside Jammu & Kashmir.
A decision was taken that from the year 1979 80 onwards resin extracted from its forests should not be allowed to be exported outside the territories of the State and should be utilised only by industries set up within the State.
There were certain forests which were out of access on account of their distance from the roads and no contractor could be found for taking tapping contracts even on the basis of royalty.
The Chief Conservator of Forests and other Forest Officers at a meeting took a decision which was also confired at a subsequent meeting, between the Forest Minister, the Forest Secretary and the Chief Conservator of Forests, that the blazes for such inaccessible areas should be allotted to some private party.
In view of that decision the second respondent who had earlier addressed a letter to the State Government offering to set up a factory for manufacture of resin turpentine oil and other derivatives in the State and had sought for allotment of 10,000 metric tonnes of resin annu was sanctioned the allotment of 11.85 lacs blazes in the inaccessible areas for a period of 10 years on the terms and conditions set out in the order.
This was challenged in the aforesaid case.
This Court said that whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position and as such every activity of the Government which has a public element in it must be reasonable and not arbitrary.
However, the allotment of the contract in favour of the second respondent was upheld.
It was pointed out that the blazes were situated in inaccessible areas and in spite of the offers given no bidders were attracted and as such the State had no option but to allot the said contract on basis of the offer made by the second respondent.
97 The case of State of Madhya Pradesh vs Nandlal Jaiswal (supra) related to grant of liquor licences.
The procedure adopted for such grant were being challenged as being violative of Article 14 of the Constitution.
It was said by this Court: "But, while considering the applicability of Article 14 in such a case, we must bear in mind that, having regard to the nature of the trade or business, the Court would be slow to interfere with the policy laid down by the State Government for grant of licences for manufacture and sale of liquor.
The Court would, in view of the inherently pernicious nature of the cornmodify allow a large measure of latitude to the State Government in determining its policy of regulating, manufacture and sale of liquor would essentially be a matter of economic policy where the court would hesitate to intervene and strike down what the State Government has done, unless it appears to be plainly arbitrary, irrational or mala fide.
" But even in that case it was said: No one can claim as against the state the right to carry on trade or business in liquor and the State cannot be compelled to part with its exclusive right or privilege or manufacturing and selling liquor.
But when the State decides to grant such right or privilege to others the State cannot escape the rigour of Article 14.
It cannot act arbitrarily or at its sweet will.
It must comply with the equality clause while granting the exclusive right or privilege of manufacturing or selling liquor.
" The execution of the supplemental agreement cannot be considered at par with the grant of a liquor licence, which related to any economic policy.
So far the case of Sachidanand Pandey vs State of West Bengal (supra) is concerned, in a public interest litigation the grant of lease in favour of Taj Group of Hotels for establishment of a Five Star Hotel at Calcutta had been challenged.
It was said: "It is to be seen that in the present case no one has come forward alleging that he has been discriminated against and his 98 fundamental right to carry on business had been affected.
The very nature of the construction and establishment of a Five Star Hotel is indicative of a requirement of expertise and sound financial position on the part of those who might offer to construct and establish them.
The decision taken by the All India Tourism Council was an open decision well known to everyone in the hotel business.
Yet no one except the ITDC and the Taj Group of Hotels had come forward with any proposal.
We have it in the record that the Oberoi Group of Hotels already had a Five Star Hotel in Calcutta while the Welcome Group of Hotels were making their own private negotiations and arrangements for establishing a Five Star Hotel.
In the circumstances, particularly in the absence of any leading hoteliers coming forward, the Government of West Bengal was perfectly justified in entering into negotiation with the ITDC and the Taj Group of Hotels instead of inviting tenders.
" But at the same time it was said: "On a consideration of the relevant cases cited at the bar the following propositions may be taken as well established : Stateowned or public owned property is not to be dealt with at the absolute discretion of the executive.
Certain precepts and principles have to be observed.
Public interest is the paramount consideration.
One of the methods of securing the public interest, when it is considered necessary to dispose of a property, is to sell the property by public action or by inviting tenders.
Though that is the ordinar y rule, it is not an invariable rule.
There may be situations where there are compelling reasons necessitating departure from the rule but then the reasons for the departure must be rational and should not be suggestive of discrimination.
Appearance of public justice is as important as doing justice.
Nothing should be done which gives an appearance of bias, jobbery or nepotism.
" In the case of G.B. Mahajan vs Jalgaon Municipal Council, (supra), a piece of land had been received by the Town Municipal Council, Jalgaon, by way of gift.
Initially it had been put to the use Agricultural Produce 99 Market Committee, as a cotton and wholesale fruit and vegetable market.
in terms of the gift, in order to put the land in a better and more profitable use the Municipal Council contemplated a project comprising, inter alia, erection of a commercial complex They also persuaded for change in the terms of the deed of gift subject to condition that heirs should be given five shops free of cost in the commercial complex The scheme contemplated that a developer would execute the entire project at his own cost and would make allotments to the shopkeepers to whom the Municipal Council had given assurances of alternative accommodation at fixed rates.
The developer was also to provide the 17 floors of the administrative building free.
of cost to the municipality.
The choice of the respondent No. 6 as developer for the project aforesaid was questioned.
This Court arrived at the following conclusion: "In regard to the allegation that the project scheme was tailored to suit respondent 6 alone or that the project as put to tender did not admit of tenders on fixed comparable parameters, we find no merit.
Sri K.K. Singhvi submitted that the tender papers were prepared by reputed architects and the precise points on which comparative quotations were invited were specifically incorporated in the tender papers.
The point again is that no other tenderer expressed any grievance.
The tenders were such that the tenderer could identify the terms which form the basis of comparative evaluation.
The charge of arbitrariness cannot be upheld.
Tests to be applied in a given case may be influenced by the extent to which a decision is supported by a democratic unanimity` which evidences the decision granted, of course, the power. ' From the facts of the aforesaid case it shall appear that Municipal Council had invited competitive proposals as to the ways in which the potentiality of the land could commercially be exploited and had also competitive plans and designs and ultimately respondent No. 6 was entrusted with the execution of the said scheme.
The cases aforesaid on which reliance was placed on behalf of the appellants, have also reiterated that once the State decides to grant any right or privilege to others, then there is no escape from the rigour of Article 14; the executive does not have an absolute discretion, certain 100 precepts and principles have to be followed, the public interest being the paramount consideration.
It has also been pointed out that for securing the public interest one of the methods recognised is to invite tenders affording opportunity to submit offers for consideration in an objective manner.
However, there may be cases where in the special facts and circumstances and due to.
compelling reasons which must stand the test on Article 14 of the Constitution, departure of the aforesaid rule can be made.
This Court while upholding the contracts by negotiation in the cases referred to above has impressed as to how in the facts and circumstances of those cases the decisions taken by the State and the authorities concerned were reasonable, rational and in the public interest.
The decisions taken in those cases by the authorities concerned, on judicial scrutiny were held to be free from bias, discrimination and under the exigencies of the situation then existing to be just and proper.
On the basis of those judgments it cannot be urged that this court has left to the option of the authorities concerned whether to invite tenders or not according to their own discretion and to award contracts ignoring the procedures which are basic in nature, taking into account factors which are not only irrelevant but detrimental to the public interest.
From the statements made in the affidavit filed on behalf of the MTNL before that High Court and from the relevant minutes of the Board of the MTNL which were produced before the High Court during the course of the hearing and copies thereof have also been produced by one of the appellants before this Court, it appears that the Board in its 28th meeting held on 28.12.1990 considered the default made by UIP in not publishing the directories in terms of the agreement every year.
The Board took note of the fact that UIP had run into financial difficulties and cash flow problem.
The banks who had advanced loans to them have not yet received back the payments.
The paper mills were not willing to supply paper on credit.
The printing presses were also not prepared to print the directories without getting advance payments.
In this background the Board considered the three options (1) to invoke the penalty clause and print the Directory by the MTNL at the risk and cost of the UIP.
(ii) provide the necessary loan secured or unsecured to print the directories, (iii) to terminate the contract and award the work to some other contractor.
The matter was again considered in the 29th meeting of the Board held 101 on 29th March, 1991 where a note was put up saying that if the contract with the UIP was terminated and a decision was taken to go in for a fresh tender the following problems may arise (i) UIP/UDI may put legal obstacles in retendering, (ii) the response for printing and delivering the directories free of cost and also paying royalty may be poor from the parties, considering the failure of the present experiment and prohibitive increase in the cost of paper and printing, (iii) the concept of the yellow pages may suffer a big set back and may make it unattractive to the advertisers because of the loss of confidence.
The Board in its 29th meeting discussed the aforesaid agenda and took a decision that MTNL has no option but to grant loan to UIP/UDI to help them to print out the directories.
The Board also felt that grant of the loan to UIP/UDI was quite risky but the said distress measure had to be taken to avoid any stalemate and was in the large interest of the MTNL.
The matter was further discussed in the 31st meeting of the Board held on 6th August, 1991.
The agenda note for this meeting after stating the aforesaid circumstances said that UIP had approached MTNL once again with a package of proposals in supersession of their all requests/proposals made earlier, so that they may be bailed out of their financial problems and assuring uninterrupted supply of directories for the revised period of contract.
The note recorded that proposal had also been received from Sterling through UDI to print and publish the directories of the MTNL with their financial support.
A decision was taken in order to enable the MTNL to salvage the contract and get the job executed without further delay and to avoid consequent inconvenience to the customers, to negotiate on revised terms with UIP/UDI/Sterling.
There is no dispute that the Board in its 32nd meeting held on 19th August, 1991 approved the new terms and conditions, and took a decision that an extension of the contract be given to UIP/UDI and Sterling for printing the 13 issues of directories for Delhi and Bombay.
On basis of that decision the impugned supplemental agreement was executed on 26th September, 1991.
In the facts and the circumstances of the present case it has to be held that the MTNL has applied the "irrelevant considerations" doctrine while granting a fresh contract for a period of five years through the supplemental agreement dated 26th September, 1991, because it has failed to take into account considerations which were necessarily relevant i.e. 102 following the rule of inviting tenders while granting the contract for a further period of five years on fresh terms and conditions and has taken into account irrelevant considerations that (i) if the contract is terminated and a decision is taken for a fresh tender, the UIP/UDI may put legal obstacles in retendering, (ii) the response for printing free of cost and also paying the royalty may be poor (iii) the concept of the yellow pages may suffer a big set back and may make it unattractive to the advertisers because of the loss of confidence.
MTNL should have been conscious of the fact that admittedly the UIP/UDI had miserably failed in performing their part of the contract for a period of five years, inasmuch as they were required to publish between the period 1987 1991 one issue of the main directory every year for Delhi and Bombay apart from supplementary.
Instead of that they published for the year 1987 directories for Delhi and Bombay after a delay of seven months and six months respectively.
The Delhi issue of directory for the year 1988 was published only in August, 1990.
So far Bombay is concerned there was no publication for the years 1988, 1989, 1990 and 1991.
The MTNL also overlooked the fact that the period of contract had already expired and as such the MTNL was in error in treating the supplemental agreement as only an extension of the original agreement.
Learned counsel appearing for the appellants did not dispute and contest that by the supplemental agreement the period of contract which had expired in 1991 was extended upto 1997/1998 for printing the directories for Delhi and Bombay, and that the terms and conditions were different.
For the period 1991 1997 additional royalty which had been agreed to be paid by the UDI/UIP/Sterling was only Rs. 10 crores whereas for the period 1987 1991 it was Rs. 20.16 crores.
Philanthropy is no part of the management of an undertaking, while dealing with a contractor entrusted with the execution of a contract.
The supply of the directories to public in time, was a public service which was being affected by the liberal attitude of the MTNL and due to the condonation of delay on the part of the UIP/UDI.
There was no justification on the part of the MTNL to become benevolent by entering into the supplemental agreement with no apparent benefit to the MTNL, without inviting fresh tenders from intending persons to perform the same job for the next five years.
Public authorities are essentially different from those of private persons.
Even while taking decision in respect of commercial 103 transactions a public authority must be guided by relevant considerations and not by irrelevant ones.
If such decision is influenced by extraneous considerations which it ought not to have taken into account the ultimate decision is bound to be vitiated, even if it is established that such decision had been taken without bias.
The contract awarded for the publication of the directories had not only a commercial object but had a public element at the same time i.e. to supply the directories to lakhs of subscribers of telephones in Delhi and Bombay, every year within the stipulated time free of cost.
In such a situation MTNL could not exercise an unfettered discretion after the repeated breaches committed by UIP/UDI, by entering into a supplemental agreement with the sterling for a fresh period of more than five years on terms which were only beneficial to UIP/UDI/Sterling with corresponding no benefit to MTNL, which they have realised only after the High Court went into the matter in detail in its judgment under appeal.
The supplemental agreement is really a fresh agreement with fresh terms and conditions which has been entered by MTNL without inviting any tender for the same.
The supplemental agreement has been entered to benefit the parties who are admittedly defaulters by not publishing directories for Bombay for the years 1988, 1989, 1990 and 1991 and for Delhi for the years 1989, 1990 and 1991 although they had collected several crores of rupees for the advertisements for the directories to be published in the aforesaid years.
We fail to understand as to how a fresh contract for a period upto 1997/1998 was awarded to UIP/UDI/Sterling in the garb of an agreement for extension of the period of the original agreement taking into account irrelevant factors as already enumerated above.
If the supplemental agreement has been executed without following the procedures which are essential in view of the repeated pronouncements of this Court and taking into consideration irrelevant factors, then can it be said that "decision making process" before the supplemental agreement was entered into was consistent with the requirement of Article 14 of the Constitution? In such a situation there is no scope for argument that any interference by Court shall amount to an intervention like a court of appeal.
Once the process through which the supplemental agreement was executed is held to be against the mandate of Article 14 of the ' Constitution, the supplemental agreement shall be deemed to be avoid.
The appellants also took an objection to the maintainability of the 104 writ application, on the ground of delay and laches.
It was pointed out that supplemental agreement was entered into on 26th September, 1991 whereas the Writ Petition was filed before the High Court on 19th May, 1992, although during this period the petitioners had full knowledge about the supplemental agreement.
According to the petitioners, the supplemental agreement was kept as a guarded secret by the MTNL as well as UIP/UDI/Sterling and it is only in April 1992 the petitioners could know some details of the supplemental agreement.
In this connection our attention was drawn to an advertisement published on 27th September, 1991 saying that official Bombay directory was being released in December, 1991 and Delhi telephone directory in January, 1992.
That advertisement was given on behalf of the UDI only.
In the body of the advertisement it was mentioned that UDI and Sterling have made all necessary arrangements to ensure that every subscriber receives up to date directory in Delhi and Bombay in time.
It was urged on behalf of the writ petitioners that under the supplemental agreement it was the Sterling who had been given the right to publish the directories and as such in normal course the advertisement should have been given in the paper on behalf of the Sterling but only with an ulterior motive the advertisement was published on behalf of the UDI.
Our attention was also drawn to several communications addressed by the Department of Telecommunications, Madras, to the dif ferent authorities of the MTNL making enquiries as to whether the Sterling had been entrusted with the printing of directories for Delhi and Bombay, as tenders for printing and supply of main telephone directories with yellow pages on turnkey basis were under consideration at Madras.
The aforesaid queries were made in the month of December, 1991.
The office of the Chief General Manager, MTNL, on 2nd January replied to the Divisional Engineer, Madras Telephones, saying "perhaps, MTNL, Corporate Office have entrusted some job of printing of telephone directories to M/s Sterling Computers Ltd. In this connection, you are therefore requested to contact Chairman cum Managing Director, MTNL".
A letter dated 30.12.1991 was addressed by Sterling to the Divisional Engineer, Madras Telphones, in reply to the query whether they had been entrusted with the printing and supply of telephone directories, saying "Much as we would like to provide you a copy of the order of Mahanagar Telephone Nigam Ltd. we are unable to do so due to certain circumstances beyond our control.
" Reference was made to yet another communication dated 30.12.1991 addressed 105 by MTNL to Deputy General Manager, Madras Telephones, saying that so far the Sterling Computers were concerned "they have been allowed a sub contract by M/s UDI for printing the directories for Delhi and Bombay", without giving the details of any such contract.
It was pointed out on behalf of the the writ petitioners that an affidavit, was filed on behalf of the Sterling, before the Madras High Court in connection with another Writ Petition on 19.4.1992, in which the details of the supplement agreement were disclosed.
The Writ Petition in the Delhi High Court was filed on 19.5.1992.
Under the circumstances mentioned above it is difficult to reject the Writ Petition on the ground of delay and laches.
As already mentioned above, Mr. Venugopal, the learned counsel appearing for the writ petitioners, offered an amount of Rs. 60 crores on behalf of the writ petitioners as royalty to the MTNL for printing the directories for Delhi and Bombay for the period of the supplemental agreement, if the said job is entrusted to them on the same terms and conditions.
For that period the UIP/UDI/Sterling have offered only Rs. 10 crores as additional royalty.
This Court could have considered the desirability of directing the MTNL to consider the said offer of Rs. 60 crores on behalf of the writ petitioners by according to us, if any such direction is given and on basis of such direction the job of printing the directories for the period in question is given to the writ petitioners, the procedure so adopted shall suffer from the same vice.
The MTNL will enter into an agreement with the writ petitioners without inviting tenders and without offering opportunities to others who may be interested in the printing of the directories for Delhi and Bombay.
As such while affirming the judgement of the High Court, we direct that all steps should be taken by MTNL as early as possible for publishing the directories for Delhi and Bombay so that public in general should not suffer any more.
The appeals are accordingly dismissed but in the facts and circumstances of the case there shall be no order as to costs.
Before we part with the judgment we shall like to strike a note of caution.
It is a matter of common experience that whenever applications relating to awarding of contracts are entertained for judicial review of the administrative action, such applications remain pending for months and in some cases for years.
Because of the interim orders passed in such applications, the very execution of the contracts, are kept in abeyance.
The cost 106 of different projects keep on escalating with passage of time apart from the fact that the completion of the project itself is deferred.
This process not only affects the public exchequer but even the public in general who are deprived of availing the facilities under different projects.
As such it need not be impressed that while exercising the power of judicial review in connection with contractual obligations.
Courts should be conscious of the urgency of the disposal of such matters, otherwise the power which is to be exercised in the interest of the public and for public good in some cases becomes counter productive by causing injury to the public in general.
N.V.K. Appeals dismissed.
| IN-Abs | The three appeals arose out of disputes relating to the publication of telephone directories of MTNL a Government of India Undertaking.
The MTNL introduced a new concept of "yellow pages ' in telephone directories, and these yellow pages were to contain advertisement under different headings.
The contractor who was to be awarded the contract for printing such directories was to collect the revenue from the advertisements in the yellow pages as well as in the white pages of the telephone directory, supply the same free of cost to the for its subscribers, and pay royalty to the MTNL in connection with printing of such directories.
Tenders for publication of the directories for Delhi and Bombay were invited.
Tender of UIP respondent No. 2 in the Writ Petition and appellant in one of the appeals (CA.No. 91 of 1993) was accepted, and an agreement dated 14th March, 1987 was executed.
UDI, respondent No. 3 to the Writ Petition and appellant in one of the other appeals (CA No. 90, of 1993) was a subsidiary of UIP.
Under the original agreement UIP was to publish directories every year for a period of five years from 1987 to 1991 for Delhi and Bombay separately, pay an amount of Rs. 20.16 crores as royalty to the MTNL, supply the directories free of cost to subscribers.
UIP also furnished a 82 ` performance guarantee for a sum of Rs. one crore, and was also to supply the same number of supplementary directories which were to be published six months after the publication of the annual issue, to be published in November/December every year.
UIP was given the exclusive right for procurement of the advertisements in the yellow pages as well as strips, bold the extra entries in the white pages, the rates to be fixed by the UIP for each issue of the directory, and such rates to be printed for general information.
It was stipulated that if UIP committed default or breach of the agreement or failed in the due performance thereof, the MTNL shall be entitled to recover from the UIP by way of compensation or liquidated damages and amount calculated at the rate of Rs. One lakh for every day or part thereof for the delay beyond the stipulated date.
The MTNL without prejudice to other rights could by notice in writing determine the contract.
UIP defaulted and committed breach of the agreement inasmuch as directories for Delhi were published only for the years 1987 and 1988 and for Bombay only for the year 1987.
For the year 1987, Delhi issue was published after a delay of seven months and Bombay issue after six months, and the Delhi issue of 1988 was published only in August, 1990, a delay of two years.
There was no publication of the directories for Delhi for the years 1989, 1990 and 1991, and in respect of Bombay for the years 1988, 1989, 1990 and 1991.
A supplemental agreement was entered on 26th September, 1991 between UIP, UDI, MTNL and Sterling Computers Limited appellant in one of the appeals (CA.
No. 89 of 1993).
Sterling by this agreement was introduced to carry out the unexecuted portion of the agreement with UIP.
By this supplemental agreement Sterling was to print and publish 13 main issues of Delhi and Bombay directories within a period of seven years including the year 1991 on payment of additional royalty of only Rs. 10 crores to the MTNL over and above the royalty stipulated in the original agreement by the UIP.
Under the agreement dated 14th March, 1987 the royalty which was payable was Rs. 20.16 crores for the period 1987 to 1991, but under the supplemental agreement Sterling was given the contract to publish 13 main issues of the Delhi and Bombay directories upto 1997 and 1998, but for the extended period it had to pay royalty only for an amount of Rs. 10 83 crores.
A Writ Petition was flied questioning the validity and legality of the supplemental agreement on different grounds including the ground of mala fide.
It was contended by the petitioners that under the grab of a supplemental agreement a fresh contract was awarded to Sterling for a fresh period from 1991 to 1997 on fresh terms and conditions to publish the directories every year for Delhi and Bombay without inviting tenders or affording an opportunity to others, to submit tenders so that they may be also considered for award of the said contract.
It was asserted by the petitioners that in the process of entering into the supplemental agree ment the MTNL, which is a public undertaking and a "State ' within the meaning of Article 12 of the constitution, had suffered a loss of more than Rs. 60 crores without any corresponding benefit accruing to the MTNL or to the public in general.
MTNL contested the writ petition, contending that the supplemental agreement was a result of a bona fide commercial decision free from any bias or malice, that the original contract for the years 1987 to 1991 had been awarded to UIP after inviting tenders, but UIP having gone bankrupt, no money could have been realised from it.
The termination of the original contract was no remedy although repeated contraventions and breaches had been committed by the UIP inasmuch as there was no publication of directory for Bombay for the years 1988, 1989, 1990 and 1991 and for Delhi for the years 1989, 1990 and 1991.
In order to salvage Rs. 20.16 crores which was payable to the MTNL under the original agreement dated 14th March, 1987 by the UIP and which had not been paid, a decision was taken by the MTNL to enter into a supplemental agreement and to allow the UIP/UNI/Sterling to publish the thirteen issues of directories, six main issues for Delhi and seven main issues for Bombay upto years 1997 98 apart from the supplementary directories.
The High Court allowed the writ petitions, and came to the conclusion that the supplemental agreement dated 26th September, 1991 cannot be held to be an extension of the original agreement dated 14th March, 1987, and that the supplemental agreement was tainted with malice the object being to provide unjust enrichment to UIP/UDI/Sterling.
In the appeals to this Court, it was contended on behalf of the 84 appellants that the supplemental agreement was entered into by the MTNL taking into consideration the circumstances then existing which had been examined at the highest level and as such a Court should not examine the discretion exercised by the public authority as a court of appeal because the decision to enter into the supplemental agreement also involved a question of policy, and it was pointed out that the contract had been awarded in the year 1987 to UIP on an experimental basis on such terms and conditions on which in past directories had not ever been published, and that the real experiment was as to how the directories ' could be published without incurring any cost by MTNL.
On behalf of the Writ Petitioners it was stated that they were prepared to pay to the MTNL an amount of Rs. 60 crores for the period 1991 to 1997/1998 the period covered by the supplemental agreement for which the UIP/(JDI/Sterling have undertaken to pay only Rs. 10 crores as royalty.
Dismissing the appeals, this court HELD:1.
Ile publication of directories by the MTNL is not just a commercial venture, the primary object is to provide service to the people.
[92F] 2.The norms and procedures prescribed by Government and indicated by Courts have to be more strictly followed while awarding contracts which have along with a commercial element a public purpose.
[92F] 3.The action or the procedure adopted by the authorities which can be held to be a 'State ' within the meaning of Article 12 of the Constitution, while awarding contracts in respect of properties belonging to the state can be judged and tested in the light of Article 14 of the Constitution.
Raman Davaram Shelly vs 7he International Airport Authority of India, ' ; ; M/s. Kasturi Lal Lakshmi Reddy vs The State of Jammu and Kashmir, ; ; Fertilizer Corporation Kamgar Union (Regd) Sindri vs Union of India, ; ; Ram and Shyam Company vs State of Haryana, ; ; Haji T.M. Hasan Rawther vs Kerala Financial Corporation, AIR 1988 SC 157; Mahabir Auto Stores vs Indian Oil Corporation, ; and Kumari Shrilekha Vidyarthi vs State of U.P., , referred to.
[92 H 93 A] 4.
Public authorities, at times It Is said must have the same liberty 85 as they have in framing the policies, even while entering into contracts because many contracts amount to implementation or projection of policies of the Government.
But it cannot be overlooked that unlike policies, contracts are legally binding commitments and they commit the authority which may be held to be a State within the meaning of Article 12 of the Constitution In many cases for years.
That is why the courts have impressed that even in contractual matters the public authority should not have unfettered discretion.
[91G H, 92A] 5.In contracts having commercial elements, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue But even in such matters they have to follow the norms recognised by courts while dealing with public property.
[92B] 6.Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purposes of taking a decision its to whom the contract is to be awarded and at what terms.
If the decisions have been taken in bone fide manner although not strictly following the norms laid down by the Courts, such decisions are upheld.
[92C] 7.Public authorities are essentially different from those of private persons.
Even while taking decision in respect of commercial transactions a publicauthority must be guided by relevant considerations and not by irrelevant ones.
If such decision is influenced by extraneous considerations which it ought not to have been taken into account the ultimate decision is bound to be vitiated, even if it is established that such decision had been taken without bias.
[102H, 103A] 8.While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the 'decision making process '.
By way of judicial review the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the state.
Courts have inherent limitations on the scope of any such enquiry.
But the Courts can certainly examine whether "decision making process ' was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.
[95C E F] 86 Chief Constable of the North Wales Police vs Evans, ; , referred to.
9.In the facts and the circumstances of the instant case, it has to be held that the MTNL has applied the "irrelevant considerations ' doctrine while granting a fresh contract for a period of five years through the supplemental agreement dated 26th September, 1991, because it had failed to take into account considerations which were necessarily relevant ie.
following the rule of inviting tenders while granting the contract for a further period of five years on fresh terms and conditions and had taken into account irrelevant considerations.
[101H, 102A] 10.Philanthropy is no part of the management of an undertaking, while dealing with a contractor entrusted with the execution of a contract. '[102F] 11.The supply of the directories to public in time, was a public service which was being affected by the liberal attitude of the MTNL and due to the condonation of delay on the part of the UIP/UDI.
There was no justification on the part of the MTNL to become benevolent by entering into the supplemental agreement with no apparent benefit to the without inviting fresh tenders from intending persons to perform the some job for the next five years.
[102G] 12.The supplemental agreement is really a fresh agreement with fresh terms and, conditions which has been entered by MTNL without inviting any tender for the same.
It has been entered to benefit the parties who are admittedly defaulters by not publishing directories for Bombay for the years 1988 1991, and for Delhi for the years 1989 1991 although they had collected several crores or Rupees for the advertisements for the directories to be published in the aforesaid years.
[103D E] 13.It is a matter of common experience that whenever applications relating to awarding of contracts are entertained for judicial review of the administrative action, such applications remain pending for months and in some cases for years.
Because of the interim orders passed in such applications, the very execution of the contracts, are kept in abeyance.
The cost of different projects keep on escalating with passage of time apart from the fact that the completion of the project itself Is deferred.
This process not only affects the public exchequer but even the public In general 87 who are deprived of availing the facilities under different projects.
As such, it need not be impressed that while exercising the power of judicial review in connection with contractual obligations, Courts should be conscious of the urgency of the disposal of such matters, otherwise the power which is to be exercised in the interest of the public and for public good in some cases become counter productive by causing injury to the public in general.
[106AB]
|
Appeal No. 572 & 591 of 1980.
From the Judgment and Order dated 7.11.79 of the Orissa High Court in Misc.
92 of 1979.
G.L. Sanghi, Harish N. Salve, section Khaitan and Darshan Singh for the Appellant in CA.
No. 572/80 and Respondent in CA.
No. 571/80.
B.M. Patnaik, R.K. Mehta and Ms. Mona Chakraborty for the Respondent in CA.
No. 572/80 and for the Appellant in CA.
No. 571/80.
The Judgment of the Court was delivered by BHARUCHA, J.
These are cross appeals and they can be disposed of by a common judgment.
The Industrial Development Corporation of Orissa Ltd. (IDCO)) is the appellant in Civil Appeal No. 571 of 1980 and Jajodia (Overseas) Private Ltd. (JOPL) is the appellant in Civil Appeal No. 572 of 1980.
232 IDCO and JOPL entered into an agreement whereunder IDCO agreed to supply to JOPL 5000 tons of M.S. Rounds for export on the terms and conditions mentioned therein.
The goods were not supplied.
By a letter dated 12th September, 1969, IDCO cancelled the agreement and intimated to JOPL that its offer, which had culminated in the agreement, should be treated as withdrawn.
There was some correspondence between the parties.
Thereafter the claim against IDCO for damages for breach of contract made by JOPL was referred to the Chief Secretary to the Government of Orissa, the arbitrator named in the agreement, for 'adjudication.
The Chief Secretary declined to act as arbitrator '.
Thereupon JOPL filed a suit under Section 20 of the , in the Calcutta High Court praying that the agreement be taken on file and the dispute between JOPL and IDCO be referred to an arbitrator to be nominated by the court.
That plaint was returned to JOPL to be presented before the proper court.
It was presented in the court of the Subordinate judge, Bhubaneswar.
On 4th April, 1973, the learned Subordinate Judge appointed Mr. B. Mohapatra, a retired Judge of the Patna High Court "to act as the arbitrator to give his award on the disputes between the parties as enumerated in their respective pleadings and the order of this court.
Reference he made to him requesting him to make the award by 30th June, 1974.
Copy of the plaint, written statement and the order of this court be sent to the arbitrator.
" The arbitrator entered upon the reference and, after hearing parties and considering the material placed upon the record before him, gave an award on 24th September, 1985.
In the Preamble to the award the arbitrator set out briefly some of the facts aforementioned.
The arbitrator stated that issues had been settled for adjudication and that the parties produced a large number of documents, examined witnesses and advanced elaborate arguments.
The arbitrator, having given careful consideration to all the written statements, documents and evidence and the arguments, set out the conclusions to which he had come upon the issues raised.
He concluded: " In the result, my award is that Jajodia Overseas Pvt. Ltd. is entitled to recover from the Industrial Development Corporation of Orissa Rs. 11,00,344 only (eleven lakhs three hundred forty four) with pendente lite interest at the rate of 6 per cent per annum from 28th April, 1974 to the date of award (24th September, 1975)".
233 The award was challenged by IDCO before the Subordinate Judge, Bhubaneshwar.
JOPL supported the award and prayed that it be made a rule of the court with future interest.
The learned Subordinate Judge dismissed IDCO 's petition and made the award a rule of the court ordering that JOPL was entitled to future interest at the rate of 6 per cent per annum.
The judgment and order, of the learned Subordinate Judge was impugned before the Orissa High Court.
The learned Single Judge who heard the appeal rejected all contentions raised on behalf of IDCO except one: be found that in answering three issues the arbitrator had arrived at inconsistent conclusions which had a bearing on the question whether or not damages should be awarded.
The inconsistency was not a trifling or inconsequential matter and, being apparent on the face of the award, the learned Judge held that the arbitrator had been guilty of legal misconduct so that the award was set aside.
The learned Judge directed that the records pertaining to the arbitration proceeding be sent back to the arbitrator, who was directed to give a fresh award, after giving an opportunity of hearning to both parties, keeping in view the findings and observations made in the judgment.
Against the judgment and order of the Orissa High Court, both JOPL and IDCO are in appeal.
JOPL contends that there is no inconsistency upon the face of the award which vitiates it.
On behalf of IDCO it is contended that the award is bad and that, in any event the High Court was in error in sending the matter back to the arbitrator for making a fresh award.
It was submitted by Mr. B.M. Patnaik, learned counsel for IDCO, that (i) No disputes which were referred to the Chief Secretary by JOPL and which were contained in the plaint and the written statement before the Subordinate Judge, Bhubaneshwar, and were referred by the said Subordinate Judge to the arbitrator were considered by the arbitrator because these documents were not mentioned in the award.
Consequently, the arbitrator had acted without jurisdiction.
(ii) That the award of damages was based on no evidence or material.
234 (iii) The answer by the arbitrator to issue No. 2, set out in the award, showed that the arbitrator had construed the agreement between the parties.
As such, the agreement was incorporated in the award and it was, therefore, open to the court to see if the arbitrator had in any wise misconstrued the agreement.
(iv) The arbitrator had referred to the statement of claim and the counter filed before him and had given findings.
As suck the statement of claim and the counter was incorporated in the award so that the whole matter was open before the court.
(v) The award was a speaking award inasmuch as the answers to the issues were the reasons for the award.
(vi)There were inconsistencies in the answers to the issues and the arbitrator had, therefore, misconducted the proceedings.
(vii)In any event, if at all the matter had to go back, it should not go back to the arbitrator but to the arbitral tribunal now constituted in the State of Orissa.
It is, we think, necessary, first, to clear some cobwebs.
A speaking or reasoned award is one which discusses or sets out the reasons which led the arbitrator to make the award.
Setting out the conclusions upon the question or issues that arise in the arbitration proceedings without discussing the reasons for coming to these conclusions does not make an award a reasoned or speaking award.
The arbitrator has in the award before us only answered the issues that were framed.
He has not discussed or set out the reasons for the answers.
The award is, therefore, not a speaking or reasoned award.
That the arbitrator merely referred to the pleadings filed before him does not mean that the pleadings are incorporated in the award.
As was aid in the context of a contract in a passage, quoted by this Court with approval in Allen Berry and Co. vs Union of India ; , from he judgment of Diplock, LJ.
in Ciacomo Costa Fu Andrea vs British Italian Co. Ltd., : "It seems to me, therefore, that, on the cases, there is none which compels us to hold that a mere reference to the contract in the award entitles us to look at the contract.
It may be that 235 in particular cases a specific reference to a particular clause of a contract may incorporate the contract, or that clause of it, in the award.
I think that we are driven back to first principles in this matter, namely, that an award can only be set aside for error which is on its face.
It is true that an award can incorporate another document so as to entitle one to read that document as part of the award and, by the reading them together, find an error on the face of the award." "9.
The question whether a contract or a clause of it is incorporated in the award is a question of construction of the award.
The test is, does the arbitrator come to a finding on the wording of the contract.
If he does, he can be said to have impliedly incorporated the contract or a clause in it whichever be the case.
But a mere general reference to the contract in the award is not to be held as incorporating it.
" The arbitrator merely referred to the fact that parties had "filed their statements" before him and that he had given "careful consideration to all the written statements, documents and evidence and the arguments".
This is not such a reference as can be said to incorporate the pleadings before him in the award.
Reference was made to issue No.2 and its answer and it was contended that the arbitrator had thereby made a specific reference to the agreement and it must, therefore, be held that the agreement was incorporated in the award.
Issue No. 2 and the answer to it read thus: "Issue Was the said agreement a commission agency or export agency agreement.
Answer The agreement was not a commission agency or export agreement.
" In the first place, the pleadings before the Subordinate Judge, Bhubaneshwar and the order of reference made by him are not placed by IDCO before us.
If it was IDCO 's case that no issue of law had specifically been referred to the arbitrator, it was its obligation so to show.
But we shall proceed on the basis that a specific question of law was not referred.
The submission on IDCO 's behalf was that the arbitrator misconstrued the 236 agreement and, therefore, the court was entitled to look into the agreement and determine whether the award was correct.
We do not think that this broad submission is correct.
It would appear that the arbitrator construed only such clause of the agreement as was relevant to decide whether the agreement was, as contended by IDCO, a commission or export agency agreement.
Such clause alone would be incorporated in the award and could be looked at by the court to determine whether the arbitrator misconstrued it.
We cannot accede to the submission that, by reason of the answer to issue No. 2, the entire agreement became incorporated in the award and that it was, therefore, open to the court to look into the entirety of the dispute in the arbitration proceedings and determine whether the award was correct.
Even assuming the incorporation of the agreement, an error apparent upon the face of the award had to be shown.
We may refer with advantage to this court 's judgment in Bungo Steel Furniture Pvt. Ltd. vs Union of India, ; The court quoted the well known passage from the judgment of Lord Dunedin in Champasey Bhara and Company vs Jivraj Balloo Spinning and Weaving Company Ltd., 50 I.A. 324, thus: "An error in law on the face of the award means, in their Lordships ' view, that you can find in the award or a document actually incorporated thereto, a:; for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous.
It does not mean that in narrative a reference is made to a contention of one party, that opens the door to seeing first what that contention is, and then going to the contract on which the parties ' rights depend to see if that contention is sound.
" It went on to observe: 'An award may be set aside by the court on the ground of an error of law apparent on the face of the award but an award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion.
" 237 It was argued on behalf of IDCO before the High Court that the pleadings before the Subordinate Judge, Bhubneshwar and the order of reference to the arbitrator made by him were not before the arbitrator and that, therefore, the arbitrator had acted without jurisdiction.
The High Court rejected that contention and made reference to the order of the Subordinate Judge, which we have quoted above, which showed that if directed that the copy of the pleadings and of itself should be sent by,.
the Court to the arbitrator.
Before us it was submitted that these pleadings and order had not been considered by the arbitrator, because he had not mentioned them in the award.
Issues were framed by the arbitrator, obviously in consultation with the parties and arising upon the pleadings.
There were several hearings.
It is, in these circumstances, inconceivable that the issues would not have reflected the referred dispute between the parties.
It is also significant that the pleadings before the Subordinate Judge, Bhubaneshwar, and the statement of claim and the counter filed before the arbitrator were not produced before us by IDCO so that we could determine whether the statement of claim filed by JOPL before the arbitrator raised claims different from those contained in the pleadings before the Subordinate Judge, Bhubaneshwar.
It was submitted that the award of damages was based on no evidence or material.
The submission was based on the finding that the originals of the foreign sale contracts entered into by JOPL in respect of the goods under the agreement had not been sent to IDCO.
That these original agreements had not been sent does not ipso facto lead to the conclusion that the arbitrator had no material before him upon which he could find that JOPL had suffered damage and assess the same in monetary terms.
This brings us to the question of the inconsistencies found by the High Court upon the face of the award.
The issues and the answers to which the High Court referred are issue Nos. 6, 7(b) and 9(a).
In our view, it is necessary to reproduce the issue nos.
6, 7, 9, and 10 and their answers in extenso.
"Issues 6.
Did the claimant fulfil their obligations under the terms and conditions of the agreement.
Answers JOPL fulfilled their obligations under the agreement in question.
38 7.(a) Did the respondent ac IDC accepted or affirmed or affirm the claimant 's the JOPL 's order for supply order for supply of 4000 ton of 4000 tonnes.
as mentioned nnes as mentioned in para 4 of the statement of the claim ? (b) Did the claimant send JOPL did not send the original the foreign sale contracts foreign sale contracts to originalnal foreign sale I.D.C. contractsto the respondent.
9.(a) Were the acts mentioned The agreement provided inpara 10 of the counter state for JOPL sending the orig ment covered by the agreement nal foreign sale contracts to the respondent at a certain stage.
Reference to para 10 of the counter statement IDC.
(b) Were the acts mentioned in The agreement provided para 11 of the counter state that JOPL would arrange ment covered by the agree for export license, (Refer ment.
ence to para 11 of the counter statement of IDC.
(c) Were the acts mentioned The agreement provided that in para 12 of the counter JOPL would procure orders statement covered by the for export of 5000 metric agreeement?(JOPL) tonnes of MS rounds within 3 months from the date of acceptance of the IDC 's offer and they would follow up th indents placed by the respondent(IDC) for supply of billets and arrange for export licences, letter of authorisation from the Iron the Iron and Steel Controller in time (Ref.
to para 12 of counter statement of IDC).
239 (d) Were the acts mentioned in The 'acts ' mentioned in para 13 of the counter state para 13 of the counter ment covered by the statement by IDC are cov agreement.
red by the previous three paragraphs(10, 11 and 12) of that statement and they have been already dealt/with under sub issues.
(a),(b) above.
If so, did the party concer The party concerned that ned perform such Acts? is the JOPL performed their part of the work as was necessary under the agreement at relevant stage.
Was the respondent jus IDC was not justified in tified in cancelling the cancelling the agreement".
agreement? It will be seen that the award says that the agreement provided for JOPL sending the original foreign sale contracts to the respondent at a certain stage.
" It also says that "JOPL fulfilled their obligations under the agreement in question" and that "JOPL performed their part of the work as was necessary under the Agreement at relevant Stage" On the other hand, it says that 'JOPL did not send the original foreign sale contracts to I.D.C. ' The award then finds that "IDC was not justified in cancelling the agreement".
(Emphasis supplied).
Reading these issues and answers together and harmoniously, it is apparent that the agreement provided that JOPL should send to IDCO the original foreign sale contracts at a certain point of time and that it is found that JOPL had not sent the original foreign sale contracts to IDCO.
It is also apparent that it is found that at the point of time at which IDCO purported to cancel the agreement, JOPL had performed all its obligations under the agreement.
The conclusion is, there fore, that upto that point of time JOPL had not been obliged to send the foreign sale contracts to IDCO.
So read, in our view, there are no inconsistencies upon the face of the award as can be characterised as errors that vitiate the award.
An award has to be read as a whole and harmoniously.
The grounds upon which an award can be set aside are limited.
The court 240 should be very circumspect about setting aside an award reached by an arbitrator for parties have agreed that the disputes that may arise or have arisen between them should be resolved not by a court of law but by arbitration.
Mr. Patnaik pointed out that the Orissa High Court had recognised that 'the malady of the racket of arbitration" affected its State of Orissa vs Gangaram ahapolia, and that this had been taken note of by this court in State of Orissa vs Dandasi Sahu ; The court said: "In our opinion, the evidence of such state of affairs should make this court scrutinise the award carefully in each particular case but that does not make the court declare that all high amounts of awards would be bad per se.
" We are in respectful agreement.
We do not, having bestowed due care upon the award and the arguments advanced to assail it, find the award to be bad in law.
Having regard to the view that we take, the question of setting aside the award and sending the arbitration proceedings back to the arbitrator or to the arbitral tribunal now created in the State of Orissa does not arise.
In the result, Civil Appeal No. 571 of 1980 (filed by IDCO) is dismissed.
Civil Appeal No. 572 of 1980 (filed by JOPL) is allowed and the judgment and order of the Subordinate Judge, Bhubaneshwar dated 9th March, 1979 is restored.
There shall be no order as to costs.
U.R. CA No. 571/80 dismissed.
No. 572/80 allowed.
| IN-Abs | IDCO and JOPL entered Into an agreement whereunder IDCO agreed to supply to JOPL 5000 tens of MS rounds for export on terms and conditions mentioned therein.
The goods were not supplied.
By a letter dated September 12, 1969, IDCO cancelled the agreement and intimated to JOPL that its offer which had culminated in the agreement, should be treated as withdrawn.
Some correspondence followed.
Thereafter JOPL 's claim for damages against IDCO for breach of contract was referred to the Chief Secretary, who was named in the agreement, for arbitration.
He declined to act as arbitrator.
An arbitrator was thereafter appointed by the Subordinate Judge, Bhubaneswar under S.20 of the .
He gave his award on September 24, 1985.
In the award the arbitrator briefly stated the facts, the issues settled for adjudication and that the parties had produced a large number of documents, examined witnesses and advanced elaborate arguments.
Having carefully considered them, he set out the conclusions and awarded JOPL Rs. 11,00,344 with pendente lite interest @ 6%.
IDCO challenged the award before the Subordinate Judge, Bhubaneswar who dismissed the petition and made the award a rule of the Court In appeal before the Orissa High Court, the learned Judge rejected all contentions of IDCO except one namely that In answering three issues the arbitrator had arrived at Inconsistent conclusions apparent on the face of the award, which had a bearing on the question of awarding of damages.
He therefore directed that the records be sent back to the 229 230 arbitrator for making a fresh award.
Cross appeals were filed in the Supreme Court.
JOPL contended that there was no inconsistency on the face ' of the award which vitiated it.
For IDCO, it was contended that the award was bad in law, and in any event the High Court was in error in sending the matter back to the arbitrator for making a fresh award.
Dismissing the appeal of IODC, this Court, HELD: 1.
A speaking or reasoned award is one which discusses or sets out the reasons which led the arbitrator to make the award.
Setting out the conclusions upon the questions or issues that arise in arbitration proceedings without discussing the reasons for coming to these con clusions does not make an award a reasoned or speaking award.
The arbitrator has in the award only answered the issues that were framed.
He had not discussed or set out the reasons for the answers.
The award is, therefore, not a speaking or reasoned award.
[234E F] 2.
That the arbitrator merely referred to the pleadings does not mean that the pleadings are incorporated in the award.
[234F] Allen Berry and Co. vs Union of India, AIR 1971 SC 6% and Ciacomo Costa Fu Andrea vs British Italian Trading Co. Ltd, , followed.
In answering issue no.2, the arbitrator construed only such clause of the agreement as was relevant to decide the issue.
Such clause alone would be incorporated in the award and could be looked at by the court to determine if the arbitrator had misconstrued it.
(pp.9 10) [236B] 4.
Even assuming the incorporation of the agreement, an error apparent on the face of the award had to be shown.
(p.10) [236D] Bungo Steel Furniture Pvt. Ltd. vs Union of India, ; , relied on.
In the circumstances of the case, merely because the arbitrator had not mentioned the pleadings and order of reference does not mean that the issues framed did not reflect the referred disputes.
(pp.11 and 12) [237B] 231 6.
That the original foreign sale contracts had not been sent to IDCO does not ipso facto lead to the conclusion that the arbitrator had no material before him upon which he could find in monetary terms the damages suffered by JOPL.
[237E] 7.
In the facts of the case, there are no inconsistencies upon the face of the award as can be characterised as errors that vitiate the award.
An award has to be read as a whole and harmoniously.
The grounds upon which an award can be set aside are limited.
The court should be very circumspect about setting aside an award reached by an arbitrator for parties have agreed that the disputes that may arise or have arisen between them should be resolved not by a court of law but by arbitration.
[239H, 240A] 8.
Evidence of a "malady of the racket of arbitration ' should make the court scrutinies the award carefully in each case, but would not make the court declare all high amounts of awards would be bad per se.
(p.17) [240B C] State of Orissa vs Gangaram Chhapolia, and State of Orissa vs Dandasi Sahu, ;
|
Appeal No. 1854 of 1992.
From the Judgment and Order dated 18.12.1990 of the Kerala High Court in M.F.A. No. 800 of 1990.
M.L. Verma, V.J. Francis, V. Subramanian and Padmakumar for the Appellant.
P.S. Poti and R. Sasiprabhu for the Respondent.
The Judgment of the Court was delivered by MOHAN, J.
This appeal by special leave is directed against i.e. judgment of the High Court of Kerala in M.F.A. No. 800/90 dated 18.12.90.
The short facts leading to this appeal are as under: The respondent Hotel is situated in Kaloor, Cochin 17.
It is a commercial establishment.
In July, 1985 this establishment obtained a Bar licence whereupon a Bar was started.
After running the business for some time it was closed down with effect from 31.3.88.
The Insurance Inspectors of the appellant verified the records of the respondent establishment on 29.9.87, 9.10.87 and 19.10 87.
It was reported that the employment strength of the respondent establishment including Chembaka Restaurant and Mayuri Bar was more than 19 as on 17.7.85.
Therefore, it was treated as covered under the (hereinafter referred to as the Act) with effect from 11.7.85 provisionally.
The fact of coverage was intimated to the respondent by notice dated 21.3.88.
Since the final date of coverage could be decided only after verifying all the records pertaining to the date of functioning of the establishment, the respondent was requested to produce all the records such as attendance register, wage register, ledgers etc.
from the date of starting of the establishment.
The respondent was also called upon to start 222 compliance under the Act with effect from 11.7.85.
But there was no compliance.
Hence, a notice was issued in Form C 18 dated 26.3.88 along with a draft order for contribution amount of Rs. 49,399.75 which was assessed under section 45 A of the Act for the period 11.7.85 to 313.88.
Though the respondent was afforded an opportunity to appear before the officer, it was not availed of However, a letter dated 13.7.88 was received but the explanations were not acceptable to the appellant.
Subsequently, a detailed order dated 3.8.88 under section 45 A of the Act was passed calling upon the respondent to pay a contribution of Rs. 49,399.75 together with interest at 6 per cent, failing which it would be covered as an arrears of land revenue.
Again, reminder was sent on 22.9.88.
No reply was received.
Hence, in order to recover the contribution under section 45 A of the Act, a claim in Form 19 was sent to the District Collector, Ernakulam on 31.10.88 requesting to recover the contribution for the period from 11.7.85 to 31.3.88.
Challenging these proceedings the respondent filed an application under section 75 of the Act before the Employees ' Insurance Court, Alleppey.
Inter alia it was contended that the applicant (respondent in this appeal) at no time employed 20 or more persons during the relevant time.
The order was illegal because under section 45 A of the Act the respondent was entitled to a reasonable opportunity of being heard.
That was not afforded.
These contentions were refuted by the appellant.
It was incorrect to state that on no occasion the respondent employed 20 or more workmen since the inspection report dated 8.12.86 clearly established to the contrary.
The contention that no opportunity had been afforded before initiating the revenue recovery proceedings, was also denied in view of Form C 18 dated 23.6.88, show cause notice dated 3.8.88 and reminder dated 22.9.88.
By its order dated 6th June, 1990 the Employees ' Insurance Court, Alleppey came to the following conclusion: "In the result, I can only uphold the assessment made by the ESI Corporation.
But when the question of recovery is considered, certain other aspects cannot be ignored.
The adhoc assessment itself was made by the opposite party after the 223 closure of the entire establishment.
All the employees working in the establishment had left by that time after accepting the termination of their services.
In respect of those employees who had already left, the ESI Corporation is now trying to recover contribution.
Now the position emerges is that despite the collection of contribution it will be impossible to bring under coverage those employees, because, they are not at all available for coverage and for enjoying the benefits under the scheme.
Therefore, even if the proceedings initiated earlier were sus tainable, so long as the employees are not available for the purpose of coverage, there is no meaning in collecting contribution alone.
In these circumstances, I can only hold that the applicant had failed to comply with provisions of the ESI Act at the appropriate time.
Therefore, according to me, after the closing of the establishment such recovery steps are not justified but only the prosecution as contemplated under sec.
85 of the ESI Act is attracted.
Therefore, it is upto the ESI Corporation to decide whether any prosecution should be launched against the applicant for the contravention or noncompliance of the requirements of the ESI Act and Rules. ' Aggrieved by the same the appellant Corporation preferred an appeal in M.F.A. No. 800 of 1990.
A Division Bench of the Kerala High Court by its order dated 18th December, 1990 posed the question for determination as to whether the appellant could proceed against respondent for realisation of contribution under the ESI scheme, after the closure of establishment.
The High Court upheld the finding of Insurance Court that the respondent had failed to comply with the provisions of the Act at the appropriate time.
However, it proceeded to hold that the respondent establishment was closed on 31.3.88.
P3 notice calling upon the respondent to pay the contribution was only on 23.6.88.
Since the scheme was made after the closure of the establishment, the appellant was not justified in proceeding against the respondent.
In this view, it dismissed the appeal.
It is under these circumstances, the ESI Corporation has come up by way of special leave to appeal.
Mr; M.L. Verma, learned senior counsel for the appellant urges the 224 following: 1.
The closure of the respondent establishment was on 31.3.88 but the liability with reference to contribution arose earlier.
The demand is for the period 11.7.85 to 31.3.88.
So long as the establishment is covered by the provisions of the Act it is not open to the respondent to circumvent its liability by contending that before actual recovery proceedings it had closed down.
If the finding of the High Court is accepted it would be the easiest way to evade the provisions of the Act.
In R.M. Lakshmanamurthy vs The Employees ' State Insurance Corporation, Bangalore, This Court has held that it is a beneficial piece of social security legislation in the interest of labour.
Further, the provisions of the Act will have to be construed with that end in view in order to promote the scheme and avoid the mischief.
Under section 26 of the Act all contributions are paid into a common fund.
Such a fund will have to be administered for the purposes of the Act as indicated under section 28.
Therefore, the employer cannot contend that he did not collect the employees ' contribution and hence, he cannot be called upon to pay.
Thus the impugned judgment is wrong and is liable to be set aside.
Per contra, Mr. P. Surbramanian Poti, learned senior counsel for the respondent would argue that the contention of the respondent throughout was that at no time it engaged 20 or more employees.
Therefore, it was under the belief that the Act would not be applicable.
In that belief the employer did not recover from the employees any contribution.
Nor was the employer called upon during that relevant time to comply with the provisions of the Act.
It was entirely due to the fault of the Officers of the appellant, the respondent did not make the contribution.
In any event, the establishment had been closed down on 31.3.88.
It will be unjust to enforce the provisions of the Act and to seek to recover contribution after the closure, more so, when the employees have settled their claims and have gone away.
Certainly, such a situation is not con templated under the Act.
From this point of view the judgment of the High Court is right and does not call for any interference.
In order to appreciate the rival contentions, it would be useful to set 225 out the necessary legal background.
The is an act for certain benefits to employees in cases of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto.
Section 1(4) makes it applicable to all factories, in the first instance ' Under sub section (5) of the said section, the Government may, by a Notification, extend the provisions of the Act to any other establishment or class of establishment; industrial, commercial, agricultural or otherwise.
Admittedly, in this case, the hotel industry like that of the respondent has been notified under the Act.
Under section 26, a fund called Employees ' State Insurance Fund is created by all the contributions paid under this Act, the purposes, for which it may be expended, are cataloged under section 28.
Section 38 requires all employees in factories or establishments shall be insured.
Section 39 talks of contribution.
In respect of an employee it shall comprise of contribution payable by the employer (employer 's con tribution) and contribution payable by the employee.
It is this contribution which has to be paid to the Corporation.
Section 40 imposes the liability to pay contributions, in the first instance, on the principal employer.
After such contribution the employee 's contribution could be deducted from his wages.
Sub section (4) of section 40 is important.
That says as follows: "(4) Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted." (Emphasis supplied) Therefore, this sub section puts the matter beyond doubt that there is an entrustment.
In other words, the employer is a trustee.
Under section 44 there is an obligation on the employer to furnish returns and maintain registers.
The benefits available to the insured persons are stated in section 46: 1.
Sickness 2.
Maternity 3.
Disablement 226 4.
Injury 5.
Medical treatment for and attendance on insured persons.
Lastly, there is power to prosecute under section 85 which includes punishment for failure to pay contributions as well as for contravention of or non compliance with any of the requirements of the Act.
In the above legal background we may analyse the factual situation.
Two facts stare at us.
The liability to contribution of the respondent employer relates to a period between 11.7.85 to 31.3.88. 2.
The respondent establishment was closed on 31.3.88.
The contention of the respondent that at no time there were 20 or more employees in his establishment has to be rejected because at no point of time the respondent sought an adjudication on this aspect.
On the contrary, the inspections made by the officials of the appellant on 8.12.86, September 87 and October 87 state to the contrary.
Therefore, we have to proceed on the basis that the provisions of the Act are applicable to the respondent establishment, since (i) it is a notified industry, (ii) in the establishment more than 20 employees were working at the relevant time.
From the above provisions it is clear that from the date of his commencement of business, namely, 11.7.85, there was a liability to contribute.
It has already been seen under section 40 the primary liability is his, to pay, not only the employer 's contribution but also the employee 's contribution.
Therefore, he cannot be heard to contend that since he had not deducted the employee 's contribution on the wages of the employees, he could not be made liable for the same.
The object of making a deeming entrustment sub section (4) of section 40 will be altogether rendered nugatory if such a contention were to be accepted.
After all, when he makes employee 's contribution he is entitled to deduct from the wages.
Therefore, by force of the application of the statutory provisions, the liability to contribute, during this relevant period, namely, 11.7.85 to 31.3.88, arose.
There is no gain saying in that.
Hence, we reject the arguments of Mr. Subramanian Poti, learned senior counsel for the respondent.
From the above statutory provisions, it would be clear that from out 227 of the common fund maintained under section 26, the employees derive various benefits like sickness, maternity, disablement, injury, medical treatment for and attendance on insured persons.
Therefore, it is a beneficial piece of social security legislation.
As a matter of fact, this Court had occasion to consider the same in B.M. Lakshmanamurthy 's case (supra).
At page 370, paragraph 16 it was held : "The Act is thus a beneficial piece of social security legislation in the interest of labour in factories at the first instance and with power to extend to other establishments.
Provisions of the Act will have to be construed with that end in view to promote the scheme and avoid the mischief." Mr. M.L. Verma, learned senior counsel for the appellant is right in his submissions in this regard.
The Insurance Court as well as the High Court have correctly upheld the demand for contribution.
But it is rather strange to conclude that the demand could not be enforced against a closed business.
If this finding were to be accepted it would not promote the scheme and avoid the mischief.
On the contrary, it would perpetrate the mischief.
Any employer can easily avoid his statutory liability and deny the beneficial piece of social security legislation to the employees, by closing down the business before recovery.
That certainly is not the indentment of the Act.
To hold, as the High Court has done, would set at naught all these beneficial provisions.
It is equally fallacious to conclude that because the employees had gone away there is no liability to contribute.
It has to be carefully remembered that the liability to contribute arose from the date of commencement of the establishment and is a continuing liability till the closure.
The very object of establishing a common fund under section 26 for the benefit of all the employees will again be thwarted if such a construction is put.
We cannot also accept the finding of the High Court that because Ext.
P3 notice was issued on 23.6.88 after the closure of the respondent establishment on 31.3.88, the appellant was not justified in proceeding against the respondent.
The proceeding for the recovery is of the dues of contribution which arose prior to the closure on 31.3 88.
Therefore, it matters little when notice was issued, calling upon to pay the contribution.
228 In our considered view, such a notice is only a reminder to the employer to discharge his statutory obligation.
For all these reasons, we have little hesitation in setting aside the impugned judgment of the High Court which in turn upholds the order of Employees ' State Insurance Court.
The appellant will be entitled to proceed with the recovery proceedings in accordance with law.
Accordingly, the appeal will stand allowed with costs.
G.N. Appeal allowed.
| IN-Abs | The Respondent Hotel which was also running a Bar for sometime, closed down its business after several years.
Th Inspectors of the appellant Corporation verified the records of the establishment and reported that at certain point of time the employment strength of the establishment including the bar was more than 19.
Therefore, the establishment was treated as covered provisionally under the Employees State Insurance (ESI) Act, 1948.
Since the final date of coverage could be decided only after verifying all the records, the Respondent was asked to produce them.
The Respondent did not avail the opportunity afforded to it Though the Respondent sent Its explanation, It was not acceptable to the appellant Corporation and so it passed a detailed order under S.45 A calling upon the Respondent to pay the contribution with interest at 6% failing which It would be recovered as arrears of land revenue.
Since this order and the reminder thereto, did not evoke any response from the Respondent, the appellant sent a claim in Form 19 to the District Collector requesting him to recover the said amount The Respondent challenged the proceedings by filling an application under S.75 of the Act before the ESI Court, which upheld the assessment made by the appellant Corporation, but stated that recovery steps were not justified after the closure of the establishment, and only prosecution as contemplated section 85 of the Act was attracted.
The appellant Corporation preferred an appeal against the said decision of ESI Court The High Court dismissed the appeal and held that since the scheme was made after the closure of the establishment, the 219 220 appellant was not justified in proceeding against the Respondent Being aggrieved by the judgment of the High Court, the appellant Corporation preferred the present appeal contending that so long as the establishment was covered by the provisions of the Act, the Respondent could not circumvent its liability by claiming that before actual recovery proceedings, it had closed down the establishment.
Allowing the appeal, this Court, HELD: 1.1.
Admittedly the hotel industry like that of the respondent has been notified by the Government thus extending the provisions of the to hotel industry.
Therefore, on the date of commencement of its business, namely, 11.7.85, there was a liability on the Respondent to contribute to the ESI fund.
Under section 40 the primary liability is on the employer to pay, not only his contribution but also the employees contribution.
As such the employer can not plead that since he had not deducted the employees ' contribution from their wages, he could not be made liable for the same.
After all when he makes employees ' contribution he is entitled to deduct from the wages.
Thus by force of the application of the statutory provisions, the liability to contribute during the relevant period, namely, 11.7.85 to 31.3.88, arose.
[226E G] 1.2.
The Insurance Court as well as the High Court have correctly upheld the demand for contribution.
But it is rather strange to conclude that the demand could not be enforced against a closed business.
If this finding were to be accepted it would not promote the scheme and avoid the mischief.
On the contrary, it would perpetrate the mischief.
Any employer can easily avoid his statutory liability and deny the beneficial piece of social security legislation to the employees, by closing down the business before recovery.
That certainly is not the indentment of the Act.
It is equally fallacious to conclude that because the employees had gone away there is no liability to contribute.
It has to be carefully remembered that the liability to contribute arose from the date of commencement of the establishment and is a continuing liability till the closure.
The very object of establishing a common fund under section 26 for the benefit of all the employees will again be thwarted if such a construction is put.
[227D F] R.M.
Lakshmanamurthy vs The Employees ' State Insurance Corporation, Bangalore, , relied on.
221 2.
The proceeding for the recovery is in respect of the dues of contribution which arose prior to the closure on 31.3.88.
Therefore, it matters little when notice was issued calling upon the establishment to pay the contribution.
Such a notice is only a reminder to the employer to discharge his statutory obligation.
The appellant corporation is thus entitled to proceed with the recovery proceedings in accordance with law.
[227H, 228A]
|
Appeal No. 37 of 1958.
Appeal by special leave from the judgment and order dated September 14, 1956, of the Madras High Court in Writ Appeal No. 64 of 1956, arising out of the judgment and order dated May 1, 1956, of the said High Court in Writ Petition No. 852 of 1955.
G. section Pathak, R. Ganapathy lyer and O. Gopalakrishnan, for the appellant.
A. V. Viswanatha Sastri, J. B. Dadachanji and section N. Andley, for respondent No. 4. 1959.
February 18.
The judgment of Imam and Subba Rao, JJ., was delivered by Subba Rao, J. Sarkar, J., delivered a separate judgment.
SUBBA RAO, J.
This appeal by Special Leave against the judgment of the High Court of Judicature at Madras raises the question of interpretation of section 43A of the (IV of 1939), as amended by the Motor Vehicles (Madras Amendment) Act, 1948 (Mad. XX of 1948), hereinafter referred to as the Act.
On February 19, 1955, the Regional Transport Authority, Tanjore, Madras State, the second respondent herein, called for applications under section 57(2) of the Act for grant of a stage carriage permit on the Saliamangalam Kodavasal route.
The appellant and the fourth respondent, K. M. Shanmugam, Proprietor, K. M. section Transport, Ammapet, Tanjore District, along with others, applied for the grant of the said permit.
The Regional Transport Authority 230 at its meeting held on April 19, 1955, after hearing the representations of the applicants, granted the permit to the appellant.
The fourth respondent and two others preferred appeals against the said order to the Central Road Traffic Board, Madras, the third respondent herein.
The Central Road Traffic, Board by its order dated June 25, 1955, set aside the order of the Regional Transport Authority and granted the permit to the fourth respondent.
The appellant preferred a Revision Petition against that order to the first respondent, the State of Madras, but the first respondent rejected the petition by its order dated October 14, 1955.
Thereafter, the appellant filed a Writ Petition (No. 852 of 1955) in the High Court of Madras under article 226 of the Constitution to quash the orders of the Central Road Traffic Board and the State of Madras.
Rajagopalan, J., of the said High Court by his order dated May 1, 1956, quashed the order of the Government and directed the State Transport Appellate Tribunal which had been constituted in place of the Central Road Traffic Board to dispose of the appeal in accordance with law.
Against the judgment of the learned Judge, the fourth respondent preferred an appeal under the Letters Patent and the Appellate Bench of that High Court, consisting of Rajamannar, C. J., and Ramaswami, J., set aside the order of RajagopaIan, J., and restored the order of the Central Road Traffic Board.
The appellant with special leave filed the present appeal against that judgment of the High Court.
Mr. Pathak, appearing for the appellant, raised before us the following two points: (i) The appeal filed by the fourth respondent against the order of the Regional Transport Authority to the Central Road Traffic Board was barred by limitation and the Board acted illegally in disposing of the appeal without deciding the question of limitation; and (ii) the appellant had the fundamental right to carry on the business of transport subject to reasonable restrictions imposed by law as on the date he applied for a permit or at any rate when the Regional Transport Authority issued the permit to him, and that the Central Road 231 Traffic Board committed an error, evident on the face of the record, in disposing of the appeal in accordance with the new restrictions imposed by law made pending the appeal before it.
Stated as a legal proposition, the contention is that the appellant had acquired a vested right to carry on the business of transport and that the same could not be defeated by a subsequent law made pending the appeal, which was only prospective in character.
The first argument need not detain us, for the learned Counsel, in view of the finding of the High Court that as a matter of fact the appeal to the Central Road Traffic Board was not barred, fairly did not press it before us.
This leaves us with the second and the only argument in the case.
To appreciate the contention it is necessary to set out some more relevant facts: On March 28, 1953, the Government made an order, G. O. Ms. No. 1037 Home, purporting to be under section 43A of the Act.
The material part of that order reads: " (1) That additional buses should not be permitted to ply on existing routes unless there is a clear need for increase in the number of buses plying on a particular route and wasteful competition should be discouraged but healthy competition where there is room should be encouraged and, (2)that the transport authorities while granting stage carriage permits should work up to the minimum of 5 permits with a spare bus for each operator and the issue of permits should be so regulated as not to encourage benamidars on one hand and inefficient operators on the other." On November 15, 1954, in supersession of paragraph 2 of the above order, the Government issued an order, G. O. Ms. No. 3353 Home, to the following effect: " The Governor of Madras hereby directs that each viable stage carriage unit in this State shall consist of not less than 10 buses and that in the matter of grant of stage carriage permits, other things being equal, and with a view to build up such viable units, the following shall be the order of preference 232 (1)Operators with less than 10 buses but nearer the mark of 10.
(2) Operators with 10 and more buses.
(3) Others including new entrants.
The Government also directs that in order to facilitate the amalgamation of existing small units into viable units transfer of permits shall be allowed liberally.
" On June 15, 1955, the Government issued another order, G. O. Ms. No. 1689 Home, whereby the Central Road Traffic Board was informed that pending further orders of Government after re examination of the question of formation of viable units of stage carriages, the orders in para.
(2) of G. O. Ms. No. 1037 Home dated 28th March, 1953, would be in force.
The effect of this order was that the first order was restored pending final orders.
When the Regional Transport Authority issued the permit in favour of the appellant, G. O. Ms. No. 3353 Home dated 15th November, 1954, was in force, and when the Central Road Traffic Board made the order giving the permit to the fourth respondent, G. O. Ms. No. 1689 Home dated 15th June, 1955, was in operation.
Apart from other considerations, the Regional Transport Authority relied upon the former G. O. in preferring the appellant to other applicants, while the Central Road Traffic Board referred to G. O. Ms. No. 1037 Home dated 28th March, 1953, which was restored by the later G. O. in preferring the fourth respondent to the appellant.
We shall give further details of the orders of the Regional Transport Authority and the Appellate Tribunal in the context of another argument, but, for the present, the aforesaid facts would suffice.
It would be convenient at this stage, before entering into the controversial question, to state briefly some of the well established principles relevant to the question raised: (i) A citizen has a fundamental right to ply motor vehicles on public pathways under article 19(1)(g) of the Constitution, and any infringement of that right by the State can be justified only if it falls within the scope of article 19(6) thereof See C. section section 233 Motor Service, Tenkasi vs The State, of Madras (1) and Saghir Ahmad vs The State of U. P. (2); (ii) proceedings before tribunals issuing permits are of quasi judicial in character See C. section section Motor Service, Tenkasi vs The State of Madras (1) and New Prakash Transport Co. Ltd. vs New Suwarna Transport Co. Ltd. (3) ; (iii) a new law which takes away or impairs vested rights acquired under existing laws must be deemed to be intended not to have retrospective operation, unless such law makes it retrospective expressly or by implication See Maxwell on the Interpretation of Statutes, p. 215; Garikapatti Veeraya vs N. Subbiah Chowdhury (4 ) and Seth Gulab Chand vs Kudilal (5); and (iv) the same principle applies to a law made pending an appeal before an appellate Court See P. M. Seshadri vs Province of Madras (6).
So much is not, and cannot, de disputed.
We shall assume that the said principles apply to a law made pending an appeal against an order of a quasi judicial tribunal.
The main controversy centres round the fact whether the orders made and the directions issued by the State Government under section 43A of the Act are " laws " as to attract the operation of the aforesaid principles.
While Mr. Pathak says that the said directions are as much laws as those of the provisions of a statute or rules made thereunder, Mr. A. Viswanatha Sastri contends that, having regard to the scheme of the and the different sections of the Act vesting powers in the State Government with regard to different matters dealt with by the Act, the power conferred on the State Government under section 43A is a power to make orders or issue directions in respect of administrative matters regulating the relationship between the State Government and the Transport Authorities and that such orders do not affect the legality or the validity of judicial acts of the said authorities.
To appreciate the rival contentions, it is necessary to consider the relevant provisions of the Act.
(1) I.L.R. , 330, 334.(2) [1955] 1 S.C.R. 707, 719.
(3) , 118.(4) ; , 515.
(5) ; , 322.(6) A.I.R 1954 Mad.
30 234 The Act, which is a Central Act, was passed in the year 1939 and subsequently it was amended from time to time both by Parliament and also by the local legislatures.
The main object of the Act is to regulate the motor traffic in every provisions relating to licensing of drivers of motor vehicles.
Chapter III prescribes for the registration of motor vehicles.
Chapter IV provides for the control of transport vehicles.
Chapter V lays down the general provisions regarding construction, equipment and maintenance of motor vehicles.
Chapter VI regulates the control of traffic.
Chapter VIII deals with the insurance of motor vehicles against third party risks.
Chapter IX defines the offences, lays down the penalties and prescribes the procedure for detecting offences and enforcing penalties.
Chapter X deals with miscellaneous matters.
Every Chapter contains a specific provision conferring a power on the State Government to make rules for the purpose of carrying into effect the provisions of that Chapter.
To carry out the objects of the Act, the State Government is authorized to create a hierarchy of officers such as the State Transport Authority, the Regional Transport Authority, the Registering Authority, etc.
Such Authorities are entrusted with administrative as well as quasi judicial functions.
Chapter IV with which we are now concerned follows the same pattern.
Its general heading is " Control of Transport Vehicles ".
Section 42 prohibits the owners of transport vehicles from using them in any public place without permits.
Section 43 empowers the State Government to control road transport.
Section 44 enables the State Government to constitute Transport Authorities to exercise and discharge the specified powers and functions.
Under section 44(4) the State Transport Authority is authorized to issue directions to any Regional Transport Authority and the latter shall be guided by such directions.
Sections 46, 47, 48, 57, 60 and 64 prescribe the procedure for issue of permits and also create a hierarchy of Tribunals for hearing of applications and disposal of appeals.
The said procedure is clearly quasi judicial in character and has 235 been held to be so by this Court.
Sections 67 and 68 confer a power on the State Government to make rules to regulate the operation of transport carriages and also to make rules for the purpose of carrying into effect the provisions of this Chapter.
Under the aforesaid provisions and the rules made thereunder, the State Transport Authority is made the administrative head of all the other Transport Authorities functioning in the State, and the Central Road Traffic Board the appellate authority in the hierarchy of Tribunals constituted under the Act.
As the administrative head the State Transport Authority is authorized under section 44(4) of the Act to issue directions to any Regional Transport Authority, who shall be guided by such directions.
As an appellate tribunal the Central Road Traffic Board is empowered to dispose of the appeals preferred against the orders made by the subordinate authorities under the Act in respect of specified matters.
But the Central Act did not make any provision enabling the State Governments to control either the quasi judicial or the administrative wings of the machinery provided under the Act.
While the State Transport Authority could issue directions to other Transport Authorities constituted under the Act, a State Government could not likewise issue any directions either to the State Transport Authority or to its subordinate authorities.
So too, while the Central Road Traffic Board could in its appellate jurisdiction set aside or modify the orders of the subordinate tribunals, the State Government was not in a position to set aside the improper orders of the tribunals under the Act.
Presumably, therefore, to bring the said authorities under its control, both on the judicial and the administrative wings, Motor Vehicles (Madras Amendment) Act, 1948 ((Mad. XX of 1948), was passed and it became law on December 21, 1948.
Among other amendments, sections 43A and 64A were inserted in the Act.
Section 43A reads: " The State Government may issue such orders and directions of a general character as it may consider necessary,, in respect of any matter relating to road transport, to the State Transport Authority or 236 a Regional Transport Authority; and such Transport Authority shall give effect to all such orders and directions." Section 64A is to the following effect: " The State Government may, on its own motion or on application made to it, call for the records of any order passed or proceeding taken under this Chapter by any authority or officer subordinate to it, for the purpose of satisfying itself as to the legality, regularity or propriety of such order or proceeding and after examining such records, may pass such orders in reference thereto as it thinks fit." So far as section 64A is concerned, in express terms it confers a judicial power on the State Government to keep a subordinate judicial tribunal within bounds.
Section 64A, along with sections 45 to 57, 60 and 64, forms a complete code in respect of the quasi judicial disposals of the issue of permits.
The permits should be issued in accordance with the provisions of the Act and the rules framed thereunder following the judicial procedure.
The words used in section 43A are very wide.
It says that the State Government may issue orders and directions of a general character in respect of any matters relating to road transport.
Divorced from the context and the setting in which the new section appears, it may comprehend any orders or directions of a general character in respect of road transport; and, if so construed, it would not only subvert the other provisions of the Act but also would be vulnerable to attack on the ground of constitutional invalidity.
It would entrust the Government with a naked arbitrary power capable of being used to compel quasi judicial tribunals to dispose of cases in a particular way; it would enable them to couch the order in a general way to induce a tribunal to come to a particular decision in a given case; and it would be destructive of the entire judicial procedure envisaged by the Act and the rules framed thereunder in the matter of disposal of specified questions.
It would be attributing to the legislature an incongruity, for the State Government could issue directions in respect of which it could make rules ignoring the safeguards provided in the 237 making of the rules.
Section 133 lays down that every power to make rules given by the Act is subject to the condition of the rules being made after previous publication.
It also enjoins on the Central and the State Governments to place the said rules for not less than fourteen days before the appropriate legislature and the rules so made shall be subject to such modification as the legislature may make in such session in which they are so laid.
All these salutary precautions can be ignored if the directions given under section 43A are given the status of law; on the other hand, if a restrictive meaning is given as it should be in the context, there would be a happy correlation of the functions of the various bodies under the Act, including the Government.
The Government 's legislative power is recognised under sections 67 and 68 of the Act; its judicial power is maintained under section 64A and its administrative power is affirmed under section 43A.
Chapter IV and the rules made thereunder confer adminis trative powers on the Regional Transport Authorities and the State Transport Authority.
Section 43A enables the State Government to make orders and issue directions of a general character in respect of those functions to implement the provisions of the Act and the rules made thereunder; and the said authorities shall give effect to all such orders and directions.
The context in which and the setting wherein the section is inserted also lend support to the said conclusion.
Section 42 describes the necessity for permits and section 43 confers specific powers on the Government to control road transport.
Section 43A coming thereafter and before the sections conferring quasi judicial powers on tribunals is indicative of the fact that the jurisdiction conferred under section 43A is confined to administrative functions of the Government and the tribunals rather than to their judicial functions; for, if the section was intended to confer legislative power, it should have found its place after section 64A or somewhere near the end of the Chapter.
Though it is not a conclusive test, the placing of the provisions of sections 43A and 64A, which were inserted by the same Amending Act is also a pointer to the intention of the 238 legislature, namely, that section 43A was intended to govern administrative functions of the tribunals.
The terms of the section and the manner of issuing orders and directions thereunder also support the same conclusion.
The legislature used two words in the section: (i) order and (ii) directions.
Whenever it intended to affect the rights of parties, it used the word " rules ", but in this section it designedly used the words appropriate to the control of administrative machinery.
The words " directions and order " are defined in one of the Law Lexicons thus: " Direction contains most of instruction in it; order most of authority.
Directions should be followed; orders obeyed.
It is necessary to direct those who are unable to act for themselves; it is necessary to order those whose business it is to execute the orders. " The said meaning of the words is more appropriate to administrative control rather than to rules of law affecting rights of parties.
Further, the declaration in the section that the orders and the directions under the section shall be binding on the authorities concerned is indicative of the fact that they are not laws, for if they are laws, no such declaration is necessary.
What is more, they need not even be published and may, if the Government so desires, take the form of secret communication to the authorities concerned.
Nor is there any basis for the argument that as the directions are issued under a statutory power, they are " laws ".
The source of the power does not affect the character of the things done in exercise of that power.
Whether it is a law or an administrative direction depends upon the character or nature of the orders or directions authorized to be issued in exercise of the power conferred.
That should be determined on other considerations adverted to by us already.
Our view is in accord with that expressed by a Division Bench of the Madras High Court in C. section section Motor Service, Tenkasi vs The State of Madras (1).
There the constitutional validity of sections 42, 43A, 47, 48 and 64A of the Act was questioned.
In dealing with section 43A, Venkatarama Ayyar, J., who delivered the judgment of the Court, observed at p. 335 thus (1) I.L.R. , 330, 334. 239 "Coming next to section 43A, it is argued that it confers on the Provincial Government wide and unlimited powers to issue all such orders and directions of a general character as they may consider necessary, that the transport authorities are bound under that section to give effect to such orders and directions, that there is nothing to prevent the Government from even issuing directions with reference to the judicial functions which those authorities have to dis charge under the Act, that it could not be expected that such directions would be disregarded by those authorities and that in practice the provisions of section 47 could be evaded.
Reference is also made to the fact that this section was introduced for nullifying the effect of the decision in Sri Rama Vilas Service Ltd. vs The Road Traffic Board, Madras (1) where it was held that the transport authorities had failed in the discharge of their judicial function in meekly giving effect to an order of the Government which was opposed to the provisions of the Act.
Section 43 A appears to be intended to clothe the Government with authority to issue directions of an administrative character and in that view it would be valid.
No specific order or direction of the Government is attacked in these proceedings as invalid and the discussion is largely academic.
The section must itself be held to be valid though particular orders passed thereunder might be open to challenge as unconstitutional.
" From the aforesaid observations, it is manifest that the learned Judge construed section 43A as conferring a power on the State Government to issue directions of an administrative character.
If the construction was otherwise, the learned Judge would have held that the section was constitutionally bad as he had held in regard to other sections.
The High Court of Andhra Pradesh in Gopalakrishna Motor Transport Co. Ltd. vs Secretary, Regional Transport Authority, Krishna District, Vijayawada (2) had also considered the scope of the provisions of section 43A.
There, the State Government issued an order under section 43A of the Act prescribing the manner of checking a bus for over (1) (2) loading.
The procedure prescribed was not followed by the Regional Transport Authority, which was empowered to suspend the permit on the ground of overloading under section 60 of the Act.
One of the contentions raised was that as the mandatory direction given by s the State Government under section 43A was not followed, the Regional Transport Authority in exercising its powers under section 60 should have held that there was no over loading.
In rejecting this plea, the High Court observed at p. 885 thus: " Government has power to frame rules and also to issue administrative directions of a general character under Section 43 A of the Act. . .
In so far as the order was couched in mandatory terms, it is incumbent upon the officers concerned to comply with it.
Any instruction given under Section 43 A cannot override the discretionary power conferred upon the Transport Authority under section 60. .
We, therefore, hold that the order of the Government contained only administrative instructions issued under Section 43 A.
It is true that some of the, administrative instructions impose a mandatory duty on the officers concerned and if they do not discharge their duty, Government may take disciplinary action against them.
But, in our view, non compliance with those directions cannot affect the finding the Authority arrived at on other material on the question of over loading.
" In the present case, the learned Chief Justice, who was a party to the decision in C. section section Motor Service vs The State of Madras (1), presumably on the basis of that judgment observed thus: " In our opinion, these Government orders, which are in the nature of general administrative directions to the transport authorities, do not vest any rights, indefeasible rights in any applicant for a stage carriage permit ".
The result of the discussion may be summarised thus: The appellant had a fundamental right to carry (1) I.L.R. , 334.
241 on his motor transport business subject to reasonable restrictions imposed upon that right by law.
Some of the provisions of Chapter IV of the Act contain reasonable restrictions on the said right.
He was given a permit on the basis of the law imposing the said restrictions on his right.
The orders made and the directions issued under section 43A could cover only the administrative field of the officers concerned and therefore any direction issued thereunder was not law regulating the rights of the parties.
The order made and the directions issued under section 43A of the Act cannot obviously add to the considerations prescribed under section 47 on the basis of which the tribunal is empowered to issue or refuse permit, as the case may be.
There was, therefore, no change in the law pending the appeal so as to affect the appellant 's vested right in this view, the appellant cannot question the validity of the order of the Central Road Traffic Board on the ground that it decided the appeal on a law that was made subsequent to the issue of the permit to him.
The same result could be arrived at by different process of reasoning.
The appellant had a fundamental right to carry on the business of motor transport subject to reasonable restrictions imposed by law under article 19(6) of the Constitution.
The Act imposed reasonable restrictions oil the said right.
One such restriction was that the State Government may issue such orders and directions of a general character as it ' may consider necessary in respect of any matter relating to road transport to the State Transport Authority.
When the appellant applied for a permit, be must be deemed to have bad the knowledge of the fact that his application would be disposed of by the State Transport Authority in accordance with orders and directions of a general character issued, by the State Government.
The directions were not now law that came into existence pending the appeal, but only issued under a law that was in existence even at the time he applied for a permit.
The law was that embodied in section 43A of the Act, namely, that the Government could issue directions binding on the authorities 31 242 concerned and that law was a pre existing one and the application had to be disposed of subject to that law till it was finally terminated by an order of the highest tribunal in the hierarchy.
In this view also there are no merits in the appellant 's contention.
Now coming to the merits of the case, the contentions of the parties may be stated thus: The learned Counsel for the respondents contends that there is no material difference between G. O. Ms. No. 1037 and G. O. Ms. No. 3353, except in regard to one circumstance, which is not material for the present purpose: while in the former G. O., the argument proceeds, the transport authority is directed to work up to a minimum of five units with a spare bus, under the latter G. O., the viable unit fixed is not less than ten buses and the authority concerned is directed to work up to that limit.
It is pointed out that the only difference, is in the measure of a viable unit and that the fourth respondent 's case falls squarely within the first category in the order of preference prescribed in G. O. Ms. No. 3353 of 1954.
The learned Counsel for the appellant contends that the order of preference is based upon the achievement of the object, namely, building up of viable units of ten permits and that the appellant admittedly had only four permits and, therefore, far below the viable unit and he could not be given preference in a competition between him and the appellant, who had more than thirty permits.
The problem presented can only be solved by a reasonable inter pretation of the plain words used in G. O. Ms. No. 3353 of 1954 read along with the expressed object sought to be achieved thereby.
It will be convenient at this stage to read the said order omitting the unnecessary words: G. O. Ms. No. 3353 Home dated 15th November, 1954.
" The Planning Commission has made the following recommendation in respect of Road Transport service : 'It is desirable for the existing private operators ' units to amalgamate, wherever possible, into big viable units to enable them to achieve better returns and maintain better standards of operation 243 The Government considered that it will be in the interests of the public if road transport services are conducted by operators having at least toil stage carriages and they have therefore decided that each viable unit should consist of at least ten stage carriages.
In exercise of the powers conferred by Section 43 A of the (Central Act IV of 1939), and in supersession of the orders issued in paragraph (ii) of G. O. Ms. 1037, Home dated 28th March 1953, the Governor of Madras hereby directs that each viable stage carriage unit in this State shall consist of not less than 10 buses and that in the matter of grant of stage carriage permits, other things being equal, and that with a view to build up such viable units, the following shall be the order of preference 1.
Operators with less than 10 buses, but nearer the mark of ten. 2.
Operators with 10 and more buses.
Others including new entrants.
The Governor also directs that in order to facilitate the amalgamation of existing small units into viable units transfer of permits shall be allowed liberally." The G. O., Was issued to achieve the object of inducing the operators to amalgamate wherever possible, into big viable units to enable them to achieved better returns and maintain better standards of operation.
The Government decided that a unit of at least ten buses would be necessary to achieve that object.
To implement that policy, it directed that each viable stage carriage unit should consist of not less than ten buses and with a view to build up such viable units, it directed that, other things being equal, the order of preference contained therein should be followed.
The order of preference contained three categories, one ex cluding the other.
They did not provide for any rules of preference inter se of operators coming within each one of the categories.
Presumably, that was left to be decided by the transport authorities, having regard to the considerations mentioned in section 47.
The argument 244 of the learned Counsel for the fourth respondent is based upon the first category, which reads: " Operators with less than 10 buses but nearer the mark of 10 ".
He contends that, having regard to the object of the G. O., namely, to build up a viable stage carriage unit of ten, in the absence of an operator with stage carriages nearer to the mark of ten than the fourth respondent, he is entitled to a permit in preference to the appellant provided other things are equal between them.
In respect of this argument, emphasis is laid upon the word "nearer " and it is said that the said word indicates a rule of preference between operators coming within that category, namely, that an operator like the fourth respondent is to be preferred, if there is no other operator nearer than him to the mark of ten.
This argument is attractive, but, in our view, it is inconsistent with the scheme of the order.
It is true that the phraseology of category (1) has not been happily worded and perhaps grammatically not correct.
But the intention is fairly obvious.
For one thing the rule of preference is based upon the achievement of the object, i.e., the building up of a viable unit of ten permits, for the other, the rule of preference is only to govern the three categories mentioned therein and not inter se between those falling in each category.
The word " others " in category (3) becomes meaningless, if operators far below the mark of ten permits fall within the first category.
The more reasonable interpretation and that is in accord with the intention of the State Government is that other things being equal, in a competition between the three categories of operators mentioned in the order, operators nearer the mark of ten shall be preferred.
In the absence of any such operator, operators with ten or more buses should be given the second preference.
In the absence of such operators, others, i. e., operators who are not nearer the mark of ten and new entrants, will have to be preferred.
This rule of preference was not expected to cause any injustice as the restriction on the transfer of permits was removed and the small operators were permitted to amalgamate the existing units into viable units.
245 This policy did not achieve the expected results, but encouraged monopolies; with the result that the Government had to cancel the order of June 15,1955, within about six months from the making of it; but that circumstance does not affect the construction of the clause.
We, therefore, hold that on a strict inter pretation of the G. O. Ms. No. 3353 of 1954, the fourth respondent would not have been entitled to the permit.
But as we have held that the said order was not law but was only an administrative direction, it could not affect the validity of the order of the Central Road Traffic Board, if it made the order, having regard to the consideration laid down in section 47 of the Act.
The main consideration under section 47 of the Act is that the Regional Transport Authority shall, in deciding whether to grant or refuse such carriage permit, have regard to the interest of the public generally.
The Central Road Traffic Board, after having found that the appellant had other advantages such as he operated a three route permit touching the route under appeal, that his record was satisfactory and that he was not inefficient, came to the conclusion that by giving the permit to the fourth respondent, it would be encouraging not only healthy competition but also would be enabling him to work out to the minimum of five permits.
It is true that if the 1954 order should govern the selection, the main reason given by the Board would be wrong.
Whether a small unit or a large unit would be viable or would be in the interest of the public is always a debatable point and it is possible to take conflicting views on the question.
One view is that ail operator who is described as fleet owner will have considerable experience in the business and will be in a position to keep a workshop and additional buses to meet any emergency and therefore he would be in a better position to operate the service without break and keep up the timings in the interest of the public than a stray bus operator.
The alternative view is that encouragement of large viable units will tend to monopoly and the freedom from competition will bring about deterioration in service.
Oil the other hand, new entrants and operators 246 Owning a few buses will incentive to bestow greater attention to tile public needs, particularly in view of the competition from others in the same field.
That both views are possible is evident from the fact that the State Government has been changing its views so often on the subject; and indeed the cancellation of G. O. Ms. No. 3353 of 1954, within six months from the date of its issue, presumably on the basis of the experience gained during that period, is a clear indication that in the opinion of the, Government, encouragement of large units was not in the interest of public.
If that be so, one cannot say that the Central Road Traffic Board acted without jurisdiction when it accepted the view that the smaller units would be more in the interest of the public rather than larger units ; nor the fact that it accepted the prevailing view of the Government on the subject would make it any the less an order within its jurisdiction, provided the said view was germane to one or other matters stated in section 47 of the Act.
As pointed out by us, both the views are possible and the Board was well within its rights in holding that the public interest would be served if the permit was given to the fourth respondent, in the circumstances of the case.
In this view, no other question arises for consideration.
The order of the Madras High Court is correct and the appeal is dismissed with costs.
SARKAR, J.
The appellant before us is a company operating public motor bus services in the State of Madras.
Its grievance is that it has been wrongly refused a permit to run a bus.
Motor bus services transporting passengers on the public highways for consideration, called stage carriage services, are controlled by sections 42 to 68 contained in Chapter IV of the .
The Act provides that no vehicle can be used as a stage carriage save in accordance with a permit granted by a regional Transport Authority set up by the State Government.
Section 47 of the Act lays down certain matters to which a Regional Transport Authority shall have regard in deciding whether to grant or refuse a 247 stage carriage permit, one of which is the interest of the public generally.
Section 68 of the Act authorises the State Government to make rules for the purpose of carrying into effect the provisions of Chapter IV.
The rules framed under this section do not contain anything to guide the Regional Transport Authority in the matter of granting the permits save that r. 150 provides that it " shall in all matters be subject to the orders of the Government and shall give effect to all orders passed by the Government whether on appeal or otherwise.
" Section 43 A of the Act however gives the State Government power to issue orders and directions to the Regional Transport Authority.
That sec tion is in these terms " The State Government may issue such orders and directions of a general character as it may consider necessary, in respect of any matter relating to road transport, to the State Transport Authority or a Regional Transport Authority; and such Transport Authority shall give effect to all such orders and directions.
" We are not concerned with the State Transport Authority in this case.
The Act is a Central Act and section 43 A was introduced into it by an amendment made by the legislature of the Province of Madras.
The Government of Madras from time to time issued orders under this section providing certain considerations for the guidance of the Regional Transport Authorities in deciding applications for the rant of permits for stage carriages.
The appellant 's contention is that the permit was refused to it by applying one of these orders which was not applicable to its case.
Section 64 of the Act permits an appeal to an appellate authority from an order of a Regional Transport Authority refusing to grant a permit.
This appellate authority in the State of Madras is called the Central Road Traffic Board.
Section 64 A which again was introduced into the Act by an amendment of the legislature of the Province of Madras, empowers the Government to look into the records of any case concerning the grant of a permit and pass such order as it thought fit.
Now as to the facts of this case, on March 28, 1953, 248 the Government issued an order tinder section 43 A marked G. O. Ms. No. 1037 laying down certain considerations to be observed in granting permits.
On November 15, 1954, the Government issued another order marked G. O. Ms. No. 3353 superseding the second of G. O. Ms. No. 1037 and substituting fresh provisions in its place.
As I do not consider it necessary to discuss the terms of these orders, it will tend to clarity to proceed on the basis as if G. O. Ms. No. 3353 superseded G. O. Ms. No. 1037 wholly.
The appellant, the respondent No. 4 and eight other persons had applied for the permit for a route for which applications had been invited.
It does not appear from the record when these applications had been made, but it appears that on April 9, 1955, the Regional Transport Authority after hearing all the competing applicants granted the permit to the appellant applying G. O. Ms. No. 3353, this being the order then in force.
Soon thereafter, namely, on May 20, 1955, the Government passed under the same section a fresh order being ( 'J. O. Ms. No. 1403 cancelling G. O. Ms. No. 3353 and on June 15, 1955, it passed another order being G. O. Ms. No. 1689 which, for the purpose of this case it may be said, had the effect of restoring G. O. Ms. No. 1037.
On or about June 23, 1955, the respondent No. 4, who will be referred to as the respondent as he is the only contesting respondent, preferred an appeal to the Central Road Traffic Board against the decision of the Regional Transport Authority.
It may be that some of the other disappointed applicants for the permit also preferred similar appeals but with them we are not concerned.
The Board considered the representations of all the parties before it and made an order on June 25, 1955, setting aside the decision of the Regional Transport Authority and granting the permit to the respondent.
According to the appellant, in making this order the Board followed G. O. Ms. No. 1037.
The complaint of the appellant is that the Board went wrong in doing so as G. O. Ms. No. 1037 was not in force when the appellant 's application was considered by the Regional Transport Authority but had been brought into force subsequently, and as the Board was only hearing an appeal from the Regional Transport Authority it was bound to decide the case according to the order in force when the Regional Transport Authority made its decision and was not entitled to decide it according to an order which came into existence subsequently.
The appellant took the matter up to the Government under section 64 A of the Act but the Government refused to interfere.
The appellant then moved the High Court at Madras for a writ of certiorari quashing the orders of the Board granting the permit to the respondent and of the Government refusing to interfere.
Rajagopalan, J., who heard the application, thought that the Government had failed to exercise its jurisdiction by not deciding a point raised before it, namely, whether the appeal to the Board had been made within the prescribed time.
He, therefore, set aside the order of the Government and sent the case back for reconsideration.
The respondent went up in appeal from the order of Rajagopalan, J.
The appeal was heard by a bench of the same High Court consisting of Rajamannar, C. J., and Ramaswami, J., and was allowed.
The learned Chief Justice who delivered the judgment of the court, held that Rajagopalan, J., was not right in thinking that the Government had failed to decide whether the appeal to the Board had been filed by the respondent within the prescribed time.
He rejected the contention of the appellant that the order of the Board was liable to be set aside inasmuch as it had been made pursuant to G. O. Ms. No. 1037 which was not the order in force when the Regional Transport Authority heard the matter.
He observed, " these Government orders, which are in the nature of general administrative directions to the transport authorities, do not vest any rights, indefeasible rights in any applicant for a stage carriage permit ".
He also held, " It cannot be said that because on the date of the disposal of the application by the Regional Transport Authority a particular G. O. was in force, any one had a vested 32 250 right conferred on him by that G. O.
We think that it was permissible to the Central Road Traffic Board to decide between the claimants on the basis of the G.O. which was in force at the time the appeal was being heard.
" The appellant has now come to this Court by special leave in appeal against this judgment.
Only one point has been argued by Mr. Pathak appearing in support of the appeal.
He said that the Board was a quasi judicial tribunal and an order made by it is therefore liable to be quashed by a writ of certiorari if that order discloses an error apparent on the face of it.
He then said that the order of the Board of June 25, 1955, was erroneous in law as it decided the case by the terms of G. O. Ms. No. 1037, which was brought into force after the date of the decision of the Regional Transport Authority and bad not been given a retrospective operation, and the Board which was hearing an appeal from the Regional Transport Authority, could only decide whether that Authority had gone wrong in the application of the provisions in force at the time of the hearing before it, namely, the provisions contained in G. O. Ms. No. 3353.
He also said that such error was apparent on the face of the record as the Board in its decision stated that it was deciding the case by G. O. Ms. No. 1037.
It has not been contended before us that the Board is not a quasi judicial Tribunal.
It clearly is so.
In view of the many decisions of this Court in similar matters it would be impossible to take a contrary view.
Then again it is a principle firmly established and accepted by this Court that a writ of certiorari can issue where the decision of a tribunal discloses an error of law apparent on its face.
I am also clear in my mind that if it was an error for the Board to have followed G. O. Ms. No. 1037, such error appeared on the face of its decisions for it expressly purported to be guided by G. O. Ms. No. 1037.
The only questions that remain are whether this was an error and an apparent error.
These I now proceed to discuss.
It is true that G. O. Ms. No. 1037 which had been 251 superseded by G. O. Ms. No. 3353 on November 15, 1954, was revived by G. O. Ms. No. 1689 issued on June 15, 1955, i.e., after the date of the decision of the Regional Transport Authority given on April 9, 1955, when G. O. Ms. No. 3353 prevailed.
I will assume now that G. O. Ms. No. 1689 did not bring back G. O. Ms. No. 1037 with retrospective force.
Was the Board then wrong in a plying G. O. Ms. No. 1037 when it decided the appeal from the Regional Transport Authority 's decision ? I do not think so.
It may be that when one regular and ordinary court bears an appeal from the decision of another such court, it cannot, generally speaking, take into consideration a law which has been passed since that decision.
But it is far from clear that the same rule applies when an appeal from the order of a quasi judicial tribunal is heard by another such tribunal, as is the case here.
No authority to warrant such a proposition was cited and as at present advised, I am not prepared to assent to it.
In any case, it can safely be said, and it is enough for the purpose of this case to do so, that it is far from clear that a quasi judicial tribunal like the one before us is not entitled in hearing appeal from another such tribunal to apply a rule which has come into existence since the decision under appeal.
If it is not so clear there of course is no error apparent on the face of the record.
It cannot be overlooked that such a tribunal is not enforcing a vested right which one party has against another or others.
The tribunal is to choose from amongst a number of persons the fittest to be granted a permit.
The overriding interest in the selection is of one who is not a party to the proceedings, namely, the travelling public.
The lower tribunal is entitled to be heard on an appeal under section 64, a procedure which is wholly inapplicable in appeals from the decisions of what are called courts of law.
As a general rule, a court gives effect at the trial to the substantive rights of the parties existing at the date of the writ and it is for this reason that a change in the law cannot ordinarily be taken into account in appeals.
Now such a consideration does not prevail in the 252 present case.
It is not said that a person when he makes an application for a permit acquires a right to have his application decided by the order under the section then in force.
All that is said is that the Transport Authority must consider the applications according to the order in force at the time it hears them.
If this is so, as I think it is, then the basis for saying that the appellate authority cannot consider a Government order issued since the order under appeal was made, completely disappears.
Another reason given for the view that a court of appeal cannot take into consideration a new law is that, " a matter of substantive right which has become res judicata cannot be upset by a subsequent general change of the law": see Re a Debtor, Exparte Debtor (1).
Now it does not seem to me possible to say that an applicant for a permit has a substantive right to the permit vested in him.
Nor is it possible to conceive of the decision of a Regional Transport Authority in granting or refusing to grant a permit as having any operation by way of res judicata.
It therefore seems to me that there is no warrant for applying the general rule applicable to a court of law hearing an appeal from a similar subordinate court which prevents it from taking notice of a new law, to tribunals such as those with which this case is concerned.
I wish to add one thing more on this subject.
Even in the case of appeals strictly so called, the court hearing the appeal may take cognisance of new laws which are made applicable to pending cases: see Quilter vs Mapleson (2).
I have so long been proceeding on the assumption that G. O. Ms. No. 1689 had no retrospective effect at all.
Now it seems to me that there is at least grave doubt if G. O. Ms. No. 1689 which revived G. O. Ms. No. 1037, was not intended to be applied to pending appeals.
It was directed only to the Central Road Traffic Board which heard appeals, and this would indicate that it was intended that the Board would follow it in deciding the appeals that were then pending before it.
It is not therefore clear that G. O. Ms. No. 1689 was not intended to (1) , 243.
(2) 253 have at least this retrospective effect.
If it did, which on the form of the order it may well be said to have done, then that would be another reason for saying that it is not clear that the Board was in error in applying it.
In my view therefore it has not been shown that the Board committed an error apparent on the face of its decision in applying G. O. Ms. No. 1037 to the appellant 's case.
This appeal must therefore fail.
Before leaving the case I wish to express my opinion on a matter which was pressed on behalf of the respondent.
It was said that only administrative orders could be made under section 43 A which orders were not laws, and therefore an error with regard to them would not be an error of law which would warrant the issue of a certiorari.
I am unable to assent to this contention.
To my mind the question is not solved by describing the orders as administrative orders, a term as to the meaning of which, I confess, I am not clear.
So it does not seem to me to be necessary to enquire what kind of orders could be issued under section 43 A.
In my view if an order under the section is one to the observance of which a person is entitled, that would be a law, a mistake of which would justify the issue of the writ at his instance.
The whole justification for a writ of certiorari is to prevent, where no other remedy is available, a patent injustice being allowed to stand.
It would be strange if a person was entitled to the observance of a rule and was held not to have a remedy for its breach.
It can make no difference by what name that rule is called.
I wish to read here as a salutary advice to follow, what Pollock C. B. and Martin B. said in The Mayor of Rochester vs The Queen (1) regarding the writ, " Instead of being astute to discover reasons for not applying this great constitutional remedy for error and mis government, we think it our duty to be vigilant to apply it in every case to which, by any reasonable construction, it can be made applicable." The real question thus is whether the applicants for permits were entitled to the observance of the orders (1) ; ,1033; ; 254 with which we are dealing.
I think they clearly were.
The orders were made under a statutory provision.
That itself would make them binding.
Further, the statute expressly says that the " Transport Authority shall give effect to all such orders and directions ".
The statute applies to all; every one is entitled to the benefit of it.
Any person interested has therefore a right to claim that an order passed under the section shall be observed by the Transport Authorities.
The respondent himself made such a claim and has got the benefit of one of these orders.
It was however said that it is true that the Transport Authorities owed a duty to observe the orders but that was a duty they owed to the Government alone and that a breach of this duty only exposed them to disciplinary action by the Government but did not vitiate their decisions.
I find no words in the section so to limit the scope of the duty imposed by it on the Transport Authorities.
The nature of the orders makes it impossible to think that it was intended to visit a breach by disciplinary action only.
These orders lay down principles to be applied in deciding whether a person should or should not be given a permit.
They affect persons materially ; they affect persons ' living .
I find it very difficult to think that the only sanction for such rules can be disciplinary action.
It seems to me abhorrent that judicial bodies should in the discharge of their functions be subjected to disciplinary action.
Then I think it would certainly be a very unusual statute which sets up quasi judicial tribunals with power to affect people materially and binds the tribunals on pain of disciplinary action only to proceed according to rules made under its authority but gives the persons deeply affected by the tribunal 's decision no right to claim that the rules should be observed.
I am unable to hold that the is a statute of this kind.
I ought to refer to the case of Nagendra Nath Bora vs The Commissioner of Hills Division and Appeals, Assam (1).
That was a case concerning a licensing authority for liquor hops.
It was there said that a (1) [1958] S C.R. 1240.
255 breach of certain executive instructions issued to the licensing authority did not amount to error of law.
I think that case is clearly distinguishable.
It dealt with executive instructions and therefore not such as were issued under a statutory power.
There is nothing to show that it was the bounden duty of the tribunal, the licensing authority, to obey these instructions.
Had it not been that a hierachy of appeals had been provided for, it would perhaps have been held in that case that the authority was not a quasi judicial authority at all.
Furthermore, it was held there that no one had an inherent right to a settlement of a liquor shop.
Therefore it seems to me that that case does not help in deciding the effect of the orders issued under section 43 A.
It is interesting to note that it was said in that case referring to the writ of certiorari at p. 412 that, " its purpose is only to determine, on an examination of the record, whether the inferior tribunal has exceeded its jurisdiction or has not proceeded in accordance with the essential requirements of law which it was meant to administer.
" The words " law which it was meant to administer " are very significant.
The Transport Authorities in the present case were certainly meant to administer the orders issued under section 43 A.
There is one thing more that I wish to observe in this connection.
It may be that an order which it is the bounden duty of the Transport Authority to obey may give it a certain amount of discretion, but that in my view would riot make the order any the less a law.
If the discretion has been duly exercised, there would be no error of law for the law itself gives the discretion.
It would be the bounden duty of the tribunal to observe that law and so if necessary to exercise the discretion given by it.
For the reasons earlier mentioned, however, I agree that the appeal should be dismissed.
Appeal dismissed.
| IN-Abs | The appellant and the fourth respondent along with others were applicants for a stage carriage permit.
The Regional Transport Authority after hearing the applicants granted the permit to the appellant.
On appeal by the fourth respondent the Central Road Traffic Board set aside the order of the Regional Transport Authority and granted the permit to the fourth respondent.
The appellant moved the State Government in revision but to no effect.
He thereafter moved the High Court under article 226 of the Constitution for a writ of certiorari quashing the orders of the Central Road Traffic Board and the State Government.
The single judge who heard the matter quashed 228 the said orders and directed the State Transport Appellate Tribunal, which was constituted in place of the Central Road Traffic Board, to dispose of the appeal according to law.
On a Letters Patent appeal by the fourth respondent, the Appellate Bench of the High Court set aside the order of the single judge and restored the order of the Central Road Traffic Board.
Hence this appeal by special leave.
The point for determination in the appeal was whether the order granting the permit to the appellant made by the Regional Transport Authority on the basis of an order issued by the State Government under section 43A of the , as amended by the Motor Vehicles (Madras Amendment) Act, 1948, could be set aside on the basis of another order imposing new restrictions issued thereunder while the appeal was pending before the Central Road Traffic Board and thus involved the question as to whether an order or direction issued by the State Government under section 43A of the Act had the force of law, so as to create a vested right in the appellant.
Held (per jafer Imam and Subba Rao, jj.), that section 43A of the , as amended by the Motor Vehicles (Madras Amendment) Act, 1948, properly construed, must be given a restricted meaning and the jurisdiction it conferred on the State Government must be confined to administrative functions.
An order or direction made thereunder by the State Government, therefore, could not have the status of law regulating rights of parties and must partake of the character of an administrative order.
C. section section Motor Service, Tenkasi vs The State of Madras, I.L.R. and Gopalakrishnan Motor Transport Co., Ltd. vs Secretary, Regional Transport Authority, Krishna District, Vijayawada, , approved.
Consequently, in the instant case, the appellant could not be said to have acquired a vested right that was defeated by a new law enforced pending the appeal and the order of the Central Road Traffic Board could not be set aside merely on the ground that it had decided the appeal on the basis of an order issued subsequent to the grant of the permit if such order was otherwise in public interest.
Per Sarkar, J. It could hardly be said that the rule that a court hearing an appeal from a decision should not ordinarily take into consideration a law passed subsequent to that decision had application where a quasi judicial tribunal heard an appeal from another such tribunal.
Consequently, in the instant case, it could not be said that there was an error of law apparent on the face of the record so as to attract a writ of certiorari and the appeal must fail on that ground.
No applicant for a permit under the could have a substantive right to the permit vested in him and 229 the granting or refusal of a permit by the Regional Transport Authority could not operate as res judicata.
It was unnecessary for the purpose of the present case to decide what kind of orders could be issued by the State Government under section 43A of the Act, for whatever its nature, administrative or otherwise, if an order under that section entitled a person to its observance, and there was hardly any doubt as to that, it would be a law a mistake of which would justify the issue of a writ of certiorari at his instance.
The Mayor of Rochester vs The Queen, (1858) EL.
& E.L. ; , referred to.
Nagendra Nath Bora vs The Commissioner of Hills Division and Appeals, Assam, ; , distinguished.
|
Appeal No. 313 of 1993.
From the Judgment and Order dated 9.10.1992 of the Karnataka High Court in Election Petition No. 8 of 1991.
P.N. Misra for the Appellants.
R.N. Narasimha Murthy, E.C. Vidyasagar and Gopal Singh for the Respondents.
The Judgement of the Court was delivered by B.P. JEEVAN REDDY, J. Heard the counsel for the parties.
Leave granted.
This appeal raises the question whether Section 5 of the is applicable to a recrimination notice given under Section 97 of the Representation of People Act, 1951.
The learned Single Judge of the, Karnataka High Court has held that it does not.
His ,view is questioned by the returned candidate (first respondent in the election petition) before us.
The first respondent in the Election Petition who shall hereinafter be referred to as "appellant ', was declared elected from Koppal parliamentary constituency during the general elections held for the 10th Lok Sabha.
He contested on the Congress (1) ticket.
The election petitioner, referred to hereinafter as "the first respondent" had also contested from the said constituency on the ticket of Janata Dal.
Having lost the election, the first respondent filed an election petition No. 8 of 1991 for a declaration that the election of the appellant from the said parliamentary constituency was void and for a further declaration that he himself has been duly elected therefrom.
Since the appellant and some other respondents to the election petition could not be served in the ordinary course, the High Court directed publication of notice in a Kannada Daily Newspaper.
It was so published on 4.11.1991 fixing the date of appearance of the respondents on 25.11.1991.
The appellant (first respondent in the election petition) ap peared before the High Court on 4.11.1991 and sought time for filing his written statement which he did on 6.11.1992.
Thereafter, on 21.1.1992 he submitted the recrimination notice under Section 97 of the Act.
By the said notice, the appellant expressed his intention to give evidence to prove that 316 the election of the first respondent would have been void if he had been . he returned candidate and a petition had been presented calling in question his election.
Along with the recrimination notice he filed an application under Section 5 of the requesting the High Court to condone the delay in filing the same for the reasons stated therein.
According to the proviso to Section 97(j) notice of such intention should have been given to the High Court "within 14 days from the date of commencement of trial".
Admittedly, the appellant gave notice under Section 97(1) beyond the period of 14 days and hence the application under Section 5.
For a proper appreciation of the question arising herein, it would be appropriate to notice the relevant provisions of the Representation of People Act besides Section 29(2) of the .
First the provisions of the Representation of People Act.
Section 97 reads as follows: "97.
Recrimination when seat claimed. (1) When in an election petition a declaration that any candidate other than the returned candidate has been duly elected is claimed, the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election: Provided that the returned candidate or such other party as aforesaid shall not be entitled to give such evidence unless he has, within fourteen days from the date of commencement of the trial, given notice to the High Court of Ins intention to do so and has also given the security and the further security referred to in sections 117 and 118 respectively.
(2)Every notice referred to in sub section (1) shall be accompanied by the statement and particulars required by section 83 in the case of an election petition and shall be signed and verified in like manner.
" Sub section (1) of Section 97 permits the returned candidate or any other party to give evidence (in an election petition seeking a declaration that any candidate other than the returned candidate has been duly elected) to 317 prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election.
Sub section (2) says that such a notice shall be accompanied by a statement and particulars required by Section 83 in the case of an election petition and shall also be signed and verified in the same manner.
Proviso to sub section (1) says that such a notice shall be given within fourteen days from the date of "commencement of trial" and the security and further security referred to in Sections 117 and 118 respectively is furnished.
The expression "commencement of trial" has been defined in Explanation to Sub section(4) of Section 86.
The Explanation reads: "For the purposes of this sub section and of Section 97, the trial of a petition shall be deemed to commence on the date fixed for the respondents to appear before the High Court and answer the claim or claims made in the petition." According to the said definition, the notice of the recrimination should have been given in this case within fourteen days of 4.11.91.
Admittedly, it was submitted beyond the said period.
Section 83 deals with "contents of petition".
According to sub section (1) an election petition (a) shall contain a concise statement of the material facts on which the petitioner relies; (b) shall set forth particulars of any corrupt practice that the petitioner alleges including as full a statement as possible of all the names of the parties alleged to have committed such corrupt practice and the date and place of the commission of each of such practice and (c) shall be signed by the petitioner and verified in the manner laid down in the Code of Civil Procedure, 1908 for the verification of pleadings.
The proviso to sub section (1) says that where a petitioner alleges any corrupt practice, the petition shall also be accompanied by an affidavit in the prescribed form in support of the allegation of such practice and particulars therein.
Sub section (2) says that any schedule or annexure to the petition shall also be signed by the petitioner and verified in the same manner as the petition.
Section 117 requires the election petitioner to deposit in the High Court, at the time of presenting an election petition, a sum of Rs. 2,000 as security for the costs of the petition in accordance with the rules of the High Court.
Section 118 says that no person shall be entitled to be joined as a respondent under Sub section (4) of Section 86 unless he has given such security for costs as the High Court may direct.
Section 86(1) declares that "the 318 High Court shall dismiss an election petition which does not comply with the provisions of section 81 or section 82 or section 117.
" There is no provision in the Representation of People Act, 1951 making all or any of the provisions of the applicable to the proceedings under the Act.
The appellant, however, relies upon Section 29(2) of the .
According to him by virtue of the said provision, all the provisions contained in Sections 4 to 24 (both inclusive) apply to the proceedings under the Act including the recrimination notice under Section 97.
Sub section(2) of Section 29, which alone is relied upon before us reads: "Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only insofar as, and to the extent to which, they are not expressly excluded by such special or local law." In H.N. Yadav vs L.N. Misra, ; , this court held that the words "expressly excluded ' occurring in Section 29(2) of the do not mean that there must necessarily be express reference in the special or local law to the specific provisions of the , the operation of which is sought to be excluded.
It was held that if on an examination of the relevant provisions of the Special Act, it is clear that the provisions of the are necessarily excluded then the benefits conferred by the cannot be called in aid to supplement the provisions of the Special Act.
That too was a case arising under the Representation of People Act and the question was whether Section 5 of the is applicable to the filing of the election petition.
The test to determine whether the provisions of the applied to proceedings under Representation of People Act by virtue of Section 29(2) was stated in the following words "The applicability of these provisions has, therefore, to be judged not from the terms of the but by the provisions of the Act relating to the fifing of election 319 petitions and their trial to ascertain whether it is a complete code in itself which does not admit of the application of any of the provisions of the mentioned in Section 29(2) of that Act." On an examination of the provisions of the Representation of People Act and the earlier decisions of the Court, it. was held that the Representation of People Act is a self contained code and accordingly, it was concluded that "the provisions of section 5 of the do not govern the filing of election petitions.
or their trial.
" This decision, in our view, practically concludes the question before us inasmuch as the Act equates a recrimination notice to an election petition.
The language of Section 97 makes the said fact abundantly clear.
The relevant words are: "the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election.
" The proviso to sub section (1) applies the provisions of Sections 117 and 118 to such a recrimination notice.
It may be noticed that for non compliance with the requirement of Section 117 an election petition is liable to be dismissed by virtue of sub section (1) of section 86.
Sub section (2) of Section 97 further says that the "notice referred to in sub section (1) shall be accompanied by the statement and particulars required by Section 83 in the case of an election petition and shall be signed and verified in like manner.
" We may also say that the proviso to sub section (1) of Section 97 which requires such a notice to be given to the High Court within fourteen days of the "date fixed for the respondents to appear before the High Court to answer the claim or claims" (reading the definition of "commencement of trial" into it) has also a particular meaning and object behind it.
The idea is that the recrimination notice, if any, should be filed at the earliest possible time so that both the election petition and the recrimination notice are tried at the same time.
The recrimination notice is thus comparable to an election petition.
If Section 5 does not apply to the filing of an election petition, it does not equally apply to the filing of the recrimination notice.
In view of the above position, we do not think it necessary to deal with the several decisions cited before us relating to the interpretation of Sub section (2) of Section 29 of the .
The counsel for the appellant brought to our notice a decision of this 320 Court holding that the provisions of the Section 12(2) of the Limitation Act, 1908 are applicable to an appeal under Section 116(A) of the Representation of People Act, 1951 viz., V.C Shukla vs Khubchand Baghel and Ors., [1964] 6 S.C.R.129.
It is also brought to our notice that certain High Courts have taken the view that both Section 5 and Section 12(2) of the Limitation Act are applicable to the proceedings under the Act.
Reference is to , 1968 Calcutta 69 and (1976) 89 Madras La. Weekly 32.
So far as the decision of this court in V.C Shukla is concerned, it is a decision dealing with the applicability of the provision in Section 12(2) of the Limitation Act to an appeal preferred under Section 116(A) and not with the filing of an election petition.
The said decision was considered and distinguished in H.N. Yadav on the above basis.
At page 42 of the S.C.R., the Division Bench which decided H.N. Yadav distinguished the decision in V.C. Shukla in the following words : "Vidyacharan Shukla 's case (supra) is one which dealt with an appeal under the Act while what we have to consider is whether the Limitation Act is at all applicable to elec tion petitions under the Act.
Thirdly, section 29(2) of the new Limitation Act does not now give scope for this controversy whether the two limbs of the old section are independent or integrated.
No doubt section 5 would now apply where section 29(2) is applicable to even applications and petitions, unless they are expressly excluded.
Even assuming that the Limitation Act applies to election petitions under the Act, what has to be seen is whether section 5 is excluded from application to such petitions.
" The Division Bench then proceeded to examine whether the applicability of Section 5 is excluded in the matter of filing of an election petition and came to the conclusion that it was so excluded.
This aspect has already been dealt with hereinabove.
So far as the decisions of the High Courts are concerned, we cannot agree with them in so far as the applicability of Section 5 to filing on election petition and/or recrimination notice is concerned in view of the decision of this Court in H.N. Yadav.
For the above reasons, the appeal fails and is accordingly dismissed with costs.
N.P.V. Appeal dismissed.
| IN-Abs | The first respondent, a defeated candidate, riled an election petition before the High Court for a declaration that the election of the appellant was void and that he himself had been duly elected.
Since the notice could not be served on the appellant, and some other respondents in the ordinary course, it was published in a vernacular daily newspaper, as directed by the High Court, fixing the date of appearance of the respondents therein.
The appellant appeared before the High Court on the date of publication of the notice and sought time for filing the written.
statement and after doing so submitted a recrimination notice under Section 97 of the Representation of People Act, 1951.
Along with the recrimination notice he flied an application under Section 5 of the requesting the High Court to condone the delay in filing the same, since the appellant had given notice beyond the period of 14 days from the date of commencement of trial, prescribed under the proviso to Section 97(1).
The High Court held that Section 5 of the was not applicable to a recrimination notice.
Aggrieved, the appellant riled the appeal, by special leave, before this Court.
It was contended that by virtue of Section 29(2) of the , all the provisions contained in sections 4 to 24 (both inclusive) of the Act applied to the proceedings under the Representation of the People Act, 1951, including the recrimination notice under Section 97.
314 Dismissing the appeal, this Court, HELD : 1.1.
There is no provision in the Representation of People act 1951 making all or any of the provisions of the placable to the proceedings under the Act.
[318A] 1.2.
The Act equates a recrimination notice to an election petition.
The language of Section 97 makes the said fact abundantly clear.
It provides that returned candidates or any other party may give evidence to prove that the election of such candidate would have been void If he had been the returned candidate and a petition had been presented calling in question his election.
The proviso to sub section (1) applies the provisions of Sections 117 and 118 to such a recrimination notice.
For non compliance with the requirement of Section 117 an election petition is liable to be dismissed by virtue of sub section (1) of Section 86.
Sub section (2) of Section 97 further provides that the notice referred to in sub section (1) should be accompanied by the statement and particulars as required by Section 83 in the case of an election petition and should be signed and verified in like manner.
[319C E] 1.3.
The proviso to sub section (1) of Section 97 which requires such a notice to be given to the High Court within 14 days of the date fixed for the respondents to appear before the High Court to answer the claim or claims (reading the definition of 'commencement of trial ' into it) has also a particular meaning and object behind it.
The idea is that the recrimination notice, if any, should be filed at the earliest possible time so that both the election petition and the recrimination notice are tried at the same time.
[319F] The recrimination notice is thus comparable to an election petition.
If Section 5 of the does not apply to the filing of an election petition, it does not equally apply to the filing of the recrimination notice.
[319G] H.N Yadav vs L.N. Misra, ; , relied on.
Shukla vs Khubchand Baghel and Ors., [1964] 6 S.C.R. 129, distinguished.
Bhogilal Pandya vs Maharawal Laxman Singh, AIR , Bhakti Bh.
Mondal vs Hhagendra K Bandhopandhya, 1968 Calcutta 315 69, overruled.
|
Appeal Nos.
266 267 of 1993.
From the Judgment and Order dated 8.2.91 & 22.3.91 of the Central Administrative Tribunal Principal Bench, New Delhi in O.A. No. 2540/89 & M.P. No. 219 of 1991.
K.T.S. Tulsi, Additional Solicitor General B. Parthasarthy, P. Parmeshwaran and C.V.S. Rao for the Appellants.
Indu Malhotra for the Respondent.
The Judgment of the Court was delivered by MOHAN, J.
Leave granted.
The respondent, while working as Income Tax Officer, Muktsar during the year 1982 83 completed certain assessments.
A charge memorandum dated 2.5.1989 was served on him to the effect it was proposed to hold an inquiry against him under Rule 14 of the Central Civil Services (Classification, Central & Appeal) Rules, 1965.
A statement of article of charge framed against him was to the following effect : STATEMENT OF ARTICLE OF CHARGE FRAMED AGAINST, SHRI K.K. DHAWAN, A GROUP 'A ' NOW POSTED AS ASSISTANT COMMISSIONER OF INCOME TAX, BOMBAY.
Article I Shri K.K. Dhawan while functioning as I.T.O. "A" 300 Ward, Muktsar during 1982 1983 completed nine assessments in the case of : (1) M/s Chananna Automobiles, (2) N/s Gupta Cotton Industries, (3) M/s Ajay Cotton Industries, (4) M/s National Rice Mills, (5) M/s Tek Chand Buchram, (6) M/s Tilak Cotton Industries, (7) M/s Chandi Ram Behari Lal, (8) M/s Phuman Mal Chandi Ram and (9) M/s Modern Tractors in an irregular manner, in undue haste and apparently with a view to conferring undue favour upon the assessees concemed By his above acts Shri Dhawan failed to maintain absolute integrity and devotion to duty and exhibited a conduct unbecoming of a Govt.
servant, thereby violating provisions of Rules 3(1) (i), 3(1) (ii) and 3(1) (iii) of the CCS (Conduct) Rules, 1964.
This was accompanied by a statement of imputation of his misconduct or misbehaviour in support of the article of charge framed against him.
In each of the nine cases of the assesses above referred to, the details relating to misconduct or misbehaviour were furnished.
Therefore, it was charged that the respondent had violated the provisions of Rule 3(1)(i), 3(1)(ii) and 3(1)(iii) of the Central Civil Services (Conduct) Rules, 1964.
The necessary documents in support of these allegations were also enclosed.
Against the said memorandum dt.
2.5.1989, the respondent preferred an application O.A. No. 2540/89 before the Central Administrative Tribunal, New Delhi praying for a stay of the disciplinary proceedings and to consider his case for promotion on merits without resort to the sealed cover procedure.
301 By its order dt.
8.2.1991, Central Administrative Tribunal, Principal Bench, New Delhi directed the respondent Union of India to open the sealed cover immediately and implement the recommendations of the Departmental Promotion Committee in so far as it pertained to the petitioner and to promote him to the post of Deputy Commissioner of Income Tax if he was found fit for promotion within two weeks from the date of said order.
Thereafter, by a detailed judgment dated 22.3.1991, the Tribunal relying on S.L.P. (C) Nos.
2635 36/89 in Civil Appeal No. 4986 87/90, held that the action taken by the officer was quasi judicial and should not have formed the basis of disciplinary action.
Therefore, the application was allowed and the impugned memorandum dated 2.5.1989 was quashed.
The earlier order dated 8.2.1991 to open the sealed cover and implement the recommendations of Departmental Promotion Committee was made absolute.
Aggrieved by these two orders, the present special leave petitions have been preferred.
The teamed counsel for the appellant Shri K.T.S. Tulsi submits as under: (i) That in a case where disciplinary proceedings are pending against the respondent, the procedure of opening the sealed cover should not have been resorted to.
Otherwise, it would amount to putting a premium on misconduct.
(ii)The Tribunal failed to appreciate the ratio of the order in C.A. Nos.
4986 87/90.
In that case, the enquiry report showed that the charge framed against the officer had not been proved.
That is entirely different from holding that in a case of quasi judicial action taken by the Officer no disciplinary action could be taken.
The true purport of that observation is only to buttress the earlier finding that the charge had not been proved.
Therefore, reliance ought not to have been placed on this ruling which turned on the peculiar facts and circumstances of that case.
302 (iii)Though nine cases were cited in the charge memorandum, only one of the cases had been discussed.
(iv)Lastly, it is submitted that the respondent is charged for violation of Rule 3(1)(i), 3(1)(ii) and 3(1)(iii) of Central Civil Services (Conduct) Rules, 1964.
Therefore, if the conduct of the respondent could be brought within the scope of the Rules, immunity from the disciplinary action cannot be claimed.
In support of these submissions, reliance is placed on Union of India & Ors.
vs A.N. Saxena, ; In Civil Appeal No. 560 of 1991, the peculiar facts art different; in disregard to the instructions of the Central Board of Direct Taxes, refund of taxes was ordered.
Further, there was no allegation of corrupt motive or to oblige any person on account of extraneous considerations.
Therefore, that ruling is distinguishable.
The respondent would try to support the impugned order contending that the opening of the sealed cover was correctly ordered because on the date when the Departmental Promotion Committee met in March 1989, no charge sheet had been served on the respondent.
The charge memorandum dated 2.5.1989 came up to be served only on 5.5.1989.
Therefore, following the earlier procedure such a direction was given.
This is a case in which the respondent was exercising quasi judicial functions.
If the orders were wrong the remedy by way of an appeal or revision could have been resorted to.
Otherwise, if in every case of wrong order, disciplinary action is resorted to, it would jeopardize the exercise of judicial functions.
The immunity attached to the officer while exercising quasi judicial powers will be lost.
Rightly, therefore, the Tribunal relied on Civil Appeal Nos.
4986 87/90 where this Court took the view that no disciplinary action can be taken in respect of exercising quasi judicial functions.
To the same effect in Civil Appeal No. 560/91 the decision relied on by the appellant namely Union of India & Ors., ; (supra) has no application to the instant case.
The charge memorandum dated 2.5.1989 states as follows 303 MEMORANDUM "The President proposes to hold an inquiry against Shri K.K. Dhawan under Rule 14 of the Central Civil Services (Classification, Central and Appeal) Rules, 1965.
The substance of the imputations of misconduct or misbehaviour in respect of which the inquiry is proposed to be held is set out in the enclosed statement of article of charge.
" At this stage, we will refer to Rule 3(1)(i) , 3(1)(ii) and 3(1)(iii) of the Central Civil Services (Conduct) Rules, 1964 which are as under Rule 3 (1) : Every government servant shall at all time (i) maintain absolute integrity; (ii) maintain devotion to duty and (iii) do nothing which is unbecoming of a government servant.
The substance of the charge is the completion of nine assessments in an irregular manner, hastily with a view to confer undue favour upon the various assessees.
By such act, the respondent failed to maintain absolute integrity and devotion to duty and exhibited a conduct unbecoming of government servant.
Certainly, it cannot be contended that concerning the violation of these rules, no disciplinary action could be taken.
However, what is urged is that in so far as the respondent was exercising quasi judicial functions, he could not be subject to disciplinary action.
The order may be wrong.
In such a case, the remedy will be to take up the matter further in appeal or revision.
The question, therefore, arises whether an authority enjoys immunity from disciplinary proceedings with respect to matters decided by him in exercise of quasi judicial functions? In Govinda Menon vs Union of India, ; , it was contended that no disciplinary proceedings could be taken against appellant for acts or omissions with regard to his work as Commissioner under Madras Hindu Religious and Charitable Endowments Act, 1951.
Since the 304 orders made by him were quasi judicial in character, they should be challenged only as provided for under the Act.
It was further contended that having regard to scope of Rule 4 of All India Services (Discipline and Appeal) Rules, 1955, the act or omission of the Commissioner was such that appellant was not subject to the administrative control of the Government and therefore, the disciplinary proceedings were void.
Rejecting this contention, it was held as under : "It is not disputed that the appropriate Government has power to take disciplinary proceedings against the appellant and that he could be removed from service by an order of the Central Government, but it was contended that I.A.S. Officers are governed by statutory rules, that ,any act or omission ' referred to in Rule 4(1) relates only to an act or omission of an officer when serving under the Government, and that 'serving under the Government ' means subject to the administrative control of the Government and that disciplinary proceedings should be, therefore, on the basis of the relationship of master and servant.
It was argued that in exercising statutory powers the Commissioner was not subject to the administrative control of the Government and disciplinary proceedings cannot, therefore, be instituted against the appellant in respect of an act or omission committed by him in the course of his employment as Commissioner.
We are unable to accept the proposition contended for by the appellant as correct.
Rule 4(1) does not impose any limitation or qualification as to the nature of the act or omission in respect of which disciplinary proceedings can be instituted.
Rule 4(1) (b) merely says that the appropriate Government competent to institute disciplinary proceedings against a member of the Service would be the Government under whom such member was serving at the time of the commission of such act or omission.
It does not say that the act or omission must have been committed in the discharge of his duty or in the course of his employment as a Government servant.
It is, therefore, open to the Government to take disciplinary proceedings against the appellant in respect of his acts or omissions which cast 305 a reflection upon his reputation for integrity or good faith or devotion to duty as a member of the service.
It is not disputed that the appellant was, at the time of the alleged misconduct, employed as the First Member of the Board of Revenue and he was at the same time performing the duties of Commissioner under the Act in addition to his duties as the First Member of the Board of Revenue.
In our opinion, it is not necessary that a member of the Service should have committed the alleged act or omission in the course of discharge of his duties as a servant of the Government in order that it may form the subject matter of disciplinary proceedings.
In other words, if the act or omission is such as to reflect on the reputation of the officer for his integrity or good faith or devotion to duty, there is no reason why disciplinary proceedings should not be taken against him for that act or omission even though the act or omission relates to an activity in regard to which there is no actual master and servant relationship.
To put it differently, the test is not whether the act or omission was committed by the appellant in the course of the discharge of his duties as servant of the Government.
The test is whether the act or omission has some reasonable connection with nature and condition of his service or whether the act or omission has cast any reflection upon the reputation of the member of the Service for integrity or devotion to duty as a public servant.
We are of the opinion that even if the appellant was not subject to the administrative control of the Government when he was functioning as Commissioner under the Act and was not the servant of the Government subject to its orders at the relevant time, his act or omission as Commissioner could form the subject matter of disciplinary proceedings provided the act or omission would reflect upon his reputation for integrity or devotion to duty as a member of the service.
" In this context reference may be made to the following observations of Lopes, LJ.
in Pearce vs Foster, [1866] 17 OBD 536, p.542.
"If a servant conducts himself in a way inconsistent with the 306 faithful discharge of his duty in the service, it is misconduct which justifies immediate dismissal.
That misconduct, according to my view, need not be misconduct in the carrying on of the service of the business.
It is sufficient if it is conduct which is prejudicial or is likely to be prejudicial to the interests or to the reputation of the master, and the master will be justified, not only if he discovers it at the time, but also if he discovers it afterwards, in dismissing that servant." (emphasis supplied) Concerning, the exercise of quasi judicial powers the contention urged was to the following effect : "We next proceed to examine the contention of the appellant that the Commissioner was exercising a quasi judicial function in sanctioning the leases under the Act and his order, therefore, could not be questioned except in accordance with the provisions of the Act.
The proposition put forward was that quasi judicial orders, unless vacated under the provisions of the Act, are final and binding and cannot be questioned by the executive Government through disciplinary proceedings.
It was argued that an appeal is provided under S.29(4) of the Act against the order of the Commissioner granting sanction to a lease and that it is open to any party aggrieved to file such an appeal and question the legality or correctness of the order of the Commissioner and that the Government also may in revision under S.99 of the Act examine the correctness or legality of the order.
it was said that so long as these methods were not adopted the Government could not institute disciplinary proceedings and reexamining the legality of the order of the Commissioner granting sanction to the leases.
" That was rejected as under: 'The charge is, therefore, one of misconduct and recklessness disclosed by the utter disregard of the relevant provisions of S.29 and the Rules thereunder in sanctioning the leases.
On behalf of the respondents it was argued 307 both by Mr. Sarjoo Prasad and Mr. Bindra that the Commissioner was not discharging quasi judicial functions in sanctioning leases under S.29 of the Act, but we shall proceed on the assumption that the Commissioner was performing quasi judicial functions in granting leases under S.29 of the Act.
Even upon that assumption we are satisfied that the Government was entitled to institute disciplinary proceedings if there was prima facie material for showing recklessness or misconduct on the part of the appellant in the discharge of his official duty.
It is true if the provisions of S.29 of the Act or the Rules are disregarded the order of the Commissioner is illegal and such an order could be questioned in appeal under S.29 (4) or in revision under S.99 of the Act.
But in the present proceedings what is sought to be challenged is not the correctness or the legality of the decision of the Commissioner but the conduct of the appellant in the discharge of his duties as Commissioner.
The appellant was proceeded against because in the discharge of his functions, he acted in utter disregard of the provisions of the Act and the Rules.
It is the manner in which he discharged his functions that is brought up in these proceedings.
In other words, the charge and the allegations are to the effect that in exercising his powers as Commissioner the appellant acted in abuse of his power and it was in regard to such misconduct that he is being proceeded against.
It is manifest, therefore, that though the propriety and legality of the sanction to the leases may be questioned in appeal or revision under the Act, the Government is not precluded from taking disciplinary action if there is proof that the Commissioner had acted in gross recklessness in the discharge of his duties or that he failed to act honestly or in good faith or that he omitted to observe the prescribed conditions which are essential for the exercise of the statutory power.
We see no reason why the Government cannot do so for the purpose of showing that the Commissioner acted in utter disregard of the conditions prescribed for the exercise of his power or that he was 308 guilty of misconduct or gross negligence.
We are accordingly of the opinion that the appellant has been unable to make good his argument on this aspect of the case.
" The above case, therefore, is an authority for the proposition that disciplinary proceedings could be initiated against the government servant even with regard to exercise of quasi judicial powers provided : (i) The act or omission is such as to reflect on the reputation of the government servant for his integrity or good faith or devotion to duty, or (ii)there is prima facie material manifesting recklessness or misconduct in the discharge of the official duty, or (iii)the officer had failed to act honestly or in good faith or had omitted to observe the prescribed conditions which are essential for the exercise of statutory power.
We may also usefully refer to two English decisions.
Thayre vs The London, Brighton and South Coast Railway Company, states: "Dishonesty ' included dishonesty outside the service of the company as well as dishonesty towards the company." In Thompson vs British Berna Motor Lorries Limited 33 T.L.R. 187 at page 188, it has been held as under : "It was the duty of the servant to render proper, full and clear accounts to his principals, and it was the duty of a servant to render prompt obedience to the lawful orders of his master.
in this case the plaintiff had failed in both respects.
There was no question as to the plaintiff 's honesty, but he had been negligent.
" The Tribunal has chosen to rely on Civil Appeal Nos.
4986 87/90.
The order in that case clearly shows the ultimate conclusion was that the charge framed against the delinquent officer had not been established.
In support of that conclusion, it was observed as under 309 "We are also of the view that the action taken by the appellant was quasi judicial and should not have formed the basis of disciplinary action.
" We do not think where to buttress the ultimate conclusion, this observation was made, that could ever be construed as laying the law that in no case disciplinary action could be taken if it pertains to exercise of quasi judicial powers.
Then, we come to Civil Appeal No. 560/91 to which one of us (Mohan, J.) was a party.
The ruling in this case turned on the peculiar facts.
Nevertheless, what we have to carefully notice is the observation as under : "On a reading of the charges and the allegations in detail learned Additional Solicitor General has fairly stated that they do not disclose any culpability nor is there any allegation of taking any bribe or to trying to favour any party in making the orders granting relief in respect of which misconduct is alleged against the respondent.
" The above extract will clearly indicate that if there was any culpability or any allegation of taking bribe or trying to favour any party in exercise of quasi judicial functions, then disciplinary action could be taken.
We find our conclusion is supported by a following observations found in the said order at page 3: "In our view, the allegations are merely to the effect that the refunds were granted to unauthorized instructions of the Central Board of Direct Taxes.
There is no allegation, however, either express or implied that these actions were taken by the respondent actuated by any corrupt motive or to oblige any person on account of extraneous considerations.
In these circumstances, merely because such orders of refunds were made, even assuming that they were erroneous or wrong, no disciplinary action could be taken as the respondent was discharging quasi judicial function.
If any erroneous order had been passed by him correct remedy is by way of an appeal or revision to have such orders set aside.
" 310 In the case on hand, article of charge clearly mentions that the nine assessments covered by the article of charge were completed (i) in an irregular manner, (ii) in undue haste, and (iii) apparently with a view to confer undue favour upon the assessees concerned.
(Emphasis supplied) Therefore, the allegation of conferring undue favour is very much there unlike Civil Appeal No. 560/91.
If that be so, certainly disciplinary action is warranted.
This Court had occasion to examine the position.
In Union of India & Ors.
vs A.N. Saxena; , to which one of us (Mohan, J.) was a party, it was held as under : "It was urged before us by learned counsel for the respondent that as the respondents was performing judicial or quasi judicial functions in making the assessment orders in question even if his actions were wrong they could be corrected in an appeal or in revision and no disciplinary proceedings could be taken regarding such actions.
In our view, an argument that no disciplinary action can be taken in regard to actions taken or purported to be done in the course of judicial or quasi judicial proceedings is not correct.
It is true that when an officer is performing judicial or quasi judicial functions disciplinary proceedings regarding any of his actions in the course of such proceedings should be taken only after great caution and a close scrutiny of his actions and only if the circumstances so warrant.
The initiation of such proceedings, it is true, is likely to shake the confidence of the public in the officer concerned and also if lightly taken likely to undermine his independence.
Hence, the need for extreme care and caution before initiation of disciplinary proceedings against an officer performing judicial or quasi judicial functions in respect of his actions in the discharge or purported to discharge his functions.
But it is not as if such action cannot be taken at all.
Where the 311 actions of such an officer indicate culpability, namely a desire to oblige himself or unduly favour one of the parties or an improper motive there is no reason why disciplinary action should not be taken.
" This dictum fully supports the stand of the appellant.
There is a great reason and justice for holding in such cases that the disciplinary action could be taken.
It is one of the cardinal principles of administration of justice that it must be free from bias of any kind.
Certainly, therefore, the officer who exercises judicial or quasi judicial powers acts negligently or recklessly or in order to confer undue favour on a person is not acting as a Judge.
Accordingly, the contention of the respondent has to be rejected.
It is important to bear in mind that in the present case, we are not concerned with the correctness or legality of the decision of the respondent but the conduct of the respondent in discharge of his duties as an officer.
The legality of the orders with reference to the nine assessments may be questioned in appeal or revision under the Act.
But we have no doubt in our mind that the Government is not precluded from taking the disciplinary action for violation of the Conduct Rules.
Thus, we conclude that the disciplinary action can be taken in the following cases (i) Where the officer had acted in a manner as would reflect on his reputation for integrity or good faith or devotion to duty; (ii)if there is prima facie material to show recklessness or misconduct in the discharge of his duty; (iii)if he has acted in a manner which is unbecoming of a government servant; (iv)if he had acted negligently or that he omitted the prescribed conditions which are essential for the exercise of the statutory powers; (v) if he had acted in order to unduly favour a party , (vi) if he had been actuated by corrupt motive however, small the bribe may be because Lord Coke said long ago "though the bribe may be small, yet the fault is great.
" 312 The instances above catalogued are not exhaustive.
However, we may add that for a mere technical violation or merely because the order is wrong and the action not falling under the above enumerated instances, disciplinary action is not warranted.
Here, we may utter a word of caution.
Each case will depend upon the facts and no absolute rule can be postulated.
In view of the foregoing discussion, the appeals will stand allowed.
There will be no order as to costs.
We make it clear that it is open to the respondent to put forth all defenses open to him in the departmental inquiry which will be considered on its merit.
V.P.R. Appeals allowed.
| IN-Abs | The respondent while working as Income Tax Officer completed certain assessments during the year 1982 83.
A charge memorandum, was served on him, proposing to hold an inquiry against him under Rule 14 of the Central Civil Services (Classification, Central Appeal) Rules, 1965.
A statement of article of charge was framed against the respondent.
The substance of the charge was the completion of nine assessments in an irregular manner, hastily with a view to confer undue favour upon the assessees, and by such act, he failed to maintain absolute integrity and devotion to duty and exhibited a conduct unbecoming of government servant.
The details relating to misconduct or misbehaviour of the respondent were furnished and he was charged for violating the provisions of Rules 3 (1) (i), 3 (1) (ii) and 3 (1) (iii) of the Central Civil Services (,Conduct) Rules, 1964.
In support of the allegations, he was also supplied with the necessary documents.
Against the memorandum, the respondent preferred an application before the Central Administrative Tribunal, praying for a stay of the disciplinary proceedings and to consider his case for promotion on merits without resort to the sealed cover procedure.
On 8.2.1991, the Tribunal directed the appellant Union of India to open the sealed cover and to implement the recommendations of the 297 Departmental Promotion Committee to promote the respondent to the post of Deputy Commissioner of Income Tax, if he was found fit for promotion within two weeks from the date of order.
Later on 223.1991, the Tribunal allowed the respondent 's application, holding that the action taken by the respondent officer was quasi judicial and should not have formed the basis of disciplinary action.
The Tribunal also made its earlier order dated 8.2.1991 absolute.
The Union of India preferred the present appeals by special leave against the orders of the Tribunal, contending that in a case where disciplinary proceedings were pending against the respondent, the procedure of opening the sealed cover should not have been resorted to.
Otherwise, it would amount to putting a premium on misconduct ; that the Tribunal failed to appreciate the ratio of the order in C.A. Nos.
4986 87/90; that as the respondent was charged for violation of Rules 3(1)(i), 3(1)(ii) and 3(1)(iii) of the Central Civil Services (Conduct) Rules, 1964; immunity from the disciplinary action could not be claimed.
The respondent contended that the opening of the sealed cover was correctly ordered because on the date when the Departmental Promotion Committee met in March 1989, no charge sheet was served on the respondent; that as the respondent was exercising quasi judicial functions, orders made by him if were wrong, the remedy by way of an appeal or revision could be resorted to; that if in every case of wrong order, disciplinary action was resorted to, it would jeopardize the exercise of judicial functions; and the immunity attached to the officer while exercising quasi judicial powers would be lost.
On the question, whether an authority enjoys immunity from disciplinary proceedings with respect to matters decided by him in exercise of quasi judicial functions; allowing the appeals, this Court, HELD : 1.01.
The disciplinary action can be taken in the following cases : (i) Where the Officer had acted in a manner as would reflect on his reputation for integrity or good faith or devotion to duty ; (ii) if there is prima facie material to show recklessness or misconduct in the discharge of his duty; (iii) if he has acted in a manner which is unbecoming of a govern 298 ment servant; [311E F] (iv) if he had acted negligently or that he omitted the prescribed conditions which are essential for the exercise of the statutory powers; (v) if he had acted in order to unduly favour a party, (vi) if he had been actuated by corrupt motive however, small the bribe may be.
[311G H] The instances above catalogued are not exhaustive.
For a mere technical violation or merely because the order is wrong and the action not falling under the above enumerated instances, disciplinary action is not warranted.
Each case will depend upon the facts and no absolute rule can be postulated.
[312A B] 1.02.
There is a great reason and justice for holding in such cases that the ' disciplinary action could be taken.
It is one of the cardinal principles of administration of justice that it must be free from bias of any kind.
[311B] 1.03.
The officer who exercises judicial or quasi judicial powers acts negligently or recklessly or in order to confer undue favour on a person is not acting as a judge.
[311C] 1.04.
In the present case, this Court Is not concerned with the correctness or legality of the decision of the respondent but the conduct of the respondent in discharge of his duties as an officer.
The legality of the orders with reference to the nine assessments may be questioned in appeal or revision under the Act.
[311D] 1.05.
In the case on hand, article of charge clearly mentions that the nine assessments covered by the article of charge were completed (i) in an irregular manner, (ii) in undue haste, and (iii) apparently with a view to confer unduefavour upon the assessees concerned.
[310A B] Therefore, the allegation of conferring undue favour is very much 299 there and certainly disciplinary action is warranted.
[310C] Govinda Menon vs Union of India, ; ; Thayre vs The London, Brighton and South Coast Railway Company, and Thompson vs British Berna Motor Lorries Limited, at page 188, referred to.
Union of India & Ors.
vs A.N. Saxena, ; , explained.
SLP (C) Nos.
2635 36/89 in CA No. 4986 87/90, distinguished
|
N: Criminal Appeal No. 715of 1981.
WITH Criminal Appeal No. 716 of 1981.
From the judgment and order dated 15.5.1981 of the Punjab and Haryana High Court in Criminal Appeal No. 419(DB) of 1980.
U.R. Lalit, A.N. Mulla, S.K. Sabharwal and O.K. Khullar for the Appellants.
I.S. Goyal for the Respondent.
The Judgment of the court was delivered by PUNCHHI, J.
These two appeals are directed against the judgment and order of May 15,1981 passed by a Division Bench of the Punjab and Haryana High Court in Criminal Appeal No. 419 DB of 1981.
589 The appellants are three in number .
They are Wazir Singh, his nephew Darbara Singh and share cropper(seeri)Dalip Singh.
These three, together with Mohin der Singh the brother of Wazir Singh ' and father of Darbara Singh, as also one Avtar Singh, Wazir Singh 's father in law 's brother, stood trial before the sessions Judge, Bhiwa ni for offences under sections 148, 302/149 and 323/149 I.P.C.for having caused the murder of Sadha Singh, paternal cousin of Wazir Singh and Mohinder Singh accused, as also to have caused simple hurts to Ranjit Singh, PW4 sister 's son of the deceased.
The learned Sessions Judge acquitted Avtar Singh taking the view that since the Investigating Officer could not recover the gun, the weapon of offence, from him in spite of interrogation, his name had been introduced by the prosecution in order to complete the alleged unlawful asembly,convenient and handy as it was because of relation ship with deceased.
Avtar Singh was attributed no part in the actual occurrence except exhortations.
The remaining four accused were convicted under sections 302/34 and 323/34 I.P.C. and were sentenced to life imprisonment and six months rigorous imprisonment respectively.
In appeal the High Court acquitted Mohinder Singh accused taking the view that though he was stated to have used his kirpan with force, the medical evidence did not corroborate this version because DR.
B.M. Kapur, PW 2, who performed the autopsy of the deceased, opined that the injuries which apparently were kirpan injuries could only be caused by the tip of the kirpan suggesting that much force had not been used.
The High Court then went on to agree with the opinion of Dr. Kapur to say that all the incised wounds on the deceased could have been caused by Kulhari exhibit
This Kulhari was suggested to have been used by Wazir Singh appellant towards commission of the crime.
On that premise the High Court let off Mohinder singh recording the opinion that his participa tion was doubtful.
For lack of coroboration of medical evidence the High Court also observed that it was quite probable that like Avtar Singh, acquitted co assused, Mohin der Singh accused too had been brought in as an accused.
As a result the three apellants remained convicted and sen tenced.
So they are here before us.
Criminal Appeal No.714 of 1981 was preferred by Ranjit Singh complainant against acquitted co accused Mohinder Singh but this appeal was dismissed by us on 8 4 1992 for non prosecution because learned counsel for that appellant stated that he had no instructions.
So Mohinder Singh re mained acquitted.
590 The occurrence took palce on November 10,1979 at 12.30 P.M. in the open fields of Village Kikral.
Deceased Sadha Singh was present in his fields taking out grass while deceased 's nephew Ranjit Singh P.W.4 was present ploughing the de ceased 's field.
close by in their own fields were Jagir Singh P.W.5 and Malkiat Singh P.W.6.
At that juncture Mohin der Singh acquitted co accused armed with a sword, Wazir Singh armed with a kulhari, Darbara Singh and Dalip Singh, armed with lathis each and Avtar Singh acquitted co accused armed with a gun came together towards the deceased and opened assault on him.
Wazir Singh apellant started and gave a kulhari blow on the head of the deceased whereas Mohinder Singh acquitted co accused gave injuries by kirpan.
Dalip Singh and Darbara Singh appellants inflicted lathi blows, Avtar Singh acquitted co accused raised exhortations.
When Ranjit Singh P.W. interfered he was given lathi blows by Dalip Singh and Darbara Singh, appellants.
Jagir Singh and Malkiat Singh P.Ws.
who saw the occurrence came running to the place and found Sadha Singh lying injured seriously.
Sadha Singh and Ranjit Singh victims were brought by Jagir Singh and Malkiat Singh P.Ws.
in injured condition to Rural Dispensary, Siwani which is at a distance of 5 kilometers from the place of occurrence.
Dr. Ram Krishan P.W.3 Incharge of the Dispensary, after examining and giving first aid to Sadha Singh advised him to be taken to Civil Hospital, Bhiwani as his condition was serious.
Ranjit Singh P.W. however was admited in the Rural Dispensary Siwani, Siwani police was informed about the arrival of both the them.
Sadha Singh was taken to Civil Hospital, Bhiwani, where he was found dead.
Dr. Gambhir P.W. 1 sent message to the police station informing the Bhiwani police about the arriv al of the dead body.
Sub Inspector Sadhu Sing P.W. 12 on the basis of message of Dr. Ram Kishan P.W. 3 went to Rural Dispensary, Siwani where he recorded the statement of Ranjit Singh P.W.4 at 4.15 p.m.
First Information Report on the basis of the said statement was recorded at the police station at 5.30p.m.
The special report reached the Magis trate at Bhiwani on 11 11 1979.
Now about the motive.
The grand father of sadha singh deceased had four sons, chanan Singh , Bishan Singh, Kishan Singh and Makhan Singh.
The eye witnesses Malkiat Singh and jagir Singh are the sons of Chanan Singh.
Sadha Singh de ceased was the son of Bishan Singh.
Mohinder Singh acquitted co accused and Wazir Singh appellant are sons of Kishan Singh.
Makhan Singh the fourth son was married to Harnam Kaur but had not made issue.
It appears that Makhan Singh on September 591 20,1975 executed an agreement to sell his lands in some proportions to the three families of his brothers, but Mohinder Singh acquitted co accused wanted to purchase all the land of Makhan Singh.
The agreement ultimately did not materialise.
Thereafter there is history of acrimony and illwill between the parties itching to obtain the land of Makhan Singh.
Besides Wazir Singh appellant got lodged FIR against Sadha Singh deceased in may, 1977 accusing him of an attack and of having stolen away his motor cycle.
such were the strained relations which provided the motive of the crime.
The post mortem of Sadha Singh deceased performed by Dr. B.M. Kapur P.W.2 revealed 13 injuries on his body.
the first one was an incised wound 2"x1/2" over the left side of the forehead, on dissection of which it was found to be a fracture of the frontal bone.
There was also extra dural haemotoma and fracture of the skull on the left side.
The other injuries were either incised wounds or blunt weapon injuries.
They were on non vital parts of the body.
There were, however, compound and diverse fractures of both bones of both the legs as well as that of both the arms.
The cause of death then opined by Dr. Kapur was, due to shock and haemorrhage on account of multiple injuries, which was sufficient to cause death in the ordinary course of nature.
At the trial however Dr. Kapur went on to add that injury No.1 could individully be sufficient in the ordinary course of nature to cause death.
He also opined that injuries other than injury NO.1 collectively were sufficient to cause death in the ordinary course of nature even if one were to exclude injury No.1.
Dr. Kapur further opined that all the incised wounds could be caused by kulhari P.1.
Dr. Ram Kishan P.W.3 on examination found Ranjit Singh having five injuries on his person which were simple in nature and were caused by a blunt weapon.
Four of them were contusions which were size able and one was an abrasion.
During the investigations the weapons of the offence were recovered by the investigating officer at the instance of recovery statements made by the accused persons respec tively.
The entire bundle of evidence was produced before the Court of sessions which led to the result above indicated.
Learned counsel for the appellants individually as well as collectively at the first instance pressed into service reasons for the acquittal of Avtar Singh and Mohinder Singh 592 co accused to contend that the prosecution case has been discredited by the courts below rendering it unacceptable.
Highlighting this aspect it was contended that the complain ant party apparently had spread their net wide and had dragged in Avtar Singh acquitted co accused just in order to lay charge of unlawful assembly and Mohinder Singh co accused to share the incised injuries, when those injuries could have been caused by one weapon like kulhari exhibit
On that basis it was asserted that P.W.s having told lies the entire prosecution case deserved throwing out.
Beside it was urged that the evidence regarding recovery of weapons did not inspire confidence.
These arguments even though attrac tive do not appeal to us.
There may be a tendency here and there to implicate a person in addition to actual assailants in a crime but substitution is rare and that cannot be the case here.
As is evident the parties are closely related.
The crime was committed in broad day light.
Ranjit Singh is a stamped witness.
There was no reason for the prosecution to falsely evolve a case against the appellants.
Now here there are two types of injuries on the deceased being in cised wounds and blunt weapon injuries totalling 13 in number.
This is suggestive of at least two assailants re spectively armed with suitable weapons.
to be responsible for these injuries.
But when these seven blunt weapon in juries of the deceased are added to five blunt weapon in juries of Ranjit Singh P.W. and the extensive damage caused seen, it becomes evident that there were more than one assailant inflicting blunt weapon injuries.
Thus there were three assailants as is evident from the result.
Besides shortly before the occurrence Ranjit Singh P.W. was plough ing the field and it is expected of a ploughman to be carry ing a stick.
The very fact that he did not claim to have used any goes to confirm that he was a victim of two assail ants who could use their blunt weapons against him as well as against the deceased.
The medical evidence is thus con sistent and corroborative in connecting all the three appel lants, that is, in Wazir Singh having used his kulhari and Dalip Singh and Darbara Singh having used their lathis in the commission of the crime.
On the eye witness account and the corroboration it receives from medical evidence, their guilt is established even if the evidence of recovery of weapons is kept aside.
We have thus no reason to question the ultimate result arrived at by the High Court though we have our doubts about the reasoning employed by it to acquit Mohinder Singh co accused.
The next point urged was with regard to nature of the offence committed by the appellants.
We notice that out of 13 injuries on the dead body of Sadha Singh, six were in cised wounds and the remaining were blunt 593 weapon injuries.
Amongst the incised wounds the first one above described was by itself sufficient in the ordinary course of nature to cause death of the deceased.
That injury was positively attributed to Wazir Singh appellant who opened the attack but the remaining five incised wounds were not positively attributed to Wazir Singh appellant alone.
It can safely be assumed that some may have fallen in his share to be inflicted and others to Mohinder Singh co accused who has since been acquitted.
Even though Dr. B.M. Kapur has stated that all the incised wounds could have been caused by kulhar p.1 but that by itself cannot go on to conclude that all the incised wounds were caused by Wazir Singh appellant.
Distinguishing the role assigned to Wazir Singh in this manner, we take the view that on the infliction of the first incised wound on the head of the deceased, which was suffi cient by itself in the ordinary course of nature to cause death, and death did ensue, Wazir Singh appellant has ren dered himself liable to be adjudged guilty under section 302 I.P.C. Dr. B.M. Kapur has further opined that leaving aside injury No.1, injuries nos.2 to 13 were collectively sufficient to cause death in the ordinary course of nature.
In this collection we have five incised wounds and seven blunt weapon injuries.
The blunt weapon injuries are frac tures of bones of both the arms and legs.
Even though some of those blunt weapon injuries are extensive and grievious in nature because of the fracture of bones of the left fore arm, right fore arm, elbow, left leg and right leg, these by themselves cannot in the facts and circumstances of this case, be said to have been inflicted by the assailants other than Wazir Singh appellant with the intention of causing death, or in ratification of the act of Wazir Singh appellant.
But since extensive damage had been done to the limbs of Sadha Singh, after the infliction of vital injury No.1, it can safely by inferred that despite the assailant 's choosing non vital parts of the body for inflicting those injuries, they must be attributed the knowledge that by their concerted act they were likely to cause death of the decease, for which act they could be punishable under sec tion 304 part II of the Indian Penal Code.
The act was done while sadha Singh was alive.
The outcome of injury No.1 may or may not have been perceived by assailants other than Wazir Singh but they were satisfied in choosing and inflict ing injuries on non vital parts of the body of Sadha Singh, Which injuries were breaking bones of his arms and legs.
We have leaned towards this view also for the reason that Darbara 594 Singh, due to his young age being in teens, may have acted under the influence of his paternal uncle Wazir Singh, appellant and though he shared the common intention of causing extensive injuries to deceased Sadha Singh and injuries to Ranjit Singh P.W. he may not have shared the common intention of causing the former 's death but can definitely be attributed the knowledge that by his concerted act Sadha Singh could die.
Similarly Dalip Singh, a share cropper of his employer, Wazir singh and Mohinder singh, perhaps had acted under the influence of his employers but cannot in these facts be said to be a co participant in intentionally causing the death of Sadha Singh.
He too must be attributed the knowledge that by his act in concert with others he was likely to cause to death of the deceased.
It is worth reminding that neither of the two accused Darbara Singh and Dalip Singh are attributed any injury on any vital part of the body of the deceased.
Thus on the above analysis Darbara Singh and Dalip Singh, appellants are held guilty for offence under section 304 IPC, read with Section 34 IPC.
Resultantly we alter the conviction of Wazir Singh appellant to a plain one under section 302 IPC and maintain his life sentence.
His conviction and sentence under section 323/34 is also sustained.
The convictions of Darbara Singh and Dalip Singh appellants are altered to one under section 304 IPC read with section 34 IPC for which sentence of seven years rigorous imprisonment is imposed on each of them.
The appeals stand disposed of accordingly.
G.N. Appeals disposed of.
| IN-Abs | The appellants and two others were charged with and tried for offences under sections 148,302,149 and 323/149 IPC for causing the murder of one S and causing simple hurts to one R, both related to the accused.
The Trial Judge acquitted one of the five accused since no part of the actual occurrence except exhortations were attributed to him and convicted the other four accused under section 302/34 and 323/34 IPC, and sentenced them to life imprisonment and 6 months rigorous imprisonment respectively.
On appeal, the High Court acquitted one more accused on the ground that the medical evidence did not corroborate the claim that he used his kirpan with force as alleged by the prosecution.
The appeal preferred by the complainant against this acquittal,was dismissed by this Court.
The other three accused whose conviction and sentence were confirmed by the High Court, have preferred the present appeals.
It was contended on behalf of the appellants that the prosecution case has been discredited by the Courts render ing the same unacceptable resulting in the acquittal of two accused and for the same reasons, they also deserved acquit tal.
It was also contended that the evidence regarding recovery of weapons did not inspire confidence.
587 Disposing of the appeal, this court, HELD: 1.
There may be a tendency here and there to implicate a person in addition to actual assailants in a crime but substitution is rare and that cannot be the case here.
As is evident the parties are closely related.
The crime was committed in broad day light.
The witness is a stamped witness.
There was no reason for the prosecution to falsely evolve a case against the appellants.
The medical evidence is consistent and corroborative in connecting all the three appellants.
On the eye witness account and the corroboration it receives from medical evidence, their guilt is estab lished even if the evidence of recovery of weapon is kept aside.[592 C G] 2.
Out of 13 injuries on the dead body six were incised wounds and the remaining were blunt weapon injuries.
Amongst the incised wounds the first one was by itself sufficient in the ordinary course of nature to cause death of the de ceased.
That injury was positively attributed to the appel lant in the second case who opened the attack but the re maining five incised wounds were not positively attributed to him alone.
It can safely be assumed that some may have fallen to his share to be inflicted and others to the co accused who has since been acquitted.
Even though the Doctor has stated that all the incised wounds could have been caused by Kulhar P.1, that by itself cannot go to conclude that all the incised wounds were caused by the appellant in the second case.
Since he inflicted the first incised wound on the head of the deceased, which was sufficient by itself in the ordinary course to cause death, he has rendered himself liable to be adjudged guilty under section 302 IPC.
[592 H; 593 A_C] 3.
Since extensive damage had been done to the limbs of the deceased after the infliction of vital injury No.1, it can safely be inferred that despite the assailants ' choosing non vital parts of the body for inflicting those injuries, they must be attributed the knowledge that by their concert ed act they were likely to cause death of the deceased, for which act they could be punished under section 304 part II of the Indian penal Code.
The act was done while the de ceased was alive .
The outcome of injury No.1 may or may not have been perceived by the assailants except the appellant in the second case, but they were satisfied in choosing and inflicting injuries on non vital parts which injuries were caused by breaking the bones of his arms and legs.[593 F H] 4.
Due to his young age, being in teens, the appellant in the first case 588 may have acted under the influence of his paternal uncle, viz; the appellant in the second case.
Though he shared the common intention of causing extensive injuries to the de ceased and injuries to P.W.4 he may not have shared the common intention of causing death but can definitely be attributed the knowledge that by his concerted act the victim could die.
Similarly the share cropper had acted under the influence of his employers.but cannot be said to be a co participant in intentionally causing the death of the death of the deceased.
He too must be attributed the knowledge that by his act in concert with others he was others he was likely to cause the death of the deceased.
Also, no injury on any vital part of the body of the de ceased was attributed to either of these accused.
According ly, these appellants are held guilty of offence under sec tion 304 IPC, read with section 34 IPC, and not under section 302 IPC.[594 A D] 5.
The conviction of the appellant in second case is altered to a plain one under section 302 IPC and his life sentence is maintained.
His conviction and sentence under section 323/34 is also sustained.
The conviction of the other appellants are altered to one under section 304 IPC read with section 34 IPC for which a sentence of seven years rigorous imprisonment is imposed on each of them.[594 D,E]
|
Appeal Nos.
185 187 of 1993.
From the Judgment and Order dated 5.8.1991 of the Orissa Ad ministrative Tribunal, Bhubaneshwar in O.A. No. 679 of 1988.
246 B.A. Mohanty, A Mariarputham, Mrs. Aruna Mathur, Raju Rama chandran and A.K. Panda for the Appellants.
Shanti Bhushan, Prashant Bhushan, P.N. Misra, P. Gour, R.P. Wadhwani and C.N. Sreekumar for the Respondents.
The Judgment of the Court was delivered by MOHAN, J.
Leave granted in all the matters.
All these appeals can be dealt with under a common judgment since they are directed against the judgment and order dated August 5, 1991 passed by the Orissa Administrative Tribunal Bhubaneshwar in Original Application No. 679 of 1988.
Prakash Chandra Misra (Respondent 1 in all these appeals) was directly recruited to the Orissa State Forest Service Class 11 by the Orissa Public Service Commission in the year 1979.
After completion of training for two years at Forest Service College, Burnihat, Assam he was appointed as an Assistant Conservator of Forests.
He moved the Administrative Tribunal challenging the seniority of the Forest Rangers who were members of Orissa Subordinate Forest Service and were promoted as Assistant Conservator of Forests, between his recruitment and the joining of service after training.
According to first respondent, the promotees who were promoted in the years 1981 and 1982 ought to have been assigned a place below him as per recruitment rules.
The seniority of direct recruits vis a vis the promotees required to be decided on the basis of the Orissa Forest Service Class II Recruitment Rules, 1959.
It was further urged that he was recruited in the year 1979 through Public Service Commission.
He had to undergo training for two years and thereafter he was appointed in the year 1981.
Therefore, the short question was whether the respondent was to be assigned seniority from the year 1979 (the year of recruitment) or from the year 1981 (the year of appointment).
The Tribunal observed that Rule 9(a) of 1959 Rules read with Rule 6 would point out that the promotee officers were to be on probation for a period of two years like the direct recruits.
Such direct recruits were also sent for training to the Forest Training College.
The 1959 Rules used the word 'recruited ', the 1984 Rules used the word "appointed".
These words must be assigned proper meaning.
247 Inasmuch as the direct recruits were to be treated as seniors to promotees 'en bloc ' the first respondent must be treated as a recruit of 1979 and ought to be treated as senior to promotees.
The next question that came up for consideration was as to the application of quota rule.
On this, the Tribunal held that both in the 1959 Rules as well as in the 1984 Rules, the promotees and direct recruits will be in the proportion of 1/3rd and 2/3rd.
In the present case, 1959 Rules being applicable there was no doubt that promotees have substantially encroached upon the quota for direct recruits.
In view of that, promotions which have been made more than the quota prescribed in the rules have to be either adjusted against future vacancies in the promotion quota or reverted.
Such promotions beyond the prescribed quota are illegal.
In view of these findings, the Tribunal held that the first respondent was entitled to be treated (i) as a direct recruit of 1979 and (ii) he shall be confirmed and promoted on the basis of being direct recruit of 1979.
His seniority was to be fixed on the basis of being a direct recruit of 1979 within the 2/3rd quota for direct recruits.
These directions were to be implemented within six months from the date of the order.
On these terms, the petition of the first respondent came to be allowed.
Aggrieved by this judgment, SLP (C) No. 615 of 1992 has come to be preferred by Prafulla Kumar Swain, a promotee (Respondent No. 91 before the Orissa Administrative Tribunal).
SLP (Civil) No. 1604 of 1992 has come to be preferred by Bijay Kishore Mohanty and 10 others (respondents before the Orissa Administrative Tribunal).
The State has preferred SLP (C) No. 4186 of 1992.
Mr. Raiu Ramachandran, learned counsel for the appellant in SLP (C) No. 1604 of 1992 would submit that the first respondent was selected for undergoing superiod Forest Service Course at the Forest Service College, Burnihat, Assam in the year 1979.
Having regard to the terminology of the order wh ich says 'he was selected", it cannot be held that he could lay a claim to the post.
The Orissa Forest Service Class II Recruitment Rules, 1959 govern the case in question.
The Tribunal had gone wrong in its interpretation of the various 248 rules.
First of all, it is incorrect to hold that they are merely administrative instructions.
On the contrary, they are rules framed under proviso to Article 309 of the Constitution of India, as a result of which, they have statutory force.
Having held that both the direct recruits as well as the promotees undergo probation for a period of two years, properly speaking, the period of training for the direct recruits could not count as service.
That is precisely what is stated in clause (c) of Regulation 12.
If under the said Regulation the appointment to service is to commence only after the successful completion of training there is no justification whatever to conclude that the date of recruitment could be the relevant date for the purposes of reckoning the seniority.
Recruitment in the submission of the learned counsel would merely mean enlistment or selection.
That is why Regulation 13 says the "selected candidates".
Even Rules 9 has not been appreciated in its proper perspective.
As regards the ratio of 2/3rd and 1/3rd between direct recruits and promotees the relevant rule that is applicable is Rule 5(3).
That sub rule contains a provision: "Save as otherwise decided by Government".
If, therefore, it has been otherwise provided by the Government, this ratio of 2/3rd and 1/3rd does not apply.
In other words, there is overriding power vested in the Government.
Hence, the ratio is flexible and contemplates a departure whenever the Government otherwise decides.
Here again, the Tribunal has gone wrong.
In Direct Recruit Class II Engineering Officers ' Association and Ors.
vs State of Maharashtra and Ors.
, ; at page 938 this Court has taken the view that where the rules permit the authorities to relax the provisions relating to the quota, ordinarily a presumption should be raised that there was such relaxation when there is a deviation from the quota rule.
In any event, the placement of Respondents 42 to 94 as per Civil List corrected upto 1982 was published in the year 1985 by the State Government.
They are the promotees from amongst the various Rangers in Subordinate Service Class 11 as Assistant Conservator of Forests in 1980.
This was at a time when the first respondent was undergoing training at Burnihat, Assam.
If really, therefore, the gradation list was published as early as 1985, there is absolutely no justification for the first respondent to approach in the year 1988.
The judgment of the Tribunal has resulted in unsettling the settled matters.
For these reasons, it is prayed that the order of the Tribunal may be reversed.
Mr. A.K. Panda, learned counsel for the State adopts the arguments 249 of Mr. Raju Ramchandran, learned counsel for the appellant.
Mr. Shanti Bhushan, learned counsel appearing for the first respondent would submit that recruitment is different from appointment.
The definition of the service is contained under Rule 3(e) which states "service" means Orissa Forest Service Class 11.
The service consists of Officers of Class 11 who are designated as Assistant Conservator of Forests.
Rule 5(c) talks of recruitment to Class II.
In sub rule (a) a reference is made to Regulation.
What is contemplated hereunder is nothing more than the competitive examination prescribed under Regulation.
Therefore, Regulation 12 cannot be pressed into service.
When an officer is recruited to Class 11 Service it does not mean that only from the date of appointment his seniority is to be reckoned.
The very fact that his recruitment to the service is enough.
The argument of the other side that the period of training will have to be excluded merely because both the direct recruits as well as the promotees undergo probation is untenable.
The question is, whether the direct recruits who are definitely superior could be pushed lower down to the promotees.
In Service Law the direct recruits are always treated on a better footing than the promotees.
Even though the relevant years of recruitment and promotion of persons involved are essentially of the years 1979 to 1984, yet it is 1984 Rules which will govern.
Rule 24 of the 1984 Rules contains the repeal and saving clauses.
That says that all the officers who were appointed prior to the repeal shall be deemed to have been appointed under the provisions of 1984 Rules.
If that be so, the aforesaid Explanation to Rule 16 must apply.
Thus it is clear as on today the seniority by the 1984 Rules.
The same has clearly provided that the date of appointment of direct recruits for the purposes of seniority will be deemed to be 2 years prior to the date of appointment to a working post.
Since the normal period of training is 2 years this cannot but mean that the date of appointment of direct recruits for the purposes of seniority will be the date of selection.
If the seniority is not a vested right it is well open to the Government to alter the same by making a departure from 1959 and providing for the same in the amended 1984 Rules.
Learned counsel draws our attention to Indian Forest Service (Appointment by Promotion) Regulations of 1966.
In the said Regulations, Regulation 5 in its Explanation 11 states that in computing the period of 250 continuous service the period of training which an officer had undergone is to be included.
If that is the intention for Grade I Service, certainly a different intention cannot be spelt out under the 1959 Rules for Grade 11 Service.
This is also evident when the 1984 Rules are looked at.
There the rules clearly lay down in Rules 16 in its Explanation that the training period is not to be excluded.
When rules specifically prescribe the quota as 1/3rd the Government cannot wriggle out of the situation that a saving provision had been made which is factually not so in this case.
For this purpose, the Government has relied upon the proceedings held on 5.1.80 and 7.1.80.
The proceedings of Departmental Promotion Committee will not constitute the Government order.
All Government orders must be issued under the signature of the Minister according to the Rules of Business.
In the present case, no such order of the Minister regarding the alteration of quota is produced.
The statutory rules lay down a clear legislative policy with regard to fixation of quota so that the brightest talent be made available for the service.
As to what would be the consequence of violating a statutory rule has come to be laid down in Keshav Chandra Joshi and Ors.
vs Union of India, [1990] Supp. 2 SCR 573 at page 586.
That ratio squarely applies to the facts of the case.
The point relating to laches was never argued before the Tribunal.
Therefore, the appellant cannot be allowed to argue at this stage.
We will now proceed to set out the necessary factual background.
The Orissa Public Service Commission through an advertisement dated 8.10.64 invited applications from open market for admission of candidates to a competitive examination for selection to the posts of Orissa Forest Service Class II service.
18 candidates were selected.
They were sent for training at Indian Forest College, Dehradun during the year 1965 67.
Only on successful completion of the training they could be appointed to Class 11 Service.
One of the candidates who was successful in completion of training and who received the posting order 233/67 came forward with a writ petition before the Orissa High Court that he had been assigned in the list of gradation a rank junior to the promotees who were confirmed by Service Commission after the recruitment of the petitioner.
The scope of 1959 Rules came up for consideration and the High Court concluded that the recruitment to Class II Service was complete only after successful 251 completion of two years ' training in the Forest College.
Relief was granted on that basis.
That came up in appeal to this Court in Civil Appeal Nos.
2051 52 of 1974 State of Orissa vs Manoranjan Rath & Ors.
By an order dated 7th of January, 1988, finding that there was no ground to interfere with the judgment of the High Court, the appeals came to be dismissed.
While the matter stood thus one of the directly recruited officers (Prakash Chandra Misra, respondent No.1) filed a petition before the Tribunal challenging the seniority.
He contended that the promotees who were promoted in the year 1981 82 ought to have been assigned a place lower than him as per recruitment rules.
Two main contentions were: 1.
His services should be reckoned from the date of recruitment itself and not from the date of actual appointment.
Therefore, the exclusion of the period of two years ' training for the purposes of reckoning the seniority was illegal.
The promotees had been appointed in excess of the quota which the rules had prescribed.
There is no specific order of Government providing otherwise.
The Tribunal accepted these contentions and held that the petitioner before it being a direct recruit of the year 1979 must be treated as such and had to be confirmed and promoted on the basis of being a direct recruit of the year 1979.
This should be done within the 2/3rd quota for direct recruits.
Accordingly the petition was allowed.
It is under these circumstances, special leave petitions have come to be preferred.
Having regard to the arguments two points arise for our determination: (1) Whether the direct recruits are to be considered as recruited in the year in which they were selected by the Service Commission and sent for training into the Forest College or in the year in which they were actually appointed to a working post on completion of training? (2) Whether there was a quota fixed for promotees in the Orissa Forest Service during the relevant years.
Even at the outset, we may point out that the Tribunal has grossly erred in holding that the Orissa Service Class 11 Recruitment Rules of 1959 are mere administrative instructions.
On the contrary, these rules were framed under the proviso to Article 309 of the Constitution and they are 252 statutory in character.
Section 3(e) of 1959 Rules says 'Service" means the Orissa Forest Service Class II.
Rule 5 reads as under: "5.
(1) Recruitment to Class II service shall be made (a)by direct recruitment on the result of competitive examination as per Regulation I appended to this rule; (b)by promotion as per the Regulation 11 appended to this rule governing promotions to the Orissa Forest Service, Class II; (2)Government shall decide from time to time the number of vacancies in class II Service to be filled by direct recruitment and by promotion.
(3)Save as otherwise decided by Government, number of posts of the service filled up by promotion shall not exceed one third of the total number of such posts in the cadre.
" Rule 9 is as follows: "9(a) When officers are recruited by promotion and by direct recruitment during the same year the directly recruited members shall be considered senior to the promoted members irrespective of their dates of appointment.
(b)In case of promotion, seniority may be determined in accordance with the positions the promoted officers held in the recommendation of Public Service Commission made according to merit.
(c)In case of direct recruitment, seniority may be determined according to the achievements in the examination in the Forest College.
" Besides these rules there are also Regulations dealing with direct recruitment.
It may be stated that the Regulations prescribe the condition of eligibility (Regulation 1(2)), educational qualification (Regulation I(6)), written test by means of a competitive examination (Regulation 18(a)) and 253 a viva voice test.
The candidates are to be summoned for viva voice test on securing the minimum qualifying marks prescribed by the Commission.
Thereafter the Commission prepares a list of successful candidates provided they are found fit in the physical test as prescribed under Regula tion 1(5).
The fist of successful candidates is to be forwarded to the Government for approval.
Regulation 12 is important for our purposes.
Under that Regulation the finally selected candidates are required to undergo two years training.
During the period of pendency a consolidated monthly allowance of Rs. 150 as stipend is paid.
Under clause (b) of that Regulation he is required to execute a bond provided for in Appendix A. Regulation 12(c) in unmistakable terms says the period of training will not count as service under Government.
Such service will count only from the date of appointment to the service after successful completion of the course of training.
(Emphasis supplied).
We must give full meaning and effect to this Regulation.
At this stage, we will proceed to decide as to the meaning and effect of the words "recruitment" and "appointment".
The term "recruitment" connotes and clearly signifies enlistment, acceptance, selection or approval for appointment.
Certainly, this is not actual appointment or posting in service.
In contradistinction the word "appointment" means an actual act of posting a person to a particular office.
Recruitment is just an initial process.
That may lead to eventual appointment in the service.
But, that cannot tantamount to an appointment.
No doubt, Rule 5 talks of recruitment to Class II Service.
We consider these are two sources of recruitment.
Nowhere in the Recruitment Rules of 1959 it is specified that the services of a direct recruit under the Government shall be reckoned from the date of selection in the competitive examination.
On the contrary, Regulation 12(c) is very clear that the period of training is not to be reckoned as Government service.
It is admitted before us that after the successful completion of training when the appointment order is issued the direct recruits are put on probation.
Similar is in the case of the promotees.
Both of them undergo probation.
Therefore, in the light of these provisions it is not possible for us to accept the contention advanced on behalf of the direct recruits that their seniority must be reckoned from the date of their recruitment.
This is why Mr. Shanti Bhushan, learned counsel for the direct 254 recruits, respondents, would urge that 1984 Rules would govern.
Rule 16 in Explanation provides thus: "Explanation For the purpose of clause (a), the year of appointment of direct recruits shall be deemed to be the year arrived at after deducting two years from the date of successful completion of the training in the Forest College." He would urge that in view of Rule 24 all the appointments must be deemed to have been made under these Rules.
Rule 24 reads thus: "24.
All rules and orders corresponding to these rules and in force immediately before the commencement of these rules are hereby repealed: Provided that nothing in these rules shall be construed as affecting or invalidating the appointments already made or orders issued in accordance with the provisions of any rules or orders in force immediately before the commencement of these rules and that all such appointments and orders shall continue in force and shall, as far as may be, be deemed to have been made and issued under the appropriate provisions of these rules: Provided further that Government may, by order, direct that any of the provisions of these rules shall not apply to the Officers already appointed under the rules and orders in force immediately before the commencement of these rules or shall apply to them with such modifications as the Government may specify in that order. ' Therefore, according to him, the benefit of Explanation to Rule 16 quoted above must apply.
We find it impossible to accept this contention for the following reasons: 1.Since the appointments in question have been made under 1959 Rules, 1984 Rules will be inapplicable.
2.The 1984 Rules came into force only when they were published in the Official Gazette on December 21, 1984.
255 3.
Explanation under Rule 16 is a substantive provision.
Therefore, it cannot be retrospective.
As regards Rule 24, the proviso clearly states that the Rules cannot be construed as affecting or invalidating the appointments already made.
Therefore, if any right has been acquired or any privilege had accrued that would remain unaltered.
Therefore, these appointments which are governed by the 1959 Rules will continue notwithstanding the repeal.
Clauses (a) and (e) of Section 6 of the also point this position: 6.
Effect, of repeal: Where this Act, or any (Central Act) or Regulation made after the commencement of this Act, repeals any enactment hitherto made, or hereafter to be made, then, unless a different intention appears, the repeal shall not (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) (c) (d) (e) effect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid.
" Coming to the deeming clause, that creates a legal fiction; the Court is to ascertain for what purpose the fiction is created.
In Justice G.P. Singh Principles of Statutory Interpretation (Fourth Edition 1988) at page 208 it is stated thus: "As was observed by James, LJ. : 'When a statute enacts that something shall be deemed to have been done, which in fact and in truth was not done, the court is entitled and bound to ascertain for what purposes and between what person the statutory fiction is to be resorted to '. 'When a legal fiction is created ', stated S.R. Das, J. "for what purposes, one is led to 256 ask at once, is it so created?" Therefore, by the operation of deeming clause it only enables appointments made under 1959 Rules to be continued under 1984 Rules.
Certainly, by the repeal of 1959 Rules it cannot mean all those appointments cease.
Nor again, the substantive provision of Rule 16, as stated above.
Would govern.
Therefore, Rule 24 has no application.
Thus, we conclude that the seniority of direct recruits will have to be reckoned only from the date of appointment and not from the date of recruitment.
The gradation list which was impugned by the first respondent before the Tribunal was prepared in pursuance of the order of this Court read with the aforementioned judgment of the Orissa High Court and this is so stated in a letter dated 4th January, 1989 written by the Deputy Secretary to the Government of Orissa, Forest, Fisheries and Animal Husbandry Department, Bhubaneshwar to the Principal Chief Conservator of Forest, Orissa, Bhubaneshwar (Annexure II to the Special Leave Petition in S.L.P. (C) No. 1604 of 1992).
That this gradation list had been framed upon the aforesaid basis also does not appear to have been brought to the attention of the tribunal.
The gradation list has been in operation over several years.
We see no reason to unsettle the settled position.
In this behalf we draw support from the judgment of this Court in Direct Recruit Class II Engineering Officers ' Association vs State of Maharashtra and others.
; , We may also note that though the same question was before this Court a little before the petition was made by the first respondent before the Tribunal, no effort was made by the first respondent to intervene and place before this Court his point of view.
It is inconceivable that he would not have known that the same question was before this Court.
Turning to the quota rule the records reveal that the Government had clearly taken a decision to increase the number of posts to be filled up by promotion in excess of the 1/3rd of total posts in the cadre on administrative grounds connected with nationalisation of Kendu Leaf Trade in 1972 73 in the interest of public due to non availability of direct candidates trained in the Indian Forest College, Dehradun.
It is not correct to say that Government have decided that the quota of direct recruitment which will be encroached upon by the promotees will be released as and when direct recruits are available.
In fact, it was decided that the 4 direct 257 candidates who were by then under diploma course Training in forestry at Dehradun in the event of their coming out successful during 1974 from the training College may be appointed and in consequence, the junior most promotee officers whom were appointed on ad hoc basis as aforesaid pending concurrence of Orissa Public Service Commission will have to be reverted to make room for them.
No promotion to Orissa Forest Service Class 11 could be made on regular basis without obtaining concurrence of the Orissa Public Service Commission as per Clause 2(h) of Regulation 11 appended to the Orissa Forest Class II Recruitment Rules, 1959.
In view of the urgency to implement the Kendu Leaf Scheme in 1973, 39 Forest Rangers were appointed to Class 11 Forest Service on an 'ad hoc ' basis for a period of six months or till concurrence of the Commission is received for their final appointment.
The 39 Forest Ranger had already been promoted to Orissa Forest Service Class 11 on regular basis on the recommendation of the Orissa Public Service Commission.
In view of this, it is not correct to say in that the decision taken by Government for promoting excess promotees in the year 1972 was only to promote them on an ad hoc basis within that quota.
Hence, to contend that the promotees would obviously have to yield to direct recruits who came in subsequently within their quota and would consequently also not be eligible for seniority above direct recruits, is untenable.
We may also add that there were earlier proceedings in Transfer Application No.147 of 1986 before the Orissa Administrative Tribunal.
The decision was rendered on 3.7.87.
SLP (C) No. 1624 of 1.988 filed against the said decision was dismissed by this Court on 18.1.89.
There was also an application, OJ.C. No. 588 of 1972 before the Orissa High Court in Manoranjan Rath vs State of Orissa and others.
The decision was rendered on 10.6.74.
Against the said decision Civil Appeal Nos.
2051 52 of 1974 were preferred to this Court which were dismissed on 7.1.88.
The Tribunal in the above judgment had held on perusal of the departmental file that the Government had taken decision to increase the number of posts to be filled up by promotion on administrative grounds.
This was necessitated because of the nationalisation of Kendu Leaf Trade.
Action to fill up the posts by promotion of Forest Rangers in excess of 1/3rd of the total posts in the cadre was taken in pursuance of the decision of the Government.
Though the actual decision of the Government is not produced before us yet the proceedings of the meetings of the Departmental Committee held on 5.1.80 and 7.1.80 to select Forest Rangers suitable for promotion took note of 258 Rule 5(3) which contains the saving clause.
"Save as otherwise decided by Government, number of posts of the service filled up by promotion shall not exceed one third of the total number of such posts in the cadre.
" These proceedings speak volumes.
The proceedings were given effect to by promotions.
Such promotions in excess of the prescribed quota had to be made since no more directly recruited candidates were available during that year.
The Government did not want its work to be hampered by allowing the posts were to remain vacant.
While seeking the concurrence of Orissa Public Service Commission to the decision taken by the Departmental Committee held on 5.1.80 and 7.1.80, the proceedings of the Committee explain the circumstances under which the Government decision was taken.
From this point of view, we find the decision in Keshav Chandra Joshi 's case (supra) has no application here.
Therefore, the promotions given in excess of 1/3rd quota are valid.
There is no justification to push down the promotees in seniority.
The promotion in excess of the prescribed quota was necessitated by the exigencies and in the interest of the public.
It is supported by a conscious decision of the Government which is permissible under Rule 5(3).
Therefore, we reject the arguments advanced on behalf of the direct recruits in this regard.
A reference was made to the Indian Forest Service (Appointment by Promotion) Regulations, 1966, particularly Regulation 5.
It is also urged that from the post of Class 11, promotion is to be made to Class 1.
We are of the view that since the appointments in question are regulated under Orissa Forest Service Class II Recruitment Rules, the said Regulations of 1966 have no application.
Further, as pointed out above, the Orissa Rules were framed under proviso to Article 309 of the Constitution of India and have statutory and binding force.
Now comes the proverbial last straw on the camel 's back.
There have been laches on the part of the direct recruits in seeking the remedy.
When the list was published in 1985 nothing prevented them to approach earlier.
This is the point to be put against them.
That this position was known to the direct recruit (Prakash Chandra Mishra) is clear from paragraph 18 of his petition before the Tribunal.
It 259 reads thus.
Therefore, placement of Respondent Nos.
42 to 94 as per Civil List corrected upto 1982 published in the year 1985 by the State Government who are promotees from amongst the Forest Rangers in Subordinate Service to Class II Service as Assistant Conservator of Forests in the year 1980 when this applicant was undergoing training at Burnihat, Assam, is patently illegal and an act without jurisdiction by the State Government of Orissa. ' (Emphasis supplied) We do not want to unsettle settled matters which will lead to several complications.
In view of the foregoing discussion, we set aside the judgment of the Tribunal.
The appeals will stand allowed.
However, there shall be no order as to costs.
V.P.R. Appeals allowed.
| IN-Abs | The Orissa Public Service Commission through an advertisement dated 8.10.64 Invited applications for admission of candidates to a competitive examination for selection to the posts of Orissa Forest Service Class II Service.
The 18 selected candidates were sent for training at the Indian Forest College during the year 1965 67.
One of the candidates, who successfully completed the training was appointed to Class 11 Service.
He filed a writ petition in the High Court, as he was assigned in the list of gradation a rank junior to the promotees, who were confirmed by Service Commission after his recruitment The High Court held that the recruitment to class II Service was complete only after successful completion of two years ' training in the Forest College.
The appeals by special leave flied against the High Courts 242 Judgment were dismissed by this Court.
In 1979, the respondent No. 1 (in all the present appeals) was directly recruited to the Orissa State Forest Service Class II by the State Commission.
He was appointed as an Assistant Conservator of Forests, after his completion of training for two years at the Forest Service College.
Respondent No. 1 moved the Administrative Tribunal challenging the seniority of the Forest Rangers, who were members of the Orissa Subordinate Forest Service and were promoted as Assistant Conservators of Forests, when the respondent was undergoing his training.
Respondent contended before the Tribunal that the seniority of direct recruits vis a vis the promotees required to be decided on the basis of the Orissa Forest Service Class II Recruitment Rules, 1959; that his services should be reckoned from the date of recruitment Itself and not from the date of actual appointment; that the exclusion of the period of two years ' training from the purposes of reckoning the seniority was illegal; and that the appointment of the promotees in excess of the quota prescribed by the Rules and in the absence of any specific order of Government providing otherwise was illegal.
Allowing the petition, the Tribunal held that the respondent No.1 (in the present appeals) was entitled to be treated as a direct recruit of 1979 and he be confirmed and promoted on being direct recruit of 1979 and his seniority to be fixed on the basis of being a direct recruit of 1979 within the 2/3rd quota for direct recruits.
The present appeals by special leave were preferred by the aggrieved parties against the judgment of the Tribunal.
The appellant in SLP (C) No. 1604 of 1992 submitted that the respondent No.1 was selected for undergoing superior Forest Service Course at the Forest Service College in 1979; that having regard to the terminology of the order which stated, "he was selected", it could not be held that he could lay a claim to the post; that the Tribunal had gone wrong in its interpretation of the rules that having held that both the direct recruits as well as the promotees were to undergo probation for a period of two years, the period of training for the direct recruit could not count as service; that the ratio of 2/3rd and 1/3rd between direct recruits 243 and promotees did not apply, if the Government provided otherwise; that the Civil List corrected upto 1982 was published in 1985; and that the judgment of the Tribunal resulted in unsettling the settled matters, hence same to be reversed.
The State adopted the arguments of the appellant in SLP (C) No. 1604/92.
The respondent No.1 submitted that recruitment was different from appointment; that when an officer was recruited to Class 11 Service if did not mean that only from the date of appointment his seniority was to be reckoned, that the argument that the period of training to be excluded merely because both the direct recruits as well as the promotees undergo probation was untenable; that when rules specifically prescribed the quota as 2/3rd and 1/3rd, the Government could not wriggle out of the situation that a saving provision was made which was factually not so in this case; that the point relating to laches which was never argued before the Tribunal, could not be raised before the Court.
Allowing the appeals, this court, HELD, 1.01.
The term 'recruitment "connotes and clearly signifies enlistment, acceptance, selection or approval for appointment Certainly, this Is not actual appointment or posting in service.
In contradistinction, the word 'appointment ' means an actual act of posting a person to a particular office.
[253E] 1.02.
Recruitment is just an initial process. 'Mat may lead to eventual appointment in service.
But, that cannot tantamount to an appointment.
No doubt, Rule 5 talks of recruitment to Class 11 Service.
[253E] 1.03.
Nowhere in the Recruitment Rules of 1959 it is specified that the services of a direct recruit under the Government shall be reckoned from the date of selection in the competitive examination.
On the contrary, Regulation 12(c) is very clear that the period of training is not to be reckoned as Government service.
[253F] 1.04.
Under Regulation 12 the finally selected candidates are required to undergo two years training.
During the period of pendency & consolidated monthly allowance of Rs. 150 as stipend is paid.
Under clause (b) of that Regulation he is required to execute a bond provided for 244 in Appendix A. Regulation 12 (c) in unmistakable terms says the period of training will not count as service under Government.
Such service will count only from the date of appointment to the service after successful completion of the course of training.
[253B C] 1.05.
After the successful completion of training when the appointment order Is issued the direct recruits are put on probation.
Similar Is in the case of the promotees.
Both of them undergo probation.
[253G] 1.06.
The seniority of direct recruits will have to be reckoned only from the date of appointment and not from the date of recruitment.
[253G] 2.01.
The Government had clearly taken a decision to increase the number of posts to be filled up by promotion in excess of the 1/3rd of total posts in the cadre on administrative grounds connected with nationalisation of Kendu Leaf Trade in 1972 73 in the interest of public due to non availability of direct candidates trained In the Indian Forest College, Dehradun.
[256G] 2.02.
It is not correct to say that Government have decided that the quota of direct recruitment which will be encroached upon by the promotees will be released as and when direct recruits are available.
[256H] 2.03.
Hence, to contend that the promotees would obviously have to yield to direct recruits who came in subsequently within their quota and would consequently also not be eligible for seniority above direct recruits, is untenable.
[257D] 2.04. ]Me promotions given in excess of 1/3rd quota are valid.
There is no justification to push down the promotees in seniority.
The promotion in excess of the prescribed quota was necessitated by the exigencies and in the intersest of the public.
It is supported by a conscious decision of the Government which is permissible under Rule 5(3).
[258D] Keshav Chandra Joshi and Ors.
vs Union of India, [1990] Supp. 2 SCR 573 at page 586, distinguished.
Direct Recruit Class II Engineering Officers Association and Ors.
vs State of Maharashtra and Ors.
, ; at page 938; SLP (C) No. 1624 of 1988 Disposed of on 18.01.89; CA.
2051 52 of 1974 Disposed of on 7.1.88, referred to.
245 3.01.
By the operation of deeming clause it only enables appointments made under 1959 Rules to be continued under 1984 Rules.
Certainly, by the repeal of 1959 Rules It cannot mean all those appointments cease.
Nor again, the substantive provision of Rule 16 would govern.
Therefore, Rule 24 has no application.
[256A B] 3.02.
Since the appointments in question have been made under 1959 Rules, 1984 Rules will be inapplicable.
The 1984 Rules, came into force only when they were published in the Official Gazette on December 21, 1984.
Explanation under Rule 16 is a substantive provision.
Therefore, it cannot be retrospective.
As regards Rule 24, the proviso clearly states that the Rules cannot be construed as affecting on invalidating the appointments already made.
Therefore, if any right has been acquired or any privilege had accrued that would remain unaltered.
Therefore, these appointments which are governed by the 1959 Rules will continue not withstanding the repeal.
[254H, 255A B] 3.03.
Since the appointments in question are regulated under Orissa Forest Service Class 11 Recruitment Rules, the Indian Forest Service (Appointment by Promotion) Regulations of 1966 have no application.
The Orissa Rules were framed under proviso to Article 309 of the Constitution of India and have statutory and binding force.
[258F] G.P. Singh: Principles of Statutory Interpretation Fourth Edition 1988, at page 208, referred to.
There have been laches on the part of the direct recruits in seeking the remedy.
When the list was published in 1985 nothing prevented them to approach earlier.
This is the point to be put against them.
[258G] 4.02.
The gradation list has been in operation over several years.
There is no reason to unsettle the settled position.
[256E] Direct Recruit Class II Engineering Officers ' Association vs State of Maharashtra and others; , , referred to.
|
Appeal No. 47 of 1979.
From the Judgment Order dated 20.1.77 of the Gujarat High Court in Second Appeal No. 90 of 1976.
Krishan Kumar for Vimal Chandra section Dave for the Appellants.
Ms. Meenaksh Arora for Anip Sachthey for the Respondent.
The Judgment of the Court was delivered by ANAND, J.
This appeal by special leave, is directed against the judgment of the Gujarat High Court dated 20th of January, 1977 in Second Appeal No. 90 of 1976.
The plaintiffs appellants are the farmers of the Village Morzar under Bhanwad Taluka of Jamnagar District.
Their lands are situated on the outskirts of the village.
Under the Vartu Dam Irrigation Scheme, the defendant State proposed to construct a Dam on river Vartu and prepared a sketch, indicating the passage of the canal from Vartu Dam and for that purpose, it proceeded to acquire land through which the canal was proposed to run.
The plaintiffs appellants apprehended serious damage to their lands by the passing of the canal through their lands and they filed a Regular Civil Suit in 1966 against the defendant State, seeking to restrain it from implementing the Irrigation Scheme, as proposed.
Suit was registered and defendants were summoned.
During the pendency of the suit, it appears that an agreement was arrived at between the parties and it was agreed that the canal from Vartu Dam would be run as per the line demarcated in red in the map appended to the deed of agreement Ex.45.
As a result of the said agreement the suit was unconditionally withdrawn by the plaintiffs on 24.11.1966.
Somewhere in 1972, the plaintiffs appellants discovered that the State Government was going back from the agreement and alignment of the canal was being undertaken contrary to the alignment reflected in the map appended to the agreement Ex.45.
They, therefore, filed a fresh suit for declaration to the effect that the agreement, dated 7.11.1966, entered into between them and the respondents through its Executive Engineer, Irrigation Department Jamnagar, was binding on the parties and that the parties were bound to act according to the terms of the said agreement and for an injunction, restraining the defendant State from going back on the agreement.
This suit of the plaintiffs appellants was contested and the following issues were framed 371 (1) Whether the suit agreement dated 7.11.1966 is not binding to the defendant ? (2) If it is binding whether the plaintiff prove that they have complied with the terms and conditions of this agreement? (3) Whether the suit as framed is not maintainable? (4) Whether the suit is bad for the mis joinder of the plaintiffs and the cause of action? (5) Whether the suit is not maintainable as the agreement dated 7.11.1966 has not been registered of because no compromise decree had been passed in terms of this agreement? (6) Whether the suit is not in time? (7) Whether the plaintiffs are entitled to the declaration sought? (8) Whether the plaintiffs are entitled to get the permanent injunction as prayed for by them? (9) What order? Issues 1 to 8 were decided in favour of the plaintiffs appellants and against the defendant State.
The Trial Court decreed the suit and declared that the suit agreement dated 7.11.1966 entered between the plaintiffs and the defendants through its executive engineer, was binding on the parties and that the parties were bound to act in accordance with the terms of the said compromise the defendant state was permanently restrained from going back from the agreement and act otherwise than as per the terms of the same.
The State of Gujarat preferred an appeal in the Court of District Judge Jamnagar against the judgment and decree of the Trial Court.
During the hearing, the parties confined their arguments to the following two points (1) Whether the agreement dated 7.11.66 is binding to the 372 State of Gujarat? (2) Whether the plaintiffs are entitled to the reliefs, granted to them by the trial court? The appellate court answered both the questions in the affirmative and by its order dated October 20, 1975 confirmed the judgment and decree of the trial court.
The appeal of the State of Gujarat was dismissed.
The State filed a Second Appeal in the High Court.
The High Court examined the agreement dated 7.11.1966, exhibit 45 which is in Gujarati and is described as Rojkam on the subject of the alignment of Vartu Canal.
The High Court noticed that the Rojkam refers to the filing of the suit in the Civil Court and the meeting between the Executive Engineer and the occupants of land and proceeded to recite that on the aforesaid subject there was discussion of the Executive Engineer with the occupants and thereafter both the sides have amicably settled(compromised) the dispute with regard to the alignment of the canal.
The Rojkam further records that both the sides have agreed to the alignment shown in rose colour in the map.
The Rojkam then records: "The Executive Engineer Mr. B.V. Nanavati having assured of getting necessary alterations as aforesaid made, they (i.e., the plaintiffs or the occupants) have shown willingness to withdraw unconditionally the suit filed in Civil Court.
" The Rojkam is signed by the Executive Engineer as also by the occupants.
Before the High Court, the main plea raised by the State was that the alleged compromise/agreement was not binding upon the State.
It was stated that the State does not admit any agreement made by the Executive Engineer either on behalf of the State or as a representative of the State and, therefore, the so called agreement did not bind the State Government.
It was asserted by the State that the Executive Engineer had no authority to agree on behalf of the State Government as he was not the representative of the Government.
Similar plea had been raised before the trial court and the lower appellate court but was rejected.
The High Court, however, accepted the plea of the State and found that the courts below had erred in ignoring the mandatory provisions of Article 299 of the Constitution of India which mandates that all contracts made in the exer 373 cise of the executive power of the Union or of a State shall be expressed to be made by the President or by the Governor of a State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall executed on behalf of the President or the Governor by such persons and in such a manner as he may direct or authorise.
The High Court found that for non compliance with the provisions of Article 299(1) of the Constitution of India which are mandatory in character, the agreement exhibit 45, was a null and void document.
The High Court then observed : "Apart from the question whether the Executive Engineer in the present case was directed or authorised to execute this agreement on behalf of the State Government, it is clear on the face of the document Ex.45 itself that the alleged agreement contained therein is not expressed to be made by the Governor.
This position is incontrovertible and even Mr. Shah for plaintiffs respondents was not able to show that the document Exh.45 contains an agreement expressed to be made by the Governor.
Really speaking, on a correct interpretation of this document Exh.45, it only contains basis of the compromise terms between the Executive Engineer and the occupants (who probably were plaintiffs of the earlier suit) as regards the change of alignment; and pursuant to which compromise the plaintiffs agreed to withdraw the suit.
The Governor or the State Government is nowhere in the picture if we go through this agreement.
Therefore, assuming that the document contains an agreement in reality it is an agreement not by the Governor or the state Government but by the Executive Engineer with the occupants who signed the same.
Such an agreement which is not in compliance with the provisions of Article 299 of the Constitution is void and unenforceable against the State.
If this is so, the suit filed by the respondents plaintiffs must fail.
" The High court negatived the contention raised on behalf of the plaintiffs appellants to the effect that under the statutory powers conferred by Section 18 of the Bombay Irrigation Act, 1879 (hereinafter called the Act), the Executive Engineer was competent to enter into compromise and 374 that the said compromise arrived at during the pendency of the earlier suit was binding on the Government.
The High Court said : "Then it was contended that in exercise of his powers under section 18 of the aforesaid Act, the Executive Engineer acts for the Government; and, therefore, the agreement in question is binding on the Government.
There is an inherent misconception underlying this contention.
While exercising statutory powers i.e. powers conferred by a statute an officer of the Government does not act for the Government.
He acts not because of any authority derived from the Government to exercise power conferred on him by the Statute.
This contention must also fail." As a consequence, the appeal filed by the State was allowed and the judgment and decree passed by the courts below were reversed and the suit filed by the plaintiffs appellants was dismissed with costs throughout.
Learned counsel for the appellants has assailed the judgment of the High Court and submitted that the agreement/compromise, Ex.45, had been validly entered into by the Executive Engineer with the appellants in view of the statutory powers vested in the Executive Engineer under Section 18 of the Act and reliance placed on Article 299 of the Constitution of India, in the facts and circumstances of this case, was wholly erroneous.
It was urged that by a Notification, dated 27th of September 1963, published in Part IV B of the Gujarat Government Gazette dated 31st of October, 1963, the Government of Gujarat had appointed all Executive Engineers and superintending Engineers in charge of canals in the State of Gujarat to be Canal Officers in respect of such canals and assigned to them all the powers and duties of the Canal Officers under the Act, and, therefore, the agreement/compromise entered into by the Executive Engineer on 7.11.1966 during the pendency of the suit of which he was doing "pervi" was a validly executed compromise which was binding on the parties and the respondent could not go back on it.
Having been made to withdraw their earlier suit on the basis of the agreement, dated 7.11.1966, it was not permissible for the respondent to now dispute the act done by its officers or agents within their powers under the statute.
In the facts and circumstances of this case, we find force in the submission of learned counsel for the appellants regarding the non ap 375 placability of Article 299 of the Constitution of India to invalidate the agreement/compromise dated 7.11.1966 arrived at during the pendency of the earlier suit filed by the appellants relying whereupon the appellants withdrew the earlier suit.
The agreement/compromise Ex.45, arrived at in the previous suit, could not have been equated with a contract between the State and the citizen.
Article 299 (1) which reads thus : "All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise.
" concerns itself with contracts and assurances of property and lays down how Government contracts, including assurances of property are to be made and executed.
Indeed, the provisions of Article 299 are mandatory in character and their non compliance would render a contract void but where the agreement is not referable to Article 299 and is not a contract, as contemplated by that Article, the agreement cannot be invalidated for not satisfying the essential requirements of Article 299 of the Constitution.
A compromise of the nature contained in the agreement dated 7.11.1966, arrived at during the pendency of a suit, is not a contract executed between the parties as envisaged by Article 299.
There is a marked distinction between contracts which are executed in exercise of the executive powers and agreements or orders made which are statutory in nature.
Article 299(1) applies to a contract made in exercise of the executive power of the Union or the State and it has no application to a case where a particular statutory authority, as distinguished from the Union or the State, enters into an agreement within his authorised capacity.
In State of Haryana & Ors.
vs Lal Chand & Ors., ; this Court considered a contract granting exclusive privilege of liquor vending, in exercise of the statutory powers referable to Punjab Excise Act, 1914 and Punjab Liquor Licence Rules, 1956, and held that the grant of the exclusive privilege gave rise to a contract of a statutory nature, distinguished from the one executed under Article 299(1) and, therefore, compliance with Article 299(1) was not required in such a case.
376 The question which immediately arises for our consideration is : Was the Executive Engineer competent to execute the agreement Ex.45? In this connection, it would be relevant to refer to some of the more relevant statutory provisions contained in the Act.
Section 3(6) provides as follows : (6) "Canal Officer" means any officer lawfully appointed or invested with powers under section 4; Section 17 reads thus; "Any persons desiring to construct a new water course, but being unable or unwilling to construct it under a private arrangement with the holder of the land required for the same, may apply in writing to any Canal Officer duly empowered to receive such applications, stating; (1) that he is ready to defray all the expense necessary for acquiring the land and constructing such water course; (2) that he desires the said Canal Officer in his behalf and his cost to do all things necessary for constructing such water course.
" Section 18 provides as follows "If the Canal Officer considers the construction of such water course expedient, he may call upon the applicant to deposit any part of the expense to such officer may con sider necessary, and upon such deposit being made, shall cause inquiry to be made into the most suitable alignment for the said water course, and shall mark out the land which, in his opinion, it will be necessary to occupy for the construction thereof, and shall forthwith publish a notification in every village through which the water ' course is proposed to be taken, that so much of such land as is situated within such 377 village has been so marked out, and shall send a copy of such notification to the Collector of every district in which such land is situated, for publication on such land.
The said notification shall also call upon any person who wishes to share in the ownership of such water course to make his application in that respect to the Canal Officer within thirty days of the publication of such notification.
If any such applicant appears, and his application is admitted, he shall be liable to pay his share in the construction of such water course, and in the cost of acquiring the land for the same, and shall be an owner of such water course when constructed.
" Powers of the canal officers are contained in Section 77 reads thus "(1) For the purpose of the inquiries under section 76 such Canal Officer may enter, by himself or any officer authorised by him for the purpose, upon any land adjacent to any such work, and may survey, demarcate and make a map of the same.
(2)Notwithstanding anything contained in section 76 where no sufficient evidence is forthcoming as to all or any of the matters specified in that section such Canal Officer shall, so far as may be, settle and record the aforesaid matters in such manner as he may deem fit.
" A perusal of the record reveal that it was the Executive Engineer who was doing "pervi" of the case in the suit filed.
in 1966.
The agreement (compromise) Ex.45 was entered into during the pendency of the said case.
As already noticed the Government of Gujarat had appointed all Executive Engineers and Superintending Engineers in charge of Canals in the State of Gujarat to be Canal Officers in respect of such canals and assigned to them all the powers and duties of the Canal Officers under the Act by virtue of the Notification dated 27th September, 1963.
Thus, it is manifest that the Executive Engineer, by virtue of the said Notification, had been lawfully appointed as Canal Officer within the meaning of Section 378 3(6) of the Act.
Section 18 of the Act vests the Canal Officer with the power to hold inquiry and direct the construction of suitable alignments for a water course and by Section 77 of the Act (supra) the Canal Officer is vested with the authority to survey, demarcate and make a map of the land which in his opinion is suitable for constructing an alignment for the water course.
Thus, under the statute,, read with the Notification dated 27th September 1963, the Canal Officer (Executive Engineer) was fully com petent to decide about the particular alignment of the water course and it fell within his jurisdiction to decide and settle about the suitable demarcation of the alignment of the water course of the canal from Vartu Dam.
He exercised that jurisdiction under the statute when he demarcated the water course in red, in the map attached to Ex.45, the agreement.
It is the content of the agreement and not its form which is relevant to trace the source of power behind it and when examined in the light of the statutory provisions noticed above, it is manifest that the document Ex.45 has been executed by the Executive Engineer by virtue of the statutory powers vested in him.
The circumstance that the agreement Ex.45 came into existence during the pendency of the suit and was executed by way of an agreement does not militate against the order of alignment as reflected therein being any less statutory in character.
As a matter of fact the Act itself envisages that the Canal Officer may alter and settle the alignment in consultation with the landholders through which the water course is to run.
In the agreement Ex.45, the Executive Engineer had agreed to alter the alignment of the water course in consultation with the petitioners who thereupon ,unconditionally ' withdrew the suit as it appears no grievance remained to be settled.
The altered alignment was, therefore, validly made by following the procedure envisaged by the Act.
The High Court fell in error in ignoring this aspect of the case.
It failed to appreciate the statutory powers of the Executive Engineer, vested in him under Sections 18 and 77 of the Act read with the notification of 27th September, 1.963 on the true import of agreement Ex.45.
Thus, in the facts and circumstances of the case we are satisfied that the agreement dated 7.11.1966, exhibit 45 was lawfully executed by the Executive Engineer in exercise of his statutory powers under the Act and the State was obliged to act according to the terms of the said agreement and could not give it a go bye without following the procedure under the Act to again alter the alignment.
It is nobody 's case that for making an alteration in the alignment, the requisite exercise was undertaken, as envisaged by the Act, in 1972, when the suit out of which 379 these proceedings have arisen was filed.
In view of the aforesaid discussion, the judgment and decree of the High Court deserves to be set aside and are hereby set aside.
The judgment and decree passed by the Trial Court as confirmed by the District Judge are restored though for different reasons, as detailed above.
The appeal is consequently allowed.
The parties, however, shall bear their own costs throughout.
Before parting with the judgment, we would also like to clarify certain position.
The dispute is almost three decades old.
Learned counsel for the parties were unable to state as to whether fresh alignments as envisaged by the red line in the map attached to Ex.45, agreement, had been made for the passing of the canal or not.
We would, therefore, like to clarify that if any fresh alignment for the water course is required to be made, different than the one originally proposed or the one contained in the said Map, the same may be made but only by following the procedure prescribed under the Act and this judgment shall not be construed as any bar therefore.
N.P.V. Appeal allowed.
| IN-Abs | Under an Irrigation Scheme, the respondent State proposed to construct a dam on a river in the State and prepared a sketch, indicating the passage of the canal from the Dam and for that purpose, proceeded to acquire land through which the canal was proposed to run.
Apprehending that serious damage will be caused to their lands by the passing of the canal through their lands, the appellants farmers filed a suit against the respondent State, seeking to restrain it from implementing the Irrigation Scheme, as proposed.
During the pendency of the suit an agreement was arrived at between the parties to the effect that the canal from the Dam would be run as per the line demarcated in red in the map appended to the deed of agreement.
As a result, the suit was unconditionally withdrawn by the appellants, but subsequently, on discovering that the State Government was going back from the agreement and the alignment of the canal was being undertaken contrary to the alignment reflected in red in the map appended to the agreement, they filed a fresh suit for declaration to the effect that the agreement entered into between them and the respondents through its Executive Engineer, Irrigation Department, was binding on the 367 parties and that the parties were bound to act according to the terms of the said agreement and for an injunction, restraining the respondent State from going back on the agreement.
The trial court decreed the suit and permanently restrained the State from going back from the agreement and acting otherwise than as per the terms of the same.
The appeal preferred by the State was also dismissed by the District Judge.
The State riled a second appeal before the High Court contending that the alleged compromise/agreement was not binding upon the State, inasmuch as the Executive Engineer had no authority to agree on behalf of the State Government as he was not the representative of the Government.
The High Court held that the agreement was a null and void document for non compliance with the mandatory provisions of Article 299(1) of the Constitution.
It also rejected the appellants ' plea that under the statutory powers conferred by section 18 of the Bombay Irrigation Act, 1879 the Executive Engineer was competent to enter into a compromise and that the said compromise arrived at during the pendency of the earlier suit was binding on the Government.
In the appeal filed before this Court on behalf of the appellants farmers, it was submitted that reliance placed on Article 299 of the Constitution of India was wholly erroneous, that by a Notification, dated 27th of September 1963, published in Part IV B of the Government Gazette, the State Government had appointed all Executive Engineers and Superintending Engineers in charge of canals in the State to be Canal Officers in respect of such canals and assigned to them all the powers and duties of the Canal Officers under the Act and, therefore, the agreement/compromise entered into by the Executive Engineer during the pendency of the suit of which he was doing 'pervi ' was a validly executed compromise which was binding on the parties and respondent could not go back on it, and that after having made the appellants to withdraw their earlier suit on the basis of the agreement, it was not permissible for the respondent to dispute the act done by its officers or agents within their powers under the statute.
Allowing the appeal, this Court, HELD : 1.1.
The agreement/compromise arrived at in the previous 368 suit, could not have been equated with a contract between the State and the citizen.
Article 299(1) of the Constitution concerns itself with contracts and assurances of property and lays down how Government contracts, including assurances of property are to be made and executed.
The provisions of Article 2" are mandatory in character and their non compliance would render a contract void, but where the agreement is not referable to Article 299 and is not a contract, as contemplated by that Article, the agreement cannot be invalidated for not satisfying the essential requirements of Articles 299 of the Constitution.
[375B, D E] 1.3.
There is a marked distinction between contracts which are executed in exercise of the executive powers and agreements or orders made, which are statutory in nature.
Articles 299(1) applies to a contract made in exercise of the executive power of the Union or the State and it has no application to a case where a particular statutory authority as distinguished from the Union or the State, enters into an agreement within his authorised capacity.
[375F] State of Haryana and Ors.
vs Lal Chand and Ors., ; , relied on.
A compromise of the nature contained in the agreement arrived at during the pendency of a suit, in the instant case is not a contract executed between the parties as envisaged by Article 299.
[375E] 2.1 It is clear from the record that it was the Executive Engineer who was doing 'pervi ' of the case in the suit filed earlier.
The agreement in question was entered into during the pendency of the said case.
The State Government had appointed all Executive Engineers and Superintending Engineers in charge of canals in the State to be Canal Officers in respect of such canals and assigned to them all the powers and duties of the Canal Officers under the Act by virtue of the Notification dated 27th September, 1963.
Thus, it is manifest that the Executive Engineer, by virtue of the said Notification, had been lawfully appointed as Canal Officer within the meaning of Section 3(6) of the Bombay Irrigation Act, 1879.
[377F H, 378A] 2.2.
Section 18 of the Act vests the Canal Officers with the power to 369 hold Inquiry and direct the construction of suitable alignments for a water course and by Section 77 of the Act a Canal Officer Is vested with the authority to survey, demarcate and make a map of the land which, in his opinion, Is suitable for constructing an alignment for the water course.
[378A] 23.
Thus, under the statute, read with the notification dated 27th September, 1963, the Canal Officer (Executive Engineer) was fully competent to decide about the particular alignment of the water course and it fell within the jurisdiction of the Canal Officer to decide and settle about the suitable demarcation of the alignment of the water course of the canal from the Dam, in question and he exercised that jurisdiction under the statute when he demarcated the water course in red, in the map attached to the agreement.
It is the content of the agreement and not its form which is relevant to trace the source of power behind it and in the light of the statutory provisions, it Is manifest that the document has been executed by the Executive Engineer by virtue of the statutory powers vested In him.
The circumstance that the agreement came into existence during the pendency of the suit and was executed by way of an agreement does not militate against the order of alignment as reflected therein being any less statutory in character.
[378B D] 2.4.
The Act itself envisages that the Canal Officer may after and settle the alignment in consultation with the landholders through which the water course is to run.
In the agreement in question, the Executive Engineer had agreed to alter the alignment of the water course in consultation with the appellants who thereupon 'unconditionally ' withdrew the suit since no grievance remained to be settled.
The altered alignment was, therefore, validly made by following the procedure envisaged by the Act.
The High Court fell in error in ignoring the statutory powers of the Executive Engineer, vested in him under Sections 18 and 77 of the Act read with the notification or 27th September, 1963 on the true import of agreement.
[378E F] 2.5.
Under these circumstances, the agreement was lawfully executed by the Executive Engineer in exercise of his statutory powers under the Act and the State was obliged to act according to the terms of the said agreements and could not give it a go bye without following the procedure under the Act to again alter the alignment [378G] 370
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(C) Nos.
1189798 of 1992 etc.
From the judgment and Order dated 28.8.1992 of the Delhi High Court in Civil Writ Petition Nos.
1152 & 1157 of 1992.
V.R. Reddy, Addl.
Solicitor General, Kapil Sibbal, P.P. Rao, Rama Jois, A. Temton, Dr. Shankar Ghosh, K.K Venugopal, Harish Salve, F.S. Nariman, A.N. Haksar, Shanti Bhushan, K.N. Bhat, T.R. Andhyarujina, C.V. Subba Rao, P.P. Singh, Mrs B. Sunita Rao, Sudhir Kulshreshtha, Rohit Tandon, Parijat Sinha, Ms Sunanda Roy, Ms. section Bhattacharya, B.D. Ahmed, Man Mohan Singh, Gopal Subramanium, D.N. Mishra, A.M. Dittia, P. K. Ganguli, Manoj K. Das, Amit Prabhat, Tripurary Roy, K.L. Mehta, section Ganesh, Pratap Venugopal, K.J. John, Pramod Dayal, Ajay K. Jain and D.N. Najjunda Reddy for the appearing parties.
The following Order of the Court was delivered by 116 K. JAYACHANDRA REDDY, J. All these Special Leave Petitions arise out of the common judgment of the High Court of Delhi in Civil Writ Petitions Nos. 1 152 and 1 157/92.
We heard these matters for considerable length of time.
Eminent counsel appearing on both sides advanced detailed arguments.
After the conclusion of the hearing it was represented that having regard to the constraint of time factor, namely that the contracts with the Railways entered into by the manufacturers who are parties, have to be completed very soon the judgment in these matters has to be delivered as early as possible or at least the conclusions have to be given soon.
We are conscious of the fact that it is likely to take considerable time to deliver a detailed judgment.
However having gone through the records carefully and after due consideration of the various arguments advanced, we have reached the conclusions given hereunder and we propose to deliver the detailed judgment at a later stage giving all the reasons in support of these conclusions.
We, however, think it necessary to state a few relevant facts and the issues involved in a concised form before we set out our conclusions.
Every year the Railway Board enters into contracts with the manufacturers for the supply of cast steel bogies which are used in turn for building the wagons.
Cast steel bogies come under a specialised item procured by the Railways from the established sources of proven ability.
There are 12 suppliers in the field who have been regularly supplying these items.
Two new firms Simplex and Beekay also entered the field.
Among them admittedly M/s H.D.C., Mukand and Bhartiya are bigger manufacturers having capacity to manufacture larger quantities.
On 25, 10.91 a limited tender notice for procurement of 19000 cast steel bogies was issued to the regular suppliers as well as the above two new entrants for the year namely from 1.4.1992 to 31.3.93.
The last date for submission of offers to the Ministry of Railways was 27.11.91 by 2.30 P.M. and the tenders were to be opened on the same day at 3 P.M.
It was also stated therein that the price was subject to the price variation clause and the base date for the purpose of escalation was 1.9.91 and that the Railway reserved the right to order additional quantity upto 30% of the ordered quantity during the currency of the contract on the same price and terms and conditions with suitable extensions in delivery period.
The offers were to remain open for a period of 90 days.
On that day the tenders were opened in the presence of all parties.
The price quoted by the three manufacturers 117 i.e M/s H.D.C., Mukand and Bharatiya was an identical price of Rs. 77,666 per bogie while other tenderers quoted between 83.000 and 84,500 per bogie.
After the tenders were opened and before the same could be finalised, the Government of India announced two major concessions namely reduction.
of custom duty on the import of steel scrap and dispensation of freight equalisation fund for steel.
The tenders were put up and and placed before the Tender Committee of the Railways which considered all the aspects.
The committee concluded that three of the tenderers namely M/s H.D.C., Mukand and Bharatiya who had quoted identical rates without any cushion for escalation between 1.7.91 and 1.9.91, have apparently formed acartel.
The Tender committee also noted that the rates quoted by them were the lowest.
Taking into consideration the reduction of Rs. 1500 as a result of the concessions in respect of the reduction of custody duty on the import of steel scrap and dispensation of the freight equalisation fund for steel, the Tender Committee concluded that the reasonable rate would be Rs.76,000per bogie.
On the question of distribution of quantities to the various manufacturers the Tender committee decided to follow the existing procedure.
The Tender Committee.
signed these recommendations on 4.2.92 but on the same day the Member (Mechanical) of the Committee received letters from M/s H.D.C. and Mukand.
M/s H.D.C. in its letter stated that in view of the concessions and also on the basis that per kg.
rate of casting per bogie could be reduced from Rs.37.50 to Rs.29 the cost of casting can also be reduced and therefore they would be in a position to supply the bogies at a lesser rate, in case a negotiation meeting is called.
M/s Mukand in its letter also offered to substantially reduce the prices and they would like to co operate with the Railways and the Government and bring down the prices as low as possible and asked for negotiations.
Though this was post tender correspondence, the Department felt that the offers made by M/s H.D.C. and Mukand could be considered.
The whole matter was examined by the Advisor (Finance) in the first instance and by an elaborate note he observed that the need for encouraging open competition to improve quality and bring down costs has been recommended by the Government and if it is intended to continue the existing policy of fixing a rate and distributing the order among all the manufacturers, then negotiations may not be useful as uniform prices offered to all manufacturers have to be sufficient even for the smaller and less economical units and that as any review of the 118 existing policy would take time, the present tender can be decided on the basis of the existing policy.
With this noting the file was immediately sent to the Member ( Mechanical), the nest higher authority.
He with some observation, however recommended the acceptance of the Tender Committee 's recommendations.
The file was then put up to Financial Commissioner, He noted that the Tender Committee was convinced that the three manufacturers who quoted identical price of Rs. 77,666 had formed a cartel.
He also considered the offers made by M/s H.D.C. and Mukand and observed that these three manufacturers who quoted a cartel price intended to get a larger order on the basis of such negotiated price which would eventually nullify the competition from the other manufacturers and lead to their industrial sickness and subsequently to monopolistic price situation.
lie, however, approved the Tender committee 's recommendations that a counter offer of Rs. 76,000 may be accepted but in the case of M/s H.D.C. a price lower by Rs. 1 1,000 may be offered as per their letter dated 4.2.92.
lie also recommended that the two manufacturers M/s. Cimmco and Texaco may the given orders to the extent of their capacity or quantity offered by them whichever is lower in view of the fact that they are wagon builders and the present formula regarding the distribution of quantities may he applied to all manufacturers except the three who have formed a cartel.
He also recommended some recoveries from these three manufacturers who are alleged to have formed a cartel on the basis of their letters wherein they have quoted prices which were much less than the updated price as on 1.9.91 of Rs. 79,305.
He also made certain other recommendations and finally concluded that the post tender letters may be ignored and that for short term gains the Department can not sacrifice long term healthy competition.
After these recommendations of the Financial commissioner the file was put up to the approving authority i.e. the Minister for Railways, who in general agreed with the recommendations of the Financial Advisor.
He also noted that these three manufacturers have formed a cartel.
He also noted that subsequent to the Financial commissioner 's note, besides M/s H.D.C. and Mukand has also offered to reduce the price by 10% or more vide their letter dated 19.2.92 if called for negotiations.
Taking these circumstances into consideration the Minister ordered that all these three firms may be offered a price lower by Rs. 1 1,000 with reference to the counter offer recommended by the Tender committee and the quantities also be suitably adjusted so that the cartel is broken.
The Minister also noted that as a result of this a saving of about Rs. 11 119 crores would be effected.
In his note, the Minister also ordered redistribution of the quantities.
Heal so ordered that3O% options should straightaway be exercised.
After the approving authority took these decisions,the file went to he Chairman Railway Board for implementing the decisions.
The noted that action will be taken as decided by the Minister but added that action will be taken as decided by the Minister but added that it results in dual pricing namely one to the three manufacturers and the higher one to the others and therefore the Minister may consider whether they could counter offer the lower price to all the manufacturers as that would result in saving much more.
The file was then again sent to and was considered by the financial Commissioner who noticed this endorsement made by the Chairman, Railway Board.
He however noted that so far all the other firms are concerned it is Rs.3305 less than the present contract price but it would not be equitable to offer the lower price put forward by the three manufacturers as it would make the other units enviable and that incidentally the price of ' Rs. 76,000 now proposed to be counteroffered to the other firms is also in line with the recommendation of the Tender committee.
The, however, noted that some of the units were sick units and owe a lot of money to the nationalised banks and it would therefore be in the national interest to accept dual pricing.
Therefore the file was again put up to the approving authority who agreed with the recommendations of the Financial Commissioner and the render Committee and directed that the same may be implemented.
In view of this final decision taken by the approving authority a telegram was issued to the three manufacturers giving them a counter offer of Rs. 65 000 per bogie.
The counter offer was also made to the other nine manufacturers at the rate of Rs. 76,000per bogie namely the price worked out by the Tender committee.
Soon after the receipt of this telegram dated 18.3.92 M/s H.D.C. and Mukand filed writ petitions in the Delhi High Court challenging the so called discriminatory counteroffer.
M/s Bhartiya also filed a similar petition in Calcutta High Court but the same was withdrawn but another writ petition was filed later in the Delhi High Court.
In the writ petitions filed by M/s H.D.C. and Mukand, the High Courts stayed the operation of the telegram dated 18.3.92 and issued notice to the Union of India and to the Executive Director and Director of the Railways (Stores) who figured as respondents in those writ petitions.
M/s H.D.C. and Mukand also wrote to the Minister of Railways in reply to the telegram that they were not prepared to accept the counter offer at the rate of Rs.65,000 and 120 instead they offered to supply the bogies at the rate of Rs 67,000) per bogie.
The Railways accepted this offer and intimated M/s H.D.C. and Mukand accordingly.
The High Court, in an interlocutory stage pending the writ petitions, passed an order on 2.4.92 directing the Ministry to accept the allocation of bogies recommended by the Tender committee and to pay a price at the rate of Rs. 67,000 only per bogie and that would be subject to the final decision of the writ petitions.
Being aggrieved by this order, the Railways filed a petition for special leave to appeal No. 5512/92 and this court while refusing to interfere at that interlocutory stage made the following observations on 28.4.92: "However, we may observe and so direct that during the pendency of the writ petition if any of the suppliers in terms of the package of distribution indicated by the High Court (including the petitioners in the High Court in the writ petition), seek an "on account" payment representing the difference between the sum of Rs. 67,000 indicated as price by the High Court and the sun of Rs 76,000 contemplated by the Railways; the order of the High Court shall not prohibit the Government making such on account payment to such suppliers on each wagon on the condition that the said on account payment of Rs. 9,000 per bogie should be covered by a bank guarantee for its prompt repayment together with interest at 20% per anum in the event the on account payment cannot be observed in the price structure that may ultimately come to be determined pursuant to the final decision in the writ petitions.
The special leave petitions are disposed of accordingly.
" Thereafter the High Court took up the writ petitions for final hearing and by the impugned judgment allowed the writ petitions filed by M/s H.D.C. and Mukand and directed that all the suppliers should make the supplies at the rate of Rs. 67,000 per bogie and also set aside the quantity allocation and directed that the same should be considered 121 afresh on a reasonable basis and pending such fresh consideration future supplies should he made on the basis of the recommendations ofthe Tender Committee.
In the course of the judgment, the High Court also made certain observation to the effect that the decision of the approving authority is arbitrary and that this Government has no justification to offer a higher price than the market price to any supplier to rehabilitate it.
It was further observed that the stand of the Railways that those three manufacturers formed a cartel is based on extraneous considerations.
The learned judges of the High Court also observed that they failed to understand as to why the Railways authorities could not initiate negotiations with those manufacturers who had offered to reduce their offer which could result in saving crores of rupees to the Railways.
Aggrieved by this judgment of the High Court the Union of India filed S.L.P. (civil) Nos. 1 1897 98/92.
Before the High Court in the two writ petitions filed by M/s H.D.C. and Mukand the other manufacturers figured is respondents Nos. 4 to 12 and M/s Bharatiya otherwise Known as Besco figured as respondent No. 13.
The other S.L.Ps. are filed by those nine manufacturers.
M/s Bharatiya, respondent No. 13, has not questioned the judgment of the High Court.
As mentioned above M/s Bharatiya filed a separate writ petition No. 1753/ 92 in the Delhi High Court after withdrawing an earlier writ petition filed in the Calcutta High Court.
The same also was disposed of in terms of the judgment in the, other two writ petitions Nos. 1 152 and 1157/92.
But they have not questioned the same.
Consequently M/s Bhartiya figures as a respondent before us in the SLP filed by the Union of India.
Before we proceed further.
we would like to briefly indicate the main submissions made on behalf of all the parties to the extent relevant and important for arriving at the necessary conclusions.
Learned counsel have advanced arguments on several other aspects which are incidental.
We propose to deal with them and give our findings in our detailed judgment at a later stage.
Mr. Kapil Sibal, learned counsel appearing for the Union of India submitted that the three big manufacturers i.e. M/s H.D.C. Mukand and Bhartiya formed a cartel and the same is evident from the fact that each one of them quoted an identical price which is a cartel price; and that the Government in the matters of economic policy for good and sufficient reasons and in the public interest can reject the lowest offer with a view not to allow any monopoly and to encourage competition among the recognised manufacturers and that the dual pricing adopted 122 by the Railways under the circumstances is not discriminatory.
In this context it is also submitted that the Railways had rightly taken into account the two concessions and found that the price at the rate of Rs. 67,000 per bogie was not reasonable and workable and it was only a cartel price and that Rs. 76,000 was the reasonable price and on that basis made acounter offer to other manufacturers except to these three big manufacturers.
The Railways had no option except to accept the offer of Rs. 67,000 by the three big manufacturers as they took firm stand that the price is reasonable and that they would be able to supply on that rate and thereby a binding contract came into force so far these three manufacturers are concerned.
Regarding the allocation of quantities the Railways have taken into consideration all the relevant factors namely that three of the nine manufacturers were BIER companies and the two others are also wagon builders having their entire business with Railways only and on that rational basis the quantities were allotted.
It is also his submission that since the three big manufacture originally offered a cartel price and ill of them later apparently offered Rs. 67,000/ , in unworkable price, the Railways felt that they attempted to destroy the competition.
Therefore they were not given larger share.
Learned counsel relied on several authorities particularly touching the scope and ambit of Article 14 and the power of the court under Article 226 of the constitution of India.
Mr. Sibal also strongly contended that the High Court grossly erred in making certain observations against the Railways namely that the stand of the Railways that those three manufacturers formed a cartel is based on extraneous considerations and somewhat similar observations in respect of the decision or the Railways on the question of price fixation.
The other counsel appearing for the nine smaller manufacturers in general supported these submissions and also highlighted certain aspects in their individual cases.
Shri K.K. Venugopal.
learned counsel appearing for the respondent namely M/s H.D.C. submitted that the award of the contract for supply of bogies was vitiated by malafides and that disproportionate allotment of quota of bogeis and dual pricing were based on malafides and extraneous considerations violating Article 14 of the Constitution.
tie further submitted that the reasons put forward on behalf of the Railways are disingenuous and bereft of rationale.
The supported the finding of the High Court that the price should he fixed at Rs. 67,000 123 for every manufacturer.
Shri Nariman, learned counsel appearing for M/s Mukand, another respondent submitted that the dual set of counter offers and allocation of disproportionate quantites are highly arbitrary and that the practice and policy of the past 10 years of placing orders on all manufacturers in respect of the quantities worked out on the basis of standard quantity formula at a uniform price, gave rise to legitimate expectations among all bogie manufacturers and irrational departure from the existing policy is arbitrary and unreasonable.
He further submitted that the making of law tender offers can not by itself be visited with punty consequences like dual pricing and reducing the allotment of legitimate quantities.
Shri Shanti Bhaushan, learned counsel appearing for M/s. Bhartiya submitted that the Tender Committee erred in treating M/s. Bhartiya also as a member of the cartel and that the allotment of quantities has been arbitrarily reduced.
He however made one special submission namely that M/s Bhartiya never made an offer of Rs. 67,000 and there is nothing in writing to that effect and that merely because of the statement of the counsel during the proceedings before the High Court, it should not be understood that they are, willing to supply at the, rate of Rs. 67,000 and that they should not be treated by treated differently from the other nine manufacturers.
Taking all the aspects into consideration and for the purpose of giving our conclusions it may broadly be stated that M/s H.D.C. and Mukand gave post tender offers at a low pride with the hope that they would get a larger quantity allotted.
M/s Bhartiya also fell in line with them though did not specifically put it in writing.
But during the course of the hearing of the writ proceedings, it was represented on behalf of M/s Bharatiya that they would be willing to supply at Rs. 67,000 if the court fixes that price.
This is noted by the High Court in its judgment.
The Railways authorities however concluded that in the beginning itself these three have formed a cartel and the price quoted by them was only a cartel price.
The note by the Financial Commissioner is somewhat elaborate on this aspect and the Minister for Railways, the competent authority agreed with him and also directed that the quantities be suitably adjusted so that the cartel is broken.
He also took into consideration the fact that some of the smaller units are sick and 124 therefore they should be given a larger quantity to enable them to rehabilitate.
The other recommendations of the authorities were also accepted.
However in giving any directions we must bear in mind that the contract period is going to end shortly and till now all the manufacturers have been manufacturing and supplying pursuant to the interim orders.
We may indicate at this stage that we shall discuss all these aspects later in detail in our judgment.
After due and careful consideration of all the aspects, our conclusions are as follows: (1) There is no enough material to conclude that M/s H.D.C., Mukand and Bhartiya formed a cartel.
Because of mere quoting identical tender offers by the said three manufacturers for which there is some basis, the conclusion that the said manufacturers had formed a cartel does not appear to be correct.
However since the offers of the said three tenders were identical and the price was somewhat lower, the Tender Committee entertained a suspicion that a cartel had been formed and the same got further strengthened by the post tender attitude of the said manufacturers which further resulted in entertaining the same suspicion by the other authorities in the hierarchy of the decision making body including the Minister of Railways.
Though there is no enough of material to establish formation of a cartel as is understood in the legal parlance but at the same time it cannot be contended that such an opinion entertained by the concerned authorities including the Minister was perse malicious or was actuated by any extraneous considerations.
After a careful examination of the entire record and facts and circumstances of the case we are of view that all the Railway authorities including the Minister acted in a bonafide manner in taking the stand that the three manufactures formed a cartel.
(2) The current contract price based on the updated price is Rs. 79,305 The three manufacturers offered at Rs. 77,6000. 'Faking into consideration the later concessions, the Tender Committee decided that the price of Rs. 76,000 is reasonable.
In the post tender correspondence M/s H.D.C. and Mukand offered to supply at a price of Rs. 67,000 per bogie, but no particulars as to how it would be reasonable, were given.
However they have come forward before us with some particulars.
M/s Bhartiya did not gave any such offering writing, but fell in line with them and did not choose to question the order of the High court fixing the price at Rs. 67,000 The Railways were of the view that 125 it is an unreasonable price an smaller manufacturers cannot supply at that price and consequently they will get extinguished resulting in a monopoly by the big manufacturers.
The High court has directed that supply should be at Rs. 67,000 by everyone.
Taking into consideration all these aspects we are of the view that the fixation of price at Rs. 67,000 per bogie straightaway without necessary and proper consideration and appraisal regarding the viability and other aspects by some experts, is not just and fair from many points of view.
A fresh consideration is called for, particularly from the point of view of safeguarding the interests of the public exchequer and giving_ necessary protection to the smaller manufacturers.
Consequently we set aside this direction of the High Court and direct the Tender Committee to reconsider the question of fixation of reasonable price.
The Tender committee shall consider the offer of Rs, 67,000 made by M/s H.D.C. and Mukand along with the data that would be given by them in support of that and the percentage of profits available to all the 3 manufacturers and other relevant aspects and then fix a reasonable price.
at which the manufacturer would be able to supply.
The Tender Committee shall within two weeks from today complete the process.
(3) At a belated post tender stage Railways authorities did not deem it fit to reconsider the question of fixation of price in the light of the post tender offers made by M/s H.D.C. and Mukand, as by then they were of the opinion that the three big manufacturers have formed a cartel and quoted a cartel price.
The stand by the Railways to adopt dual pricing under these circumstances is bonafide and not malafide.
However.
dual pricing on principle may not appear to be rational since the railways have been following certain formula in fixing the price which is made applicable to all the manufacturers, But under certain circumstances dual pricing may be reasonable.
In the instant case M/ s H.D.C. and Mukand came forward with firm offer of a price at Rs. 67,000 per bogie.
M/s Bharatiya also got committed to supply at the same price.
All the three of them did not even challenge the order of the High Court.
These three big manufacturers just be deemed to be in a position to supply at the rate of Rs. 67,000 and thus they form a distinct category.
The smaller manufacturers belong to a different category and if a different price is fixed for them it is not discriminatory.
126 (4) If the price that is to be fixed by the Tender Committee as directed by us happens to be more than Rs. 67.000 then that would be applicable to the smaller manufacturers only and not to M/s H.D.C., Mukand and Bhartiya who on their own commitment have to supply at the rate of Rs. 67,000.
(5) The price thus fixed by the Tender committee which applies only to the smaller manufacturers shall he deemed to be final and the respective contracts shall be deemed to be concluded so for the price is concerned.
(6) Now coming to the allotment of quota of bogies the Tender Committee made recommendations on the basis of the existing practice.
The Minister of Railways in his ultimate decision has made some variations taking into consideration tile recommendations of the Financial commissioner and other authorities.
The has however not accepted these recommendations fully.
In making these variations, the Minister accepting ultimately reduced the allotment of quota to the said three tenderers substantially by way of reprisal.
In view of our finding that the formation of an opinion that cartel was formed had no firm factual foundation; such a reduction of quota by way of reprisal can not be justified.
we are however, not inclined to accept the contention made on behalf of M/s H.D.C., Mukand and Bhartiya that no departure from the recommendations of the Tender committee is permissible in the absence of any established policy which was also known by the tenderers.
From the records it appears that in the past also there have been such variations.
In our view, the Minister of Railways as the final authority.
after considering various relevant factors, may he justified in taking a particular decision in the matter of allotment of quota but such decision must be taken on objective basis.
But, in this case.
it appears to us that all the smaller manufacturers deserving a favourable treatment in the matter of allotment of quota, have not been equally treated in the sense that one or, two of them got larger quantities.
Though this does not appear to be a serious departure, yet in these matters the Govt.
is expected to be just and fair to one and all.
We hope that in future the authorities would make a proper consideration of the relevant factors in respect of each tenderer in an objective manner in allotting the quantities.
127 (7) In view of the interim orders, during the pendency of writ petitions before the High Court, and until now all the manufacturers have been supplying as per the allotments by the Tender Committee.
The High Court in its judgment finally directed the Railways to reconsider the allocation on reasonable basis.
It is submitted on behalf of the smaller manufacturers that they have made necessary manufac turing arrangements on the basis of the final allotment.
On behalf of the M/s H.D.C., Mukand and Bhartiya, it is submitted that their legitimate quotas also are cut short and that they are entitled to larger quantities in view of the low price offered by them.
Having considered the contentions made by all the manufacturers direct that the there manufacturers M/s H.D.C., Mukand and Bhartiya should be allocated the quantities as per the recommendations of the Tender committee.
We, however.
do not want to disturb at this stage the quantities finally allotted by the competent authority to the small manufacturers as that would cause great hardship to them.
We leave it to the Railway authorities to make necessary adjustments next year in the matter of allocation of quantities to them taking, into consideration these allotments given to them this year.
To that extent we modify the order of the High Court.
(8) It will he open the Railways to exercise 30% option, if not already exercised.
(9) Taking all the circumstances and the time factor into consideration the time to complete the supply is extended upto 31.3.1993.
Accordingly these Special Leave petitions are disposed of.
There will he no order as to costs.
V. P. R. SL Ps disposed of.
| IN-Abs | The Railway Board entered into contracts with 12 manufactur ers for the supply of cast steel bogies to be used for building the wagons, every year.
Among them H.D.C., Mukand and Bhartiya had capacity to manufacture larger quantities.
In 1991 two new firms Simplex and Beekay also entered the field.
For the year 1992 93, a tender notice for procurement of 1900 cast steel bogies was issued to the Regular suppliers as well as to Simplex and Beekay the new entrants.
The tender notice stated therein that the last date for submission of offers was 27.11.91 by 2.30 P.M. and the tenders to be opened at 3 P.M. on the same day; that the price was subject to the price variation clause and the base date for escalation purpose was 1.9.91; that the Railways reserved the right to order additional quantity upto 30 % of the quantity ordered during the currency of the contract on the same price and terms and conditions with suitable extensions in delivery period.
The price quoted by H.D.C., Mukand and Bhartiya firms was identical, i.e. Rs. 77.
666 per bogie.
Other tenderers price varied between Rs. 83.000 and Rs. 84, 500 per bogie.
The Government 's announcement of reduction of custom duty 109 on the import of steel scrap and dispensation of freight equalisation fund for steel came after the opening of the tenders and before the finalisation of the tenders.
The Tender Committee recommended that the three manufac turers who quoted an identical lowest rates without any cushion for escalation between 1.7.91 and 1.9.1991 formed a cartel; that the reasonable rate per bogie was to be Rs. 76,000 by taking into consideration of the two concessions announced by the Government; and that the existing procedure to be followed on the question of distribution of quantities to the tenderers.
On 4.2.92, the Committee signed the recommendations.
On the same date, the Member (Mechanical) of the Committee received letter from H.D.C. and Mukand, wherein the tenderers offered to substantially reduce the prices because of the concessions.
The Advisor (Finance) examined the matter and observed that if it was intended to continue the existing policy of fixing a rate and distributing the order among all the tenderers, then negotiations might not be useful; that review of the existing policy would take time; and that the present tender be decided on the basis of the existing policy.
The Member (Mechanical), the next higher authority recom mended the acceptance (if the Tender Committee 's recommendation.
The Finance Commissioner approving the recommendations of the committee, noted that the tenderers who quoted the identical rates had formed a cartel; that a counter offer of Rs. 76,000 be accepted but in the case of H.D.C., a price lower by Rs.1 1,000 to he offered as per their post tender letter dated 4.2.92; that the present formula regarding the distribution of quantities be applied to all tenderers except the three who formed a cartel; that some recoveries from the three tenderers he made on the basis of their letters wherein they quoted prices which were much less than the updated price on 1.9.91 of Rs.79.305; that the post tender letters be ignored and that for short term gains the Department could not sacrifice long term healthy compensation.
110 The Minister for Railways, the approving authority agreeing with the recommendations of the Finance Advisor, noted that the three tenderers had formed a cartel and they he offered a price lower by Rs. 1 1.000 with reference to the counter offer recommended by the Tender Committee and the quantities also be suitable adjusted to break the cartel and ordered for redistrib ution of the quantities exercising 30% option.
The Chairman, Railway Board, when received the file for implementation of the orders from the Minister, noted that action be taken as decided by the Minister, which had resulted in dual pricing, namely, one to the three tenderers and the higher one to the other tenderers and therefore, the Minister to consider whether they could counter offer the lower price to all the tenderers as that would result in saving much more.
When the matter was sent to the Finance Commissioner, he observed that as some of the units were sick units and owe a lot of money to the nationalised banks; it would be in the national interest to accept dual pricing.
Therefore, the rile was again put up to the approving authority.
He agreed with the recommendations of the Commissioner and the Tender Committee and directed for their implementation.
As per the final decision taken by the approving authority the three tenderers were issued a counter offer of Rs.65,000 per bogie by telegram and other tenderers were given a counter offer of Rs.76,000/ per bogie.
After the receipt of the telegram dated 18.3.92 H.D.C. and Mukand riled writ petitions in the Delhi High Court challenging the discriminatory counter offer.
Bhartiya had riled a writ petition in the Calcutta High Court.
It was withdrawn and another writ petition was riled later in the Delhi High Court.
In the writ petitions filed by H.D.C.and Mukand, the High Court issuing notice to the respondents,stayed the operation of the telegram dated 18.3.92.
111 In reply to the telegram, H.D.C. and Mukand also wrote to the Minister of Railways offering to supply the bogies at the rate of Rs.67.000 per bogie, which was accepted by the Railway.
Pending the writ petitions, the High Court passed an interlocutory order, directing the Railway to accept the allocation of bogies recommended by the Tender Committee at the rate of Rs.67.000 per bogie subjected to the final decision in the writ petitions.
The Railway 's petition for special leave to appeal filed against the interlocutor%, order of the High Court was dismissed.
Thereafter, the High Court allowed the writ petitions riled by H.D.C and Mukand and directed that all the tenderers should make the supplies at the rate of Rs. 67.000 per bogie and allocation of quantity to be considered afresh on a reasonable basis.
The Union of India filed appeal by special leave (S.L.P. (c) Nos. 11897 98/92) against the judgment of the High Court.
The other SLPs.
were riled by the affected tenderers who figured as respondents Nos. 4 to 12 in the writ petitions before the High Court.
The High Court disposed of Bharatiya 's writ petition in terms of the judgment in the other two writ petitions (W.P.Nos. 1152 and 1157/ 92) wherein they were shown as respondent No. 13).
As Bharatiya alias Besco did not question the judgment of the High Court, they were arrayed as respondent in the S.L.P. riled by the Union of India.
The Union of India submitted that the three big manufactures i.e. M/s H.D.C., Mukand and Bhartiya formed a cartel and the same was evident from the fact that each one of them quoted an identical price which was a cartel price '; that the Government in the matters of economic policy for good and sufficient reasons and in the public interest could reject the lowest offer with a view not to allow any monopoly and to encourage competition among the recognised manufacturers; that the dual pricing adopted by the Railways under the circumstances was not discriminatory; that the Railways had rightly taken into account the two concessions and found that the price at the rate of Rs.67,000 per bogie was not reasonable and, workable and it was only a cartel price and that Rs. 76,000 was the reasonable price 112 and on that basis made a counter offer to other manufacturers except to these three big manufacturers; that the Railways took into consideration all the relevant factors and on rational basis the quantities were allotted; and, therefore, they were not given larger share.
The nine smaller manufacturers in general supported the sub missions of the Union of India.
The respondent M/s H.D.C. supporting the finding of the High Court submitted that the award of the contract for supply of bogies was vitiated by mala fides and that disproportionate allotment of quota of bogies and.
dual pricing were based on malafides and estraneous considerations violating Article 14 of the Constitution; that the reasons put forward on behalf of the Railways were disingenuous and bereft of rationale.
M/s Mukand respondent submitted that the dual set of counter offers and allocation of disproportionate quantities were highly arbitrary and that the practice and police of the past 10 years of placing orders on all manufacturers in respect of the quantities worked out on the basis of standard quantity formula at a uniform price, gave rise to legitimate expectations among all bogie manufacturers and irrational departure from the existing policy was arbitrary and unreasonable; that the making of law tender offers could not by Itself be visited with punty consequences like dual pricing and reducing the allotment of legitimate quantities.
M/s. Bhartiya submitted that the Tender Committee erred In treating m/s Bhartiya also as a member of the cartel and that the allotment of quantities was arbitrarily reduced; that M/s Bhartiya never made an offer of Rs. 67,000 and there was nothing in writing to that effect and that merely because of the statement of the counsel during the proceedings before the High Court, it should not be understood that they were willing to supply at the rate of Rs. 67,000 and that they should not be treated differently from the other nine manufacturers.
Disposing of the Special Leave Petitions, this Court, 113 HELD: 1.1.
Since the offers of the three tenderers were identical and the price was somewhat lower, the Tender Committee entertained a suspicion that a cartel had been formed and the same got further strengthened by the post tender attitude of the said manufacturers which further resulted in entertaining the same suspicion by the other authorities in the hierarchy of decision making body including the Minister of Railways.
(124 D) 1.2.
All the Railway authorities including the Minister acted in a bonafide mannerin taking the stand that the three manufacturers formed a cartel.
(124F) 1.3.
There is no enough of material to conclude that M/S H.D.C., Mukand and Bhartiya formed a cartel.
Because of mere quoting identical tender offers by the Said three manufacturers for which there is some basis, the conclusion, that the "id manufacturers had formed a cartel does not appear to be correct.
(124 C) 1.4.
The current contract priced based on the updated price is Rs.79,505.
The three manufacturers offered at Rs. 77,600.
Taking into consideration the later concessions, the Tender Committee decided that the price of Rs. 76,000 is reasonable.
(124 F) 1.5.
The fixation of price at Rs. 67,000 per bogie straightaway without necessary and proper consideration and appraisal regarding the viability and other aspects by some experts, is not just and fair from many points of view.
A fresh consideration is called for, particularly from the point of view of safeguarding the interests of the public exchequer and giving necessary protection to the smaller manufacturers.
(125 B) 1.6.
The Tender committee is directed to reconsider the question of fixation of reasonable price.
The Tender Committee shall consider, the offer of Rs. 67,000 made by M/s H.D.C. and Mukand along with the data that would he given by them in support of that and the percentage of profits available to all the manufacturers and other relevant aspects and then fix a resonable price, at which the manufacturer would be able to supply.
(125 C) 114 1.7.
At a belated post tender stage the Railway authorities did not deem it fit to reconsider the question of fixation of price in the light of the post tender offers made by M/s H.D.C. and Mukand, as by then they were of the opinion that the three big manufacturers have formed a cartel and quoted a cartel price.
The stand by the Railways to adopt dual pricing under the circumstances is bona fide and not malafide.
However, dual pricing on principle may not appear to be rational since the Railways have been following certain formula in fixing the price which is made applicable to all the manufacturers.
But under certain circumstances dual pricing may be reasonable. (125 E F) 1.8.
M/s H.D.C. and Mukand came forward with firm offer of a price at Rs. 67,000 per bogie.
M/s Bhartiya also got committed to supply at the same price.
All the three of them did not even challenge the order of the High Court.
These three big manufacturers must be deemed to be in a position to supply at the rate of Rs.67,000 and thus they form a distinct category.
The smaller manufacturers belong to a different category and if a different price is fixed for them it is not discriminatory.
(125 F G) 1.9.
If the price that is to be fixed by the Tender Committee as directed by the Court happens to be more than Rs. 67,000 then that would he applicable to the smaller manufacturers only and not to M/s H.D.C., Mukand and Bhartiya who on their own commitment have to supply at the rate of Rs. 67,000.
(126 A) 1.10.
The price thus fixed by the Tender committee which applies only to the smaller manufacturers shall be deemed to be final and the respective contracts shall be deemed to he concluded so for the price is concerned.
(126 B) 1.11.
The formation of an opinion that a cartel was formed had no firm factual foundation; reduction of quota by way of reprisal can not be justified.
The Minister of Railways as the final authority, after considering various relevant factors, may be justified in taking a particular decision in the matter of allotment of quota but such decision must be taken on objective basis.
But, in this case, all the smaller manufacturers deserving a favourable treatment in the mat 115 ter of allotment of quota, have not been equally treated in the sense that one or two of them got larger quantities.
Though this does not appear to be a serious departure, yet in these matters the Govt.
is expected to be just and fair to one and all.
In future the authorities would make a proper consideration of the relevant factors in respect of each tenderer in an objective manner in allotting the quantities.
(126 E H) 1.12.
The three manufacturers M/s H.D.C., Mukand and Bhartiya should be allocated the quantities as per the recommendations of the Tender Committee.
However, this Court does not want to disturb at this stage the quantities finally allotted by the competent authority to the small manufacturers as that would cause great hardship to them.
(127 C) The Railway authorities was left to make necessary adjustments next year in the matter of allocation of quantities to them taking into consideration these allotments given to them this year.
It will be open to the Railways to exercise 30% option if not already exercised.
The time to complete the supply is extended upto 31.3.1993.
(127 D F)
|
mpt Petition No. 159 of 1992.
IN Special Leave Petition (C) No. 12709 of 1991.
From the Judgment and Order dated 26.4.1991 of the Calcutta High Court in Appeal No. 232 of 1990.
M.L. Verma, R. Mukhejee, J. Gupta and M.L. Chibber for the Petitioners.
Ranjan Dutta, Mrs. N. Dutta, Mrs. Mridula Ray and M.N. Shroff for the Respondents.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
In a suit for specific performance certain interlocutory orders were passed by a Single Judge of the Calcutta High Court.
On appeal a Division Bench of the said Court modified the said orders.
A number of special leave petitions were filed in this Court against the orders of the Division Bench.
Though the petitioners in these special leave petitions are different, the contesting respondents in all these cases are common, namely Russel Estate Corporation and its managing partner Sri Hari Narayan Bhan.
For the purpose of this petition, it is enough to mention that each of the petitioners in these S.L.Ps. is claiming to be entitled to allotment of one or more of the flats being constructed by the respondents at Calcutta.
Their complaint has been that ignoring the agreements in their favour, the 753 respondents have been allotting the constructed flats in favour of third parties thereby seeking to defeat their rights.
On 1.8.1991 a Bench of this Court comprising section Ranganathan, M. Fathima Beevi and N.D. Ojha, JJ. passed the following order in I.A. No.2 of 1991 after hearing the respondents.
"Counsel accepts notice.
in the meantime, till this Special Leave Petition is disposed of, respondents 1 & 2 should not make any further allotment of any other flats in the building in dispute, with effect from today.
Counsel for the petitioner contends that the allotment of the flat, originally allotted to him, to some other person violates an oral order of a Division Bench of the High Court.
It will be open to the petitioner to move the High Court for appropriate relief in this regard if so advised." This Contempt Petition is filed complaining that the respondents have allotted certain flats in favour of third parties in violation of the said order.
So far as the petitioners in this Contempt Petition (Major) Genl.
B.M. Bhattacharjee and Smt.
section Laha) are concerned, they claim to be interested in the flats on the 8th floor of the said building.
At any rate the complaint in this Contempt Petition pertains to the said two flats.
The petitioners say that the said flats have been allotted to the third parties in the month of January, 1992.
They rely upon the report of a group of investigators (National Bureau of Investigation) in support of the said plea.
Notice was issued to the respondents.
In their counter (filed by Shri Hari Narayan Bhan) it is stated that the two floors on the 8th floor (described as east and west flats) were allotted on 26th April, 1991 itself i.e., long prior to the order of this Court dated 1.8.1991.
It is denied that the allotment of said flats took place in the month of January, 1992.
The correctness of the Report of the National Bureau of Investigation is disputed.
It is, however, conceded that the possession of the said flats was handed over to the said third parties on 17th August, 1991 which is admittedly a date subsequent to the date on which this Court passed the aforesaid restraint order.
It is also not disputed by them that the registered sale deeds in respect of said flats in favour of the said third parties were 754 also executed in March, 1992.
The report of the Receiver (Smt.
Pratibha Bonnerjea, a retired Judge of the Calcutta High Court who was appointed as such by an order of this Court dated 7.1.1992) also supports the petitioners ' allegations.
The relevant portion of the Report reads as follows: "Present condition of these two flats in the floor.
The western apartment in the 8th floor is occupied by one Mr. & Mrs.
Kamal Thavrani, Ms. Thavrani said that they are in occupation of the flat from December, 1991.
Mr. K.K. Thavrani said that he had taken both the eastern and western apartments in the 8th floor.
He produced a copy of the agreement executed on 26.4.91 on a stamp paper purchased on 26.4.91 by M/s. Russel Estate Corporation.
The agreement relates to both the flats on the 8th floor for a total consideration of Rs. 13,40,000.
It is stated that the occupiers have taken possession in December, 1991.
Mr. Thavrani submits that the conveyance have been registered in March, 1992 but he is unable to produce the registered conveyance as the same is still lying with the Registrar.
We found eastern flat was not complete.
Wooden work was going on.
Photos Nos.
3 to 5 are attached to this effect.
" At the bearing of this Contempt Petition the respondents ' counsel took the stand that the delivery of possession on 17.8.1991 and the execution of the registered sale deed in March, 1992 do not constitute violation of the Order dated 1.8.1991.
His submission is that this Court merely restrained the allotment of flats.
Allotment, according to the learned Counsel, means entering into the agreement of sale.
Inasmuch as the agreement of sale with respect to the said two.
flats on the 8th floor was entered into long prior to the said Order of this Court, it is submitted, there is no disobedience to the order of this Court.
it is submitted that delivery of possession and the registration of the sale deed(s) is in pursuance of the aforesaid agreement of sale and not in pursuance of any agreement of We entered into on or after 1.8.1991.
The counsel further submitted that even on the date when the aforesaid order was passed on 1.8.1991, the second respondent had represented to this Court that agreement of sale in respect 755 of all the flats have already been entered into.
In this view, it is submitted, there has been no misrepresentation or suppression of relevant facts on their part.
We may mention that when we indicated our disagreement with the above stand during the course of hearing, the counsel for the respondents, Shri Dutta took time till 14th of January, 1993 to file a further affidavit/additional counter and/or documents in continuation of the counter already filed.
The second respondent has accordingly filed a further affidavit on 14.1.1993.
The counsel for the petitioners ' disputes the correctness, genuineness and validity of the agreement, allegedly entered into on 26.4.1991 in respect of said flats.
According to him, it is a fabricated document.
He points out that the stamp paper for the said agreement of sale was purchased by the Russel Estate Corporation and not by the purchaser of the flats.
It is also pointed out that the agreement is not a registered one and that it could have been fabricated at any time putting a back date.
It is not necessary for us to pronounce upon the disputed question whether the agreement dated 26.4.1991 relating to the said two flats on the 8th floor is true and genuine.
Assuming that the said agreement is true, we are yet of the opinion that the respondents have committed gross contempt of this Court by their brazen violation of the order dated 18 1991.
By the said order this Court directed the respondents 1 and 2 not to make "any further allotment of any other flats in the building in dispute with effect from today. ' Now what does the word "allotment" mean in the context.
In our opinion, the said word must be understood reasonably and having regard to the context.
The first respondent is not like a Government Department or Public Corporation where an allotment order or allotment letter is issued from the office in pursuance of which other steps are taken.
The first respondent is a proprietary concern, according to the petitioners, whereas according to the respondents it is a partnership concern.
In either event, there is no such thing as "allotment" in its case.
Even now, it is not their case that they have issued any orders or letters of allotment.
According to them, there was first an agreement of sale, then delivery of possession and finally a registered sale deed.
We are of the opinion that in the context and circumstances, the word "allotment" in the said order means making over of the flats.
In other words, it means delivery of possession 756 and registration of the sale deeds.
An agreement of sale, that too unregistered, has no significance in the context, difficult as it is to verify its truth and correctness.
This court could not be presumed to have interdicted such an uncertain thing.
It must be remember that even according to the respondents they had represented to this Court, at the time the said order was passed, that they have already entered into agreements of sale in respect of the flats and yet this Court chose to pass the said order.
In the circumstances, it cannot mean anything else than delivery of possession of flats and their sale.
It may also mean an agreement of sale but its meaning is certainly not confined to an agreement of sale.
To say so, as do the respondent, is to rob the order of any meaning or content.
Mr. Dutta, the learned counsel for the respondents contended that the second respondent understood the allotment in a particular manner and that the said misunderstanding, if any, was bona fide.
We are not prepared to agree.
Firstly, there could not have been any doubt in the mind of Respondent with respect to the meaning of the order.
Secondly, assuming that he had any doubt regarding its meaning, the least he could have done was to ask for a clarification of the said Order.
He could well have represented that he had already entered into an agreement of sale on 26.4.1991 in restpect of these flats and that he may be permitted to deliver possession and/or execute sale deeds in respect of said flats in favour of third parties.
He did nothing of the sort.
Having placed a highly restrictive and unwarranted interpretation upon the order of this Court, he went ahead and not only delivered possession of the flats to third parties subsequent to the said order but also registered sale deeds in their favour.
He thus rendered the said order nugatory.
It was not open to the respondents to place a convenient interpretation upon the order and proceed to act upon it, thereby totally nullifying the order of this Court.
In this context, we ought to refer to the conduct of the second respondent as disclosed from the order of this Court dated August 7, 1992 to which one of us (B.P. Jeevan Reddy, J.) was a party.
The first two paragraphs of the said order may be quoted in rull.
"In these special leave petitions notice was duly served on the respondents and the matters came up for hearing initially before a Bench of this Court comprising of Ranganathan J., Fathima Beevi J. and Ojha J. on 31.7.91 and 757 1.8.91when the parties were heard and certain interim orders were passed.
Thereafter it was listed before a Bench of this Court (of which Ranganathan J. and V. Ramaswami J. were members) on a number of occasions at which the respondents were represented and no objection was voiced against the hearing of the matters by the said Bench.
However, sometime later an attempt was made on behalf of the respondents to have these matters transferred from this Bench to some other Bench on the allegation that one of the Judges (Ranganathan J.) was biased against the respondents.
This request was made before a Bench presided over by the learned Chief Justice by the second respondent who appeared in person and made the request for the transfer of the case.
The prayer was rejected by the learned Chief Justice on 11.11.1991.
Thereafter the matter was again fisted before a Bench consisting of Ranganathan J., V. Ramaswami J. and Ojha J.
On different occasions without any demur from the parties.
It was then listed before a Bench comprising of Ramaswamy J., Yogeshwar Dayal J. and Mohan J. on 4.3.92.
This Bench directed the cases to be posted before a Bench of which Ranganathan J. is a member.
About this time, an application seems to have been presented to the Registrar that this case should be transferred to some other Bench.
However, the matters came up before us again some time last week when counsel for the respondents agreed that the matters may be listed this week.
The matters were fisted yesterday.
A person claiming to be the son of the second respondent made a request that the matter should not be heard by this Bench.
We rejected this request and made it clear to him that he should make arrangements for the conduct of the case.
The matters did not reach yesterday and when the matters came up today, a letter dated 6.8.92 written by the second respondent to his counsel revoking the counsel 's vakalatnama has been placed before us.
But the respondent No. 2 did not appear before us nor did he make other arrangements for the conduct of the case.
Sri Chatterjee, his advocate on 758 record, appeared but expressed his inability to conduct the case since his client had withdrawn the vakalatnama.
We understand that in one of the matters the respondents are represented by another counsel whose vakalatnama is also seen to have been revoked but she has not appeared or sought permission to withdraw from the case.
In these circumstances we have no other option but to proceed against the respondents ex parte.
We are unable to accede to the respondents request made on a previous occasion by the son of the second respondent for transfer of case to some other Bench.
The circumstances narrated above would show that the respondent has appeared before the Bench on several occasions without protest.
The request made for transfer, after the rejection of the earlier petition by the learned Chief Justice, is belated and is just an attempt by the second respondent to circumvent the order already passed by the Chief Justice rejecting a request for transfer and only because the Constitution of the Bench is not to his liking.
Such a request, we are clear, cannot be countenanced.
" It should be noticed that the said order dated August 7, 1992 was passed not only in the special leave petitions but also in this very Contempt Petition.
The attitude adopted by them before the Receiver (Smt.
Pratibha Bonnerjea retired Judge of Calcutta High Court, appointed by this Court as a Receiver in this case) also discloses the total disregard and disrespect the Respondents have towards the orders of this Court.
The Receiver says: "The next day, by a letter dated 22.8.92, Mr. H.N. Bhan informed me that he would not submit to the order dated 7.8.92 as the Bench was not properly constituted due to the fact that the Hon 'ble Mr. Justice V. Ramaswami was one of the judges and that an application would be moved for recalling the said order.
Thereafter, there was complete non cooperation by M/s. Russel Estate Corporation.
" The conduct of the second respondent as evidenced from the aforesaid material establishes beyond doubt that the second respondent 759 was trying to play with this Court and was consistently flouting its orders.
In the circumstances, the theory of bona fide belief, now put forward before us by his counsel, cannot be accepted.
We may at this stage deal with the further affidavit filed by the second respondent on 14.1.1993.
In para 3 of the affidavit the second respondent has stated that he has the highest regard for this Court, that he has all along complied with the orders passed by this Court and that he never intended to flout or defy the orders of the Court.
He stated further "if in spite of the aforesaid, any order of this Hon 'ble Court has been violated, the same has been so done through mistake, inadvertence and by a misunderstanding of the meaning and purport of that order and surely not intentionally and for which unconditionally apologise for self and on behalf of the Respondent firm and I beg to be excused." Then in paragraphs 4 to 12 he has "without waiving the aforesaid and fully relying thereupon" repeated the contentions which were urged by his counsel before us and which we have dealt with hereinbefore.
He stated that he understood this court 's order dated 1.8.1991 as prohibiting only the entering into of agreements of sale and not delivery of possession or registration of the sale deeds.
All the said contentions we have dealt with hereinbefore.
They need not be reiterated here.
So far as the apology contained in para 3 of the second respondent 's further affidavit is concerned, it may firstly be mentioned that it is not really an unconditional apology though it purports to say so.
While tendering unconditional apology in para 3, the second respondent has tried to defend his action in the subsequent paragraphs.
Secondly, even if we construe paragraph 3 as tendering an unconditional apology, we are not minced to accept the same having regard to the conduct of the respondent which we have adverted to hereinbefore with reference to the order of this court and the report of the Receiver.
Accordingly, we reject the apology tendered in para 3 of the further affidavit.
For the above reasons, we hold the second respondent guilty of Contempt of this Court.
Having regard to the facts and circumstances of this case, we impose a sentence of one month 's imprisonment in addition to a fine of Rs. 2,000 upon the second respondent.
The fine shall be paid into this Court within two weeks from today, in default thereof the second 760 respondent shall undergo a further imprisonment of two weeks.
The second respondent shall also pay the costs of the respondents in this Contempt case which are assessed at Rs. 5,000 within two weeks from today.
In case of failure, the Respondents are free to execute this order as a decree of Court and recover the same from the Respondents.
Mr. H.N. Bhan, who is present in the court, be taken into custody forthwith to undergo the sentence of imprisonment.
G.N. Petition allowed.
| IN-Abs | The present Contempt Petition has been filed complaining that the Respondents had allotted certain flats in favour of third parties in violation of this Court 's order dated 1.8.91.
The Petitioners ' interest has been in respect of two flats on the 8th floor.
They claimed that the said flats had been allotted to third parties in January, 1992, long after this Court 's order dated 1.8.91.
It was also contended that the agreement to sell was a fabricated document.
The Respondents contended that the said flats were allotted on 26.4.91 itself, though possession of the flats was handed over on 17.8.1991, and sale deeds were executed and registered in March 1992.
It was further contended that inasmuch as the agreement for sale was entered into long before the orders of this Court were issued, there was no question of disobedience of the orders of this Court.
Finding the Respondent guilty of Contempt of Court, this Court, HELD : 1.1.
Even assuming that the agreement of sale dated 26.4.1991 is true, the respondents have committed gross contempt of this Court by their brazen violation of the order dated 1.8.1991.
By the said order this Court directed the respondents 1 and 2 not to make "any further allotment of any other flats in the building in dispute with effect 751 from today".
The word "allotment" must be understood reasonably and having regard to the context The first respondent is not like a Government Department or Public Corporation where an allotment order or allotment letter is issued from the office in pursuance of which other steps are taken.
There is no such thing as "allotment" in this case.
According to the Respondents there was first an agreement of sale, then delivery of possession and finally a registered sale deed.
In the context and circumstances of the case, the word "allotment in the said order means making over of the flats; it means delivery of possession and registration of the sale deeds.
An agreement of sale, that too unregistered, has no significance in the context, difficult as it is to verify its truth and correctness.
This court could not be presumed to have interdicted such an uncertain thing.
Admittedly the respondents had represented to this Court, at the time the said order was passed, that they have already entered into agreements of sale in respect of the flats and yet this Court chose to pass the said order.
In the circumstances, it cannot mean anything else than delivery of possession of flats and their sale.
It may also mean an agreement of sale but its meaning is certainly not confined to an agreement of sale.
To say so is to rob the order of any meaning or content.
There could not have been any doubt in the mind of the Second Respondent with respect to the meaning of the order.
In case of any doubt the least he could have done was to ask for a clarification of the said Order.
He could well have represented that be had already entered into an agreement of sale on 26.4.1991 in respect of these flats and that he may be permitted to deliver possession and/or execute sale deeds in respect of the said flats in favour of third parties.
He did nothing of the sort Having placed a highly restrictive and unwarranted interpretation upon the order of this Court, he went ahead and not only delivered possession of the flats to third parties subsequent to the said order but also registered sale deeds in their favour.
He thus rendered the said order nugaptory.
[755E H, 756A E] 1.2.The conduct of the second respondent as evidenced from the material on record establishes beyond doubt that he was trying to play with this Court and was consistently flouting its orders.
[758H, 759A] 2.
So far as the apology tendered by the second respondent is concerned it is not really an unconditional apology.
While tendering apology the second respondent has tried to defend his action.
Even if it is 752 considered as unconditional apology this Court is not inclined to accept the same having regard to the conduct of the respondent Accordingly, the apology tendered by Respondent No.2 is rejected.
[759E G] 3.
The second respondent is guilty of Contempt of this Court Having regard to the facts and circumstances of this case, a sentence of one month 's imprisonment in addition to a fine of Rs. 2,000 is imposed upon him.
The fine shall be paid into this Court within two weeks and in default thereof the second respondent shall undergo a further imprisonment of two weeks.
[760A B]
|
ition (Civil) Nos.
351/72 and 798 of 1992.
(Under Articte 32 of the Constitution of India).
G. Ramaswamy, Attorney General, Soli J. Sorabjee, H.N. Salve, G.L. Sanghi, Dr. V. Gaurishankar, D.D. Thakur, A.K. Ganguli, J.B. Dadachandji Mrs. A.K. Verma, Sunil Gupta, section Sukumaran, Manmohan, Mrs. section Pathak, section Rajappa, Ms. A. Subhashini, P. Parmeshwaran, C.V.S. Rao, R.F. Nariman, M.P. Vinod, R. Nagendra Naidu, N.N. Bhatt, C.N. Sreekumar, Pichai, D. Goburdhan, Santokh Singh, Ms. M. Karanjawala, Antip Sachthey and G. Prakash for the appearing Parties.
The Judgments of the Court were delivered by.
section RATNAVEL PANDIAN, J.
These two Writ Petitions call in question the constitutional validity of the Constitution (Twenty sixth Amendment) Act of 1971 inter alia, on the ground that it violates the basic structure and essential features of the Constitution of India and is, therefore, outside the scope and ambit of constituent powers of the Parliament to amend the Constitution as provided under Article 368 of the Constitution.
In addition, certain directions or suitable orders are sought for declaring that the petitioner continue to be the Rulers or the 'Successor Rulers ', as the case may be and directing the respondent Union of India to continue to recognise their personal rights, amenities and privileges as Rulers of their erstwhile States and also continue to pay privy purse to them in addition to their arrears of amounts.
For facilitating a proper understanding of the controversy that has led to the filing of these two Writ Petitions and the interlocutor Applications 1 to 3 of 1992 in Writ 490 Petition No. 351 of 1972, a synoptical resume of the case as adumbrated in Writ Petition No. 351/72 with the historical background may be stated : The petitioner, Shri Raghunathrao Raja was the Co Ruler of Indian State of Kurundwad Jr. which was prior to 15th August, 1947 a sovereign State in treaty relationship with, and under the suzerainty of the British Crown.
On the commencement of the Indian Independence Act, 1947, British Paramountcy lapsed and the Indian States became completely sovereign and independent.
They were free to accede to either of the two Dominions of India or Pakistan or to remain independent.
The petitioner 's co Ruler, on behalf of both, executed an instrument of accession under Section 5 of the Government of India Act, 1935, as adopted under the Indian Independence Act, 1947.
This instrument was accepted by the Governor General of India and the State thus became a part of the Dominion of India.
Likewise, Rulers of most of the other Indian States also executed similar instruments which were accepted by the Governor General.
By the said instrument, the petitioner accepted the matters specified in the schedule thereto as matters with respect to which the Dominion Legislature may make laws for the State and declared his intent that the Governor General of India, the dominion Legislature, the Federal Court and any other Dominion authority established for the purposes of the Dominion shall, subject to the terms of the instrument, exercise in relation to the Kurundwad State such functions as may be vested in them by the Government of India Act, 1935 as in force in the Dominion of India on the 15th August, 1947.
According to the petitioner, clause 7 of the Instrument provided that nothing therein shall be deemed to commit the Ruler in anyway to acceptance of any future Constitution of India or to fetter his discretion to enter into agreements with the Government of India under any such future Constitution.
Subsequently, a number of Rulers executed Agreements of Merger and transferred the administration of their States to the Dominion Government.
The Merger Agreement was in the form given in the 'White Paper on Indian States ' and it was executed on the 19th February, 1948.
Then the administration of the State of the petitioner was handed over on the 8th March, 1948.
The case of the petitioner is that under the Merger Agreement he was entitled to receive annually from the revenues of the State his privy 491 purse as specified in the Merger Agreement (as amended by an order of Government of India in 1956) free of taxes, besides reserving his personal rights, privileges and dignities.
Certain groups of States entered into covenants for the establishment of United States comprising the territories of the covenanting States and Talukas with a common executive, legislature and judiciary.
The covenants inter alia provided for the administration of United States by a Rajpramukh aided and advised by a Council of Ministers.
They also envisaged the establishment of a Constituent Assembly charged with the duty to frame Constitution for the United States within the framework of covenants and of the Constitution of India.
Each of the covenants was concurred in by the Government of India which guaranteed all its provisions including provisions relating to the privy purse, personal privileges etc.
However, it was later desired that the Constitution of the United States should also be framed by the Constituent Assembly of India and form part of the Constitution of India.
It was decided in consultation with the Government of the United States that the Constitution of India as framed by the Constituent Assembly of India should itself contain all the necessary provisions governing the constitutional structure of the United States as well as the provisions for the guarantee contained in the covenants and the Merger Agreements.
In pursuance of this decision the necessary provisions including part VII providing for the Government, legislature, judiciary, etc.
of the United States as well as certain separate articles governing other matters, for example, the privy purse and privileges of Rulers bringing them within the framework of the covenants were included in the Constitution of India.
Accordingly on 13th October, 1949 the Constituent Assembly of India adopted inter alia two Articles namely, Article 291 relating to payment of privy purse and Article 362 relating to personal rights and privileges of the Rulers.
Amendment relating to the United States and other States which had not merged were also adopted and these States were called Part 'B ' States.
The Rulers and Rajpramukhs of the States agreed to adopt the Constitution as drafted by the Constituent Assembly of India and issued proclamations directing that the Constitution to be adopted by the Constituent Assembly of India shall be the Constitution for the United States.
Supplementary covenants were also executed by the covenanting States which covenants were concurred in and guaranteed by Government of India.
Thereafter, the Constituent Assembly passed and adopted the Constitution.
According to the petitioner, it was only on the 493 was to terminate the privy purses and privileges of the former Indian Rulers and to terminate expressly the recognition already granted to them under those two deleted Articles.
According to the learned counsel appearing for the writ petitioners the withdrawal of the guarantees and assurances given under those articles and the abolition of the privy purse, personal rights, privileges and dignities is in violent breach of the power of Parliament acting as a constituent body under Article 368 of the Constitution inasmuch as it not only sought to amend the Constitution but also destroy the basic philosophy, personality, structure and feature of the Constitution.
Though it is not necessary to narrate in detail the historical events leading to the transfer of power and the integration of Indian States consequent upon the political and constitutional changes, yet a prefatory note of the past historical background may be stated so as to have a better understanding of the policy step taken for the integration of the States in terms of the consolidation of the country.
Though India is geographically one entity yet throughout its long and past chequered history it never achieved political homogeneity.
There were about 554 States (subject to a marginal variation as found in various Reports), out of which the States of Hyderabad and Mysore were left territorially untouched.
Two hundred and sixteen states were merged in the adjoining provinces in which they were situated, or to which they were contiguous.
Five were taken over individually as Chief Commissioners ' provinces under the direct control of the Government of India besides twenty one Punjab Hill States which comprised Himachal Pradesh.
Three hundred and ten were consolidated into six Unions, of which Vindhya Pradesh was subsequently converted into a Chief Commissioner 's province.
Thus, as a result of integration, in the place of 554 states, fourteen ad ministrative units had emerged.
This was a physical or geographical consolidation.
The next step was to fit all these units into a common administrative mould.
Administration in the erstwhile States was in varying stages of development and, with a few exceptions it was both personal and primitive.
Such states being Mysore, Baroda, Travancore and Cochin could stand comparison with their neighboring provinces and in some respects were ahead of them.
But there were smaller States where, owing mainly to the 449 slenderness of their resources, the rulers were not in a position to discharge even the elementary functions of government.
Between these two extremes, there were several States with administrative systems of varying degrees of efficiency.
In the past, the comparative Indian area covered by the States was 48 per cent of the total area of the Dominion of India, the relative population ratio of the States was 28 per cent of the total population of the Dominion of India.
All the above Indian states formed a separate part of India before their merger with the rest of India.
It is common knowledge that the aim of Government of India Act, 1935 was to associate the Indian states with the British India as equal partners in loose federation.
When India became independent by the Indian Independence Act of 1947, British paramountcy in respect of the Indian states lapsed.
Therefore, theoretically though the Rulers became independent in actual fact almost all the Rulers signed Instruments of Accession in August 1947 surrendering Defence, External Affairs and Communications.
The Rulers immediately after independence became divided into four classes.
All the agreements of merger and covenants provided for the fixation of the Rulers ' privy purse which was intended to ;cover all the expenses of the Rulers and their families including the expenses of their residences, marriages and other expenses etc.
Under the terms of the agreements and covenants entered into by the Rulers, privy purses were paid to the Rulers out of the revenues of the States concerned and payments had so far been made accordingly.
During the course of the discussion with the Indian States Finances Enquiry Committee, it was urged by most of the States that the liability for paying privy purses of Rulers should be taken over by the Centre.
Having regard to the various factors, it was decided that the payments should constitute a charge on the Central revenues.
The privy purses settlements, were, therefore in the nature of consideration for the surrender by the Rulers of all the ruling powers and also for the dissolution of the States as separate units.
it is stated that the total amount of the privy purse came to about Rs. 5.8 crores per annum and the quantum of privy purse each year was liable to reduction with every generation.
According to V.P. Menon, who was the Constitutional Advisor to the Governor General till 1947 and then the Secretary to the Ministry of States and closely connected with the 495 annexation of the princely states "the price paid as Privy Purses was not too high for integration and indeed it was insignificant when compared with what the Rulers had lost.
" He pointed out that "the cash balances were to the tune of Rs. 77 crores and that palaces in Delhi alone were worth several lakhs of rupees.
" It is appropriate to refer to the speech of Sardar Vallabhbhai Patel made on 12th October 1949 in the Constituent Assembly on the Draft constitution, on which reliance was placed by the writ petitioners.
The speech reads thus : "There was nothing to compel or induce the Rulers to merge the identity of their States.
Any use of force would have not only been against our professed principles but would have also caused serious repercussions.
If the Rulers had elected to stay out, they would have continued to draw the heavy civil lists which they were drawing before and in large number of cases they could have continued to enjoy unrestricted use of the State revenues.
The minimum which we could offer to them as quid pro quo for parting with their ruling powers was to guarantee to them privy purses and certain privileges on a reasonable and defined basis.
The privy purse settlements are, therefore, in the nature of consideration for the surrender by the Rulers of all their ruling powers and also for the dissolution of the States as separate units.
We would do well to remember that the British Government spent enormous amounts in respect of the Mahratta settlements alone.
We are ourselves honouring the commitments of the British Government in respect of the persons of those Rulers who helped them in consolidating their empire.
Need we cavil then at the small purposely use the world small price we have paid for the bloodless revolution which has affected the destinies of millions of our people.
justice to them; let us place ourselves in their position and then assess the value of their sacrifice.
The Rulers have now discharged their part of the obligations by transferring all ruling powers and by agreeing to the 496 integration of their States.
The main part of our obligation under these agreements, is to ensure that the guarantees given by us in respect of privy purse are fully implemented.
Our failure to do so would be a breach of faith and seriously prejudice the stabilization of the new order.
" The constitutional provisions of Articles 291 a, ,id 362 which are now deleted by Section 2 of the impugned Constitution (Twenty sixth) Amendment Act as they stood, read as follows "291 Privy purse sums of Rulers (1) Where under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of this Constitution, the payment of any sums, free of tax, has been guaranteed or assured by the Government of India to any Ruler of such State as privy purse (a) such sums shall be charged on, and paid out of, the consolidated Fund of India; and (b) the sums so paid to any Ruler shall be exempt from all taxes on income.
(2) Where the territories of any such Indian State as aforesaid are comprised within a State specified in Part A or Part B of the First Schedule, there shall be charged on, and paid out of, the Consolidated Fund of that State such contribution, if any, in respect of the payments made by the Government of India under clause (1) and for such period as may, subject to any agreement entered into in that behalf under clause (1) of Article 278, be determined by order of the President.
362 Rights and privileges of Rulers of India States In the exercise of the power of Parliament or of the Legislature of a State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such covenant or agreement as is referred to in clause 497 (1) of Article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State. ' Clause (22) of Article 366 was amended by Section 4 of the impugned Act of 1971.
We shall reproduce that clause as it stood then and the substituted clause (present) consequent upon the amendment.
Unmended Clause Ruler" in relation to an Indian State means the Prince, Chief or other person by whom any such covenant or agreement as is referred to in clause (1) of Article 291 was entered into and who for the time being is recognized by the President as the Ruler of the State, and includes any person who for the time being is recognized by the President as the successor of such Ruler.
" Substituted or amended clause "Ruler" means the Prince, Chief or other person who, at any time before the commencement of the Constitution (Twenty sixth Amendment) Act, 1971 was recognized by the President as the Ruler of an Indian State or any person who, at any time before such commencement, was recognized by the President as the successor of such Ruler. ' In this connection, the new Article 363 A which has been inserted by section 3 of the impugned Amendment Act which is also relevant for our purpose may be reproduced : 363 A Recognition granted to Rulers of Indian States to cease and privy purses to be abolished Notwithstanding anything in this Constitution or in any law for the time being in force (a) the Prince, Chief or other person who, at any time before the commencement or the Constitution (Twentysixth Amendment) Act, 1971 was recognized by the President as the Ruler of any Indian State or any persons who, at any time before such commencement, was recognized by the President as the successor of such ruler shall, on 498 and from such commencement, cease to be recognized as such Ruler or the Successor of such Ruler.
(b) on and from the commencement of the Constitution (Twenty sixth Amendment) Act, 1971 privy purse is abolished and all rights, liabilities and obligations in respect of privy purse are extinguished and accordingly the Rulers, or as the case may be, the successor of such Ruler, referred to in clause (a) or any other person shall not be paid any sum as privy purse.
The submissions advanced by Mr. Soli J. Sorabjee the learned senior counsel appearing on behalf of the writ petitioner in Writ Petition No. 351 of 1972 are thus.
Articles 291, 362 and 366(22) of the Constitution were integral part of the constitutional scheme and formed the important basic structure since the underlying purpose of these Articles was to facilitate stabilization of the new order and ensure organic unity of India.
These Articles guaranteed pledges to the Rulers based on elementary principles of justice and in order to preserve the sanctity of solemn agreements.
It was only by the incorporation of these Articles that the unity of India was achieved by getting all the Rulers within the fold of the Constitution, and that the deletion of these Articles has damaged and demolished the very basic structure of the Constitution.
The covenants entered into were in the nature of contracts which had been guaranteed constitutionally and affirmed by making the privy purse an expenditure charged under the Consolidated Fund of India and the use of the expressions 'guaranteed or assured by the Government of the Dominion of India to any Ruler" as embodied in Article 291 and the expression 'guaranteed and assurance given under such covenants or agreements as is referred to in clause (1) of Article 291. . . as comprised in Article 362 were a permanent feature of the Constitution reflecting the intention of the founding fathers of the Constitution and as such these two Articles should have been kept intact.
According to the learned counsel, the deletion of these Articles amounted to a gross breach of the principle of political justice enshrined in the preamble by ', depriving or taking away from the princes the privy purses which were given to them as consideration for surrendering all their sovereign rights and contributing to the unity and integrity of the country 499 and that the deletion of these Articles by the impugned Amendment Act, is arbitrary, unreasoable and violative of Article 14 of the Constitution.
Further it has been urged that the Rulers acceded to the Dominion of India and executed Instruments of Accession and Covenants in consideration of the pledges and promises enshrined in Articles 291 and 362 and that the impugned Amendment Act is beyond and outside the scope and ambit of, the constitutional power of the Parliament to amend the Constitution as provided under Article 368 of the Constitution.
Mr. Soli J. Sorabjee, the learned senior counsel in his additional written submissions has further urged that without the co operation of the Rulers, not only the territory of India, its population, the composition of the State Legislatures, the Lok Sabha and Rajya Sabha but also the Constitution that was adopted on 26th November, 1949 would have been basically different and that India i.e. Bharat would have been fundamentally different from the Bharat that came into being.
In Writ Petition No. 351 of 1972 in Ground Nos. 38, 39 and 40, it is contended that the Constitution (Twenty sixth Amendment) Act is unconstitution, null void and violative of Articles 14, 19(1)(g), 21, 31 (1) and (2) of the Constitution.
Mr. Harish Salve, the learned senior counsel contended that 291 and 362 when incorporated were intended to grant recognition to the solemn promises on the strength of which the former Rulers ageed to merge with the Indian Dominion and the guarantee of privy purses and certain privileges was as a just quid pro quo for surrendering their sovereignty and dissolving their States.
It has been stated that the constitutional guarantees and assurances promising continuance of privy purse as enshrined in the Agreements and Covenants were 'an integral part of the Constitutional Schemes ' and 'an important part of the Constitutional structure ' and they were to be fully honoured and not cast away on a false morass of public opinion or buried under acts of States, but the impugned Act, ex facie has abolished and destroyed those constitutional provisions of Articles 291 and 362 affirming the guarantees and assurances given to agreements.
To highlight the signature of those agreenents whereby the Rulers were persuaded to sign the instruments, the statement of Shri V.P. Menon who was Closely connected with the annexation of the princely states and the speech of Sardar Vallabhbhai 500 Patel made in the Constituent Assembly were cited.
It is further emphasized that Sardar Patel also made it clear that according to the vision and views of the Constitution makers, the guarantees of Privy Purse, privileges etc., were perfectly in keeping with the democratic ethos and principle of the Indian people.
Then the learned counsel stated that the views expressed in the Constituent Assembly were unanimously accepted and there was no dissent and that in fact the closing remarks in the debate of Dr. B. Pattabhai Sitaramayya were not only remarkably confirmatory of the permanence and indefeasibility of the aforesaid guarantees and assurances but also went a long way in determining that the said guarantees and assurances have come to stay as an integral and untouchable part of the basic structure of the Constitution.
Finally, it was said that there can be no basic structure of a Constitution divorced from the historical evolution of the precepts and principles on which the Constitution is founded.
Any effort to determine the basic structure of the Constitution without keeping a finger on the historical pulse of the Constitution may well lead to substantial injustice.
According to him, if the historical approach to the test of basic structure is kept in view, the guarantees and assurances of the privy purses, privileges, etc.
granted by the Constitution makers by incorporating Articles 291, 362 and 366 (22) in the Constitution framed by them would, without any doubt or dispute, emerge in their own rights 'as basic features ' of the Constitution which cannot be abrogated or annihilated by any Constitutional amendment.
What he fmally concluded is that the guarantees and assurances of the privy purses, privileges etc.
contained in the above three Articles were, in fact, the reflections of the aforesaid virtues of the Constitution makers which are the very virtues which characterized the personality of the Indian Constitution and that the Objects and Reasons of the impugned Amendment clearly establish the mala fides of the Amendment.
Mr. A.K. Ganguly, the learned senior counsel appearing in IA.
No. 3 of 1992 in W.P. No. 351 of 1972 pointed out that after the Articles 291, 362 and 366 (22) were adopted by the Constituent Assembly of India on 12th, 13th, 14th and 16th October of 1949, Maharaja of Mysore then issued a proclamation on 25th November 1949 to the effect that the Constituent Assembly of Mysore and Maharaja adopted the Constitution of India which would be as passed and adopted by the Constituent Assembly of India.
On 501 the following day, namely, 26th November, 1949, the Constituent Assembly adopted the Constitution of India.
Thereafter, on 23rd January, 1950, Maharaja of Mysore executed the Merger Agreement with the Government of India.
The learned counsel after giving a brief history of the Merger of the princely States, stated that the fact that the framers of the Constitution adroitly chose the words "guarantee or assured" unequivocally conveys the intention of the framers of the Constitution to continue the guarantee as per the covenants in their plain meaning.
Learned counsel submitted that the fact that the expression "guaranteed" occurring both in Article 32 and Article 291 besides in Article 362 ( 'guarantee ') clearly demonstrates the mind of the Constitution makers that they intended the said provisions of Articles 291 and 362 to be the basic and essential structure of the Constitution.
According to him, to preserve the sanctity of these rights, the framers of the Constitution chose to avoid voting in Parliament on the amount to be paid as privy purses and keeping that object in their view, they framed Articles 291(1) reading "Such sums shall be charged on and paid out of the Consolidated Fund of India and that the said payments would be exempted from all taxes on income".
When such was the sanctity attached to this guarantee, the impugned Amendment completely throwing away those guarantees and assurances to the wind is palpably arbitrary and destructive of the equality clause which is admittedly a basic feature of the Constitution.
1992 in Writ Petition No. 351 of 1972 adopted the arguments of the other counsel and contended that the erstwhile Rulers of the princely states formed a class apart in that there is a real and substantial distinction between them and the citizenry of India.
In this context, he referred to Section 87B of the Civil Procedure Code, 1908 which was introduced by way of Amendment after the Constitution came into force in the year 1951 and in order to protect the erstwhile Rulers from frivolous suits filed against them in free India after the Constitution came into force.
This, according to learned counsel was legislative recognition in addition to the constitutional guarantee contained in Articles 291 and 362 of the fact that the erstwhile Princes formed a class apart.
When such was the position, according to the learned counsel, the impugned Amendment which violates the basic structure of the Constitution is unconstitutional.
He cited certain decisions in support of his arguments that the Amendment Act is violative of the essential features contained in Articles 14 and 19(1)(f).
502 Mr. D.D. Thakur, the learned senior counsel appearing for the petitioner in Writ Petition No. 798/92 besides adopting the argument advanced in Writ Petition No. 351/72 added that these two Articles Were not at all amendable on the principle of prohibition, against impairment of the contract obligations, a principle recopised in Section 10, Article 1 of the Constitution of the United States of America.
The same principle is incorporated in the Indian Constitution in the shape of Articles 362 and 291.
According to the learned counsel, the impugned Amendment Act is an ugly epitome of immorality perpetrated by the Indian Parliament, that, too, in the exercise of its constituent powers and the said Amendment Act constitutes an unholy assault on the spirit which is impermissible and that the principle of justice, fairness and reasonableness are beyond the amending powers of the Parliament.
He further stated that the equality clause as interpreted by this Court in various decisions is the most important and indispensable feature of the Constitution and destruction thereof will amount to changing the basic structure of the Constitution, and that the authority of the Parliament to amend the Constitution under Article 368 could be exercised only if the Amendment in the Constitution is justifiable and necessitated because of the socioeconomic reasons broadly referred to in the directive principles of the State Policy and that any Amendment unrelated to any genuine compulsion amounts to an abuse of the power and is therefore a fraud on the exercise of power itself.
The learned Attorney General of India with regard to the above pre Constitutional agreements stated that the history of the developments leading to the merger agreements and the framing of the Constitution clearly show that it is really the union of the people of the native States with the people of the erstwhile.
British India and the Instruments of Accession were only the basic documents but not the individual agreements with the Rulers and therefore to attribute the agreements entered into by Rulers as a sacrifice by the Rulers is unfounded.
Secondly, the nature of the covenants is not that of a contract because a contract is enforceable at law while these covenants were made non justiciable by the Constitution vide Article 363.
According to him the covenants were political in nature and that no legal ingredients as the basis can be read into these agreements and that the guarantees and assurances embodied in Articles 291 and 362 were guarantees for the payment of privy purses.
He has urged that such a guarantee can always be revoked in public interest pursuant to fulfilling, a policy objective or the directive principles of the Constitution.
That being 503 so, the theory of sanctity of contract or unamendability of Articles 291 or 362 did not have any foundation.
He continues to state that the theory of political justice is also not tenable because political justice means the principle of political equality such as adult suffrage, democratic form of Government etc.
In this context, he drew the attention of this Court to a decision in Nawab Usmanali Khan vs Sagarmal, ; wherein Bachawat, J speaking for the Bench has held: ". . . the periodical payment of money by the Government to a Ruler of a former Indian State as privy purse on political considerations and under political sanctions and not under a right legally enforceable in any municipal court is strictly to a political pension within the meaning of section 60(1)(g) of the Code of Civil Procedure.
The use of the expression "privy purse" instead of the expression "pension" is due to historical reasons.
The privy purse satisfies all the essential characteristics of a political pension.
" Furhter it has been observed in the above case purse are not liable to attachment or sale in execution of the respondent 's decree.
" Before embarking upon a detailed discussion on the various facets of the contentions both factual and legal we shall deal with the precursive point with regard to the pre constitutional Instrument of Accession, the Merger Agreement and the covenants which guaranteed the payment of privy purse and the recognition of personal privileges etc.
and which ageements ultimately facilitated the integration of these States with the Dominion of India.
In 1947, India obtained independence and became a Dominion by reason of the Indian; Independence Act of 1947.
The suzerainty of the British Crown over the Indian States lapsed at the same time because of Section 7 of that Act.
Immediately after, all but few of the Indian States acceded to the new Dominion by executing Instruments of Accession.
The Instrument of Accession executed by the Rulers provided for the accession of the States to the Dominion of India on three subjects, namely, (1) 504 Defence, (2) External Affairs and (3) Communications, their contents being defined in List I of Schedule VII of the Government of India Act, 1935.
This accession did not imply any financial liability on the part of the acceding States.
This accession of the Indian States to the Dominion of India established a new organic relationship between the States and the Government, the significance of which was the foregoing of a constitutional link or relationship between the States and the Dominion of India.
The accession of the Indian States to the Dominion of India was the first phase of the process.
of fitting them into the constitutional structure of India.
The second phase involved a process of two fold integration, the consolidation of States into sizable administrative units, and their democratization.
Though high walls of political isolation had been raised and buttressed to prevent the infiltration of the urge for freedom and democracy into the Indian States, with the advent of independence, the popular urge in the States for attaining the same measure of freedom as was enjoyed by the people in the Provinces, gained momentum and unleashed strong movements for the transfer of power from the Rulers to the people.
On account of various factors working against the machinery for self sufficient and progressive democratic set up in the smaller states and the serious threat to law and order in those States, there was an integration of States though not in an uniform pattern in all cases.
Firstly, it followed the merger of States in the Provinces geographically contiguous to them.
Secondly, there was a conversion of States into Centrally administered areas and thirdly the integration of their territories to create new viable units known as Union of States.
Sardar Vallabhbhai Patel had a long discussion with the Rulers and took a very active role in the integration of the States.
As a result of the application of various merger and integration schemes, (1) 216 States had been merged into Provinces; (2) 61 States had been taken over as Centrally administered areas; and (3) 275 States had been integrated in the Union of States.
Thus, totally 552 States were affected by the integration schemes.
Reference may be made to (1) the Report of the Joint Select Committee on Indian Constitutional Reforms (1933 34), (2) the Report of the Expert Committee headed by Nalini Ranjan Sarkar, published in December 1947, (3) The Indian States ' Finances Enquiry Committee chaired by 505 Sir V.T. Krishnamachari appointed on 22nd October, 1948 the recommendations of which, on further discussions with the representatives of the States and Union of States led to the conclusion that the responsibility for payment of the privy purses fixed under various covenants and agreements should be taken over by the Government and (4) the Report of the Rau Committee appointed in November 1948 under the chairmanship of Sir B.N. Rau.
Reverting to the cases on hand, Shri Raghunathrao Ganpatrao, the petitioner in Writ Petition No. 351 of 1972 executed a merger agreement as per the form of merger on 19th February 1948 and handed over the administration of the State on 8th March, 1948.
The petitioner was entitled to receive annually from the revenues of the States his privy purse of Rs. 49,720 as specified in the Merger Agreement (as amended by an Order of Government of India in 1956) free of taxes besides his personal privileges, rights and the Dominion Government guaranteed the succession according to law and custom of the Gadi of the State and the Raja 's personal rights privileges and dignities.
Shri Jaya Chamaraja Wadiyar, father of the petitioner (Sri Srikanta Datta Narasimharaja Wadiyar) in Writ Petition No. 798 of 1992 executed an Instrument of Accession and entered into an Merger Agreement/Treaty on 23rd January, 1950.
Under the merger Agreement, the Maharaja of Mysore was entitled to receive annually for his privy purse the sum of Rs. 26,00,000 (Rupees twenty six lakhs) free of all taxes w.e.f.
1st April 1950.
Article (1) of the said Agreement contained a proviso that the sum of Rs. 26,00,000 was payable only to the then Maharaja of Mysore for his life time and not to his successor for whom a provision would be made subsequently by the Government of India.
Besides, the then Maharaja was entitled to the full ownership, use and enjoyment of all his private properties (as distinct from State properties) belonging to him on the date of the agree ment as specified under clause (1) of Article (2) of the Agreement.
We are not concerned about the particulars of the agreements executed by other Rulers of various States.
While, it was so, in 1950 when the Constitution was enforced, it conferred upon the Rulers the aforesaid guarantees and assurances to privy purse, privileges etc.
under Articles 291, 362 and 366(22) of the Constitution.
Accordingly, Rulers continued to enjoy the said benefits upto 1970.
506 On 14th May, 1970, the Constitution (Twenty fourth Amendment) Bill, 1970 for abolition of the above said privy purse, privileges etc.
conferred under Articles 291, 362 and 366 (22) was introduced in the Lok Sabha by the then Finance Minister, Shri Y.B. Chavan.
The Bill contained three caluses and a short statement of Objects and Reasons.
The statements reads thus : "The concept of rulership, with Privy Purses and Special Privileges unrelated to any current functions and social purposes, is incompatible with an egalitarian social order.
Government have, therefore, decided to terminate the Privy Purses and Privileges of the Rulers of former Indian States.
Hence this Bill.
" On 2nd September, 1979, the Bill was voted upon in the Lok Sabha.
But on 5th September, 1970, the Rajya Sabha rejected the same since the Bill failed in the Rajya Sabha to reach the requisite majority of not less than two third members present as required by Article 368 and voting.
Close on the heels of the said rejection, the President of India purporting to exercise his powers under clause (22) of Article 366 of the Constitution, signed an Order withdrawing recognition of all the Rulers in the country en masse.
A communication to this effect was sent to all the Rulers in India who have been previously recognised as Rulers.
This Presidential Order de recognising the Rulers was questioned in H.H. Maharajdhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors.
vs Union of India ; by filing Writ Petitions under Articles 32 of the Constitution challenging it as unconstitutional, ultra vires and void.
An eleven Judges Bench of this Court by its Judgment dated 15th December 1970 struck down the Presidential Order being illegal, ultra vires and inoperative on the ground that it had been made in violation of the powers of the President of India under Article 366(22) of the Constitution and declared that the writ petitioners would be entitled to all their pre existing rights and privileges including right to privy purses as if the impugned orders therein had not been passed.
Here, it may be noted that Mitter and Ray, JJ. gave their dissenting judgment.
Thereupon, the payment of privy purses to the Rulers was restored.
Subsequently, Parliament enacted a new Act entitled the Constitution (Twenty Fourth Amendment) Act, 1971 on receiving the ratification by the 507 Legislature of 11 States.
It received the assent of the President on 5th November, 1971.
By this amendment Act, clause (4) reading "Nothing in this article shall apply to any amendment of this Constitution made under Article 368" was inserted in Article 13 and Article 368 was renumbered as clause (2).
The marginal heading to that article was substituted namely "Power of Parliament to amend the Constitution and procedure therefor" in the place of 'Procedure for amendment of the Constitution.
Before re numbered clause (2), clause (1) was inserted.
In the re numbered clause (2) for the words "it shall be presented to the President for his assent upon such assent being to the Bill" the words "it shall be presented to the President who shall give his assent to the Bill and thereupon" was sub stituted.
After the re numbered clause (2), clause (3) was inserted, namely 'Nothing in article 13 shall apply to any amendment under this article.
" It may be recalled that Article 368 was firstly amended by Section 29 of the Constitution (Seventh Amendment) Act, 1956 by omitting the words and letters "specified in Part A and B of the First Schedule ' and thereafter by Section 3 of the Constitution (Twenty Fourth Amendment) Act, 1971.
Again by Section 55 of the Constitution (Forty second Amendment) Act, 1956, clauses (4) and (5) were inserted.
But this amendment has been held unconstitutional in Minerva Mills vs Union of India, ; , holding that Sections 55 of the Forty second Amendment Act inserting clauses (4) and (5) to Article 368 had transgressed the limits of the amending power of the Parliament which power in Kesavananda Bharati was held not to include the power of damaging the basic features of the Constitution or destroying its basic structure.
The Constitution (Twenty fifth Amendment) Act, 1971 by substituting a new clause to clause (2) of Article 31 and inserting clause (2B) after clause (2A) came into force.
By the same Amendment Act, Article 31C was inserted after Article 31B entitled "Saving of laws giving effect to certain directive principles".
It is significant to note that Article 31 was omitted by the Constitution (Fourty fourth Amendment) Act, 1978 w.e.f.
20th June, 1979.
The impugned Constitution (Twenty sixth) Amendment, 1971 was passed by the Parliament and it received the assent of the President on 28th December 1971.
By this Act, Articles 291, 362 were omitted and Article 363 A was inserted under the title "Recognition granted to Rulers 508 of India States to cease and privy purses to be abolished".
By the same Amendment Act, an amended new clause was substituted to the then existing clause (22).
We have already reproduced Articles 291, 362 and the past and present clause (22) of Article 366.
After the impugned Twenty sixth Amendment was brought into force w.e.
L 28th December, 1971, the present writ Petition No. 351 of 1972 was filed on 24th August, 1972 for declarations that the Twenty fourth, Twenty fifth and Twenty sixth Amendment Acts of 1971 are unconstitutional, invalid, ultra vires, null and void and that the petitioner continues to be entitled to the privy purse and to personal rights, privileges as a Ruler and for a Writ or order directing the respondent to continue to pay privy purse to the petitioner.
Another Writ Petition No. 352 of 1972 was filed by H.H. Nawab Mohanuned If tikhar Ali Khan of Malekotla seeking same relief as in Writ Petition No. 351 of 1972.
It may be noted when Writ Petition Nos. 351 and 352 challenging the Twenty fourth, Twenty fifth and Twenty sixth Amendment Acts were filed in this Court, Writ Petition No. 135 of 1970 entitled His Holiness Kesavananda Bharati Sripadagalvaru vs State of Kerala and Another was pending before this Court.
When both these Writ Petitions i.e., W.P. No. 351 and 352 of 1972 were listed together, on 28th August, 1972 this Court passed the following order : "Upon hearing for the parties, the Court directed issue of Rule Nisi and directed these petitions to be heard along with Writ petition No. 135 of 1970.
Respondents granted time till end of September 1972 to file counter affidavit to the writ petitions.
Notice of the writ petitions shall issue to the Advocates General of all States.
All the Writ Petitions to be heard on the 23rd October,1972.
Written arguments dispensed with.
" A thirteen Judges bench of this court in Kesavananda Bharati vs State of Kerala, [1973] 4 SCC 225 heard some writ petitions along with these two writ petitions and gave its conclusions thus: "The view by the majority in these writ petitions is as 509 follows: 1.
Golak Nath 's case is over ruled; 2. article 368 does not enable Parliament alter the basic structure of framework of the Constitution; 3.
The Constitution (Twenty fourth Amendment) Act, 1971 is valid; 4.
Section 2(a) and (b) of the Constitution (Twenty fifth Amendment) Act, 1971 is valid; 5.
The first part of Section 3 of the Constitution (Twenty fifth Amendment) Act, 1971 is valid.
The second part, namely, "and no law containing a declaration that it is for giving effect to such policy shall be called in question in any Court on the ground that it does not give effect to such policy ' is invalid.
The Constitution (Twenty ninth Amendment) Act, 1971 is valid.
The Constitution Bench will determine the validity of the Constitution (Twenty sixth Amendment) Act, 1971 in accordance with law.
The cases are remitted to the Constitution Bench for disposal in accordance with law.
There will be no order as to costs incurred up to this stage. ' In pursuance of the said Order, Writ Petition No. 351 of 1972 is now before this Constitution Bench for determination of the constitutional validity of the Twenty sixth Amendment Act in accordance with the law laid down in Kesavananda Bharati.
Since the constitutional validity of the same Twenty sixth Amendment Act is involved in Writ Petition No. 798 of 1992, it is also before this Bench along with Writ Petition No. 351 of 1972.
As regards the inbuilt separate mechanism for amending the Constitution, Dr. Amedkar said, "One can, therefore, safely say that the Indian 510 federation will not suffer from the faults of rigidity or legalism.
Its distinpishing feature is that it is a flexible consideration." Dr. Wheare in his modern Constitution has commended that it "strikes a good balance by protecting the rights of the State while leaving remainder of the Constitution easy to amend. ' Our constitution is amendable one.
In fact, tin now Seventy two amendments have been brought about, the first of which being in 1951 i.e. within 15 months of the working of the Constitution.
The first amendment was challenged in Shankari Prasad vs Union of Indua ; but the Supreme Court unanimously upheld the validity of the Amendment.
A brief note as regards the circumstances which necessitated the Twenty fourth Amendment being brought may be recapitulated.
The Constitution Bench of this Court in Sajjan Singh vs State of Rajasthan; , wherein the constitutional validity of the Constitution (Seventeenth Amendment) Act, 1964 was challenged, reiterated the views expressed in Shankari Prasad by a mojority of three Judges although two Judges gave their separate dissenting judgments.
one of the dissenting Judges, Hidayatullah, J stated that the "Constitution gives so many assurances in Part III that it would be difficult to think that they were the playthings of a special majority. ' The other dissenting Judge, Mudholker, J. took the view that the word 'law ' in Article 13 included a constitutional amendment under Article 368 and that, therefore, the Fundamental Rights part was unalterable.
In his view, Article 13 qualified the amending power found in Article 368 making the Fundamental Rights part of India 's Constitution unamendable.
The concerns of the two dissenting learned Judges came before an eleven Judges Bench of this Court in Golak Nath vs State of Punjab; , involving another round of attack on three Amendment Acts, namely, the first, fourth and seventeenth Amendment Acts.
This Court by a ratio of six to five held that the Parliament had no power "to amend any of the provisions of Part III. . so as to take away or abridge the fundamental rights enshrined in that Part.
The decision in Golak Nath was rendered in 1967, but one of the amendments it would invalidate dated am 1951, another from 1955 and another from 1964.
Therefore, this Court order to avoid any catastrophe that would have ensued in the social and economic relations, had the Court ruled that the amendments were void 511 ab initio, relied on American cases and adopted the doctrine of prospective overuling which was construed to enable the Court to reverse its prior decisions, to continue the validity of the three amendments in issue, and to declare that after judgment the Indian Parliament would have no power to amend or abridge any of the Fundamental Rights.
Therefore, intending to override the ruling in Golak Nath 's case, the (Twenty fourth Amendment) Act, 1971 was brought, as reflected from the Objects and Reasons of the Twenty fourth Amendment, which read thus Objects and Reasons In the Golak Nath case; , , the Supreme Court reversed, by a narrow majority, its own earlier decisions upholding the power of Parliament to amend all parts of the Constitution including Part III relating to fundamental rights.
The result of the judgment was that Parliament was considered to have no power to take away or curtain any of the fundamental rights even if became necessary to do so for the attainment of the objectives set out in the Preamble to the Constitution.
The Act, therefore, amends the Constitution to provide expressly the Parliament power to amend any part of the Constitution.
" Thereafter, the Twenty fifth Amendment Act was brought in 1971 which amended the Constitution to surmount the difficulties placed in the way of giving effect to the Directive Principles of State Policy by the interpretation of Article 31 of the Constitution in Rustom Cawasjee Cooper vs Union of India ; The said Act substituted clause (2) and inserted clause (2B) to Article 31 and added Article 31C.
These amendment acts, namely, twenty fourth and twenty fifth besides twentyninth Amendment Act and the continuing validity of the dictum laid down in Golak Nath 's case, were the subjects for decision in Kesavananda Bharati.
Though Writ Petition No. 351 of 1972 challenging the twentyfourth, twenty fifth and twenty sixth Amendment Act was also listed along with other writ petitions in Kesavananda Bharati the constitutional validity of the twenty sixth amendment was left over for determination by a Constitution Bench.
We shall now proceed to examine the constitutional validity of the ampuped Amendment Act.
512 The question whether Article 291 is a provision related to the Covenants and Agreements entered into between the Rulers of the States and Indian Domination and is that in reality and substance a provision on the subject matter of covenants and agreements were considered by Hidayatullah, CJ in his separate concurring judgment in Madhav Rao and they" are answered in the following terms "The Article when carefully analysed leads to these conclusions: The main and only purpose of the provision is to charge Privy Purses on the Consolidated Fund of India and make obligatory their payment free of taxes on in come.
It narrows the guarantee of the Dominion Government from freedom from all taxes to freedom only from taxes on income.
Earlier I had occasion to show that the Princes had guaranteed to themselves, their Privy Purses free of all taxes.
The Dominion Government had guaranteed or assured the same freedom.
The Constitution limits the freedom to taxes on income and creates a charge on the Consolidated Fund.
There were other guarantees as in the Merger Agreements of Bilaspur and Bhopal (quoted earlier) which are ignored by the Article.
The guarantee of the Dominion Government is thus continued in a modified form.
The reference to Covenants and Agreements is casual and subsidiary.
The immediate and dominant purpose of the provision is to ensure payment of Privy Purses, to charge them on the consolidated Fund and to make them free of taxes on income." (emphasis supplied) Shah, J speaking for the majority with reference to the covenants and eements made the following observation : "After the Constitution the obligation to pay the privy purse rested upon the Union of India, not because it was inherited from the Dominion of India; but because of the constitutional mandate under article 291.
The source of the obligation was in article 291, and not in the covenants and the agreements." (emphasis supplied) 513 So far as Article 362 is concerned, it has been held by majority of the Judges that the said Article is plainly a provision relating to covenants within the meaning of Article 363 and a claim to enforce the rights, privileges and dignities under the covenants therefore, are barred by the first limb of Article 363 and a claim to enforce the recognition of rights and privileges under Article 362 are barred under the second limb of Article 363 and that the jurisdiction of the Courts however, is not excluded where the relief claimed is founded on a statutory provision enacted to give effect to personal rights under Article 362.
The important question now that arises for our consideration is whether the twenty sixth amendment Act, which completely omitted Articles 291, 362 and inserted a new Article 363A and also substituted a new clause (22) in place of its original clause or Article 366, has destroyed, damaged and altered the basic structure of the Constitution.
The Constitution remains at the apex because it is the supreme Law.
The question is what is the power of the Parliament to amend the Constitution either by abridging or omitting any existing Article or adding any new Article or clause or substituting any new clause for its original clause.
To answer this most important question, some supplementary questions have to be examined, those being as to what is the parameter or the mode by which an amendment can be brought and what are limitations either express or implied on the amending power which inters in the Constitution itself including its Preamble.
Before, we proceed further, let us understand what is meant by an 'amendment '.
The word has latin origin 'emendere ' to amend means to correct.
Walter F. Murply in 'Constitutions, Constitutionalism and Democracy ' while explaining what 'amendment ' means has stated "Thus an amendment corrects errors of commission or omission, modifies the system without fundamentally changing its nature that is an amendment operates within the theoretical parameters of the existing Constitution.
" In our Constitution, the expression 'amendment of the Constitution ' is not defined.
However, Part XX which contains one Article viz. Article 368 provide a special procedure for amending certain provisions of the Constitution under the heading "Amending of the Constitution".
514 It is not necessary for us to deal with the different provisions of the Constitution and the procedures for amendment as laid down by the Constitution because the authority of the Parliament in bringing about the impugned amendment Act is not under challenge.
After the judgment of Madhav Rao Scindia the twenty sixth amendment was brought to overcome the effect of the judgment, The objects and reasons of the twenty sixth amendment makes the position clear, which read thus : "The concept of rulership, with privy purses and special privileges unrelated to any current functions and social purposes, was incompatible with an egalitarian social order.
Government, therefore, decided to terminate the privy purses and privileges of the Ruler of former Indian States.
It was necessary for this purpose, apart from amending the relevant provisions of the Constitution to insert a new article therein so as to terminate expressly the recognition already granted to such Rulers and to abolish privy purses and extinguish all rights, liabilities and obligations in respect of privy purses.
Hence this Act.
" We shall now deal with the dictum laid down in Kesavananda Bharati as regards the power vested in the Parliament and the limitations either express or implied or inherent therefor to amend the Constitution.
In Kesavananda Bharati, the Supreme Court upheld the validity of the twenty fourth Amendment.
Of the 13 Judges, Shelat, Hedge, Grover, Jagmohan Reddy and Mukherjea observed that the Twenty fourth Amendment did not more than clarify in express language that which was implicit in the unamended Article 368 and it did not and could not add to the power originally conferred thereunder.
Ray, J said that the Twenty fourth Amendment made explicit what the judgment in Shankari Prasad and the majority judgment in Sajjan Singh and the dissenting judgment in Golak Nath said, namely, that Parliament has the constituent power to amend the Constitution.
Sikri, CJ and Ray, Palekar, Khanna, Beg, Dwivedi, JJ who also held the twenty fourth Amendment valid, said that under Article 368 Parliament can now amend every article of the Constitution.
According to Khanna, J. the non obstante clause (1) has been in 515 serted in the article to emphasise the fact that the power exercised under that Article is constituent power, not subject to the other provisions of the Constitution and embraces within itself addition, variation and repeal of any provision of the Constitution.
Mathew, J. put it succinctly stating that the twenty fourth Amendment Act did not add anything to the content of Article 368 as it stood before the amendment, that it is declaratory in character except as regards the compulsory nature of the assent of the President to a Bill for amendment.
Dwivedi, J. has explicitly stated that except as regard the assent of the President to the Bill, everything else in the twenty fourth Amendment was already there in the unamended Article 368 and that this amendment is really declaratory in nature and removes doubts cast on the amending power by the majority judgment in Golak Nath.
Sikri, CJ.
elaborating the above theme has observed that the Twenty fourth Amendment, insofar as it transfers power to amend the Constitution from the residuary entry (Entry 97, List I) or from Article 248 of the Constitution to Article 368 is valid; in other words, Article 368 of the Constitution as now amended by the twenty fourth Amendment Act deals not only with the procedure for amendment but also confers express power on Parliament to amend the Constitution.
He has also further held that under Article 368, Parliament can now amend every article of the Constitu tion as long as the result is within the limits laid down.
Thus the Constitutional questions that arose in Kesavananda Bharati 's case were scrupulously and conscientiously examined in detail on varied and varying topics from different angles such as 'the basic elements of the Constitutional structure ', 'the basic structure of the Constitution ', 'the essential and non essential features of the Constitution ', 'the plenary power of amendment ' etc.
etc., and finally by majority it is laid down that the power of amendment is plenary and it includes within itself the power to add, alter or repeal the various Articles of the Constitution including those relating to fundamental rights, but the power to amend does not include the power to alter the basic structure or framework of the Constitution so as to change its identity.
In fact, there are inherent or implied limitations on the power of amendment under Article 368.
We shall now examine the various arguments made on behalf of the petitioners and the interveners grouping all those submissions under separate and distinct topics.
516 One of the points urged in common before us is that the framers of the Constitution in their wisdom had thought it fit to incorporate the words ,guaranteed ' or 'assured ' in Article 291 which by their very plain meaning convey the intention of the framers of the Constitution guaranteeing or promising that the erstwhile Rulers of the States would be entitled to receive their privy purses from the revenues of the Union and that it would be free from all taxes.
As we have indicated above there were multiple sequence of events in the historical evolution which necessitated the Indian Rulers to enter into various agreements and ultimately to agree for integration of their States with the Dominion of India by dissolving the separate indentity of their States and surrendering their sovereignty but reserving only their rights for privy purses and privileges.
Though India was geographically regarded as one entity it was divided in as many as about 554 segments big and small.
On 15th August 1947 the British paramountacy lapsed and India attained its independence.
The fact that a heavy price was paid to attain independence and freedom which are sanctified by the blood of many martyrs is unquestionable.
During the independence struggle there was popular urge in the Indian States for attaining the freedom which unleashed strong movements for merger and integration of the States with the Dominion of India.
The agreements entered into by the Rulers of the States with the Government of India were simple documents relating to the accession and the integration and the "assurances and guarantees" given under those documents were only for the fixation of the privy purses and the recognition of the privileges.
The guarantees and the assurances given under the Constitution were independent of those documents.
After the advent of the Constitution, the Rulers enjoyed their right to privy purses, private properties and privileges only by the force of the Constitution and in other respects they were only ordinary citizens of India like any other citizen, of course, this is an accident of history and with the concurrence of the Indian people in their Constituent Assembly.
Therefore, there cannot be any justification in saying that the guarantees and assurances given to the Rulers were sacrosanct and that Articles 291 and 362 reflected only the terms of the agreements and covenants.
In fact as soon as the Constitution came into force, the Memoranda of 517 Agreements executed and ratified by the States and Union of States were embodied in formal agreements under the relevant Articles of the Constitution and no obligation flowed from those agreements and covenants but only from the Constitutional provisions.
To say differently, after the introduction of Articles 291 and 362 in the Constitution, the agreements and covenants have no existence at all.
The reference to Covenants and Agreements was casual and subsidiary and the source of obligation flowed only from the Constitution.
Therefore, the contention urged on the use of the words 'guaranteed ' or 'assured ' is without any force and absolutely untenable.
The next vital issue is whether the impugned Amendment Act has damaged any basic structure or essential feature of the Constitution.
According to Mr. Soli J. Sorabjee, by the repeal of Articles 291 and 362 which were integral part of the constitutional scheme, the identity of the Constitution has been changed and its character has been fundamentally altered.
The total repeal of these Articles coupled with an express repudiation of the guarantees embodied therein has resulted in nullification of "a just quid pro quo" which were the essence of these guarantees.
He has urged that the underlying purpose of doing justice to the Rulers has been subverted and breach of faith has been sanctioned.
He based the above arguments on three decisions of this Court, namely, (1) Waman Rao and Others vs Union of India and Others, ; at 588 80; (2) Maharao Sahib Shri Bhim Singhji vs Union of India and Others, at 212; and (3) Madhav Rao vs Union, at 74 and 83.
There has been a common recurrent argument that the impugned Amendment Act is beyond the constituent power of the Parliament since it has damaged the basic structure and essential features of the Constitution.
Mr. D.D. Thakur in addition to the above has stated that one of the tests to determine whether the provision of the Constitution was intended to be permanent or could be deleted or amended is to see whether the Constitution makers had intended that to be permanent.
In support of his submission, he placed much reliance on the observation of Mudholkar, J in Sajjan Singh vs State of Rajasthan, ; at page 966 reading thus : 518 "Above all, it formulated a solemn and dignified preamble which appears to be an epitome of the basic features of the Constitution.
Can it not be said that these are indicate of the intention of the Constituent Assembly to give a permanency to the basic feature of the Constitution.
" This observation has been reiterated in a separate judgment of Hedge and Mukherjea, JJ in Kesavananda Bharati stating that it was Mudholkar, J who did foresee the importance of the question whether there is any implied limitation on the amending power under Article 368 of the Constitution.
On the basis of the above, he has urged that if the intention of the founding fathers regarding the permanence or imper manence of a provision of the Constitution is conclusive for determining whether a provision is basic or not, there is no difficulty in gathering the intention of the founding fathers from Article 362 itself He continues to state that the fact that 'assurances and guarantees ' had been insulated against every future constituent inroad or legislative incursion of Parliamentary control is further substantiated from the provisions of Article 291 of the Constitution.
Mr. A.K. Ganguly has adopted the above arguments and supple mented the same stating that the privileges of the Rulers of the State were made an integral part of the constitutional scheme and that thereby a class of citizens are for historical reasons accorded special privileges and that the recognition of the status, rights and privileges conferred on the Rulers were not on temporary basis and as such they are not liable to be varied or repudiated.
Mr. Nariman also emphasises the same.
Before adverting to the above contentions, we state in brief about the basic principle to be kept in view while amending a Constitution.
In our democratic system, the Constitution is the supreme law of the land and all organs of the Government executive, legislative and judiciary derive their powers and authority from the Constitution.
A distinctive feature of our Constitution is its amendability.
The Courts are entrusted with important constitutional responsibilities of upholding the supremacy of the Constitution.
An amendment 519 of a Constitution become ultra vires if the same contravenes or transgresses the limitations put on the amending power because there is no touchstone outside the Constitution by which the validity of the exercise of the said powers conferred by it can be tested.
In our Constitution, there are specific provisions for amending the Constitution.
The amendments had to be made only under and by the authority of the Constitution strictly following the modes prescribed, of course, subject to the limitations either inherent or implied.
The said power cannot be limited by any vague doctrine of repugnancy.
There are many outstanding interpretative decisions delineating the limitations so that the Constitutional fabric may not be impaired or damaged.
The amendment which is a change or alteration is only for the purpose of making the Constitution more perfect, effective and meaningful.
But at the same time, one should keep guard over the process of amending any provision of the Constitution so that it does not result in abrogation or destruction of its basic structure or loss of its original identity and character and render the Constitution unworkable.
The Court is not concerned with the wisdom behind or proprietary of the Constitutional amendment because these are the matters for those to consider who are vested with the authority to make the Constitutional amendment .
All that the Court is concerned with are (1) whether the procedure prescribed by Article 368 is strictly complied with '? and (2) whether the amendment has destroyed or damaged the basic structure or the essential features of the Constitution.
If an amendment transgresses its limits and impairs or alters the basic structure or essential features of the Constitution then the Court has power to undo that amendment.
The doctrine of basic structure was originated in Sajjan Singh and has been thereafter developed by this Court in a line of cases, namely (1) Kesavananda Bharati (supra), (2) Indira Gandhi Nehru, (3) Minerva Mills, (4) Waman Rao and (5) Sanjeev Coke Manufacturing Company vs Bharat Coaking Coal Ltd.; , Mr. Soli J. Sorabjee 'in support of his contention that Articles 291 and 362 and clause (22) of Article 366 were integral part of the constitutional scheme which otherwise would mean the 'essential part of the constitutional scheme ', referred to Webster New International Dictionary, 3rd Edition and Collins Concise English Dictionary, and has pointed out the lexical meaning say, that 'integral ' means 'essential ' and, therefore, 520 according to him, the total abolition of the provisions of the Constitution which are its integral parts otherwise essential parts has damaged the essential and basic features of the Constitution.
To draw strength for his submission, he relied upon certain observations made by Shah, J in his judgment in Madhav Rao observing, "By the provisions enacted in Articles 366(22), 291 and 362 of the Constitution the previliges of Rulers are made an integral part of the constitutional scheme" and 'An order merely "de recognising" a Ruler without providing for continuation of the institution of Rulership which is an integral part of the constitutional scheme is, therefore, plainly illegal." (emphasis supplied) The learned Attorney General has vehemently opposed the above submission stating that the expression "integral part of the scheme of the Constitution" used in Madhav Rao are not the same as the basic structure and that expression has to be read in the context of a challenge to the Ordinance which sought to render nuptory certain rights guaranteed in the Constitution, then existing.
It is further stated that the attack on the Twenty sixth Amendment based on the principles laid down.
in Madhav Rao is totally misconceived because only in order to overcome the effect of that judgment, the Twenty sixth Amendment was passed by the Parliament in exercise of its constituent powers.
According to the Attorney General, the observations in the said case were nullified by the Amendment and that judgment is no longer good law after the Amendment.
To test the Amendment on the basis of that judgment is impermissible and all the arguments based upon this case are, therefore, misconceived.
In this content, it becomes necessary to recall certain events which ultimately gave rise to Madhav Rao 's case.
After the commencement of the Constitution, in pursuance of Article 366(22), the Rulers were recognised and they had been enjoying the Privy purses, privileges, dignities etc.
on the basis of the relevant constitutional provisions.
Pursuant to the resolution passed by the AD India Congress committee in 1967, the Union of India introduced the Twenty fourth Amendment Bill in 1970 to implement the decision of the AR India Congress Committee favouring removal of privy purses, privileges etc.
But the Bill though passed in the Lok Sabha failed to secure the requisite majority in the Rajya Sabha and thereby it lapsed.
It was only thereafter, the President of India issued an Order in exercise of the powers vested in him under Article 366(22) derecognising the Rulers and stopping the privy 521 purses, privileges etc.
enjoyed by the rulers.
This Order passed by the President was the subject matter of challenge in Madhav Rao.
The Supreme Court struck down the Order of the President as invalid as in the view of the Court derecognition of the Rulers would not take away right to privy purses when Articles 291 and 362 were in the Constitution.
It was only in that context, the observations which have been relied upon by Mr. So;i J. Sorabjee, were made.
The Twenty sixth Amendment itself was passed by Parliament to overcome the effect of this judgment.
Now by this Amendment, Articles 291 and 362 are omitted, Article 363A is inserted and clause 22 of Article 366 is amended.
Therefore, one cannot be allowed to say that the above said omitted Articles and unamended clause were the essential part of the constitutional scheme.
So they have to be read only in the context of a challenge made to the Presidential Order which sought to render nugatory certain rights guaranteed in the Constitution which were then existing.
In any event, the constitutional bar of Article 362 denudes the jurisdiction of any Court in disputes arising from covenants and treaties executed by the Rulers.
The statement of Objects and Reasons of Twenty sixth Amendment clearly points out that the retention of the above Articles and continuation of the privileges and privy purses would be incompatible with the egalitarian society assured in the Constitution and, therefore, in order to remove the concept of rulership and terminate the recognition granted to Rulers and abolish the privy purses, this Amendment was brought on being felt necessary.
We are of the opinion that the observations of Shah, J in Madhav Rao that 'the privileges of Rulers are made an integral part of the constitutional scheme" and that "institution of Rulership is an integral part of the constitutional scheme ', must be read in their proper context.
That was a case, where by a Presidential order, the Rulers were deprived of their privy purses and other privileges while keeping Articles 291 and 362 intact in the Constitution.
Indeed, the said Presidential order was issued after the Government failed in its attempt to effect an amendment on those lines.
It is in that connection that the learned Judge made the above observations.
It is clear that the learned Judge used the words 'integral part ' in their ordinary connotation not in any lexicographical sense.
Ordinarily speaking, 'integral ' means "of a whole or necessary to the completeness of a whole ' and as "forming a whole ' (Concise Oxford Dictionary).
Our Constitution is not a disjointed document.
It incorporates a particular socio economic and political philosophy.
It is an integral whole.
Every provision 522 of it is an integral part of it even the provisions contained in Part XXI "Temporary, Transitional and Special Provisions".
One may ask which provision which concept or which 'institution ' in the Constitution is not an integral part of the Constitution? He will not find an answer.
To say that a particular provision or a particular 'institution ' or concept is an integral part of the Constitution is not to say that it is an essential feature of the Constitution.
Both are totally distinct and qualitatively different concepts.
The said argument is really born of an attempt to read a judgment as a statute.
One may tend to miss the true meaning of a decision by doing so.
We may say, the aforesaid observations of Shah, J constituted the sheet anchor of the petitioners ' argument relating to basic structure.
In the above premise, it is not permissible to test the Twenty sixth Amendment with reference to the observations made in Madhav Rao.
We shall now dispose of the contention raised in the grounds of the Writ Petition No. 351 of 1972 that the impugned Amendment is violative of Articles 14, 19(1)(f) and (g), 21, 31 (1) and (2) of the Constitution.
Evidently this contention has been raised in the year in 1972, that is long before the Constitution (Fortv fourth Amendment) Act of 1978 was passed w.e.f.
26th June 1979.
Writ Petition No. 798 of 1992 has been filed on October 15, 1992 in which the ground with reference to Articles 19(1)(f) and 31 are left out.
It is to be stated that Articles 19 (1) (f) and 31 are completely omitted by the Forty fourth Amendment.
By the deletion of these Articles by Forty fourth Amendment, the status of 'right to property ' from that of a fundamental right is reduced to a legal right under Article 300A which reads "No person shall be deprived of his property save by authority of law.
However, in order to allay the fears of the minorities in respect of that right guaranteed in the then Article 31, Article 30 (1A) has been inserted by the Forty fourth Amendment.
The right to property even as a fundamental right was not a part of the basic structure and even assuming that the right to privy purse is a property, it is a right capable of being extinguished by authority of law vide article 300A. Needless to emphasise, according to the rules laid down in Keshavananda Bharati that even the fundamental right can be amended or altered provided the basic structure of the Constitution in any way is not damaged.
Permanent retention of the privy purse and the privileges of rights 523 would be incompatible with the sovereign and republican form of Government.
Such a retention will also be incompatible with the egalitarian form of our Constitution.
That is the opinion of the Parliament which acted to repeal the aforesaid provisions in exercise of its constituent power.
The repudiation of the right to privy purse privileges, dignities etc.
by the deletion of Articles 291 and 362, insertion of Article 363A and amendment of clause 22 of Article 366 by which the recognition of the Rulers and payment of privy purse are withdrawn cannot be said to have offended Article 14 or 19 (g) and we do not Find any logic in such a submission.
No principle of justice, either economic, political or social is violated by the Twenty sixth Amendment.
Political justice relates to the principle of rights of the people, i.e. right to universal suffrage, right to democratic form of Government and right to participation in political affairs.
Economic justice is enshrined in Article 39 of the Constitution.
Social justice is enshrined in Article 38.
Both are in the Directive Principles of the Constitution.
None of these rights are abridged or modified.
by this Amendment.
We feel that this contention need not detain us any more and, therefore, we shall pass on to the next point in debate.
A serious argument has been advanced that the privy purse was a just quid pro quo to the Rulers of the Indian States for surrendering their sovereignty and rights over their territories and that move for integration began on a positive promising note but it soon de generated into a game of manoeuvre presumably as a deceptive plan or action.
This argument based on the ground of breaking of solemn pledges and breach of promise cannot stand much scrutiny.
To say that without voluntary accession, India i.e. Bharat would be fundamentally different from that Bharat that came into being prior to the accession is untenable muchness inconceivable.
We have already dealt with the necessity of the Rulers to accede for the integration of States with the Dominion of India in the earlier part of this judgment and, therefore, it is quite unnecessary to reiterate in this context, except saying that the integration could have been achieved even otherwise.
One should not lose sight of the fact that neither because of their antipathy towards the Rulers nor due to any xenophobia, did the Indian Government entertain the idea of the integration but because of the will of the people.
It was the people of the States who were basically instrumental in the integration of India.
It would be apposite to refer to the observation of Bose, J in Varinder singh & Ors vs State of U.P., ; at 435.
The said observation reads as follows 124 "Every vestige of sovereignty was abandoned by the dominion of India and by the States and surrendered to the peoples of the land who through their representatives in the Constituent Assembly hammered out for themselves a new Constitution in which all were citizens in a new order having but one tie, and owning but one allegiance : devotion, loyality, fidelity to the Sovereign Democratic Republic that is India.
" It is also worthwhile to take note of the historical process of states integration which is well set out in Chapter 18 under the heading Indian states in 'The Framing of Constitution A Study by B. Shiva Rao.
A persual of that chapter indicates that the attitude of the princes towards joining a united India was one of resistance, reluctance and high bargain, and it was the peoples of the States who forced them to accede to the new United India.
To say in other words, the States were free but not stable because of the stress and strain they underwent both from inside and outside.
Though the process of integration and democratisation called as unionization" in the words of Sardar Patel, was undertaken step by step at various stages, multiple forces, such as political, economic and geographic, more so the democratic movement within the States accelerated the process of integration.
Therefore, it is a misnomer to say that the Rulers made their.
sacrifices for which they were given just compensation and assured permanent payment of privy purses.
What was given to the Rulers was a political pension as rightly pointed out in Usman A1is case, on consideration of their past position.
Hence there is no question of breaking of solemn pledges or breach of promises etc.
given to the Rulers.
Therefore, the repudiation of the same cannot be said to have amounted to any breach of those guarantees and promises resulting in alteration of the basic structure of the Constitution.
Mr. D.D. Thakur has submitted that the Twenty sixth Amendment is an ugly epitome of immorality perpetrated by the Indian Parliament, that too in the exercise of its constituent powers and that the justice, fairness and reasonableness is the soul, spirit and the conscience of the Constitution of India as framed originally and that the impugned Amendment Act constitutes an unholy assault on that spirit which is impermissible and beyond the amending powers of the Parliament under Article 368 of the constitution.
According to him, the equality clause as interpreted by this 525 Court in (1) Maneka Gandhi vs Union of India, [1978] 2 SCR 621, (2) R.D. Shetty vs Intemational Airport Authority of India, ; , (3) Kasturi Lal Lakshmi Reddy vs State of Uttar Pradesh; , , (4) E.P. Royappa vs State of Tamil Nadu, ; , (5) Indira Gandhi 's case and (6) Minerva Mill 's case (supra) is the most important indispensable feature of the Constitution and destruction thereof will amout to changing the basic structure of the Constitution.
Mr. Harish Salve in addition to the above, urged that the basic structure test is to be applied on the touchstone of the Constitution as it stood while being delivered at the hands of the Constitution makers and that it would be contrary to the very principle of the basic structure to apply any personal notion or ideological predilections while determining the ' personality test ' of the original Constitution.
Further he states that the identity of the Constitution has been lost on account of the impugned Amendment.
As regards the submission that the amendment is an ugly epitome of immorality perpetrated by the Indian Parliament, it has been seriously opposed by the learned Attorney General that this argument based on immorality has only to be stated to be rejected and that it is an elementary principle of jurisprudence that a law cannot be interpreted on the basis of moral principles.
In this connection, reference may be made to the following passage in Dias 's Jurisprudence, Fifth Edition, at Page 355 and 356, It reads thus : "As a positivist, Prof. Hart excludes morality from the concept of law, for he says that positivists are concerned to promote 'clarity and honesty in the formulation of the theoretical and moral issues raised by the existence of particular laws which were morally iniquitous but were enacted in proper form, clear in meaning, and satisfied all the acknowledged criteria of validity of a system.
Their view was that, in thinking about such laws, both the theorist and the unfortunate official or private citizen who was called on to apply or obey them, could only be confused by an invitation to refuse the title of 'law ' or 'valid ' to them.
They thought that, to confront these problems, simpler, more candid resources were available, which would bring into focus far 526 better, every relevant intellectual and moral consideration: we should say, 'This is law , but it is too inquitous to be applied or obeyed. ' "it was pointed out at the beginning of this chapter that the principal.
call for a positivist concept of law is to identify laws precisely for the practical purposes of the present and that for the limited purpose, it is desirable to separate the 'is ' from the 'ought '.
To accomplish this no more would appear to be needed than simply those uses of the word 'law ' by courts; which is akin to Salmond 's definition alluded to above.
Professor Hart 's concept, however, is of 'legal system ', which is a continuing phenomenon.
. . . . . . . . When Professor Hart thinks in a continuum, as he does with society, he has to bring in morality , but in order to defend positivism he shifts ground and takes refuge in the present time frame, for only in this way can he justify the exclusion of morality for the purpose of identifying laws here and now.
There would thus appear to be a greater separation between his concept of law and his positivism than ever he alleges between law and morality.
For the limited purpose of identifying 'law his concept seeks to accomplish more than is necessary; for the purpose of portraying law in a continuum it does not go far enough.
Bentham in his Theory of Legislation, Chapter XII at page 60 said thus: "Morality in general is the art of directing the actions of men in such a way as to produce the greatest possible sum of good.
Legislation ought to have precisely the same object.
But although these two arts, or rather sciences, have the same end, they differ greatly in extent.
All actions, whether public or private, fall under the jurisdiction of morals.
It is a guide which leads the individual, as it were, by the hand through all the details 527 of his life, all his relations with his fellows.
Legislation cannot do this; and, if it could, it ought not to exercise a continual interference and dictation over the conduct of men.
Morality commands each individual to do all that is advantageous to the community, his own personal advantage included.
But there are many acts useful to the community which legislation ought not to command.
There are also many,injurious actions which it ought not to forbid, although morality does so.
In a word legislation has the same centre with morals, but it has not the same circumference.
" Reference may also be made to Krishna Kumar vs Union of India, ; The above passages remind us of the distinction between law and morality and the line of demarcation which separates morals from legislation.
The sum and substance of it is that a moral obligation cannot be converted into a legal obligation.
In the light of the above principle, the Attorney General is right in saying that Courts are seldom concerned with the morality which is the concern of the law makers.
According to him there is no unreasonableness, unfairness and dishonesty in bringing this amendment or in any way injuring the basic feature of the Constitution and this amendment has not caused any damage to the concept of reasonableness and non arbitrariness pervading the entire Constitution scheme.
On a deep consideration of the entire scheme and content of the Constitution, we do not see any force in the above submissions.
the present case, there is no question of change of identity on account of the Twenty sixth Amendment.
The removal of Articles 291 and 362 has not made any change in the personality of the Constitution either in its scheme nor in its basic features, nor in its basic form nor in its character.
The question of identity wilt arise only when there is a change in the form, character and content of the Constitution.
In fact, in the present case, the identity of the Constitution even on the tests proposed by the counsel of 528 the writ petitioners and interverners, remains the same and unchanged.
Mr. R.F. Nariman has contended that by removing the 'real and substantial ' distinction between the erstwhile Princes forming a class and the rest of the citizenary of India the Constitutional amendment has at one stroke violated the basic structure of the Constitution as reflected both in Articles 14 and 51 (c) and treated unequals as equals thereby giving a go by to a solemn treaty obligation which was sanctified as independent Constitutional guarantee.
He has drawn strength in support of his above argument from the decisions in Md. Usman & Ors.
vs State of Andhra Pradesh & Ors, [1971] Supp.
SCR 549 and Ramesh Prasad Singh vs State of Bihar & Others, ; After carefully going through the above decisions which relate to service matters, we are afraid that such an argument.
as one made by Mr. Nariman could be substantiated on the principles laid down in these two decisions that Article 14 will be violated if unequals are treated as equals.
In our considered opinion this argument is misconceived and has no relevance to the facts of the present case.
One of the objectives of the Preamble of our Constitution is 'fraternity assuring the dignity of the individual and the unity and integrity of the nation. ' It will be relevant to cite the explanation given by Dr. Ambedkar for the word 'fraternity ' explaining that 'fraternity means a sense of common brotherhood of all Indians. ' In a country like ours with so many disruptive forces of regionalism, communalism and linguism, it is necessary to emphasise and reemphasise that the unity and integrity of India can be preserved only by a spirit of brotherhood.
India has one common citizenship and every citizen should feel that he is Indian first irrespective of other basis.
In this view, any measure at bringing about equality should be welcome.
There is no legitimacy in the argument in favour of continuance of princely privileges.
Since we have held that abolition of privy purses is not violative of Article 14, it is unnecessary for us to deal with the cases, cited by Mr. Nariman, which according to him go to say that any law violating Article 14 is equally violative of the basic structure of the Constitution, inasmuch as Article 14 is held to be a basic postulate of the Constitution.
One of the arguments advanced by Mr. D. D. Thakur is that the Constitution should be read in the context of the pluralistic society of India where there are several distinct and differing interests brought together 529 and harmonised by the Constitution makers by assuring each Section, class and society, preservsation of certain political, cultural and social features specific to that class or section.
By way of example, reference to Article 370 which confers a special status for Jammu and Kashmir, is made.
He continues to state that likewise in the North Eastern States, the tribals were given autonomus powers for their District Councils coequal to what is conferred on the states and that for minorities, special provisions are made under Article 30.
Besides Articles 25 and 26 are meant to safeguard the minorities and religious denominations.
The persons to determine the injury will be those for whom these provisions were made and whose interests are prejudiced.
According to him, in such a circumstance the "assurances and guarantees given under Articles 291 and 3462 which are the magna karta assuring the rulers of their pre existing rights cannot in any way be destroyed.
We do not think that the aforesaid special provisions have any relevance herein.
As repeatedly pointed out supra, the only question is whether there is any change in the basic structure of the Constitution by deletion of Articles 291, 362 and by insertion of Article 363A and amendment of clause (22) of Article 366.
We have already answered this question ill the negative observing that the basic structure or the essential features of the Constitution is/are in no way changed or altered by the impugned Amendment Act.
We cannot make surmises on 'ifs ' and 'buts ' and arrive to any conclusion that Articles 291 and 362 should have been kept intact as special provisions made for minorities in the Constitution.
It is but a step in the historical evolution to achieve fraternity and unity of the nation transcending all the regional, linguistic, religious and other diversities which are the bed rock on which the constitutional fabric has been raised.
The distinction between the erstwhile Rulers and the citizenary of India has to be put an end to so as to have a common brotherhood.
On a careful consideration of the various aspects of both the writ petitions, we hold that the Constitution (Twenty sixth Amendment) Act of 1971 is valid in its entirety.
For all the aforementioned reasons, both the Writ Petitions as well as the connected 1.
As are dismissed.
No costs.
It has been brought to our notice that a number of writ petitions are pending before the Karnataka High Court touching the matter in question 530 raising various other questions.
Since we have now upheld the validity of the Twenty sixth Amendment Act, the High Court may proceed to dispose of all those pending writ petitions with reference to other issues, if any arising, in accordance with law and in the light of this judgment upholding the Constitutional validity of the impugned Amendment Act.
MOHAN.
J. I had the advantage of perusing the judgment of my learned Brother Ratnavel Pandian, J. Though I am in respectful agreement with him having regard to the importance of the constitutional issues involved in this case, I would like to add the following: It was on the 15th day of August, 1947 when India attained freedom.
Pandit Jawahar Lal Nehru said in memorable words: "When the world sleeps, India will awake to life and freedom.
A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends and when the soul of nation long suppressed, finds utterance.
" With the advent of freedom, India had to faee problems of highest magnitude.
Of the many problmes three were most pressing and urgent.
The earlier they were resolved, the better it was for the country.
The first of them was, to restore the communal harmony which had been impaired to great extend.
(ii) Princely States had to be integrated into the Indian Union.
(iii) There was necessity to frame a republican constitution which would vibrate the new ideas.
With the dawn of independence it was felt that in an independent India the existence of princely states was an anachronism in the body politic.
Neither the past history nor economic and administrative realities could justify the existence of a multitude of autonomous islands.
They had to be integrated with the rest of Indian Union to forge the unity of the country.
After the withdrawal of British Power the paramountcy lapsed to the princes.
They could decide either to join India or Pakistan or even to stay independent.
Sardar Vallabhbhai Patel the architect of Indian unity and the master builder of destiny of nationalist India brought the princely states into the Indian Union by means of judicious threats of force, appeals to patriotism, warnings of anarchy and diplomatic persuasion.
An invitation was extended to all the rulers of the State to work through the Councils of 531 Constituent Assembly for the common good of all.
This invitation was accepted on 19.5.1949.
On this the White Paper says at page 109: "As the States came closer to the Centre it became clear that the idea of separate Constitutions being framed for different constituent units of the Indian Union was a legacy from the Rulers ' polity which, could have no place in democratic set up.
The matter was, therefore, further discussed by the Ministry of States with the Premiers of Unions and States on May 19, 1949 and it was decided, with their concurrence, that the Constitution of the States should also be framed by the Constituent Assembly of India and should form part of the Constitution of India.
" It may not be correct to state that those who sat down together in the Constituent Assembly and those who sent their representatives there, sat as conqueror and conquered, as those who ceded and as those who absorbed, as sovereigns or their plenipotentiaries contracting alliances and entering into treaties as high contracting parties to an act of State.
They were not there as sovereign and subject, or as citizen and alien.
On the contrary, they were the sovereign peoples of India, free democratic equals, forgoing the pattern of a new life for the common weal moving with a spirit of all times.
When India became a Dominion every vestige of sovereignty was abandoned, equally so, by the States.
They all surrendered to the peoples of the land who through their representatives in the Constituent Assembly hammered out for themselves a new Constitution in which all were citizens, in a new order having but one tie, and owing but one allegiances devotion, loyalty, fidelity, to the Sovereign Democratic Republic that is India as was eloquently stated by Justice Bose in Virendra Singh and Others vs State of Uttar Pradesh ; at P. 454: " At one Stroke all other territorial allegiances were wiped out and the past was obliterated except where expressly preserved; at one moment of time the new order was born with its new allegiance springing from the same source for all, grounded on the same basis; the sovereign will of the 532 peoples of India with no class, no caste, no race, no creed, no distinction,. ." The will of the Union Government was clearly expresssed in its White Paper: At page 115 it is said: "With the inauguration of the new Constitution the merged States have lost all vestiges of existence as separate entities" and at page 130: "The new Constitution of India gives expression to the changed conception of Indian unity brought about if by. . the unionisation of states. . " and at page31: "Unlike the scheme of 1935 the new Constitution is not an aliance between democracies and dynasties but a real union of the Indian people built on the concept of the sovereignty of the people All the citizens of India, whether residing in States or Provinces, will enjoy the same fundamental rights and the same legal remedies to enforce them.
In the matter of their constitutional relationship with the Centre and in their internal set up, the States will be on a par with the Provinces.
The new Constitution therefore finally eradicates all artificial barriers which separated the States from Provinces and achieves for the first time the objective of a strong, United and democratic India built on the true foundations of a cooperative enterprise on the part of the peoples of the Provinces and the States alike.
" The princes were first stripped of their three virtal fucntions, defence, foreign affairs and communications.
They were then urged to transfer internal government to popular movements inside the respective states.
In recompense they were allowed to retain their titles, dignities and immunities and were given generous privy purses.
It was in this context 533 Articles 291 and 362 were brought into the Constitution.
Likewise, Article 366 (22) defined the "Ruler".
On 2nd September, 1970, a Bill (Twenty fourth Amendment Bill, 1970) was introduced omitting these articles.
Though it was passed in the Lok Sabha it could not obtain the requisite majority of two thirds of the members present in voting in the Rajya Sabha.
Therefore, the motion for introduction of the Bill was declared lost.
Immediately thereafter the President of India in exercise of his power under clause (22) of Article 366 of the Constitution signed an instrument withdrawing recognision of all the Rulers.
Thereupon, the order was challenged in this Court under Article 32 of the Constitution of India.
In H.H. Maharajadhiraja Madhav Roa Jiwaji Rao Scindia Bahadur & Ors.
vs Union of India; , it was held that the order of the President derecognising the Rulers was ultra vires and illegal.
(In the later part of this judgment the ratio of this ruling will be discussed in detail).
In order to render this ruling ineffective the Twenty Sixth Amendment to the Constitution was introduced.
The following tabulated statement will bring out the legal postition as is obtainable after Twenty Sixth Amendment.
Articles before 26th Amendment Where under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of this Constitution, the payment of any sums, free of tax, has been guaranteed or assured by the Government of the Dominion of India to any Ruler of such State as privy purse (a) such sums shall be charged on, and paid out of, the Consolidated '.
Fund of India, and (b) the sums so paid to any Ruler shall be exempt from all taxes on income.
Articles after 26th Amendment 291.
(Privy purse sums of Rulers) Rep. by the Constitution (Twenty sixth Amendment) Act, 1971, Section 2.
534 Article 362.
In exercise (if the power of Indian States).
Rep. by the Parliament or of the Legislature of a State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such covenant or agreeable as is referred in article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State.
362.(Rights and privileges of Rulers of Indian States.)Rep.
by the Constitution (Teenty Amendment) Act, 1971 Section 2.
363 A. Recognition granted to Rulers of Indian States to cease and privy purses to be abolished Now it that and any anything in this Constitution or in any law for the time being in force (a) the Prince, Chief or other person, who at any time before the commencement or the Constitution (Twenty sixth Amendment) Act, 1971, was recognised by the President as the Ruler of an Indian State or any person who, at any time before such commencement, was recognised by the President as the successor of such Ruler shall, on and from such commencement, cease to be recognised as such Ruler or the successor of such Ruler; (b) on and from the commencement of the Constitution (Twenty sixth Amendment ) Act, 1971, privy purse is abolished and all rights, liabilities and obligations in respect of privy purse are extinguished and accordingly the Ruler or, as the case may Article 362(22): "Ruler" In relation to an Indian State means the Prince, Chief or other person by whom any such covenant or agreement as is referred to in clause (1) of Article 291 was entered into and who for the time being is recognised by the President as the Ruler of the State, and includes any person who for the time being is recognised by the President as the successor of such Ruler.
535 be, the successor of such Ruler, referred to in clause ( a) or any other person shall not be paid and sum as privy purse.
"Rulers" means the Prince, Chief or other person who, at any time before the commencement of the Constitution (Twenty sixth Amendment) Act, 1971, was recognised by the President as the Ruler of an Indian State or any person who, at any time before such commencement, was recognised by the President as the successor of such Rulers.
The validity of this amendment was challenged which came up for consideration in His Holiness Keasavananda Bharati Sripadagalavaru vs State of Kerala, The Court after holding that the basic structure of the Constitution cannot be amended directed by its judgment dated 24th April, 1973 that the Constitution Bench will determine the validity of the Constitution (Twenty sixth Amendment) Act, 1971 in accordance with law and the cases are remitted to the Constitution Bench for disposal in accordance with law.
This is how the matter comes before us.
Mr. Soli J. Sorabjee, learned counsel for the petitioners relying on Madhav Rao 's case (supra) makes the following submissions.
Articles 291 and 362 embodied and guaranteed pledges to the Rulers.
They are based on elementary principles of Justice.
The underlying purpose of these articles was to facilitate stabilization of the new order and to ensure organic unity of India.
This Court in no unmistakable terms said that Articles 366(22), 291 and 362 are integral part of the constitutional scheme.
The institution of rulership is an integral part of the constitutional scheme.
This enunciation of law is by a Bench of 9 Judges and is binding.
536 Integral" means essential.
Such a provision, therefore, could constitute the basic feature of the Constitution.
Conseqently, the total abolition of these previsions of Constitution would necessarily damage its essential or basic feature.
Therefore, if the amendment damages the basic or an essential feature of the Constitution it would be beyond the constituent power of the Parliament as laid down in Waman Rao and others vs Union of India and others ; @ 588 89 as also in Mahtarao Sahib Shri Bhim Singhji vs Union of India & Ors., @ 212.
The correct approach is to examine in each case the place of the particular feature in the scheme of our Constitution, its object and purpose as was held in Indira Nehru Gandhi vs Raj Narain 's case, [1975] Suppl.
SC(, page 1 @ 252.
It was by the incorporation of Articles 291 and 362 that the Constitution makers were able to get the willing consent and cooperation of the Rulers to be brought within the fold of the Constitution as laid down by this Court in Madhav 's Rao case (supra).
Without the accession of the Rulers the Constitution would have been basically different.
Equally, the territory of India, its population, the composition of the State Legislature and Assemblies and the Lok Sabha and Rajya Sabha would be radically different.
The learned counsel seeks to emphasise the nature and the character of guarantees contained in Articles 291 and 362.
When they came to he incorporated it was nothing more than the statutory recognition to the solemn promises held out by Government of India.
In order to secure a truly democratic form of Government in the united independent India these solemn promises were meant to be honoured.
They were intended to incorporate a just quid pro quo for surrender by them of their authority and powers and dissolution of their States.
By repeal of these articles it has resulted in nullification of a just quid pro quo.
The underlying purpose of doing justice to the Rulers has been subverted.
Breach of faith has been sanctioned.
Consequently, the character and personality of the Constitution have been changed from one of honouring solemn promises and doing justice into one of breaking solemn pledges.
537 One of the tests of identifying the basic feature is, whether the identity of the Constitution has been changed.
As laid down in Kesavananda Bharati 's case (supra), the question to be addressed is, can it maintain its identity if something quite different is substituted? The personality of the Constitution must remain unchanged.
It is not necessary that the constitutional amendment which is violative of a basic or essential feature should have an instant or immediate effect on the basic structure.
It is enough if it damages the essential feature as laid down in Indira Nehru Gandhi 's case (supra).
The test to be applied, therefore, is whether the amendment contravenes or runs counter to an imperative role or postulate which is an integral part of the Constitution.
As a matter of fact in Bhim Singhji 's case (supra), it has been laid down that if a statutory provision Section 27 of the Urban Land (Ceiling & Regulation) Act, 1976 confers unfettered discretion and thereby violates Article 14 of the Constitution, it can also damage the basic structure of the constitution.
For all these reasons, it is submitted that the impugned amendment is bad in law.
Mr. D.D. Thakur, learned counsel for the petitioner supporting Mr, Soli J. Sorabjee, urges that one of the most important features of the Indian Constitution is morality.
By the impugned amendment, morality is destroyed because Article 361 before the amendment contained a solemn promise to the future generations.
By the impugned amendment the solemn promise is breached.
The privy purses are charged upon the consolidated fund of India and therefore, goes out of control of Parliament.
These privy purses are payable during the life time of Maharajas or Princes.
If, therefore, it is temporary in nature and is to last only for a stated period, would the Parliament have intended to amend the law? If that was the intention of incorporation of these provisions in the Constitution, the amendment would run counter to such an intention and therefore, cannot be supported.
Article 14 guarantees equality which forbids unfair treatment.
Where by reason of this amendment, the petitioner is subject to unfair treatment, there is an impairment of basic structure since equality is a basic structure.
In connection with this submission, the learned counsel cites case dealing with equality as Ajay Hasia vs Khalid Mujib Sehravardi; , and Minerva Mills Ltd. vs Union of India & Ors., ; and 538 In any event, privy purse is property.
If the petitioner is deprived of the same, it is unfair and is violative of basic structure.
Even from that point of view, the amendment cannot be supported.
Mr. A.K. Ganguli, learned counsel on behalf of the intervenor in I.A. No. 3/92 in W.P. 351/72 would submit that under Article 291 of the Constitution, payment of any sum has been guaranteed or assured.
This guarantee is of great importance.
The guarantee would mean continuity of provision.
Article 32(4) also contains the word 'guarantee '.
The same meaning must be ascribed to guarantee under Article 291.
It is not without purpose that the privy purse is charged upon the consolidated fund of India as seen from Article 112(g).
In this connection, reference may be made to O.N. Mohindroo vs District Judge, Delhi, [1971] III SCC 9.
As to what would constitute the basic structure, could be gathered from Kesavananda Bharati Sripadagalvaru 's case (supra), par ticulary, the passages occurring at parts 582 83, 631, 632, 1159 & 1473.
Mr. R.F. Nariman, learned counsel appearing for petitioner No. 1 would draw our attention to Section 87(b) of the Code of Civil Procedure.
That provision lists the immunities of foreign rulers.
That was challenged as violative of Article 14 of the Constitution.
That challenge was repelled in Mohanlal Jain vs His Highness Maharaja Shri Swai Man Singhji, [1962] 1 SCR 702.
On the same line of reasoning, it should be held, where by the impugned amendment, the princes who form a class is sought to be destroyed there is violation of Article 14.
Wherever unequals are treated as equals, this Court has disapproved of such treatment as seen from Ramesh Prasad Singh vs State of Bihar & Ors., ; at page 793 and Nagpur Improvement Trust & Another vs Vithal Rao & Ors., [1973] III SCR 39.
If, therefore, there is violation of Article 14 that would be offensive of basic structure as seen from Minerva Mills Ltd. case (supra).
It is added that the impugned amendment is violative of Article 51(c) of the Constitution.
The learned Attorney General in countering these submissions advanced on behalf of the petitioners, would argue that the agreements with the princes were pre constitutional agreements.
Admittedly, they were entered into for the purposes of facilitating integration of the nation and 539 creating the constitutional documents for all citizens including those of the native states.
The history of the development relating to the merger agreements and the framing of the Constitution clearly shows that it is really the union of the people of the native states with the people of the erstwhile British India.
The instruments of accession arc the basic documents and not the individual agreements with the rulers.
Therefore, to contend that the agreements were entered into by the rulers as a measure of sacrifice by them is untenable.
Secondly, the nature of the covenant is not that of a contract since a contract is enforceable at law.
On the contrary, these covenants are made non justiciable as seen from Articles 363.
The convenants are political in nature and no legal ingredients as the basis can be read into these agreements as laid down in Usman Ali Khan vs Sagar Mal, 119651 3 SCR 201.
The guarantees in Articles 291 and 362 are guarantees for the payment of privy purses.
Such a guarantee can always be revoked in public interest; more so, for fulfilling a policy objective or the directive principles of the Constitution.
This is precisely what the preamble to the impugned amendment says.
That being so, the theory of sanctity of contract or the unamendability of Article 291 or 362 does not have any foundation.
The theory of political justice is also not tenable since political justice means the principle of political equality such as adult suffrage, democratic form of Government, etc.
The treaties/covenants/etc.
entered into between the Union of India and the Rulers were as a result of political action.
No justiciable rights were intended to be created.
Article 363 as it stood in its original form spells out this proposition.
The rights and privileges in the Articles prior to the 26th Amendment were as acts of State of the Government and not in recognition of the scarifies of the rulers.
By no means, can it be contended that these guarantees given to the rulers were ever intended to be con tinued indefinitely.
Turning to basic feature, the proper test for determining basic feature is to find out what are not basic features.
Rights arising out of covenants which were non justiciable cannot be regarded as basic features.
Where, therefore, Article 363 makes these features non justiciable, the 540 question of basic feature does not arise.
It is equally incorrect to contend that the amendment is violative of Article 14.
There is no such violation.
It is not that by the proposed amendment, Article 14 is amended.
Whether a provision is violative of basic feature of the Constitution has to be decided on the language of the provisions.
The observations in Madhav Rao 's case have to be read in the context of the Constitution as it then stood.
The Court did not intend limiting the amending power.
The 26th Amendment does not in any manner amend the Constitution impairing a basic structure.
The right to property even as a fundamental right was not a part of the basic structure.
Even conceding that pre 26th Amendment right to privy purses to be property, it was a right capable of being extinguished by authority of law.
A permanent retention of the privy purses and the privileges of the rulers would be incompatible with a sovereign and republican form of Government.
Such a retention would also be incompatible with the egalitarian form of the Government envisaged by Article 14.
The words 'integral part of the scheme of the Constitution ' in the majority judgment in Mudhavrao 's case (supra) are not the same as basic structure.
They have to be read in the context of a challenge to an ordinance which sought to render nugatory certain rights guaranteed in the Constitution then existing.
In any event, the constitutional bar of Article 363 denudes the jurisdiction of any court in relation to disputes arising from covenants and treaties executed by rulers.
Hence, it is idle to contend that the impugned amendment in any manner interferes with the basic structure of the Constitution.
Usman Ali 's case (supra) is still good law.
What is overruled by Madhav Rao 's case (supra) is the political character.
Articles 291, 362, 366(22) could never have intended to form a basic structure.
They have no overall applicability permeating throughout the entire Constitution so to say that their absence will change the nature of the Constitution.
The 541 intrinsic evidence is the availability of a machinery for enforcement.
In the case of the rights guaranteed under Part III of the Constitution, a machinery is available for the enforcement.
On the contrary, such a machinery for enforcement of privy purses is not available under Article 363.
Therefore, it is submitted that it is a inferior right than the fundamental right.
Hence, it cannot be called a basic structure at all.
As to what is the meaning of basic structure, reference must be made to Kesavanand 's case (supra).
The learned Attorney General also draws our attention to an Article of K. Subba Rao, Ex Chief Justice of India in [1973] 2 SCC page 1 journal section entitled as "The two judgments: Golaknath and Kesavananda Bharati".
As to the morality part of the impugned amendment, it is urged that there is nothing immoral about it.
Where the changed situation and anxiety to establish an egalitarian society require the change of law it is valid.
In reply to these submissions, Mr. Soli J. Sorabjee would contend that the submissions of learned Attorney General that the guarantees under Articles 291 and 362 are unenforceable in view of Article 363 are not tenable in view of the judgment of this Court in Madhav Rao 's case (supra).
It is also not correct to argue that it is an act of State and therefore, no relief can be granted in respect of matters covered by it.
Such a submission has not been accepted by this court as seen from Madhav Rao 's case (supra) at pages 53; 90 93.
Strong reliance was placed on Usman Ali Khan 's case (supra) that the privy purses are in the nature of compensation.
The observations relied upon by the learned Attorney General have been regarded by the majority in Madhav Rao case as not only obiter but also incorrect as seen from Usman Ali khan 's case at pages 98, 145 & 193.
The submission that the privy purses are mere privileges is contrary to the decision of Madhav Rao 's case (supra) since these have been held to be fundamental rights guaranteed under Articles 19(1)(b) and 31.
Having regard to the above submissions, the sole question would be whether the 26th Amendment is beyond the constituent power of the Parliament ? To put it in another words, does the amendment damage any 542 basic or essential feature of the Constitution ? The law prior to and after 26th Amendment has already been set out in the tabulated statement.
As could be seen by the impugned amendment, Articles 291 and 362 have come to be omitted.
A new Article 363A has come to be inserted.
The original cause 22 of Article 366 has come to be substituted by a new clause.
In pith and substance, this amendment seeks to terminate the privy purses and privileges of the Princes of the former Indian States.
It also seeks to terminate expressly the recognition already granted to them as guaranteed and assured under Articles 291 and 362 of the Constitution.
Therefore, the impugned amendment has withdrawn the guarantees and assurances and abolished the privy purses, personal rights, privileges and dignities.
The validity of the amendment is attacked under: (i) Articles 291, 362 and 366(22) of the Constitution form an important basic structure and demolition of these articles would amount to violation of basic structure.
(ii) The covenants entered into are in the nature of contracts backed by constitutional guarantees.
They are further affirmed by making the privy purses an expenditure charged upon the consolidated fund of India.
Such being the position, a breach of the covenant cannot be made since they were intended to incorporate a just quid pro quo which has come to be nullified by the impugned amendment.
(iii) It is arbitrary and unreasonable and is, therefore, violative of Article 14 and consequently basic structure.
(iv) It is not moral.
In order to appreciate the above points, it is necessary to set out the background in which the Articles came to be incorporated in the Constitution.
It was on July 5th, 1947, Sardar Vallabhbhai Patel exhorted as under: "This country, with its institutions, is the proud heritage of the people who inhabit it.
It is an accident that some live in the States and some in British India, but all alike partake of its culture and character.
We are all knit together by bonds of blood and feeling no less than of 543 self interest.
None can segregate us into segments; no impassable barriers can be set up between us.
I suggest that it is, therefore, better for us to make law sitting together as friends than to make treaties as aliens.
I invite my friends, the Rulers of States and their people to the councils of the Constituent Assembly in this spirit of friendliness and cooperation in a joint endeavor, inspired by common allegiance to our motherland for the common good of us all.
We are at a momentous stage in the history of India.
By common endeavour, we can raise the country to a new greatness while lack of unity will expose us to fresh calamities.
I hope the Indian States will bear in mind that the alternative to co operation in the general interest is anarchy and chaos which will overwhelm great and small in a common ruin if we are unable to get together in the minimum of common tasks.
Let not the future generation curse us for having had the opportunity but failed to turn it to our mutual advantage.
Instead, let it be our proud privilege to leave a legacy of mutually beneficial relationship which would raise this sacred land to its proper place amongst the nations of the world and turn it into an abode of peace and prosperity.
" While clarifying the position, he spoke on 13th November, 1947: 'The State does not belong to any individual.
Paramountcy has been eliminated, certainly not by the efforts of the Princes, but by that of the people.
It is therefore, the people who have got the right to assert themselves and the Nawab cannot barter away the popular privilege of shaping its destiny.
" In this connection, it is worthwhile to quote the following from "The framing of India 's Constitution" by B. Shiva Rao at page 520 as under 'The Indian National Congress was in the past wellknown for its sympathy with the Indian States People 's Conference, a body which sought to establish popular 544 governments in the States.
Jawaharlal Nehru himself was closely associated with this movement.
The start of the proceedings in the Constituent Assembly was not particularly propitious for cooperation between the Assembly and the Rulers.
Moving the Objectives Resolution on December 13, 1946, in the Constituent Assembly (in which neither the Indian States nor the Muslim League were at that time represented) Nehru explained that the resolution did not cern itself with what form of Government the States had or "whether the Rajas and Nawabs will continue or not".
He also emphasized that if a part of the Indian Republic desired to have its own administration it was welcome to have it.
But at the same time he made it clear that the final decision in the matter whether or not there should be a monarchical form of Government in the States was one for decision by the people of the States.
" The political background in which the Articles came up to be incorporated in the Constitution has already been set out.
At this stage, what requires emphasis is that the people brought about the integration of the States with the erstwhile British India which came to be freed from the foreign yoke.
This is very clear from the speech of Sardar Vallabhbhai Patel on 13th November, 1947 quoted above.
It was in recognition of the privileges and powers which existed hitherto the privy purses came to be conferred.
The articles assured the payment of privy purses.
Nature of What exactly is a nature of privy purse in the realm of Privy Purse law could be gathered from Usman Ali Khan 's case (supra) at page 206 as under : "The third contention of Mr. Pathak raises the question whether an amount payable to a Ruler of a former Indian State as privy purse is a political pension within the meaning of Section 60(1)(g), Code of Civil Procedure.
The word "pension" in Section 60(1)(g), Code of Civil Procedure implies periodical payments of money by the Government to the pensioner.
See Nawab Bahadur of 545 Murshidabad vs Kamani Industrial Bank Ltd., (4) 1931 LR 58 IA.
215, 219 & 220 and in Bishamber Nath vs Nawab Imdad Ali Khan, 1890 L.R. 17 IA.
181,186, Lord Watson observed "A pension which the Government of India has given a guarantee that it will pay, by a treaty obligation contracted with another sovereign power, appears to their Lordships to be, in the strictest sense, a political pension.
The obligation to pay, as well as the actual payment of the pension must, in such circumstances, be ascribed to reasons of State policy.
" Now, the history of the integration and the ultimate absorption of the Indian States and of the guarantee for payment of periodical sums as privy purse to the Rulers of the former Indian States are well known.
Formerly Indian States were semi sovereign vassal States under the suzerainty of the British Crown.
With the declaration of Independence, the paramountcy of the British Crown lapsed as from August 15, 1947 and the Rulers of Indian States became politically independent sovereigns.
The Indian States parted with their sovereignty in successive stages, firstly on accession to the Dominion of India, secondly on integration of the States into sizeable administrative units and on closer accession to the Dominion of Indian and finally on adoption of the Constitution of India and extinction of the separate existence of the States and Unions of States.
During the second phase "of this political absorption of the States, the Rulers of the Madhya Bharat States including the Ruler of Jaora State entered into a Covenant on April 22, 1948 for the formation of the United State of Gwalior, Indore and Malwa (Madhya Bharat).
By Article 11 of the Covenant, the Covenanting States agreed to unite and integrate their territories into one State.
Article VI provided that the Ruler of each Covenanting State shall not later than July 1, 1948 make over the administration of the State to the Rajpramuckh and thereupon all rights, authority and juris 546 diction belonging to the Ruler and appertaining or incidental to the Government of the State would vest in the United State of Madhya Bharat.
Article XI (1) provided that "the Ruler of each covenanting State shall be entitled to receive annually from the revenues of the United State for his privy purse the amount of specified against that Covenanting State in Schedule I. ' In Schedule 1, a sum of Rs. 1,75,000 was specified against the State of Jaora.
Article XI(2) provided that the amount of the privy purse was intended to cover all the expenses of the Ruler and his family including expenses of the residence, marriage and other ceremonies and neither be increased nor reduced for any reason whatsoever.
Article XI(3) provided that the Rajpramukh would cause the amount to be paid to the Ruler in four equal instalments at the beginning of each quarter in advance.
Article XI(4) provided that the amount would be free of all taxes whether imposed by the Government of the United State or by the Government of India.
Article XIII of the Covenant secured to the ruler of each Covenanting State al l personal privileges, dignities and titles then enjoyed by them.
Article XIV guaranteed the succession, according to law and custom, to the gaddi of each Covenanting State and to the personal rights, privileges, dignities and titles of the Ruler.
The covenant was signed by all the Rulers of the covenanting state.
At the foot of the Covenant, it was stated that "The Government of India thereby concur in the above Covenant and guarantee all its provisions." In confirmation of this consent and guarantee, the Covenant was signed by a Secretary to the Government of India.
On the coming into force of the Constitution of India, the territories of Madhya Bharat became an integral part of India.
Article 291 of the Constitution provided : "Where under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of this Constitution, the payment of any sums, free 547 of tax, has been guaranteed or assured by the Government of the Dominion of India to any Ruler of such State as privy purse : (a)Such sums shall be charged on, and paid out of, the Consolidated Fund of India; and (b)the sums so paid to any Ruler shall be exempt from all taxes on income." In view of the guarantee by the Government of the Dominion of India to the Ruler of Jaora State in the Covenant for the formation of the United State of Madhya Bharat, the payment of the sums specified in the covenant as privy purse to the Ruler became charged on the Con solidated Fund of India, and became payable to him free from all taxes on income.
Article 362 provides that in the exercise of the legislative and executive powers, due regard shall be had to the guarantee given in any such covenant as is referred to in Article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State.
Article 363(1) provides that notwithstanding anything contained in the Constitution, the Courts would have no jurisdiction in any dispute arising out of any provision in any covenant entered into by any Ruler of an Indian State to which the Government of the Dominion of India was a party, or in any dispute in respect of any right accruing under or any liability or obligation arising out of any of the provisions of the Constitution relating to any such covenant.
Article 366(22) provides that the expression "Ruler ' in relation to an Indian State means a person by whom the covenant referred to in Article 299(1) was entered into and who for the time being is recopied by the President as the Ruler of the State, ,and includes any person who for the time being is rccognised by the President as the successor of such Ruler.
Now, the covenant entered into by the Rulers of Madhya Bharat by which they gave up their sovereipity over their respective territories and vested it in the new United 548 State of Madhya Bharat.
The Covenant was an act of State, and any violation of its terms cannot form the subject of any action in any municipal courts.
The guarantee given by the Government of India was in the nature of a treaty obligation contracted with the sovereign Rulers of Indian States and cannot be enforced by action in municipal courts.
Is sanction is political and not legal On the coming into force of the Constitution of India, the guarantee for the payment of periodical sums as privy purse is continued by Article 291 of the Constitution, but its essential political character is preserved by Article 363 of the Constitution, and the obligation under this guarantee cannot be en forced in any municipal court.
Moreover, if the President refuses to recognise the person by whom the covenant was entered into as the Ruler of the State, he would not be entitled to the amount payable as privy purse under Ar ticle 291.
Now, the periodical payment of money by the Government to a Ruler of a former Indian State as privy purse on political considerations and under political sanctions and not under a right legally enforceable in any municipal court is strictly a political pension within the meaning of Section 6(1)(g) of the Code of Civil Procedure.
The use of the expression "purse" instead of the expression 'pension" is due to historical reasons.
The privy purse satisfies all the essential characteristics of a political pension, and as such, is protected from execution under Section 60(1)(g), Code of Civil Procedure.
Moreover, an amount of the privy purse receivable from the Government cannot be said to a debt or other property over which or the proceeds of which he has disposing power within the main part of Section 60(1), Code of Civil Procedure.
It follows that the third contention of Mr. Pathak must be accepted, and it must be held that the amounts of the privy purse are not liable to attachment or sale in execution of the respondent 's decree." (emphasis supplied) This case is an authority, for the proposition that it is a political pension.
The question is whether this dictum has been overruled by Madhav Rao 's case (supra).
549 At page 145 of the said decision, it is held "On the coming into force of the Constitution of India, the guarantee for payment of periodical sums as privy purse is continued by Article 291 of the Constitution, but its essential political character is preserved by Article 363 of the Constitution and the obligation under this guarantee cannot be enforced in any municipal court.
With all respect, it appears to me, that all the above was not strictly necessary for the decision of the case and it would have been enough to say that privy purse was a pension a word which according to the Oxford Dictionary means, "a periodical payment made specially by a Government, company, employer etc. ' which was political in nature because it was based on a political settlement.
However it was not the expression of opinion of only one learned Judge but the unanimous view of three learned Judges of this Court.
In Kanwar Shri Vir Rajendra Singh vs Union of India ; a Bench of another five learned Judges of this Court have pronounced on the non enfor ceability of the provision for payment of privy purse under Article 291 by resort to legal proceedings.
In my view, on the reasoning already given by me it must be held that the payment of privy purse although placed on a pedestal which defies annihilation or fragmentation as long as the above mentioned constitutional provisions enure is still subject to the constitutional bar of non justiciability and cannot be upheld or secured by adjudication in a court of law including this Court.
Further, at page 193 of the said decision, it is held "The learned Judges in that case had no occasion to consider nor did they go into the scope of Article 291 or Article 363.
Every observation of this Court is no doubt, entitled to weight but an obiter, cannot take the place of the ratio.
" A careful reading of the above shows what is overruled is the political character and not that the privy purse is not a political pension.
Even 550 otherwise, if really, this dictum has been overruled, the very basis of the judgment of Usman Ali Khan 's case (supra) would disappear.
Then the reasoning in relation to the attachability under Section 60 of Code of Civil Procedure would be incorrect.
Be that so, what is argued by Mr. Soli J. Sorabjee is the guarantee under Article 291 is enforceable notwithstanding Article 363.
Therefore, this discussion need not detain us.
As to the scope of Article 363, it could be culled from Madhav Rao 's case (supra) at page 99 : "A dispute as to the right to receive the privy purse, is therefore not a dispute arising out of the covenant within the first limb of Article 363, nor is it a dispute with regard to a right accruing or obligation arising out of a provision of the Constitution relating to a covenant.
But since the right to the privy purse arises under Article 291 the dispute in respect of which does not fall within either clause, the jurisdiction of the Court is not excluded in respect of disputes relating to personal rights and privileges which are granted by statutes.
" One thing which must be borne in mind while appreciating the scope of Madhav Rao 's case (supra) is what occurs at page 75 as under: Scope of Scindia "whether the Parliament may by a constitutional amend,Ruling amendment abolish the fights and privileges accorded to the Rulers is not, and cannot be, debated in this petition, for no such constitutional amendment has been made.
The petitioner challenges the authority of the President by an order purporting to be made under Article 366(22) to withdraw recognition of Rulers so as to deprive them of the rights and privileges to which they are entitled by virtue of their status as Rulers." (emphasis supplied) This Court had no occasion to go into the scope of constitutional amendment like the present one.
Therefore, all reasons addressed for striking down the presidential order must be confined only to the authority of the President to issue the order under Article 366(22) of the Constitution.
551 BASIC STRU This takes us to the power of amendment conferred CTURE under Article 368.
That power of amendment is unlimited except that the basic structure of the Constitution cannot be amended.
What then is the basic structure ? In Kesavananda 's case (supra), Sikri CJ.
stated at page 165 as under: whether "The learned Attorney General said that every Articles 291, provision of the Constitution is essential; otherwise, it would 362, 366(22) not has been put in the Constitution.
This is true.
But this does not place every provision of the Constitution in the same position.
The true position is that every provision of the Constitution can be amended provided in the result the basic foundation and structure of the constitution remains the same.
The basic structure may be said to consist of the following features : (i) Supremacy of the Constitution; (ii) Republican and Democratic form of Government; (iii) Secular character of the Constitution; (iv) Separation of powers between the Legislature, the executive and the judiciary; (v) Federal character of the Constitution.
The above structure is built on the basic foundation, i.e. the dignity and freedom of the individual.
This is of supreme importance.
This cannot by any form of amend ment be destroyed.
The above foundation and the above basic features are easily discernible not only from the preamble but the whole scheme of the Constitution, which I have already discussed." 552 Shelat & Grover, JJ.
in the said judgment stated at page 280 as under: "The basic structure of the Constitution is not a vague concept and the apprehensions expressed on behalf of the respondents that neither the citizen nor the Parliament would be able to understand it are unfounded.
If the historical background, the Preamble, the relevant provisions thereof including Article 368 are kept in mind there can be no difficulty in discerning that the following can be regarded as the basic elements of the constitutional structure.
(These cannot be catalogued but can only be illustrated).
The supremacy of the Constitution.
Republican and Democratic form of Government and sovereignty of the country.
Secular and federal character of the Constitution.
Demarcation of power between the legislature, the executive and the judiciary.
The dignity of the individual secured by the various freedoms and basic rights in Part III and the mandate to build a welfare State constrained in Part IV. 6.
The unity and the integrity of the nation.
" Hedge & Mukherjea, JJ.
in the said judgment stated at page 314 as under : "We find it difficult to accept the contention that our Constitution makers after making immense sacrifices for achieving certain ideals made provision in the Constitution itself for the destruction of these ideals.
There is no doubt as men of experience and sound political knowledge, they must have known that social economic and political chan ges are bound to come with the passage of time and the Constitution must be capable of being so adjusted as to 553 be able to respond to those new demands.
Our Constitution is not a mere political document.
It is essentially, a social document.
It is based on a social philosophy and every social philosophy like every religion has two main features, namely, basic and circumstantial.
The former remains constant but the latter is subject to change.
The core of a religion always remains constant but the practices associated with it may change.
Likewise, a Constitution like ours contains certain features which so essential that they cannot be changed or destroyed.
In any event it cannot be destroyed from within.
In other words, one cannot legally use the Constitution to destroy itself.
Under Article 368 the amended Constitution must remain 'the Constitution ' which means the original Constitution.
When we speak of the 'abrogation ' or 'repeal ' of the Constitution, we do not refer to any form but to substance.
If one or more of the basic features of the Constitution are taken away to that extent the Constitution is abrogated or repealed.
If all the basic features of the Constitution are repealed and some other provisions inconsistent with those features are incorporated, it cannot still remain the Constitution referred to in Article 368.
The personality of the Constitution must remain unchanged." (emphasis supplied).
Further, at page 322, it was stated as under 'On a careful consideration of the various aspects of the case we are convinced that the Parliament has no power to abrogate or emasculate the basic elements or fundamental features of the Constitution such as the sovereignity of India, the democratic character of the individual freedoms secured to the citizens.
Nor has the Parliament the power to revoke the mandate to build a welfare State and egalitarian society.
" Jaganmohan Reddy, J. in the said judgment stated at page 517 as,under: 554 "I will now consider the question which has been strenuously contended, namely, that there are no essential features, that every feature in the Constitution is essential, and if this were not so, the amending power under the Constitution will apply only to non essential features which it would be difficult to envisage was the only purpose of the framers in inscribing Article 368 and that, therefore, there is no warrant for such a concept to be read into the Constitution.
The argument at first flush is attractive, but if we were to ask ourselves the question whether the Constitution has any structure or is structureless or is a "jelly fish" to use an epithet of the learned Advocate for the petitioner, the answer would resolve our doubt.
If the Constitution is considered as a mechanism, or call it an organism or a piece of constitutional engineering, whichever it is, it must have a structure, or a composition or a base or foundation.
What it is can only be ascertained, if we examine the provisions which the Hon 'ble Chief Justice has done in great detail after which he has instanced the features which constitute the basic structure.
I do not intend to cover the same field once again.
There is nothing vague or unascertainable in the preamble and if what is stated therein is subject to this criticism it would be equally true of what is stated in Article 39(b) & (c) as these are also objectives fundamental in the governance of the country which the State is enjoined to achieve for the amelioration and happiness of its people.
The elements of the basic structure are indicated in the preamble and translated in the various provisions of the Constitution.
The edifice of our Constitution is built upon and stands on several props, remove any of them, the Constitution collapses.
These are: (1) Sovereign Democratic Republic; (2) Justice, social, economical and political; (3) Liberty of thought, expression, belief, faith and worship; (4) Equality of status and of opportunity.
Each one of these is important and collectively they assure a way of fife to the people of India 555 which the Constitution guarantees.
To withdraw any of the above elements the structure will not survive and it will not be the same Constitution, or this Constitution nor can it maintain its identity, if something quite different is substituted in its place, which the sovereign will of the people alone can do.
" Palekar, J. in the said judgment would say at page 619 "Since the 'essential features and basic principles ' referred to Mr. Palkhivala are those culled from the provisions of the Constitution it is clear that he wants to divide the constitution into parts one of the provisions containing the essential features and the other containing non essential features.
According to him the latter can be amended in any way the Parliament likes, but so far as the former provisions are concerned, though they may be amended, they cannot be amended so as to damage or destroy the core of the essential features.
Two difficulties arise, who is to decide what are essential provisions and non essential provisions? According to Mr. Palkhivala it is the court which should do it.
If that is correct, what stable standard will guide the court in deciding which provision is essential and which is no essential? Every provision, in one sense, is an essential provision, because if a law is made by the Parliament or the State Legislatures contravening even the most insignificant provision of the constitution, that law will be void.
From that point of view the courts acting under the constitution will have to look upon its provisions with an equal eye.
Secondly, if an essential provision is amended and a new provision is inserted which, in the opinion of the constituent body, should be presumed to be more essential than the one repealed, what is the yardstick the court is expected to employ? It will only mean that whatever necessity the constituent body may feel in introducing a change in the constitution, whatever change of policy that body may like to introduce in the constitution, the same is liable to be struck down if the court is not satisfied either about the 556 necessity or the policy.
Clearly this is not a function of the courts.
The difficulty assumes greater proportion when an amendment is challenged on the ground that the core of an essential feature is either damaged or destroyed.
What is the standard? Who will decide where the core lies and when it is reached? One can understand the argument that particular provisions in the constitution embodying some essential features are not amendable at all.
But the difficulty arises when it is conceded that the provision is liable to be amended, but no so as to touch its core '.
Apart from the difficulty in determining where the 'core of an essential features ' lies, it does not appear to be sufficiently realised what fantastic results may follow in working the Constitution.
Suppose an amendment of a provision is made this year.
The mere fact that an amendment is made will not give any body the right to come to this Court to have the amendment nullified on the ground that it affects the core of an essential feature.
It is only when a law is made under the amended provision and that law affects some individual 's right, that he may come to this Court.
At that time he will first show that the amendment is bad because it affects the core of an essential feature and if he succeeds there, he will automatically succeed and the law made by the Legislature in the confidence that it is protected by the amended constitution will be rendered void.
" Khanna, J. in the said judgment at page 720 stated as under "So far as the question is concerned as to whether the right to property can be said to pertain to basic structure or framework of the Constitution, the answer, in my opinion, should plainly be in the negative.
, Mathew, J. in the said judgment at page 827 828 observed "But the question will still remain, even when the core or the essence of a Fundamental Right is found, whether the Amending Body has the power to amend it in such a way as to destroy or damage the core.
I have already said 557 that considerations of justice, of the common good, or "the general welfare in a democratic society" might require abridging or taking away of the Fundamental Rights.
I have tried, like Jacob of the Old Testament to wrestle all the night with the angel, namely, the theory of implied limitation upon the power of amendment.
I have yet to learn from what source this limitation arises.
Is it because the people who were supposed to have framed the Constitution intended it and embodied the intention in an unalterable framework? If this is so, it would raise the fundamental issue whether that intention should govern the succeeding generations for all time.
If you subscribe to the theory of Jefferson, to which I have already referred and which was fully adopted by Dr. Ambedkar, the principal architect of our Constitution and that is the only same theory I think there is no foundation for the theory of implied limitations.
Were it otherwise, in actual reality it would come to this: The representatives of some people the framers of our Constitution could bind the whole people for all time and prevent them from changing the constitutional structure through their representatives.
And, what is this sacredness about the basic structure of the Constitution? Take the republican form of Government, the supposed cornerstone of the whole structure.
Has mankind, after its wandering through history, made a final and unalterable verdict that it is the best form of government? Does not history show that mankind has changed its opinion from generation to generation as to the best form of Government? Have not great philosophers and thinkers throughout the ages expressed different views on the subject? Did not Plato prefer the rule by the Guardians? And was the sapient Aristotle misled when he showed his proclivity for a mixed form of government? If there was no consensus yesterday, why expect one tommorow?" Commenting on this case and Golaknath 's decision, Subba Rao, exhibit C.J.I. in 'The two judgments : Golaknath and Kesavananda Bharati" (supra) 558 says at page 18: "The result is that the Supreme Court by majority declared that the Parliament under the Indian Constitution is not supreme, in that it cannot change the basic structure of the Constitution.
It also declared by majority that under certain circumstances, the amendment of the fundamental rights other than the right to property would affect the basic structure and therefore would be void.
The question whether the amendment of the fundamental right to property would under some circumstances affect the basic structure of the Constitution is not free from doubt; the answer depends upon the view the Supreme Court takes hereafter of the impact of the opinion of Matthew, Beg, Dwivedi and Chandrachud, JJ.
the funda mental rights are the basic features of the Constitution on the opinion of the six judges, who held that the core of the fundamental rights is part of the basic structure of the Constitution.
One possible view is that together they form a clear majority on the content of the basic structure; another possible view is that their opinion should be read along with that the entire Constitution, except perhaps the bare machine of Government, could be repealed by amendment.
" If this be the law, the question would be whether Articles 291,362 366(22) could ever be intended to form a basic structure.
The answer should be in the negative.
They have no overall applicability permeating through the entire Constitution that the absence of these provisions will change the nature and character of the Constitution.
While examining the question whether these Articles constitute the basic structure, one must have regard to Article 363 of the Constitution.
They are made enforceable in a Court of law.
If really they are to form basic structure, would not a corresponding right as occurring under Article 32(4) have been provided? In Indira Nehru Gandhi 's case (supra), the following observations are found in para 663 : 559 "The preamble, generally, uses words of "passion and power" in order to move the hearts of men and to stir them into action.
Its own meaning and implication being in doubt,the preamble cannot affect or throw fight on the meaning of the enacting words of the Constitution.
Therefore, though our Preamble was voted upon as is a part of the Constitution, it is really "a preliminary statement of the reasons ' which made the passing of the Constitution necessary and desirable.
As observed by Gajendragadkar, J. in In re Berubari Union vs Exchange of Enclaves, what Willoughby has said about the preamble to the American Constitution, namely, that it has never been regarded as the source of any substantive power, is equally true about the prohibitions and limitations.
The preamble of our Constitution cannot therefore be regarded as a source of any prohibitions or limitations." Therefore, regard must be had to the scope of the preamble which states : "The concept of Rulership, with privy purses and special privileges unrelated to any current functions and social purposes, is incompatible with an egalitarian social order.
Government have therefore decided to terminate the privy purses and privileges of the Rulers of former Indian States.
It is necessary for the purpose, apart from amending the relevant provisions of the Constitution, to insert a new article therein so as to terminate expressly the recognition already granted to such rulers and to abolish privy purses and extinguish all rights liabilities and obligations in respect of privy purses.
" If the 26th amendment aims to establish an egalitarian society which is in consonance with the glorious preamble, how could this provision be called a basic structure? No doubt, in Madhav Rao 's case (supra), it was held that these provisions are an integral part of the Constitution of this country.
Apart from the fact that all these reasons were addressed against the power of the President under Article 366(22), this statement cannot tantamount to basic 560 structure.
Nor would it mean the same as the basic structure.
To determine whether these provisions constitute basic structure or not they cannot be viewed in the historic background.
By repeal of the provisions the personality of the Constitution has not changed.
India could still retain its identity and it can hardly be said that the personality has changed.
The repudiation of the guarantees might result in the nullification of a just quid pro quo.
But, if it is the will of the people to establish an egalitarian society that will be in harmony with the changing tunes of times.
It cannot be denied that law cannot remain static for all times to come.
The extract of Matthew, J. in Kesavananda 's case highlights this aspect as under : "But the question will still remain, even when the core or the essence of a Fundamental Right is found, whether the Amending Body has the power to amend it in such a way as to destroy or damage the core.
I have already said that considerations of justice, of the common good, or 'the general welfare in a democratic society ' might require abridging or taking away of the Fundamental Rights. ' Weems vs United States, 54 Law Edition 801 quoted in Francis Coralie Mullin vs Administrator, Union Territory of Delhi & Ors., ; at page 617 succinctly states the law on this aspect as under : "Time works changes, brings into existence new conditions and purposes.
Therefore, a principle, to be vital, must be capable of wider application than mischief which gave it birth.
This is peculiarly true of Constitutions.
They are not ephemeral enactments designed to meet passing occasions.
They are, to use the words of Chief Justice Marshall "designed to approach immortality as nearly as human institutions can approach it".
The future is their care, and provisions for events of good and bad tendencies of which no prophecy can be made.
In the application of a Constitution, therefore, our contemplation cannot be only of what has been, but of what may be.
Under any other rule a 561 Constitution would indeed be as easy of application as it would be deficient in efficacy and power.
Its general principles would have little value, and be converted by precedent into impotent and lifeless formulas.
Rights declared in the words might be lost in reality.
And this has been recognised.
The meaning and vitality of the Constitution have developed against narrow and restrictive construction." (emphasis supplied) Robert section Peck in "The Bill of Rights & the Politics of Interpretation" states at page 316 317 as under : "The Constitution, then, is not a beginning nor an end, but part of a timeless process.
Any constitution "intended to endure for ages to come" (Mcculloch vs Maryland, 17 U.S. ; , 415(1819) cannot be a closed system or temporally bound.
The Constitution is more properly seen as part of a stream of history.
That stream is not always unbroken and has, frequently, taken radical turn, , That it is path has been winding is not surprising, since history is not a steady and predictable progression following earlier events.
Still, constitutional rights must be viewed as traveling down a single historic stream.
Today 's conclusions, to remain principled and persuasive, need to relate back to earlier origins.
When cases come before the Courts, purposes and concerns of timeless character require translation into practical rules that apply to their most modern manifestations.
In this role, courts perform a mediating function, harmonizing different strands into a coherent order.
But the courts do not exercise an exclusive authority in giving coherence to constitutional law.
Political leaders and political institutions have played this roles well, advancing both the law and the mechanisms available to promote constitutional liberty.
"Great constitutional provisions must be administered with caution. ' Justice Oliver Wendell Holmes remained us. 'Some play must be allowed for the joints of the machine, and it must be remembered that legislatures are ultimate guardians of the liberties and welfare of the people in quite as great a 562 degree as the Courts.
(Missouri, Kansas & Texas Rly Co. vs May, ; , 270 (1904)).
the Courts are insulated from the political winds that buffer, motivate andsometimes disable a legislature.
This independence from thelarger political world is critical to discharge of the tasks the successful discharge of the tasks we assign the judiciary Nevertheless, the courts operate in a political world of their own.
In this variety of politics, courts must harmonize past with present, conflict with resolution, change with continuity.
And they must contend with a variety of interest groups that influence the process by their actions and by the appeal of their arguments" In the words of the famous poet Jaames Russel Lowell New occasions teach new duties:Time makes ancient good uncouth: They must upward stilt and onward, who would keep abreast of Truth.
" Nodoubt, unity and integrity of India would constitute the basic structureas laid down in Kesavananda 's case (supra) but it is too far fetched aclaim to state that the guarantees and assurances in these Articles have gone into the process of unification and integration of the country.
One cannot lose sight of the fact that it was the will of the people and the urge to breathe free air of independent India as equal citizens that brought about the merger of these princely states.
Therefore, the contention that the Articles 291 and 362 facilitated the organic unity of India is unacceptable.
Next as to the violation of Article 14, it is true as laid down in Bhimsinghji 's case (supra) that if a particular provision of a constitution violates Article 14, it would affect the basic structure of the Constitution.
This case dealt with the validity of Section 27(1) of the Urban Land (Ceiling and Regulation) Act, 1976.
The relevant portion of the judgment in Bhimsinghji 's case (supra) can now be extracted 563 "Further, the restriction under Section 27(1) in the absence of any guidelines governing the exercise of the power on the competent authority in the matter of granting or ' refusing to grant the permission is highly arbitrary, productive of discriminatory results and,.
therefore, violates the equality clause of Article 14.
Which of the three objectives mentioned in the preamble should guide the exercise of power by the competent authority in.
any given case is not clear and in any case no standard has been laid down for achieving the objectives of preventing concentration, speculation, and profiteering in urban land or urban property.
Because of these reasons the provisions for appeal and revision under Sections 33 and 34 against the order passed by the competent authority under Section 27, would also not be of much avail to preventing arbitrariness in the matter of granting or refusing to grant the permission.
Section 27 is thus ultra vires and unconstitutional.
" Per Chandrachud, CJ.
and Bhagwati J. (Krishna Iyer, J., concurring) 'Sub section (1) of Section 27 of the Act is invalid insofar as it imposes a restriction on transfer of any urban or urbanisable land with a building or a portion only of such building, which is within the ceiling area.
Such property will, therefore, be transferable without the constrains mentioned in sub section (1) of the Act.
* (paras 5,8, &10) Per Krishna Iyer, J (concuming) "I agree with the learned Chief Justice both regarding the constitutionality of the legislation and regarding partial invalidation of Section 27(1).
" Per Seth J. "Sub sections (1), (2) and (3) of section 23 and the opening words 'subject to the provisions of sub sections 564 (1), (2) and (3) in Section 23(4) are ultra vires the Parliament and are not protected by Articles 31 B and 31 C of the Constitution and further, Section 27(1) is invalid insofar as it imposes a restriction on transfer of urban property for a period of ten years from the commencement of the Act, in relation to vacant land or building thereon within the ceiling limits. ' Krishna lyer, J. stated in the said judgment at page 186 as under : "The question of basic structure being breached cannot arise when we examine the vires of an ordinary legislation as distinguished from a constitutional amendment.
Kesavananda Bharati, 1973 Supp.
SCR cannot be the last refuge of the Propreitariate when benigh legislation takes away their 'excess ' for societal weal.
Nor, indeed, can every breach of equality spell disaster as a lethal violation of the basic structure.
Perioheral inequality is inevitable when large scale equalisation processes are put into action.
If all the judges of the Supreme Court in solemn session sit and deliberate for half a year to produce a legislation for reducing glaring economic inequality their genius will let them down if the essay is to avoid even peripheral inequalities.
Every, large cause claims some martyr, as sociologists will know.
Therefore, what is a betrayal of the basic feature is not a mere violation of Article 14 but a shocking unconscionable or unscrupulous travesty of the quintessence of equal justice.
If a legislation does go that far it shakes the democratic foundation and must suffer the death penalty.
But to permit the Bharati (supra) ghost to haunt the corridors of the court brandishing fatal writs for every feature of inequality is judicial paralysation of parliamentary function.
Nor can the constitutional fascination for the basic structure doctrine be made a Trojan horse to penetrate the entire legislative camp fighting for a new social order and to overpower the battle for abolition of basic poverty by the 'basic structure ' missile.
Which is more basic? Eradication of die hard, deadly and per 565 vasive penury degrading all human rights or upholding of the legal luxury of perfect symmetry and absolute equality attractively presented to preserve the status quo ante ? To use the Constitution to defeat the Constitution cannot find favour with the judiciary I have no doubt that the strategy of using the missile of 'equality ' to preserve die hard, dreadful societal inequality is a stratagem which must be given short shrift by this Court.
The imperatives of equality and development are impatient for implementation and judicial scapegoats must never be offered so that those responsible for stalling economic transformation with a social justice slant may be identified and exposed of Part IV is a basic goal of the nation and now that the Court upholds the urban ceiling law, a social audit of the Executive 's implementation a year or two later will bring to tight the gaping gap between verbal velour of the statute book and the executive slumber of law in action.
The Court is not the anti hero in the tragedy of land reform, urban and agrarian.
" In this case, the amendment does not either treat unequals as equals or in any manner violates Article 14.
AD the privy purses holders are treated alike by the withdrawal of all those privileges.
The next aspect of the matter is can the Court go into the morality in withdrawing these assurances and guarantees.
The following extract from 'Law and Morality ' by Louis Blom Cooper Gavin Drewry at page 2 is very useful : "The relationship between law and morals is in effect quadripartite, but it is only the fourth part that engages our current interest.
The first part is an historical and casual question.
Has the law been influenced by moral principles? No one doubts the answer is affirmative; conversely law has influenced moral principle.
The Suicide Act, 1961 no doubt accurately reflected the long standing moral view that to take one 's own life was not a crime against the law, a view which had not always been shared 566 by the judiciary (originally) for reasons having to do as much with property as with theological morality).
The statutory abolition of the crime of suicide in its turn buttressed and affirmed the moral attitude.
The second part questions whether law necessarily refers to morality at all; do morals and law overlap in practice, simply because both share the common vocabulary of rights and duties? It is here that the natural lawyers and legal positivists have engaged most fiercely in controversy.
The antagonists have found temporary refuge in the sterile argument about whether law is open to moral criticism.
Can a rule of law, 'properly ' derived (in constitutional terms) to be held to conflict with some moral principle? Those who witnessed Parliament, through the vehicle of the War Damage Act, 1965 reversing retrospectively the House of Lords ' decision in Burmah Oil Co. Ltd. vs Lord Advocate, ; and thus depriving a large cor poration of its fruits of litigation, would acknowledge readily the dissociation of law and political, if not social, morality.
In any event, does it matter that the law is immorally enacted, if we are all bound by it? Its enforceability (if not its actual enforcement) is unlikely to be affected by such theoretical objections.
Perhaps political morality can be defined only in terms of the franchise, and the efficacy of representative government though again the argument rests on a philosophical and psychological, rather than on an empirical plane. ' Then again, dealing with constraints on Constitutional interpretation.bent Greenwalt in conflicts of fits of Law and Morality ' 1987 Edition states at page as follows impugned 'Like ordinary legislation, constitutional provisions amendmentprotecting rights reflect the moral judgments of those who whether adopted them in this case complex judgments that certain coral activities should be put beyond the range of control by the 567 Political branches of the government.
In constitutions, as in statutes, language may embody a compromise of competing moral claims, though nothing in out federal Constitution resembles the relatively precise accommodation of the criminal law rules governing use of force in selfdefence.
The fact that the Constitution itself represents moral evaluations does not, of course, establish that moral evaluation is also the task of those who must decide if statutes and their applications fall a foul of constitutional restraints.
Widespread agreement exists on the appropriateness of some other techniques of interpretation.
The point if clearest for actions that the language of the Constitution, the intent of the Framers, and the decisions of earlier courts place squarely within the area of constitutional protection.
For these actions, a modern court win rarely need to engage in any debatable moral evaluation.
Usually it will apply the plain law, perhaps after determining that no overwhelming argument has been made contrary to the indications of these powerful sources.
Even for harder cases, judicial interpretation is not simple moral evaluation; the implications of the textual language, the Framers ' intent, and the precedents count for something if they point in one direction or another.
" To the same effect, Michael J. Perry in 'Morality Politics and law" 1988 Edn. states at page 129 as under : 'According to the view of democracy that underlies originalities, it is illegitimate for the judiciary to go beyond the enforcement of policy choices to the making of policy choices at least, it is illegitimate unless the judiciary is authorised to do so by the legislative and executive branches.
And it is illegitimate in extremis for the undemocratic judiciary to oppose itself, in constitutional cases, to the democratic branches and agencie s of government on the basis of beliefs never constitutionality by the gratifiers.
" 568 Therefore, this Court cannot concern itself with the moral aspect of the impugned amendment.
The impugned amendment is the will of the people expressed through Parliament.
In view of the foregoing discussion these petitions Are liable to be dismissed.
Accordingly, these petition stand dismissed.
V.P.R. petition dismissed.
| IN-Abs | The petitioner was a Co Ruler of an Ex Indian State of Kurundwad.
His Co Ruler, on behalf of both, executed an instrument of accession under Section 5 of the Government of India Act, 1935 and their State became a part of the Dominion of India.
A Merger Agreement was executed on the 19th February, 1948 and the administration of the State of the petitioner was also handed over to the Dominion Government on the 8th March, 1948.
The case of the petitioner was that under the Merger Agreement he 480 481 was entitled to receive annually from the revenues of the State his privy purse as specified in the Merger Agreement.
Certain groups of States entered Into covenants for the establishment of United States comprising the territories of the covenanting States and Talukas with a common executive, legislature and judiciary.
On 13th October, 1949 the Constituent Assembly of India adopted inter alia two Articles namely, Article 291 relating to payment of privy purse and Article 362 relating to personal rights and privileges of the Rulers.
The Rulers and Rajpramukhs of the States agreed to adopt the Constitution drafted by the Constituent Assembly of India.
In pursuance of Article 366(22) of the Constitution of India, the petitioner was recognized as the Ruler of the Kurundwad State with effect from 26th January, 1950 and had been in the enjoyment of the privy purse, privileges, titles and dignities issued by Merger Agreement, and by the Constitution of India.
The Parliament enacted the Constitution (Twenty Sixth Amend ment) Act of 1971, repealing Articles 291 and 362 of the Constitution, a new Article 363 A was inserted and new clause (22) to Article 366 was substituted.
It resulted in depriving the Rulers of their recognition already accorded to them and declaring the abolition of the privy purse and extinguishing their rights and obligation in respect of privy purse.
The petitioner filed the writ petition challenging the impugned Amendment Act as unconstitutional and violative and the fundamental rights of the petitioner guaranteed under Articles 14, 19(1)(f), 21 and 31(1),(2) of the Constitution.
In the Writ Petition No. 351/72, I.A. Nos. 1 to 3 of 1992 were filed by the daughters of Late Maharaja of Mysore.
WRIT PETITION NO.
798 OF 1992 The petitioner was the successor to the Ruler of Mysore also challenged the Constitution (26th Amendment) Act of 1971 on the same grounds as in Writ Petition No. 351/72.
482 The petitioner in W.P. No. 351/72 submitted that Articles 291, 362 and 366(22) of the Constitution were integral part of the constitutional scheme and formed the important basic structure since the underlying purpose of these Articles was to facilitate stabilization of the new order and ensure organic unity of India; that the deletion of the Articles damaged and demolished the very basic structure of the Constitution; that the covenants entered into were in the nature of contracts which was guaranteed constitutionally and affirmed by making the privy purse an expenditure charged under the Consolidated Fund of India; that the deletion of the Articles amounted to a gross breach of the principle of political justice enshrined in the preamble by depriving or taking away from the princes the privy purses which were given to them as consideration for surrendering all their sovereign rights and contributing to the unity and integrity of the country; that the Rulers acceded to the Dominion of India and executed Instruments of Accession and Covenants in consideration of the pledges and promises enshrined in Articles 291 and 362; that the impugned Amendment Act was beyond and outside the scope and ambit of the constitutional power of the Parliament to amend the Constitution as provided under Article 368 of the Constitution; that the Constitution (Twenty Sixth Amendment) Act was unconstitutional, null, void and violative of Articles 14, 19(1) (g), 21, 31 (1) and (2) of the Constitution; and that Articles 291 and 362 when incorporated were intended to grant recognition to the solemn promises on the strength of which the former Rulers agreed to merge with the Indian Dominion and the guarantee of privy purses and certain privileges was as a just quid pro quo for surrendering their sovereignty and dissolving their States.
The petitioner in I.A. No. 3 submitted that the fact that the expression "guarantees" occurring both in Article 32 and Article 291 besides in Article 362 ( 'guarantee ') clearly demonstrated the mind of the Constitution makers that they intended the said provisions of Articles 291 and 362 to be the basic and essential structure of the Constitution.
The petitioner in 1 A No. 1 contended that the erstwhile rulers of the princely States formed a class apart and there was real and substantial distinction between them and the citizenry of India; that the impugned amendment which violated the basic structure of the Constitution was unconstitutional that the Amendment Act was violative of the essential features contained in Articles 14 and 19(1)(f).
483 The petitioner in W.P. No. 798/92 added that the two Articles were not at all amendable on the principle of prohibition against impairment of the contractual obligations; that the impugned Amendment Act was an ugly epitome of immorality perpetrated by the India Parliament, that, too, In the exercise of its constituent powers and the said Amendment Act constituted an unholy assault on the spirit which was impermeable and that the principle of justice, fairness and reasonableness were beyond the amending powers of the Parliament; that the equality clause as interpreted by this Court in various decisions was the most important and indispensable feature of the Constitution and destruction thereof would amount to changing the basic structure of the Constitution and that the authority of the Parliament to amend the Constitution under Article 368 could be exercised only if the Amendment in the Constitution was justifiable and necessitated because of the socioeconomic reasons broadly referred to in the directive principles of the State Policy and that any Amendment unrelated to any genuine compulsion amounts to an abuse of the power and was therefore a fraud on the exercise of power itself Respondent Union of India contended that the Instruments of Accession were only the basic documents but not the individual agreements with the Rulers and therefore to attribute the agreements entered into by Rulers as a sacrifice by the Rulers was unfounded; that the nature of the covenants was not that of a contract because a contract was enforceable at law while these covenants were made non justiciable by the Constitution vide Article 363; that the covenants were political in nature and that no legal ingredients as the basis could be read into these agreements and that the guarantees and assurances embodied in Articles 291 and 362 were guarantees for the payment of privy purses; that such a guarantee could always be revoked in public interest pursuant to fulfilling a policy objective or the directive principles of the Constitution; that being so, the theory of sanctity of contract or unamendability of Articles 291 or 362 did not have any foundation; and that the theory of political justice was also not tenable because political justice meant the principle of political equality such an adult suffrage democratic form of Government etc.
Dismissing the Writ Petitions and the I.As., this court, HELD : (By Full Court) ; The Constitution (Twenty Sixth Amendment) Act of 1971 is valid in its entirety.
[529G] 484 Per section Ratnavel Pandian, J. on his behalf and on behalf of the Chief justice of India, B.P. Jeevan Reddy and S.P. Baucha, JJ.: 1.01.
The only question is whether there is any change in the basic structure of the Constitution by deletion of Articles 291, 362 and by insertion of Article 363A and amendment of clause (22) of Article 366.
The question is answered in the negative observing that the basic structure or the essential feature of the Constitution is /are in no way changed or altered by the Constitution (Twenty Sixth Amendment) Act of 1971.
[529D] 1.02.
In our democratic system, the Constitution is the supreme law of the land and all organs of the government executive, legislative and judiciary derive their powers and authority from the Constitution.
A distinctive feature of our Constitution is its amendability.
[518G] 1.03.
The power of amendment is plenary and it includes within itself the power to add, after or repeal the various Articles of the Constitution including those relating to fundamental rights, but the power to amend does not include the power to alter the basic structure or framework of the Constitution so as to change its identity.
In fact, there are inherent or implied limitations on the power of amendment under Article 368.
[515G] 1.04.
There are specific provisions for amending the Constitution.
The amendments had to be made only under and by the authority of the Constitution strictly following the modes prescribed, of course, subject to the limitations either inherent or implied.
The said power cannot be limited by any vague doctrine of repugnancy.
There are many outstanding interpretative decisions delineating the limitations so that the Constitutional fabric may not be impaired or damaged.
The amendment which is a change or alteration is only for the purpose of making the Constitution more perfect, effective and meaningful.
But at the same time, one should keep guard over the process of amending any provision of the Constitution so that it does not result in abrogation or destruction of its basic structure or loss of its original identity and character and render the Constitution unworkable.
[519B D] 1.05.
The Courts are entrusted with important Constitutional responsibilities of upholding the supremacy of the Constitution.
An amendment of a Constitution becomes ultra vires if the same contravenes or transgresses the limitations put on the amending power because there 485 is no touchstone outside the Constitution by which the validity of the exercise of the said powers conferred by it can be tested.
[518H, 519A] 1.06.
The Court is not concerned with the wisdom behind or propriety of the Constitutional amendment because these are the matters for those to consider who are vested with the authority to make the Constitutional amendment.
All that the Court is concerned with are (1) whether the procedure prescribed by Article 368 is strictly complied with? and (2) whether the amendment has destroyed or damaged the basic structure or the essential features of the Constitution.
[519D E] 1.07.
If an amendment transgresses its limits and impairs or alters the basic structure or essential features of the Constitution then the Court has power to undo that amendment.
[519F] 1.08.
No principle of justice, either economic, political or social is violated by the Twenty sixth Amendment.
Political justice relates to the principle of rights of the people, i.e., right to universal suffrage, right to democratic form of Government and right to participation in political affairs.
Economic justice is enshrined in Article 39 of the Constitution.
None of these rights are abridged or modified by this Amendment.
[523C] 1.09.
There is no question of change of identity on account of the Twenty sixth Amendment.
The removal of Articles 291 and 362 has not made any change in the personality of the Constitution either in its scheme not in its basic features nor in its basic form nor in its character.
The question of identity will arise only when there is a change in the form, character and content of the Constitution.
1527G] 1.10.
A moral obligation cannot be converted into a legal obligation.
Courts are seldom concerned with the morality which is the concern of the law makers.
[527D E] 1.11.
In a country like ours with so many disruptive forces of regionalism, communalism and linguism, it is necessary to emphasise and re emphasise that the unity and integrity of India can be preserved only by a spirit of brotherhood.
India has one common citizenship and every citizen should feel that he is Indian first irrespective of other basis.
In this view, any measure at bringing about equality should be welcome.
There is no legitimacy in the argument in favour of continuance of princely 486 privileges.
Abolition of privy purses is not violative of Article 14.
[528F] 1.12.
The Court cannot make surmises on 'ifs ' and 'buts ' and arrive to any conclusion that Articles 291 and 362 should have kept in tact as special provisions made for minorities in the Constitution.
It is but a step in the historical evolution to achieve faternity and unity of the nation transcending all the regional, linguistic, religious and other diversities which are the bed rock on which the constitutional fabric has been raised.
The distinction between the erstwhile Rulers and the citizenary of India has to be put an end to so as to have a common brotherhood.
[529E F] Nawab Usmanali Khan vs Sagamial ; ; H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors.
vs Union of India; , ; Minerva Mills vs Union of India, ; ; His Holiness Kesavananda Bharati Sripadagalavaru vs State of Kerala and Another, [1973] 4 SCC 225; Shankari Prasad vs Union of India, ; ; Sajjan Singh vs State of Rajasthan, ; at 966; Golak Nath vs State of Punjab, ; ; Rustom Cawasjee Cooper vs Union of India, ; ; Waman Rao and Others vs Union of India and Others, ; at 588 89; Maharao Sahib Shri Bhim Singhji vs Union of India and Others, at 212; Madhav Rao vs Union, ; at 74 and 83; Indira Nehru Gandhi vs Raj Narain, ; Sanjeev Coke Manufacturing Company vs Bharat Cooking Coal Ltd., ; , Varinder Singh & Ors.
vs State of U.P., ; at 435; Maneka Gandhi vs Union of India, [1978] 2 SCR 621; R.D. Shetty vs International Airport Authority of India, ; ; Kasturi Lal Lakshmi Reddy vs State of Uttar Pradesh, ; ; E.P. Royappa vs State of Tamil Nadu, ; ; Krishna Kumar vs Union of India, ; ; Mfd.
Usman & Ors.
vs State of Andhara Pradesh and Ors.
, [1971] Suppl.
SCR 549, Ramesh Prasad Singh vs State of Bihar & Ors., ; , rererred to.
Report of the Joint Select Committee on Indian Constitutional Reforms (1933 34); Report of (he Expert Committee headed by Nalini Ranjan Sarkar (published in December, 1947), Report of the Indian States ' Finances Enquiry Committee, chaired by Sir V.T. Krishanamachary (appointed on 22nd October, 1948).
Report of the Rau Committee chaired by Sir B.N. Rau (appointed in November, 1948); Dias: Jurisprudence, Fifth Edition, at pages 355 and 356; Bentham : Theory of Legislation, Chapter XII at page 60, referred to.
487 Per section Mohan, J. (Concurring) 1.01.
One of the tests of identifying the basic feature is, whether the identity of the Constitution has been changed.
[537A] 1.02.
The personality of the Constitution must remain unchanged.
It is not necessary that the constitutional amendment which is violative of a basic or essential feature should have an instant or immediate effect on the basic structure.
It is enough if it damages the essential feature.
[537B] 1.03.
The test to be applied, therefore, is whether the amendment contravenes or runs counter to an imperative role or postulate which is an integral part of the Constitution.
[537B] 1.04.
Turning to basic structure, the proper test for determining basic feature is to find out what are not basic features.
Rights arising out of covenants which were non justiciable cannot be regarded as basic feature.
Where, therefore, Article 363 makes these features non justiciable, the question of basic feature does not arise.
[539H, 540A] 1.05.
The guarantees in Articles 291 and 362 are guarantees for the payment of privy purses.
Such a guarantee can always be revoked in public interest; more so, for fulfilling a policy objective or the directive principles of the Constitution.
This is precisely what the preamble to the impugned amendment says.
That being so, the theory of sanctity of contract or the unamendability of Article 291 or 362 does not have any foundation.
The theory of political justice is also not tenable since political justice means the principle of political equality such as adult suffrage, democratic form of Government, etc.
[539D E] 1.06.
If the 26th amendment aims to establish an egalitarian society which is in consonance with the glorious preamble, how could this provision be called a basic structure? No doubt, in Madhav Rao 's case, it was held that these provisions (Articles 291, 362, 366 (22) are an integral part of the Constitution.
Apart from the fact that all these reasons were addressed against the President under Article 366(22), this Statement cannot tantamount to basic structure.
Nor would it mean the same as the basic structure.
1559G H] 1.07.
To determine whether these provisions constitute basic struc 488 ture or not, they cannot be viewed in the historic background.
By repeal of these provisions the personality of the Constitution has not changed.
India could still retain its identity and it can hardly be said that the personality has changed.
[560A] 1.08.The repudiation of the guarantees might result in the nullification of a just quid pro quo.
But, if it is the will of the people to establish an egalitarian society that will be in harmony with the changing of times.
It cannot be denied that law cannot remain static for all times to come.
[560C] 1.09 Unity and integrity of India would constitute the basic structure as laid down in Kesavananda 's case but it is too far fetched claim to state that the guarantees and assurances in these Articles have gone into the process of unification and integration of the country.
One cannot lose sight of the fact that it was the will of the people and the urge to breathe free air of independent India as equal citizens that brought about the merger of these princely States.
Therefore, the contention that the Articles 291 and 362 facilitated the organic unity of India is unacceptable.
[562E F] 1.10 In this case, the amendment does not either treat unequals as equals or in any manner violates Article 14.
All the privy purses holders are treated alike by the withdrawal of all those privileges.
[565E] 1.11.
This Court cannot concerns itself with the moral aspect of the impugned amendment.
The impugned amendment is the will of the people expressed through Parliament.
[568A] Virendra Singh and Others vs State of Uttar Pradesh, ; at 454; H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors.
vs Union of India, ; ; His Holiness Kesavananda Bharati Sripadagalavaru vs State of Kerala, [1973] Supp.
SCR 1; Waman.
Rao and Others vs Union of India and others; , at 588 89; Maltarao Sahib Shri Bhim Singh Ji vs Union of India & Ors., at 212; Indira Nehru Gandhi vs Raj Narain, [1975] Supp, SCC 1 at 252; Ajay Hasia vs Khalid Mujib Sehravardi, ; ; Minerva Mills Ltd. vs Union of India & Ors., ; & 119861 3 SCR 718; O.N. Mohindroo vs District Judge, Delhi, ; Mohanlal Jain vs His Holiness Maharaja Shri Swai Mari Singh Ji, [1962] 1 SCR 702; Ramesh Prasad Singh vs State of Bihar Another vs Vithal Rao & Ors., ; ; Usman Ali Khan vs Sagar 489 Mal ; ; Golak Nath vs State of Punjab, ; ; Weems vs United States, 54 Law Edition 801; Francis Coralie Mullin vs Administrator, Union Territory of Delhi & Ors., ; at 617, referred to.
"The Framing of India 's Constitution ' : By B. Shiva Rao at page 520; Robert section Peck "The Bill of Rights & the Politics of Interpretation", at page 316 317; "Law and Morality" : By Louis Blom Cooper Gavin Drewry at page 2; Kent Greenawalt : "Conflicts of Law and Morality", 1987 Edition at page 338, referred to.
|
etition (Civil) No. 508 of 1988.
(Under Article 32 of the Constitution of India).
(With WP(C) Nos. 534/88, CA.
5513/85, 5679/85, 5686/85, 183/86, 192, 235 36/86, 363,/86, 447/86, 510 15/86, 529/86, 646/86, 647/86, 1199/86, 1200/86, 1250/86, WP.
(C) Nos.
143, 269, 434/86, T.P. (C) Nos. 76, 77, 78 79/86, 88/86, 139 49/86, 154/86, 155/86, CA.
Nos. 81 83/86, T.C. (C) No. 81/86, I.A. Nos. 1 & 2/92 in CA.
No. 5513,185) WITH (CA.
No. 174/86 Manipal Finance Crop.
vs U.O.L, and Anr.
With CA.
193/86, 624/86, 509/86, W.P. (C) No. 1506/87, CA.
69699/86, 949 50/86, 541/86, W.P. (C) No. 602/89) D.N. Dwivedi, Additional Solicitor General, G. Viswanatha Iyer, K.N. Bhat, Anil B. Diwan, E.M.S. Anam, P.H. Parekh, C.N. Sree Kumar, R. Mohan, section Balakrishnan, M.K.D, Namboodiri, M.S. Ganesh, S.S. Khanduja, Y.P. Dhingra, B.K. Satija, Kuldeep, section Paribar.
H.S. Parihar, Ms. A Sub hashini, C.V. Subba Rao, K,R. Nambiar, M.P. Shorawala, D.K, Garg, S.K. Nandy,Randhir Jain, Ms.
Malini Poduval,M.A.Krishna Moorthy, K.J,John, Ms. section Vaidyalingam, A.K. Sanghi, P.N. Puri, Ms. Abha Jain, Ms. Madhu Moolchandani and A.G. Ratnaparkhi for the Appearing Parties.
The Judgment of the Court was delivered by MOHAN, J.
All these civil appeals arise by certificate granted by the 836 High Court of Delhi against the decision reported in Kanta Mehta vs Union of India and others, Company Cases Vol.
62 1987 page 769.
All these civil appeals and writ petitions challenge the constitutional validity of Chapter 111 C read with section 58B (5A) of the , introduced by the Banking Laws (Amendment) Act, 1983 (Act 1 of 1984).
Hence, they are dealt with under a common judgment.
In order to appreciate the challenge the necessary legal background may be set out.
In the year 1949, the Banking Regulation Act of 1949 was enacted.
That contained regulatory, provisions in regard to banking under the surveillance of the Reserve Bank of India as to what would constitute "banking" as defined under Section 5(b) of the 1949 Act.
In the year 1959, the Banking Companies (Amendment) Act, 1959 was passed.
Sections 17 and 18 were substituted which required banking companies to create reserve fund and maintain cash reserve.
In the year 1963, Banking Laws (Miscellaneous Provisions) Act, 1963 inserted Chapter III B in the .
This Chapter conferred extensive powers on the Reserve Bank of India to issue suitable instructions, to regulate and monitor diverse activities of non banking companies.
The powers to control and regulate these non banking institutions are set out in Sections 45 I to 45 L.
While exercising these powers, the Reserve Bank of India was issuing various directions to these non banking financial institutions.
One such important direction was issued on 1st of January, 1967 to the effect that the non banking financial companies were not to hold deposits in excess of 25 per cent of its paid up capital and the reserves as also to non banking, non financial companies.
They were also required to take steps to keep the deposits within the limits.
This direction was challenged unsuccessfully before the Madras high Court as seen from the case reported in Mayavaram Financial Corporation vs Reserve Bank of India.
In, 1968, by Banking Laws (Amendment) Act, 1968, Sections 10A to 10D were introduced.
Section 10A provided that the Board of Directors shall include persons with professional or special knowledge.
Section 10A(5) empowered the Reserve Bank of India to vary the composition of the Board.
837 When a report of the Study Group of non banking financial intermediaries was submitted in the year 1971 that was studied.
Thereafter in 1973 the Reserve Bank of India issued Miscellaneous Non Banking Companies (Reserve Bank) Directions, 1973 placing certain restrictions on companies carrying on prize chit and chit business from receiving deposits from the public.
In 1974, Section 58A of the Companies Act was inserted by the Companies (Amendment) Act of 1974, which came into force from 1st of February, 1975.
The object was to regulate deposits received by non banking non financial companies.
The financial companies were already covered by Reserve Bank of India directions under the .
Therefore, they were exempted under Section 58A (7) from the purview of that Section.
Since the non banking non financial companies came within the purview of Section 58A, the earlier directions issued by the to non banking nonfinancial companies in the year 1966 Were withdrawn.
By an amendment of 1977, Section 58A was further enlarged and the Central Government was empowered to grant extensions.
In June 1974, another Study Group was constituted which is popularly known as James Raj Committee.
In July 1975, the above Study Group gave its report.
In accordance with the recommendations of the Study Group elaborate rules were issued by the Central Government under Section 58A, called Banking Companies (Acceptance of Deposits) Rules, 1975 with a view of regulate the various activities of the companies to accept deposits from public.
The validity of the section and the deposit rules were questioned.
This Court in DCM Ltd. vs U. O.L, ; upheld the same.
In 1977, directions were issued by the Reserve Bank of India superseding earlier directions of 1966 and 1973.
In 1978, Bill 183 of 1978 called Banking Laws (Amendment) Bill, 1978 was introduced in the Parliament.
The said Bill provided limits on depositors which were lower than the current provisions.
However, the Bill lapsed on dissolution of Parliament.
Thereafter prize chits and Money Circulation Schemes (Banning) Act, 1978 was enacted.
This was also challenged.
But that challenge was thrown out by this Court in Srinivasa Enterprises vs Union of India, ; 838 In 1981, several new regulatory directions were given by the Reserve Bank of India.
Inter alia they included restrictions on accepting or renewing deposits from shareholders, Directors etc.
which exceeded 15 per cent of the net owned funds of the companies as also restricted payment of interest on deposits at a rate of interest exceeding 15 per cent per annum.
The validity of the amendment was upheld by the Madras High Court in the case reported in AIR 1983 Madras 330 A.S.P. Ayar vs Reserve Bank of India.
In State of West Bengal vs Swapan Kumar Guha, known as Sanchaita case, reported in ; , this Court while quashing the F.I.R. launched against the firm, Sanchaita Investments, directed that the Government and Reserve Bank of India should look into the matter deeply.
It is in this background the Banking Laws (Amendment) Act, 1983 came to be enacted.
Section 45S states thus: 45 S : Deposits not be accepted in certain cases (1) No person, being an individual or a firm or an unincorporated association of individuals.
shall at any time, have deposits from more than the number of depositors specified against each, in the table below.
TABLE (i) Individual Not more than twenty five depositors excluding depositors who are relatives of the individual.
(ii) Firm Not more than twenty five depositors per partner and not more than two hundred and fifty depositors in all, excluding, in either case, depositors who are relatives of any of the partners.
(iii) Unincorporated Not more than twenty five depositors per Association of individual and not more than two hundred and individualsfifty depositors in all excluding, in either case, depositors who are relatives of any of the individuals constituting the association.
(2) Where at the commencement of Section 10 of the Banking Laws (Amendment) Act, 1983 the deposits her by any such person are not in accordance with sub section 839 (1), he shall before the expiry of a period of two years from the date of such commencement, repay such of the deposits as are necessary for bringing the number of depositors within the relative limits specified in that sub section.
Explanation : For the purposes of this section (a) a person shall be deemed to be a relative of another if, and only if, (i) they are members of a Hindu undivided family , or (ii) they are husband and wife; or (iii) the one is related to the other in the manner indicated in the list of relatives below List of Relatives 1.
Father.
Mother (including step mother).
Son (including Stepson).
Son 's wife.
Daughter (including step daughter).
Father 's father.
Father 's mother.
Mother 's mother.
Mother 's father.
Son 's son.
Son 's son 's wife.
Son 's daughter.
Son 's daughter 's husband.
Daughter 's husband.
Daughter 's son.
Daughter 's son 's wife.
Daughters daughter.
Daughter 's daughter 's husband.
Brother (including step brother) .
Brother 's wife.
Sister (including step sister).
Sister 's husband; (b) a person in whose favour a credit balance in outstanding for a period not exceeding six months in any account relating to mutual dealings in the ordinary course of trade or business shall not, on account of such balance alone, be deemed to be a depositor." Thus, the number of depositors has come to be limited.
As to the penalty for contravention of Section 45S it is provided for under Section 58B (5A).
It runs thus: "(5A).
If any person contravenes any provision of Section 45S, he shall be punishable with imprisonment for a terms which may extend to two years, or with fine which may extend to twice the amount of deposit received by 840 such person in contravention of that section or rupees two thousand, whichever is more, or with both." These provisions were challenged by the appellants in the various civil appeals as violative of Articles 14 and 19 of the Constitution.
A Division Bench of the High Court of Delhi in, Kanta Mehta 's case supra "Section 45S read with section 58B (5A) of chapter III C of the , as introduced by section 10 of the Banking laws Amendment) Act, 1983, is not violative of articles 14 and 19 of the Constitution.
There is nothing demonstrably irrelevant or perverse in limiting in section 45S the number of depositors that an individual, firm or association could accept.
Nor is there any element of compulsion on individuals and firms or associations which are not incorporated to incorporate themselves as a company and article 19(1)(c) is not violated by the provisions of section 45S limiting the number of depositors whom individuals, firms and unincorporated associations could accept.
Chapter III C of the , imposes reasonable restrictions on the right of individuals, firms and unincorporated associations to carry on the business of acceptance of deposits and advancing or giving loans to the public.
There is also a further safeguard that Chapter 111 C is being operated under the supervision and control of the Reserve Bank of India.
The business of acceptance of deposits from the public does not fall within entry .30 or entry 32 of List II.
of Schedule VII of the Constitution.
It falls within entry 45 or in any case under entry 97 of List I of Schedule VII under which only Parliament has power to pass the impugned legislation.
Parliament had full competence and power to pass Chapter III C of the ." Mr. G. Viswanatha Iyer, learned counsel for the writ petitioners in 841 WP.
508 and 534 of 1988 submits that Section 45B is violative of the fundamental right under Article 19(1)(g) of the Constitution as it restricts the number of depositors and the rate of interest under Section 4(2)(iii) of the Kerala Money Lenders Act, 1958 (hereinafter referred to as the Kerala Act).
The two years ' period prescribed under Section 42 is unreasonable.
Under Kerala Act, with effect from 15.10.85 only 14 per cent interest alone could be charged.
In any event, while receiving deposits it was not an offence, making it a criminal liability and directing payment, would amount, to ex post facto law, offending Article 20(1) of the Constitution.
In support of this submission, reliance is placed on Chinoy Bottling Co. Pvt. Ltd. vs Assistant Registrar of Companies, Madras, page 770 and Oudh Sugar Mills Ltd. vs Union of India, AIR 1970 SC 1070.
The other learned counsel seriously pressed the point relating to criminal liability and prayed for time to comply with the provisions of Section 45S.
Mr. Anil B. Diwan, learned counsel appearing for Respondent 2 in C.A. No. 447 of 1986, after referring us to the development of law, would submit that it is open to the Government to regulate the economic activities.
While examining the validity of such provisions the courts always have regard to the wisdom of the Legislature because that alone has the necessary information and expertise pointing to the need of such a legislation.
In R.K Garg vs Union of India, ; at 969 70 this aspect of the matter was highlighted.
It was in this view, this Court upheld Maharashtra Debt Relief Act, 1976 in Fatehchand Himmatlal and others vs State of Maharashtra, ; If properly analysed, it can be seen that these provisions constitute.
a regulatory scheme and not a penal liability.
Much is made of the penal provisions under Section 58B (5A).
It is submitted that imprisonment of a recalcitrant debtor is permissible in law.
If one goes by the facts of these cases even after 1986, they collect deposits 842 when law required them not to do so.
Under Section 45(1)(bb) deposit has been defined.
If as per the definition there are enough sources of deposit there is no reason why the appellants cannot reduce the deposits.
If, therefore, the package is reasonable there is no justification to dilute the effect of Section 58B (5A).
While examining the scope of the Section it might be contrasted with Section 125 (3) of the Criminal Procedure Code wherein a sufficient cause is provided.
In Reserve Bank of India vs Peerless General Finance and Investment Co. Ltd, ; this Court had occasion to consider the adventures indulged by the persons like appellants.
It criticised the fraud played by such financial vultures.
This approach was approved in Peerless General Finance and Investment Co. Ltd vs Reserve Bank of India, ; @ 354.
The learned counsel also draws our attention to the Non banking Financial Companies (Reserve Bank) Directions of 1966.
They came into force on January 1, 1967.
Clause 4 sub clause (3) specifically provides that the deposit shall be reduced to 25 per cent of the paid up capital for which two year period was provided.
Similar directions of 1977 known as Non Banking Financial Companies (Reserve Bank) Directions, 1977 came to be issued with effect from 1st of July, 1977.
There were complaints, even then, that the financial companies were not paying interest regularly and the Reserve Bank was requested to help the depositor.
Therefore, in the teeth of this provision, to say that suddenly the appellants and the writ petitioners are called upon to reduce, would work hardship and they should not be penalised, is incorrect.
They took a calculated risk and, therefore, they had to suffer for their own fault.
In examining the various submissions addressed on behalf of the appellants and the petitioners we propose to examine the same in the following background since it is a law relating to regulation of economic activities.
In R.K Garg 's case (supra) it is held at pages 969 70 .
"Another rule of equal importance is that laws relating 843 to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc.
It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or straight jacket formula and this is par ticularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature.
The greater play in the joints has to be allowed to the legislature.
The court should feel more inclined to give judicial deference to legislature judgment in the field of economic regulation than in other areas where fundamental human rights are involved.
Nowhere has this admonition been more felicitously expressed than in Morey vs Dond, ; where Frank further, J. said in his inimitable style: "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 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 experts, 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.
" The court must always remember that "legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many 'problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry ' that exact wisdom and nice adaptation of remedy are not always possible and that 'Judgment is largely a prophecy 844 based on meagre and uninterpreted experience".
Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and therefore it cannot provide for all possible situations or anticipate all possible abuses.
There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid.
" At page 988 it is held: "That would depend upon diverse fiscal and economic considerations based on practical necessity and administrative expediency and ,would also involve a certain amount of experimentation on which the Court would be least fitted to pronounce.
The court would not have the necessary competence and expertise to adjudicate upon such an economic issue.
The court cannot possibly assess or evaluate what would be the impact of a particular immunity or exemption and whether it would serve the purpose in view or not.
There are so many imponderable that would enter into the determination that it would be wise for the court not to hazard an opinion where even economists may differ, The court must while examining the constitutional validity of a legislation of this kind, "be resilient, not rigid, forward looking, not static, liberal, not verbal" and the court must always bear in mind the constitutional proposition enunciated by the Supreme Court of the United States in Munn vs Illinois, namely, "that courts do not substitute their social and economic beliefs for the judgment of legislative bodies".
The court must defer to legislative judgment in matters relating to social and economic policies and must not interfere, unless the exercise of legislative judgment appears to the palpably arbitrary.
The court should constantly remind itself of what the Supreme Court of the United States said in Metropolis Theater Co. vs City of Chicago, (57 Lawyers ' Edition 730).
"The problems of 845 government are practical ones and may justify, if they do not require, rough accommodations, illogical it maybe, and unscientific.
But even such criticism should not be hastily expressed.
What is best is not always discernible, the wisdom of any choice may be disputed or condemned.
Mere errors of government are not subject to our judicial review.
No doubt, the impugned legislation places restrictions on the right of the appellants to carry on business, but what is essential is to safeguard the rights of various depositors and to see that they are not preyed upon.
From the earlier narration, it would be clear that the Reserve Bank of India, right from 1966, has been monitoring and following the functioning of non banking financial institutions which invite deposits and then utilise those deposits either for trade or for other various industries.
A ceiling for acceptance of deposits and to require maintenance of certain liquidity of funds as well as not to exceed borrowings beyond a particular percentage of the net owned funds have been provided in the corporate sector.
But for these requirements, the depositors would be left high and dry without any remedy.
Even the corporate sector was not free from blame.
It had done damage to the economy and brought ruination to small depositors.
This was why Section 58A in the Companies Act of 1956 came to be introduced.
It is worthwhile to quote the notes on clauses concerning this provision: "It has been the practice of the companies to take deposits from the public at high rates of interest.
Experience had shown that in many cases deposits taken by the companies have not been refunded on the due dates, either the companies have gone in liquidation or funds are depleted to such an extent that the companies are not in a position to refund the deposits, it was accordingly considered necessary to control the activities of the companies when accepting deposits from the 'the public".
We approve of the reasoning of the Delhi High Court in Kanta Mehta 's case (supra).
At pages 798 99 it runs as follows: "The danger of allowing deposits to be accepted without regulation is so acute and urgent, that to bind the 846 hands of the Legislature that only one course alone is permissible and not to permit a play of joints would be to totally make it ineffective in meeting the challenge of the social evil.
For, it must be remembered that "in the ultimate analysis, the mechanics of any economic legislation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class, the processual basis of price fixation has to be accepted in the generality of cases as valid.
" See Prag Ice and Oil Mills vs Union of India, ; , para 50).
Also such provisions meant to check such evil must be viewed, as Krishna Iyer J. said, through a socially constructive, not legally captious, microscope to discover glaring unconstitutional infirmity, that when laws affecting large chunks of the community are enacted, stray misfortunes are inevitable and that social legislation, without tears, affecting vested rights is virtually impossible.
See B. Banerjee vs Smt.
Anita Pan, ; , at pages 1150 51.
The stress by learned counsel for the petitioners on the private right of the petitioners to have unrestricted deposits and make advances in any manner they like must receive short shrift, for by now, it is too well settled to be doubted that private rights must yield to be public need and that any form of regulation is unconstitutional only if arbitrary, discriminatory or demonstrably irrelevant to the policy the Legislature is free to adopt.
" May be, Kerala Act restricts the rates of interest under Section 4(2)(iii) but that cannot enable the writ petitioners in W.P. Nos. 508 and 534 of 1988 to disregard these provisions, being the non banking financial institutions.
Hence, we reject the first of the arguments.
As regards the reasonableness of two year period Section 45(1)(bb) of the Reserve Bank Act defines "deposit" as follows: "(bb) "deposit" includes and shall be deemed always to have 847 included any receipt of money by way of deposit or loan or in any other form, but does not include (i) amounts raised by way of share capital; (ii) amounts contributed as capital by partners of a firm; (iii) any amount received from, (iv) any amount received from, (a) the Development Bank; (b) a State Financial Corporation established under the ; (c) any financial institution specified in or under section 6A of the ; or (d) any other financial institution that may be specified by the Bank in this behalf; (v) amounts received, in the ordinary course of business, by way of security deposit or dealership deposit; (vi) any amount received from an individual or a firm or an association of individuals not being a body corporate, registered under any enactment relating to money lending which is, for the time being in force in any State; and (vii)any amount received by way of subscriptions in respect of a conventional chit.
" Therefore, as rightly argued by Mr. Anil Diwan as per this definition, .if there are enough sources of deposit there is no reason why the appellants and the writ petitioners cannot reduce the deposits.
Further, non banking financial companies are required under clause 4 sub clause (3) as follows: "(3) Every non banking financial company, not being a hire purchase finance company, or a holding finance company, which on the date of commencement of these 848 directions holds deposits in excess of twenty five per cent of its paid up capital and free reserves shall secure before the expiry of a period of two years from the date of such commencement, by taking such steps as may be necessary for this purpose, that the deposits, received by the company and outstanding on its books are not in excess of the aforesaid limit.
" These directions came into force from 1st of January, 1967.
Similar directions came to be issued as Miscellaneous Non Banking Companies (Reserve Bank) Directions.
Clause 5 dealing with acceptance of deposits states as under: "Acceptance of deposits by miscellaneous non banking companies: On and from 1st of July, 1977, no miscellaneous nonbanking company shall: (a) receive any deposit repayable on demand or on notice, or repayable after a period of less than six months and more than thirty six months from the date of receipt of such deposit or renew any deposit received by it, whether before or after the aforesaid date unless such deposit, on renewal, is repayable not earlier than six months and not later than thirty six months from the date of such renewal; Provided that where a miscellaneous non banking company has before the 1st July, 1977, accepted deposits repayable after a period of more than thrity six months, such deposits shall, unless renewed in accordance with these directions, be repaid in accordance with the terms of such deposits; Provided further that nothing contained in this clause shall apply to monies raised by the issue of debentures or bonds.
(b) receive or renew: 849 (i) any deposit against an unsecured debenture or any deposit from a shareholder (not being a deposit received by a private company from its shares holders as is referred to in clause (vi) or paragraph 4) or any deposit guaranteed by any person who, at the time of giving such guarantee, was or is a director to the company, if the amount of any such deposits together with the amount of such other deposits of all or any of the kinds referred to in this sub clause and outstanding in the books of the company as on the date of acceptance or renewal of such deposits, exceeds fifteen per cent of its net owned funds.
(ii) any other deposit, if the amount of such deposit, together with the amount of such other deposits, not being deposits of the kind referred to in sub clause (i) of this clause already received and outstanding in the books of the company as on the date of acceptance of such deposits, exceeds twenty five per cent of its net owned funds.
" If, therefore, this was the position, it cannot be contended that suddenly the companies like the appellant and the petitioners arc called upon to reduce deposits.
Even otherwise, the interests of the depositors is the prime concern.
Coming to the last point, as to whether Section 58B (5A) is violative of Article 20(1) of the Constitution, we find, when a similar argument was raised against Section 58A of the Companies Act, that was repelled by this Court in Delhi Cloth and General Mills vs Union of India, ; at page 468 which runs thus: "Mr. G.A. Shah canvassed one more contention.
After stating that Rule 3A became operative from April 1, 19 ',8, he specifically drew attention to the proviso to Rule 3A (1) which required that with relation to the deposits maturing during the year ending on the 31st day of March, 1979, the sum required to be deposited or invested under sub rule 3A (1) shall be deposited or invested before the 30th day of September, 1978.
It was then contended that this provision would necessitate depositing 10% of the 850 deposits maturing during the year ending 31st March, 1979 which may have been accepted prior to the coming into force of rule 3A and to this extent the rule has been made retrospective and as there was no power conferred by sec.
58A to prescribe conditions subject to which deposits can be accepted retrospectively Rule 3A is ultra vires sec.
58A. Unquestionably, Rule 3A is to deposit 10% of the deposits maturing during the year in the manner prescribed in Rule 3.
Some deposits would be maturing between April 1, 1978 and March 31, 1979.
To provide for such marginal situation, a proviso is inserted.
Does it to make the rule retroactive? Of course, not.
In D.S. Nakara vs Union of India, ; a Constitution Bench of this Court has, in this context, observed as under: "A statute is not properly called a retroactive statute because a part of the requisites for its action is drawn from a time antecedent to its passing." Viewed form this angle, the provision can be properly called prospective and not retroactive.
Therefore, the contention does not commend to us.
" In the light of this, we should hold that the ruling of the Madras High Court in Chinoy Bottling Co. Pvt.
Ltd. (supra) is incorrect.
As to the plight of these depositors we need only to quote the case in Peerless General Finance and Investment Co. Ltd.; , At paragraph 37 it is held: "We would also like to query what action the Reserve Bank of India and the Union of India are taking or proposing to take against the mushroom growth of 'finance and investment companies ' offering staggeringly high rates of interest to depositors leading us to suspect whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings.
One has only to look at the morning 's newspaper to be greeted by advertisements inviting deposits and offering interest at astronomic rates.
851 On January 1, 1987 one of the national newspapers published from Hyderabad, where one of in happened to be spending the vacation, carried as many as ten advertisements with 'banner headlines ', covering the whole of the last page, a quarter of the first page and conspicuous spaces in other pages offering fabulous rates of interest.
At least two of the advertisers offered to double the deposit in 30 months.
2000 for 1000, 10,000 for 5,000, they said.
Another advertiser offered interes t ranging between 30 per cent to 38 per cent for periods ranging between six months to five years.
Almost all the advertisers offered extra interest ranging between 3 per cent to 6 per cent deposits were made during the Christmas Pongal season.
Several of them offered gifts and prizes.
If the Reserve Bank of India considers the Peerless Company with eight hundred crores invested in government securities, fixed deposits with National Banks etc.
unsafe for depositors, one wonders what they have to say about the mushroom non banking companies which are accepting deposits, promising most unlikely returns and what action is proposed to be taken to protect the investors.
It does not require much imagination to realise the adventurous and precarious character of these businesses.
Urgent action appears to be called for to protect the public.
While on the one hand these schemes encourage two vices affecting public economy, the desire to take quick and easy money and the habit of excessive and wasteful consumer spending, on the other hand the investors who generally belong to the gullible and less affluent classes have no security whatsoever.
Action appears imperative." And paragraph 42 also requires to be quoted "I share my brother 's concern about the mushroom growth of financial companies all over the country.
Such companies have proliferated.
The victims of the schemes, that the attractively put forward in public media, are mostly middle class and lower middle class people.
Instances are legion where such needy people have been 852 reduced penniless because of the fraud played by such financial vultures.
It is necessary for the authorities to evolve fool proof schemes to see that fraud is not allowed to be placed upon persons who are not conversant with the practice of such financial enterprises who pose themselves as benefactors of people.
" We may also add that this has been reaffirmed in Reserve Bank of India vs Timex Finance and Investment Co. Ltd., at page 354.
Therefore, we are in entire agreement with the Delhi High Court.
Since, as we have stated above, all the appellants and writ petitioners were praying for time to comply with these provisions, the matter was adjourned from time to time.
Though some of them have complied with the requirements of law yet a few others have not done so.
We make it clear that in spite of this indulgence, their failure to comply cannot be countenanced.
We dismiss the appeals and the petitions along with 1A.Nos.1 and 2 in C.A. No.5513 of 1985.
However, there shall be no orders as to cost.
N.V.K. Petitions and appeals dismissed.
| IN-Abs | The petitioners in the writ petition challenged the constitutional validity of chapter III C read with Section 58B(5A) of the introduced by the Banking Laws (Amendment) Act, 1983.
Along with the writ petition were had several civil appeals, where the appellants had unsuccessfully challenged the aforesaid provisions as violative of Articles 14 and 19 of the Constitution, in the High Court of Delhi, which upheld their validity, and granted a certificate to appeal to this Court vide Kanta Mehta vs Union of India, The newly incorporated Section 45S of the provided that no individual or firm or an unincorporated association of individuals shall, at any time, have deposits from more than the number of depositors specified against each in the table mentioned therein.
It was further provided that where at the commencement of the Act, the deposits held were not in accordance thereof,a period of two years was prescribed for bringing down the number of depositors within the relative limits specified in the Act, and contravention thereof was rendered penal. 'These provisions were brought into force on February 15, 1984.
On behalf of the petitioners it was submitted that Section 45B was 833 violative of the fundamental rights under Article 19(1) kg) of the Constitution as it restricts the number of depositors and the rate of interest under Section 4(2)(iii) of the Kerala Moneylenders Act, 1958, that the two year period prescribed under Section 42 is unreasonable, and that under the Kerala Act with effect from 15110185 only 149% interest alone could be charged.
It was further submitted that while receiving deposits it was not an offence and making it a criminal liability and directing payment, would amount to ex postfacto law offending Article 20(1) of the Constitution.
The writ petition and appeals were contested by submitting on behalf of the Reserve Bank of India that it was open to the Government to regulate economic activities, and that while examining the validity of such provisions courts a laws have regard to the wisdom of the Legislature as it alone has the necessary information and expertise pointing to the needs for such a legislation.
Attention was also drawn to the provisions of the Non Banking Financial Companies (Reserve Bank) Directions of 1966 which came into force on January 1, 1969 which specifically provided that deposits shall be reduced to 25% of the paid up capital for which a two years period was prescribed and that similar directions knows as Non Banking Financial Companies Reserve Bank Directions, 1977 came to be issued with effect from 1st of July, 1977, Dismissing the writ petition and the appeals, this Court, HELD: 1.
The impugned legislation no doubt places restrictions on the right of the appellants to carry on business, but what is essential is to safeguard the rights of various depositors and to see that they are not preyed upon.
[844G] 2.
The Reserve Bank of India, right from 1966, has been monitoring and following the functioning of non banking financial institutions which invite deposits and utilise those deposits either for trade or for other various industries.
A ceiling for acceptance of deposits and to requires maintenance of certain liquidity of funds as well as not to exceed borrowings beyond a particular percentage of the net owned funds have been provided in the corporate sector.
But for these requirements, the depositors would be left high and dry without any remedy.
[844H, 845A] 3.
Even the corporate sector was not free from blame.
It had done damage to the economy and brought ruination to small depositors.
Ex 834 perience had shown that In many cases deposits taken by the companies had not been refunded on the due dates, either the companies had gone in liquidation or funds are depleted to such an extent that the companies were not in a position to refund the deposits.
It was accordingly considered necessary to control the activities of the companies when accepting deposits from the 'the public".
That was why Section 58A in the Companies Act of 1956 came to be introduced.
[845B, C D] 4.
The danger of allowing deposits to be accepted without regulation is so acute and urgent, that to bind the hands of the Legislature that only one course alone is permissible and not to permit a play of joints would be to totally make it ineffective in meeting the challenge of the social evil.
The mechanics of any economic legislation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class, the processual basis has to be accepted 5.
May be, Kerala Moneylenders Act restricts the rates of Interest under Section 4(2)(iii) but that cannot enable the writ petitioners to disregard these provisions introduced by the Banking laws (Amendment) Act 1983 being the non banking financial institutions.
[846D] 6.
Section 45 (1) (bb) of the Reserve Bank Act defines 'deposit.
If there are enough sources of deposit there is no reason why the appellants and the writ petitioners cannot reduce the deposits.
The prescription of the two year period for reduction is therefore reasonable.
[847D] 7.
Moreover, similar directions cam to be issued as Miscellaneous Non Banking Companies (Reserve Bank) Directions.
If, therefore, this was the position, it cannot be contended that suddenly the companies like the appellants and the writ petitioners are called upon the reduce deposits.
Even otherwise, the interests of the depositors is the prime concern.
[847G, 849B] Kanta Mehta vs Union of India and others, Company Cases Vol.
62 1987 page 769, approved.
Chiney Bottling Co. Pw. Ltd. vs Assistant Registrar of Companies, Madras, page 770, disapproved.
DCM Ltd. vs U. O.I., ; ; Srinivasa Enterpries vs Union 835 of India; , ; State of West Bengal vs Swapan Kumar Guha ; ; R.K Garg vs Union of India ; and Fatehchand Himmatlal and others vs State of Maharashtra ; , referred to, Reserve Bank of India vs Peerless General Finance and Investment Co. Ltd, ; ; Peerless General Finance and Investment Co. Ltd vs Reserve Bank of India, @ 354; Delhi Cloth and General Mills vs Union of India; , at page 468 and Reserve Bank of India vs Timex Finance and Investment Co. Ltd., at page 354, referred to.
|
tition (Civil) No. 47 of 1992.
(Under Article 32 of the Constitution of India).
789 P.L Singal and NA.
Siddiqui for the Petitioner.
D.N. Dwivedi, Additional Solicitor General and Mrs. Niranjana Singh for the Respondent.
The Judgment of the Court was delivered by SHARMA CJ.
By the present application under Article 32 of the Constantine of India, the petitioner has challenged the constitutional validity of the Representation of the People (Amendment) Ordinance, 1992 (Ordinance No.1 of 1992) and the Representation of the people (Second Amendment) Ordinance, 1992 (Ordinance No.2 of 1992), on the grounds of violation of Articles 14, 19 and 21.
By the first Ordinance, section 52 of the Representation of the People Act, 1951 (the Act) providing for countermanding elections in certain circumstances has been amended.
By the second Ordinance the period of 20 days in section 30 of the Act has been reduced to 14 days.
Later, when the Parliament met, the amendments were incorporated by an amending Act.
2.The provisions of section 52, as they stood before the amendment, provided for countermanding the election in either of 2 contingencies (i) if a candidate whose nomination was found valid on scrutiny under section 36 or who has not withdrawn his candidature under section 37 died and a report of his death was received before the publication of the fist of contesting candidates under section 38, (ii) if a contesting candidate died and a report of his death was received before the commencement of the poll.
On countermanding the Returning Officer will have to report the fact to the Election Commission; and all proceedings with reference to the election will have to be commenced de novo in all respects as if for a new election.
By the first Ordinance, the area attracting the provisions of countermanding has been narrowed down by confining the provisions only to such cases where a candidate of a retired political party dies.
3.Section 30 deals with appointment of dates for nomination, scrutiny and the holding of poll and in clause (d) it is provided that the date of poll shall not be earlier than the twentieth day after the last date for the withdrawal of candidatures.
With a view to expedite the whole process the words 'twentieth day ' have been substituted by the words "fourteenth day" in the said clause by the impugned Ordinace.
790 4.
Learned counsel for the petitioner has strenuously contended that the distinction made by the impugned amendment between a candidate set up by a recognised political party and any other candidate is artificial inconsistent with the spirit of the election law and discriminatory.
The Constitution does not confer on a candidate set up by a registered political party any special right and treats all candidates similarly.
It does not recognize any categorisation.
It is, therefore, argued that the difference which is being introduced by the impugned amendment is contrary to the scheme of the Constitution and violative of the equality clause in Article 14.
According to the learned counsel this will also infringe the guarantee under Article 19(1)(a) in respect of freedom of speech and expression.
5.Elaborating his argument, the learned counsel contended that the right to choose its representative belongs to the voters of a particular constituency, and this should not be whittled down by amendments which have a tendency to undermine this element.
Lack of wisdom in giving importance to recognized political parties was emphasised by saying that such parties almost always impose their choice of candidates in their own interest and at the cost of the welfare of the constituencies.
By introducing this imbalance in the Act, it is stated, the republican character of the Constitution is jeopardised.
The sum and substance of the argument on behalf of the petitioner is that no distinction can be made between one candidate and another purely depending on recognition as a political party.
6.So far the second Ordinance is concerned, the objection is that the period of 14 days, substituted by the amendment, is too short and the reduction from the period of 20 days is arbitrary and prejudicial to the larger interest for which elections are held.
7.In reply, Mr. Altaf Ahmad, Additional Solicitor General, appearing on behalf of the Union of India has strongly relied upon the statements made in the counter affidavit filed on behalf of the respondent stating that on account of increase in terrorism and physical violence in several parts of the country combined with the phenomenal increase in the number of independent candidates, the danger of disruption of the election process has been fast growing and the problem was, therefore, taken up for serious consideration.
The issue was examined by the Electoral Reforms Committee set up in 1990 under the Chairmanship of the then Minister of law and 791 Justice, late Dinesh Goswami.
After studying the problem deeply and considering various points of view presented in this regard the.
Committee made its recommendation and, accordingly, the impugned amendment was made.
Explaining the urgency of introducing the amendment by an Ordinance (when Parliament was not in session) the counter affidavit states that it had then been decided to hold the General Elections to the House of People from the State of Punjab as also the election to the State Legislature of that State and having regard to the law and order situation prevailing in the State, it was considered essential to curb the danger of disruption of the election process by amending section 52 immediately.
With the same object in view, the period of 20 days mentioned in section 30 was substituted by 14 days.
8.Before proceeding to examine the merits of the argument addressed on behalf of the petitioner it will be useful to note that the right to vote or to stand as a candidate for election is neither a fundamental nor a civil right.
In England also it has never been recognised as a common law right.
In this connection, we may usefully refer to the following observations in,Jyoti Basu & Others vs Debi Ghosal & Others, A.I.R.1982 S.C.983 and 986 which reads as under : "The nature of the right to elect, the right to be elected and the right to dispute an election and the scheme of the constitutional and statutory provisions in relation to these rights have been explained by the Court in N.P. Ponnuswani vs Retuming Officer, Namakkal Constituency, ; : ; and Jagan Nath vs Jaswant Singh, ; We proceed to state what we have gleaned from what has been said, so much as necessary for this case.
A right to elect, fundamental though it is to democracy, is, anomalously enough, neither a fundamental right nor a Common Law Right.
It is pure and simple, a statutory right.
So is the right to be elected.
So is the right to dispute an election.
Outside of statute, there is no right to elect, no right to be elected and no right to dispute an election.
Statutory creations they are, and therefore, subject to statutory limitation.
" 792 The objection raised by the petitioner, therefore, must be examined in this background.
9.The challenge of the petitioner is directed against the differential treatment which the election law in India gives to candidates set up by political parties.
The main thrust of the argument of the learned counsel is that the party system and the recognition of political parties is itself detrimental to the cause of real democracy.
In any event, no additional advantage ought to have been allowed to candidates set up by political parties.
This stand runs counter to the constitutional scheme adopted by the nation.
It has firmly been established that the Cabinet system of Government has been envisaged by our Constitution and that the same is on the British pattern.
(See Shamsher Singh vs State of Punjab; , at 827).
In England where democracy has prevailed for longer than in any other country in recent times, the Cabinet system of Government has been found to be most effective.
In the other democratic countries also the party system has been adopted with success.
It has been realised that for a strong vibrant democratic Government, it is necessary to have a parliamentary majority as well as a parliamentary minority, so that the different points of view on controversial issues are brought out and debated on the floor of the Parliament.
This can be best achieved by the party system, so that the problems of the nation may be discussed, considered and resolved in a constructive spirit.
To abolish or ignore the party system would be to permit a chorus of discordant notes to replace an organised discussion.
In his book "Cabinet Government" (2nd Edition page 16) Sir Ivory Jennings has very rightly said.
"Party warfare is thus essential to the working of the democratic system".
It is, therefore, idle to suggest that for establishing a true democratic society, the party system should be ignored.
Our Constitution has clearly recognized the importance of this system, which was further emphasized by the addition of the 10th Schedule to it.
The Election Symbols (Reservation and Allotment) Order is also a step in that very direction.
There is also no merit whatsoever in the contention that candidates set up by political parties should not receive any special treatment.
The fact that candidates set up by political parties constitute a class separate from the other candidates has been recognized by this Court in numerous cases.
In paragraph 14 of the judgment in the case of Dr. P.N. Thampy Terah vs Union of India [1985] Suppl.
SCC 189, the Constitution 793 Bench observed thus : "It is the political parties which sponsor candidates, that are in a position to incur large election expenses which often run into astronomical figures.
We do not consider that preferring political parties for exclusion from the sweep of monetary limits on election expenses, is so unreasonable or arbitrary as to justify the preference being struck down upon that gournd." In D.M.L. Agarwal vs Rajiv Gandhi, ; a Division Bench of this Court took note of and emphasized the vital role of political parties in a parliamentary form of democracy and anxiety was expressed about the growing number of independent candidates.
For the reasons indicated above, we do not find any substance in the argument of the learned counsel for the petitioner challenging the constitutional validity of the impugned amendment of section 52.
The argument against the reduction of the period of 20 days to 14 days in section 30 is equally without any merit.
The learned counsel could not suggest any good reason for holding that the period of 14 days would be inadequate or inappropriate, especially in the changed circumstances which are prevailing in the country.
Consequently, this writ petition is dismissed with costs assessed at Rs. 2,500 payable to the respondent Union of India.
N.V.K. Petition dismissed.
| IN-Abs | The petitioner In his Writ Petition Under Article 32 of the Constitution of India, challenged the constitutional validity of the Representation of the People (Amendment) Ordinance, 1992 (Ordinance No. 1 of 1992), and the Representation of the People (Second Amendment) Ordinance, 1992 (Ordinance No.2 of 1992) on the grounds of violation of Articles 14, 19 and 21 of the Constitution of India.
The provisions of Section 52 of the Representation of the People Act, 1951 as they stood before amendment provided for countermanding the election In either of two contingencies: (1) If a candidate whose nomination was found valid on scrutiny under section 36 or who has not withdrawn his candidature under section 37 died and a report of his death was received before the publication of the list of contesting candidates under section 38, (II) If a contesting candidate died and a report of his death was received before the commencement of the poll.
By Ordinance No. 1 of 1992, the area attracting the provisions of countermanding in section 52 had been narrowed down by confining the provisions only to such cases where a candidate of a recognized political party dies.
787 Section 30 of the Representation of People Act, 1951 dealt with appointment of dates for nomination, scrutiny and the holding of poll, and in clause (d) it was provided that the date of poll shall not be earlier than the twentieth day after the last date for the withdrawal of candidatures.
With a view of expedite the whole process, the words 'twentieth day ' have been substituted by the words 'fourteenth day ' in clause (d) of Section 30 by the Second Ordinary viz. Ordinance No. 2 of 1992.
On behalf of the petitioner it was contended that the distinction made by the impugned amendment between a candidate set up by a recognised political party and any other candidate is artificial, inconsistent with the spirit of the election law and discriminatory, that the Con stitution does not confer on a candidate set up by a registered political party any special right, and treats all candidates similarly, and does not any categorisation, that the difference being introduced by the impugned amendment was contrary to the scheme of the Constitution and violative of the equality clause in Article 14, and that it also infringed the guarantee under Article 19(1) (a).
In respect of the Second Ordinance the objection was that the period of 14 days substituted by the amendment was too short, and the reduction from the period of 20 days was arbitrary and prejudicial to the larger interest for which elections are held.
The Petition was contested on behalf of Union of India by stating that on account of increase in terrorism and physical violence in several parts of the Country combined with the phenomenal increase in the number of independent candidates, the danger of disruption of the election process had been fast growing and the problem was, therefore, taken up, examined and it was considered that the amendments were essential to curb the danger of disruption of the election process.
Dismissing the Writ Petition, this Court, HELD : 1.
The right to vote or to stand as a candidate for election is neither a fundamental right nor a civil right In England also it has never been recognised as a common law right [791D] Jyoti Basu & Ors.
vs Debi Ghosal & Ors, ; and 986, referred to. 2.
The Cabinet system of Government has been envisaged by our 788 Constitution, and the same is on the British pattern.
In England, where democracy has prevailed for longer than in any other country in recent times, the Cabinet system of Government has been found to be most effective.
In other democratic countries also the party system has been adopted with success.
[792C D] Shamser Singh vs State of Punjab, ; at 827, referred to.
3.For a strong vibrant democratic Government, it is necessary to have a parliamentary majority as well as a parliamentary minority, so that the different points of view on controversial issues are brought out and debated on 'he floor of the Parliament.
This can be best achieved by the party system, so that the problems of the nation may be discussed, considered and resolved in a constructive spirit.
To abolish or ignore the party system would be to permit a chorus of discordant notes to replace an organised discussion.
[792E] Sir Ivor Jennings 'Cabinet Government 2nd Edn.
p.16, referred to.
4.Our Constitution has dearly recognised the importance of the party system, which was further emphasized by the addition of the 10th Schedule to it The Election Symbols (Reservation and Allotment) Order is also a step in that very direction.
[792F] 5.That candidates set up by political parties constitute a class separate from other candidates has been recognised in numerous cases by this Court which has also emphasized the vital role of political parties in a parliamentary form of democracy and expressed anxiety about the growing number of independent candidates.
[792H, 793C] Dr. P.N. Thampy Terah vs Union of India ; and D.M.L. Agarwal vs Rajiv Gandhi, ; , referred to.
6.The Representation of the People (Amendment) Ordinance, 1992 and theRepresentation of the People (Second Amendment) Ordinance, 1992 are constitutionally valid.
[789C]
|
eal No. 10 of 1950.
Appeal by special leave from a judgment of the High Court of Punjab (Falshaw and Soni JJ.) dated 30th December, 1949, upholding the conviction of the appellant under sections 302 and 307 read with section 34 of the Indian Penal Code and confirming the sentence of death passed against him by the Sessions Judge of Ferozepore on the 20th July, 1949, in Criminal Appeal Case No. 325 of 1949.
Jai Gopal Sethi (R. L. Kohli, with him) for the appel lant.
B.K. Khanna, Advocate.
General of the Punjab, (section M. Sikri, with him) for the respondent.
October 17.
The judgment of the court was deliv ered by FAZL ALI J.
This is an appeal by special leave from the judgment of the High Court of Punjab upholding the convic tion of the appellant.
Mohinder Singh, under sections 302 and 307 read with section 34 of the Indian Penal Code, and confirming the sentence of death passed against him by the Sessions Judge of Ferozepore.
The case for the prosecution which has been substantial ly accepted by the trial Judge and the High Court is briefly as follows.
Sometime in January, 1949, one Bachittar Singh, brother of Dalip Singh who is said, to have been murdered, lodged a complaint before the NaibTehsildar at Zira to the effect that a tree belonging to him had been cut by 7 per sons including Mohinder Singh, the appellant.
On the 28th February, 1949, which was the date fixed for the hearing of the case before the Naib TehsiIdar, Jita Singh and Dalip Singh, the two brothers of Bachittar Singh, were attacked by the appellant and one Gurnam Singh, a lad of 17, near a Gurdwara at about mid day, when 823 they were returning from their field.
Jita Singh was then carrying a load of fodder on his head while Dalip Singh had sickles in his hand.
Jita Singh was the first to be at tacked near a tailor 's shop by Mohinder Singh who fired at him from behind hitting him on the neck whereupon he fell down together with the bundle of fodder.
Dalip Singh, who was following Jita Singh, then ran backwards and he was chased by Gurnam Singh round the outer boundary of a tank which was close by.
Mohinder Singh ran on the other side of the tank in the opposite direction and confronted him and shot him with a gun on the chest whereupon he fell down.
Meanwhile, Gurnam Singh had also reached the spot and he fired with his rifle from a distance of about 4 or 5 feet near about Dalip Singh 's ear while he was lying sideways.
The injuries proved fatal and Dalip Singh died on the spot.
The same day at 3 p.m., Jita Singh went to the police station at Dharamkot, which is at a distance of 3 miles from village Augar, where the occurrence had taken place, and lodged a first information report, charging Mohinder Singh, with having caused injury to him, and Mohinder Singh and Gurnam Singh with the murder of Dalip Singh; and the police after investigating the case sent up a charge sheet against the two accused persons.
Thereafter they were tried by the Sessions Judge of Ferozepore under sections 302 and 307 read with section 34 of the Indian Penal Code.
The appellant was sentenced to death under section 302 and Gurnam Singh was sentenced to transportation for life under that section in view of his youth.
They were also sentenced to 3 years ' rigorous imprisonment each under section 307 read with section 34 of the Indian Penal Code.
It appears that Dalip Singh had 6 injuries altogether which are described by the doctor who performed the post mortem on his body in these words: " 1.
An irregularly round gun shot wound on the left temporal region, 1" diameter.
The wound is 22" behind outer canthus of left eye, its upper portion is at a level with the top of the pinna of the left ear, 824 behind it commences at the cartilages of the ear which are broken.
Brain is visible in the gap of the wound.
An area 4 " x 4 " is blackened, the wound being situated in the middle of this area.
A gun shot wound 3/4" X 1/2" on the back of right mastoid region, upper end of the wound is 1" behind the root of the right ear.
Direction is vertically oblique.
On dissection the left temporal bone under injury No. 1 is, hole and its petrous portion shattered.
A linear fracture extends upwards and backwards, from the hole into the left parietal and occipital bones.
After piercing through the left temporal lobe of the brain the projectile has pierced through the brainstem, and emerged out as injury No. 2, holding the mastoid region of the skull on the right side.
A gun shot wound 3/4" X 5/8" on the left side of chest 21/2" above and behind the left nipple and 1/2" behind the anterior axillary fold as area 1" below the wound is bruised.
A gun shot wound 1/2"X 3/4" on the right side of chest in the mid axillary line.
The top of the wound being 1 3/4" from the apex of right axilla and 4 3/4" above and behind the right nipple.
A gun shot wound 1/2"x 1/4" on the inner aspect of the right arm, upper end of the wound is 11/4" from the top of the anterior axillary fold.
A gun shot wound 3/4"X 1/2" on the front of the right arm.
Its upper end being 21/2" from the top of the anterior axillary fold.
Its distance from injury No. 5 being 1" and it is inter connected with injury No. 5 under the skin.
" The doctor has stated in his evidence that in all two projectiles appeared to have hit Dalip Singh, and injuries Nos. 1 and 2 were caused by one of them, injury No. 1 being the wound of entrance and injury No. 2 being the wound of exit, With regard to the other 4 injuries, his evidence is as follows : "Injury No. 3 is the wound of entrance of another projectile and No. 4 is the wound of its exit.
Wound 825 No. 5 is the wound of its re entrance and wound No. 6 the wound of its final exit from the body." Jita Singh had 4 slight injuries on the back of the neck which are said to have been caused by pellets and two abra sions below the right elbow and right knee said to have been caused by blunt weapons.
It may be stated here that when the investigating police officer arrived at the scene of occurrence, he found an empty cartridge case at the place where Jita Singh is said to have been fired at, and 2 empty cartridge cases and a blood stained cap of a cartridge case near the place where the dead body of Dalip Singh was lying.
Later, when Mohinder Singh appeared before the police, he was asked whether he possessed a gun and he produced a 12 bore gun (exhibit P 16) for which he held a licence.
The gun and the empty cartridges were thereupon sent to Dr. Goyle, Director of the C.I.D. Laboratory, Phillaur, and the opinion that he submitted may be summed up as follows : The gun had signs of having been fired but he could not say when it was fired last.
The cartridge cases P 10 and P 15 could have been fired through the gun P 16, but he could not say wheth er they were actually fired from that particular gun or a similar gun or guns.
He did not make any experiment by firing any cartridge from the gun P 16, nor did he compare the markings on the empty cartridges P 10 and P 15.
A notable feature of the case is that the occurrence is said to have taken place in the vicinity of a Gurdwara and some houses, but in spite of this fact, not a single person of the locality has been cited or examined as a witness by the prosecution.
The whole case rests on the evidence of 3 witnesses, viz., Jita Singh, Harnam Singh and Buta Singh.
Jita Singh, who had been shot at from behind, claims to have seen the two accused firing at his brother.
Harnam Singh admittedly lives at a considerable distance from the place of occurrence but has stated that he was coming from another village where he had gone to fetch some medicine for his maternal cousin, when he 826 saw the occurrence.
Buta Singh, who is a tonga driver, belongs to a distant village and is somewhat remotely related to Harnam Singh, and accounts for his presence near the scene of occurrence by saying that he had come to see Harnarn Singh the evening before.
Harnam Singh admitted in his evidence that there was a dispute between him and Mohinder Singh nearly a month before the occurrence about a wall, but he also says that the dispute ' had been amicably settled by the panchayat".
There is nothing before us to show what the award of the panchayat was and whether or not it left any ill feeling behind.
But, on the argu ments of the counsel and the apparently trivial motive for which Dalip Singh is said to have been murdered, it would appear that among the class of persons with which we are concerned petty quarrels give rise to enmity which does not die soon or easily.
After the close of prosecution evidence in the Ses sions Court, the appellant was examined under section 342 of the Criminal Procedure Code, and he denied that he had fired at Jita Singh and Dalip Singh with the gun P 16 and that Gurnam Singh had fired at Dalip Singh with a rifle.
He added that he was not present in village Augur at the time of the alleged occurrence but had gone to Zira to attend the Naib Tehsildar 's court.
To establish his plea of alibi, he examined 3 witnesses in the court of the Sessions Judge.
The first witness was the Naib Tehsildar before whom Bachittar Singh had lodged the complaint, and he stated that when the case was called on the 28th February, 1949, 6 or 7 persons appeared in court.
He also proved an application for a taccavi loan which purports to have been filed by the appel lant on the 28th February, 1949, and bears his thumb impres sion.
He further stated in his evidence that he had passed orders on that application on the 28th February but he did not know Mohinder Singh and therefore could not say who had produced that application before him on that date.
The second witness for the appellant was his brother in law, Jogindar Singh, who had written the application.
exhibit D C.
He has stated that 827 Mohinder Singh himself was present in the court of the Naib Tehsildar on the 28th February, 1949, that he had signed the application (exhibit D C) and that he was also one of the persons who had appeared before the Tehsildar when Bachittar Singh 's case was called out.
The third defence witness is a hand writing and fingerprint expert.
He has proved that the application (exhibit D C) alleged to have been presented to the Naib Tehsildar on the 28th February bore the thumb impression of the appellant, and he has also given evidence to show that certain handwritings which he was asked to compare did not tally.
The evidence given by him with regard to these handwritings has a bearing on the assertion made by the appellant in a petition filed before the committing Magistrate to the effect that the original service report of the process peon showing that the appellant also was one of the persons served for appearance before the Naib Tehsildar on the 28th February, 1949, had been suppressed and another report with forged handwriting had been substituted in its place.
Both the courts below have held that the alibi has not been proved by satisfactory evidence and that the charges against the appellant have been made 'out.
It seems that the learned Judges of the High Court were not at all impressed by the evidence of Dr. Goyle which they characterized as unsatisfactory and they were not also confident that the gun, exhibit P 16, had been used in causing the injuries to Dalip Singh.
This appears from the folio.wing observations made by them in their judgment: "The gun P 16 was identified by Jita Singh as the gun with which Mohinder Singh fired at him and Dalip Singh but he identified the gun because of a brass plate at its butt end.
We have seen the gun.
Its brass plate could be of no use for the identification of the gun.
" Again, commenting on the nature of the injuries, the learned Judges observed as follows : 828 "Another difficulty which is created in this case is the nature of injuries found on the body of Dalip Singh .
What kind of bullet it was which, though it had blackened the area where it entered the brain showing that it had been fired from not far away, did not shatter the brain we do not know.
What kind of projectile it was which entered the body (which if the evidence as to be believed was fired at from a few feet at Dalip Singh) and passed through the body without shattering the inside of the chest or causing extensive damage therein is also not known.
Mr. Sethi (counsel for the accused) quoted Taylor 's book on medical jurisprudence and Hateher 's book on ballistics and argued that the firing must have been from a place between 600 and 1,200 yards away in order that the projectile may pass through and through the body and not shatter it.
That of course pre supposes that the barrel of the gun, using the word 'gun ' m ' a generic sense, is grooved which causes a projectile to go forward with a rotatory motion of something under a quarter of a million revolutions a minute and travelling at the rate of about 2,000 miles an hour when it leaves the gun . .
We do not know whether the barrel of this gun (exhibit P 16) is grooved or not.
is a single bar relled gun and is country made.
The likelihood is that the barrel is not grooved.
" On a careful reading of the judgment under appeal, it appears that the learned Judges of the High Court strongly felt that they had no adequate explanation in the oral evidence before them for certain puzzling features of the injuries on Dalip Singh.
This is exactly what we also feel in this case, and it seems to us that the evidence which has been adduced falls short of proof in regard to a very mate rial part of the prosecution case.
in a case where death is due to injuries or wounds caused by a lethal weapon, it has always been considered to be the duty of the prosecution to prove by expert evidence that it was likely or at least possible for the injuries to have been caused with the weapon with which and in the manner in which they are al leged to have been caused.
It is 829 elementary that where the prosecution has a definite or positive case, it must prove the whole of that case.
In the present case, it is doubtful whether the injuries which are attributed to the appellant were caused by a gun or by a rifle.
Indeed, it seems more likely that they were caused by a rifle than by a gun, and yet the case for the prosecu tion is that the appellant was armed with a gun and, in his examination, it was definitely put to him that he was armed with the gun P 16.
It is only by the evidence of a duly qualified expert that it could have been ascertained whether the injuries attributed to the appellant were caused by a gun or by a rifle and such evidence alone could settle the controversy as to whether they could possibly have been caused by a fire arm being used at such a close range as is suggested in the evidence.
It is clear, and it is also the prosecution case, that only 2 shots were fired at Dalip Singh and one of the crucial points which the prosecution had to prove was that these shots were fired by two persons and not by one man, and both the shots were fired in such manner and from such distance as is alleged by the eye witnesses.
There is, in our opinion, a gap in the prosecu tion evidence on a most fundamental point and the error which has been committed by the courts below is to ignore the gap and decide the case merely upon the oral evidence of 3 witnesses, two of whom are mere chance witnesses and not altogether independent persons, and the evidence of the third witness is open to criticism on the ground of his partisanship as well as the improbability of his having been able to see the firing at his brother after he had himself been shot at the back of the neck.
The learned Judges of the High Court, after commenting upon the entire evidence, say in their judgment: " We are thus left with the evidence of the three wit nesses of the prosecution together with the state of wounds as shown by the medical evidence and an unsatisfactory statement of Dr. Goyle.
" 106 830 They reject the evidence of Dr. Goyle and they consider the nature of the wounds to have created a serious dificulty in the case.
Having arrived at these conclusions, it was a serious thing to rest the appellant 's conviction wholly upon the oral testimony in the case which has remained unchecked and unconfirmed by expert evidence.
The real position ap pears to be that the prosecution case cannot be said to be wholly proved but only partly proved if it is permissible to use such an expression.
This Court, as was pointed out in Pritam Singh vs The State (1), will not entertain a criminal appeal except in special and exceptional cases where it is manifest that by a disregard of the forms of legal process or by a violation of the principles of natural justice or otherwise substantial and grave injustice has been done.
It seems to us that the present case comes within the rule laid down, because the appellant has been convicted notwithstand ing the fact that the evidence is wanting on a most.material part of the prosecution case.
This is enough to dispose of this appeal, but we are constrained to say that we are not altogether happy about the manner in which the plea of alibi put forward by the appellant has been disposed of by the courts below.
Ordi narily tiffs court will not look beyond the findings of fact arrived at by the courts below, but we find that in the present case the decision on the plea of alibi has been arrived at in disregard of the principle that the standard of proof which is required in regard to that plea must be the same as the standard which is applied to the prosecution evidence and in both cases it should be a reasonable stand ard.
It is common ground in this appeal that the appellant was summoned to appear before the Naib Tehsildar on the 28th February, 1949, which was the date fixed for dealing with Bachittar Singh 's complaint.
Ordinarily and without looking at anything else, there should have been nothing improbable about his appearance before the Naib Tehsildar on that date, but in the present case there is positive (1) 831 evidence that an application for a taccavi loan bearing that date and also bearing the thumb impression the appellant was put up before the Naib Tehsildar and that was dealt with by him on that very day.
There is also affirmative evidence of a witness to prove that the appellant was present in the Naib Tehsildar 's court.
This witness is undoubtedly closely related to the appellant but his evidence is supported by probability and a written document.
One of the points raised by the prosecution was that the summons for appear ance on the 28th February was not served upon Mohinder Singh, but such evidence as there is on the record bearing on this point has certain peculiar features.
The prosecu tion having cited the Naib Tehsildar and the Ahlmad (Bench Clerk) as witnesses in the case gave them up and stated that the former had been won over by the appellant.
This allega tion could have been substantiated in the cross examina tion of the Naib Tehsildar who was examined as a defence witness, but nothing was elicited from him to support such a charge.
From the evidence of the Naib Tehsildar, it appears that on the 5th July, 1949, the Public Prosecutor showed him exhibit P.S. (which is an order directing the appearance of the seven persons including the appellant mentioned by Bachittar Singh in his complaint, before the Naib Tehsildar on the 28th February, 1949).
and that he told the Public Prosecutor that 6 or 7 persons appeared in his court.
on that date.
After this incident, on the 6th July, 1949, the Public Prosecutor informed the Court that he would "give up the Naib Tehsildar as he has been won over ".
The evidence of the process peon is of a somewhat suspicious character, because he has conveniently forgotten every material detail.
The appellant asserted at the trial that the original report of the process peon had been suppressed and another report had been fabricated and substituted in its place.
An application to this effect was made by him before the committing Magistrate, and he also examined a handwriting expert to prove some of his allegations.
Neither of the courts below has dealt with the evidence 832 of this expert.
The evidence of the Investigating Officer as recorded by the Sessions Judge is to the following effect : "P.B. and P.C. were obtained by me from the headquar ters.
Along with P.B. and P.C. the Parvana P.S. was also received by me.
After going through the zimnis, the witness states that the aforesaid documents P.B., P.C. and P.S. were summoned by the committing Magistrate and were not sent for by the witness.
On 16th March, 1949, a Foot Constable was certainly sent to Zira to bring the said file.
But since the file had been sent to the headquarters, therefore, the said constable returned quite blank.
I never inspected this file at the headquarters.
" The most material document with which we are concerned is P.S. which should have contained an endorsement of serv ice of summons on the persons against whom Bachittar Singh had complained.
It is clear from the first part of the evidence of the Investigating Officer that he had received the report of the process peon which was endorsed on the back of P.S., from the headquarters, but he says later that the papers were sent for but they did not arrive.
It is surprising that when a document was the subject of so much controversy he should have said by mistake that he had received it.
One of the comments made by the learned Ses sions Judge in dealing with the application alleged to have been made by the appellant on the 28th February, 1949, for a taccavi loan is that after producing the application before the Naib Tehsildar on that date, Mohinder Singh could have reached his village by noon time, but on this point the learned Sessions Judge seems to have wholly ignored the evidence of the Naib Tehsildar that he usually dealt with such applications between 12 and 4 P.M. on working days, and also the affirmative evidence of Joginder Singh.
In our opinion, there has been in substance no fair and proper trial in this case, and we are constrained to allow this appeal, set aside the conviction of the appellant under sections 302 and 307 read with section S4 833 of the Indian Penal Code, and direct that he be set at liberty forthwith.
In ordinary circumstances, we might have remanded the case for a flesh trial, but we consider that such a course would, in the present case, be unfair and contrary to settled practice, seeing that the appellant has been in a state of suspense over his sentence of death for more than a year.
Appeal allowed.
| IN-Abs | In a case where death is due to injuries or wounds caused by a lethal weapon, it has always been considered to be the duty of the prosecution to prove by expert evidence that it was likely or at least possible for the injuries to have been caused with the weapon with which, and in the manner in which, they are have been caused.
Where in a case of murder, the prosecution case was that the accused shot the deceased with a gun, but it appeared likely that the injuries on the deceased were inflicted by a rifle and there was no evidence of a duly qualified expert to prove that the injuries were caused by a gun, and the nature of the inajuries was also such that the shots must have been fired by more than one person and not by one person only, and the prosection had no evidence to show that another person also shot, and the High Court, though realis ing that there was thus a gap in the prosecution evidence, convicted the accused placing reliance on the oral evidence of 3 witnesses which was not, disinterested: Held, that, the present case fell within the rule laid down in Pritam Singh vs The State ([1959] S C R. 453) inas much as the appellant had been convicted notwithstanding the fact that evidence was wanting on a most material part of the prosecution case, and the conviction could not therefore be upheld, 822 Held also, that the standard of proof which is required in regard to the plea of alibi must be the same as the standard which is applied to the prosecution evidence and in both cases it should be a reasonable standard.
|
No. 132 of 1951.
Peti tion under article 32 of the Constitution for a writ in the nature of mandamus.
The material facts are set out in the judgment.
Nuruddin Abroad for the petitioner.
K.N. Aggarwal for the respondents.
February 27.
The Judgment of the Court was delivered by DAs J.
This is an application under article 32 of the Constitution made by Mohammad Yasin for the protection of his fundamental right of carrying on his business which, according to him, is being infringed by the respondent.
The case sought to be made out in the petition may be shortly stated as follows: The petitioner is a wholesale dealer in fresh vegetables and fruits at Jalalabad in the district of Muzaffarnagar in the State of Uttar Pradesh and claims to have been carrying on such business for the last 7 years or so at his shop situated in the town of Jalalabad.
The vegetable and fruit growers used to bring their goods to the town and get them auctioned through any of the vegetable dealers of their choice who used to charge one anna in the rupee as and by way of commission.
The respondent Committee which is a Town Area Committee has framed certain bye laws under which all right and power to levy or collect commission on sale or purchase of vegetables and fruits within the limits of the town vest in the respondent Committee or any other agency appointed by the Committee and no one except the respondent Committee is authorised to deal in wholesale vegetables and fruits and collect the commission thereof in any place and in any event.
The respondent Committee has by auction given the contract for sale of 575 vegetables and fruits and for collecting the commission for the current year to the respondent Bishamber who, it is alleged, has never dealt in vegetables and fruits The respondent Committee has not set up any market nor has it framed any bye laws for issue of licences to the vegetable and fruit merchants.
The bye laws also provide for prosecu tion for the breach of any of the provisions of these bye laws.
Although, in terms, there is no absolute prohibition against carrying on business as wholesale dealer in vegeta bles and fruits, the result of the bye laws requiring the wholesale dealers to pay the prescribed fee of one anna in the rupee to the contractor who holds the monopoly is, in effect, to bring about a total prohibition of the business of the wholesale dealers in vegetables and fruits.
The petitioner contends that by granting a monopoly of the right to do wholesale business in vegetables and fruits to the respondent Bishamber the respondent Committee has in effect totally prevented the petitioner from carrying on his busi ness and has thereby infringed his fundamental right under article 19(1)(g) of the Constitution.
In the alterna tive, the petitioner contends that the respondent Committee has no legal authority to impose a tax of the kind it has sought to do, that the imposition of a tax calculated at one anna in the rupee is in the nature of a sale tax and cannot be regarded as a licence fee and such unauthorised impost constitutes an illegal restraint on his fundamental right under article 19 (1) (g).
The notice of motion has been served on the respondent Committee as well as on respondent Bishamber.
The respond ents have entered appearance and filed an affidavit in opposition to the present application affirmed by their agent on record Paragraph 4 of that affidavit is as follows : "4.
Paragraphs 4, 5, 6 and 7 of the petition are wrong and misleading and do not convey the correct idea.
If the bye laws are read from beginning to end, the correct posi tion is that the Town Area Committee has lawfully imposed certain taxes on the purchase 576 and sale of fruits and vegetables within the ambit of the Town Area; and instead of collecting the aforesaid taxes departmentally the Committee finds it more convenient and less expensive to auction the 'right to collect the taxes ' and give the contract to the highest bidder or whomsoever it thinks fit and proper.
There is absolutely no restriction on anybody who wants to purchase or anybody who wants to sell; only he must pay the prescribed tax to the Town Area Commit tee through the Contractor.
The market is open, and writ large throughout the territory of the Town Area Committee and anybody can purchase from anybody and anybody can sell to anybody, without any control or intervention by the Contractor, whose position is simply that of a taxcollector on behalf of the Town Area Committee.
Instead of getting the pay, he gets the profits, if any, and runs the risk of incurring losses if his gross realisations are less than what he paid.
This is clearly the position, and it is submitted, there is nothing wrong with it legally and no interference of the petitioner 's rights.
" The petitioner has to his petition annexed copies of a set of bye laws dated June 24, 1942, and a copy of a resolu tion of the respondent Committee dated March 16, 1950, recommending the addition of several bye laws to the previ ous bye laws.
At the hearing of the petition before us it was agreed by and between counsel on both sides that the petition has to be disposed of on the basis of the bye laws of 1942 only and learned counsel for the respondent Commit tee has produced the original bye laws of 1942 before us.
Bye law 1 only provides that no person shall sell or pur chase any vegetable or fruit within the prescribed limits of the Town Area Committee, Jalalabad by wholesale or auction,without paying the fee fixed under these bye laws to the licensee appointed by the Town Magistrate.
Bye law 4 (b) expressly provides that any person can sell in wholesale at any place in the Town Area provided he pays the pre scribed fees to the licensee.
It is, therefore, clear that these byelaws do not in terms, prohibit anybody from dealing in vegetables and fruits as alleged by the petitioner 577 and in this respect they materially differ from the bye laws which this Court had to consider in the Kairana case(1) which consequently does not govern this case.
Learned counsel, however, contends and we think with considerable force and cogency that although, in form, there is no prohibition against carrying on any wholesale business by anybody, in effect and in substance the bye laws have brought about a total stoppage of the wholesale deal ers ' business in a commercial sense.
The wholesale dealers, who will have to pay the prescribed fee to the contractor appointed by auction, will necessarily have to charge the growers of vegetables and fruits something over and above the prescribed lee so as to keep a margin of profit for themselves but in such circumstances no grower of vegetables and fruits will have his produce sold to or auctioned by the wholesale dealers at a higher rate of commission but all of them will flock to the contractor who will only charge them the prescribed commission.
On the other hand, if the wholesale dealers charge the growers of vegetables and fruits only the commission prescribed by the bye laws they will have to make over the whole of it to the contractor without keeping any profit themselves.
In other words, the wholesale dealers will be converted into mere tax col lectors for the contractor or the respondent Committee without any remuneration from either of them In effect, therefore, the bye laws, it is said, have brought about a total prohibition of the business of the wholesale dealers in a commercial sense and from a practical point of view.
We are not of opinion that this contention is unsound or untenable.
Learned counsel for the petitioner, however, does not leave the matter there.
He goes further and urges that the respondent Committee has no legal authority to impose this fee of one anna in the rupee on the value of goods sold or auctioned and that such imposition is in the nature of a sale tax rather than a licence fee.
(1) ; 578 Learned counsel for the respondent in reply takes a preliminary objection to this line of argument.
He points out that as the levying of a tax without authority of law is specifically prohibited under article 265 of the Constitu tion, article 81(1) must be construed as referring to depri vation of property otherwise than by levying of a tax and that levying of a tax in contravention of article 265 does not amount to a breach of a fundamental right.
He contends, on the authority of the decision of this Court in Ramjilal vs Income tax Officer, Mohindargarh(1), that while an ille gal imposition of tax may be challenged in a properly con stituted suit, it cannot be questioned by an application under article 32.
This argument overlooks the difference between a tax like the income tax and a licence fee for carrying on a business.
A licence fee on a business not only takes away the property of the licensee but also operates as a restriction on his right to carry on his business, for without payment of such fee the business cannot be carried on at all.
This aspect of the matter was not raised or considered in the case relied on by the learned counsel, and that case, therefore, has no application to the facts of this case.
Under article 19(1) (g) the citizen has the right to carry on any occupation, trade or business which right under that clause is apparently to be unfettered.
The only restriction to this unfettered right is the authority of the State to make a law relating to the carrying on of such occupation, trade or business as mentioned in clause (6) of that article as amended by the Constitution (First Amend ment) Act, 1951.
If therefore, the licence fee cannot be justified on the basis of any valid law no question of its reasonableness can arise, for an illegal impost must at all times be an unreasonable restriction and will necessarily infringe the right of the citizen to carry on his occupa tion, trade or business under article 19 (1) (g) and such infringement can properly be made the subject matter of a challenge under article 32 of the Constitution.
(1) [1951] S.C.R.127.
579 Learned counsel for the respondents then refers us to the U.P. Town Areas Act (No. 11 of 1914) which governs the respondent Committee.
Section 14 of this Act requires the Committee to annually determine and report to the District Magistrate the amount required to be raised in any town area for the purposes of this Act and provides that the amount so determined shall be raised by the imposition of a tax to be assessed on the occupiers of houses or lands within the limits of the town area according either to their general circumstances or to the annual rental value of the houses or lands so occupied by them as the Committee may determine.
There were, at the time when the bye laws of the respond ent Committee were framed, five provisos to this section none of which authorised the imposition of any tax on any business and, therefore, they have no bearing on the ques tion now under consideration.
Learned counsel for the respondents, however, draws our attention to section 38 of the Act which authorises the Provincial Government by noti fication in the Official Gazette to extend to all or any or any part of any town area any enactment for the time being in force in any municipality in the United Provinces and to declare its extension to be subject to such restrictions and modifications, if any, as it thinks fit.
Then he proceeds to draw our attention to Notification No. 397/XI 871 E, dated the 6th February, 1929, whereby, in supersession of all previous notifications, the Provincial Government, in exer cise of the powers conferred by section 38(1) of the United Provinces Town Areas Act, 1914, extended the provisions of sections 293(1) and 298(2) (J) (d) of the United Provinces Municipalities Act (11 of 1916) to all the town area in the United Provinces in the modified form set forth therein.
The original bye laws produced by learned counsel purport, however, to have been framed by the respondent Committee under sections 298 (2)(F)(a)and 294 of the United Provinces Municipalities Act (11 of 1916).
We have not been referred to any notification whereby section '294 580 of the United Provinces Municipalities Act was extended to the respondent Committee.
It appears, however, that the bye laws of the respondent Committee were revised in Septem ber 1942 and were then said to have been made under section 298 (2) (J) (d).
It will have, therefore, to be seen wheth er these bye laws come within The purview of section 298 (2) (J) (d) as modified in their application to the respondent Committee.
It will be noticed that under section 298 (2) (J) (d) as modified as aforesaid the respondent Committee is authorised only to make bye laws fixing any charges or fees or any scale of charges or fees to be paid under section 9.93(1) and prescribing the times at which such charges or fees shall be payable and designating the persons authorised to receive payment thereof.
Section 293(1), as modified, authorises the respondent Committee to charge fees to be fixed by bye laws or by public auction or by agreement for the use or occupation (otherwise than under a lease) of any immovable property vested in, or entrusted to the management of the Town Area Committee, including any public street or place of which it allows the use or occupation whether by allowing a projection thereon or otherwise.
Bye law 1 of the respondent Committee to which a reference has already been made forbids a person from using any land within the limits of the town area for the sale or purchase of fruits and vegetables without paying the prescribed fee.
Bye law 4 (b), however, allows any person to sell in wholesale at any place in the town area, provided he pays the prescribed fees to the licensee.
These bye laws do not purport to fix a fee for the use or occupation of any immovable property vested in or entrusted to the management of the Town Area Committee including any public street or place of which it allows the use or occupation whether by allowing a projection thereon or otherwise.
Sections 293(1) and 298(2) (J) (d) of the United Province Municipalities Act, 1916, as amended at the time they were extended to the town areas in the United Provinces do not empower the Town Area Committee to make any bye law authorising it to 581 charge any fees otherwise than for the use or occupation of any property vested in or entrusted to the management of the Town Area Committee including any public street.
Therefore, the bye laws prima facie go much beyond the powers con ferred on the respondent Committee by the sections men tioned above and the petitioner complains against the en forcement of these bye laws against him as he carries on business in his own shop and not in or on any immoveable property vested in the Town Area Committee or entrusted to their management.
Learned counsel for the respondent Commit tee, however, urges that the growers of vegetables and fruits come on foot or in carts or on horses along the public street and stand outside the petitioner 's shop and for such use of the public street the respondent Committee is well within its powers to charge the fees.
From the way the case was formulated by the learned counsel, it is quite clear that if anybody uses the public street it is the growers of vegetables and fruits who come to the petition er 's shop to get their produce auctioned by the petitioner and the petitioner cannot be charged with fees for use of the public street by those persons.
In our opinion, the bye laws which impose a charge on the wholesale dealer in the shape of the prescribed fee, irrespective of any use or occupation by him of immoveable property vested in or en trusted to the management of the Town Area Committee includ ing any public street, are obviously ultra vires the powers of the respondent Committee and, therefore, the bye laws cannot be said to constitute a valid law which alone may, under article 19(16) of the Constitution,ofimpose a restric tion on the right conferred by article 19(1) (g).
In the absence of any valid law authorising it, such illegal impo sition must undoubtedly operate as an illegal restraint and must infringe the unfettered right of the wholesale dealer to carry on his occupation, trade or business which is guaranteed to him by article 19(1) (g) of our Constitution 75 582 In this view of the matter the petitioner is entitled to a suitable order for protection of his fundamental right.
The prayer in the petition, however, has been expressed in language much too wide and cannot be granted in that form.
The proper order would be to direct the respondent Committee not to prohibit the petitioner from carrying on the busi ness of a wholesale dealer in vegetables and fruits within the limits of the Jalalabad Town Area Committee until proper and valid bye laws are framed and thereafter except in accordance with a licence to be obtained by the petitioner under the bye laws to be so framed.
The respondent Commit tee will pay the costs of this application to the petition er.
Agent for the petitioner: Naunit Lal.
| IN-Abs | There is a difference between a tax like the income tax and a licence fee for carrying on an occupation, trade or business.
A licence lee on a business not only takes away the property of the licensee but also operates as a restric tion on his fundamental 573 right to carry on his business.
Therefore if the imposition of a licence fee is without authority of law it can be challenged by way of an application under article 32.
Under article 19(1) (g) of the Constitution a citizen has the right to carry on any occupation, trade or business and the only restriction on this unfettered right is the author ity of the State to make a law relating to the carrying on of such occupation, trade or business as mentioned in cl.
(6) of that article as amended by the Constitution (First Amendment) Act, 1951.
If therefore a licence fee imposed for carrying on an occupation, trade or business cannot be justified on the basis of any valid law, no question of its reasonableness can arise, for an illegal impost must at all times be an unreasonable restriction and will necessarily infringe the right of the citizen to carry on his occupa tion, trade or business under article 19(1) (g), and such infringement can properly be made the subject matter of a challenge under article 32 of the Constitution.
Bye law No. 1 of the Bye laws of the Town Area Committee of Jalalabad (in the United Provinces) provided that no person shall sell or purchase any vegetables or fruit within the prescribed limits of the Town Area Committee by whole sale or auction, without paying the fees fixed by these bye laws to the licensee appointed by the Town Magistrate.
Bye law No. 4 (b) provided that any person can sell in wholesale at any place in the town area provided he pays the prescribed fees to the licensee.
A person who had been carrying on the business of wholesale dealer in vegetables and fruits in his own shop at Jalalabad for a period of seven years applied for protection under article 32 contending that these bye laws infringed his fundamental right to carry on his trade guaranteed by article 19 (1) (g) and were there fore void.
Held, that section 293 (1) and section 298 (2) (J) (d) of the U.P. Municipalities Act, 1916, as amended at the time they were extended to the town areas in the United Provinces did not empower the Town Area Committee to make any bye law autho rising it to charge any fees otherwise than for the use and occupation of any property vested in or entrusted to the management of the Town Area Committee including any public street.
The bye laws in question which imposed a charge on the wholesale dealer in the shape of the prescribed fee, irrespective of any use or occupation by him of immovable property vested in or entrusted to the management of the Town Area Committee including any public street, are obvi ously ultra vires the powers of the Committee and, there fore, the bye laws cannot be said to constitute a valid law which alone may, under article 19 (6) of the Constitution, impose a restriction on the right conferred by article 19(1) (g).
In the absence of any valid law authorising it, such illegal imposition must undoubtedly operate as an illegal restraint and must infringe the unfettered right of the wholesale dealer to carry on 74 574 his occupation, trade or business which is guaranteed to him by article 19 (1) (g) of our Constitution.
Kairana case ; and Ramji Lal vs Income tax Officer, Mohindargarh ; distinguished.
|
26 and 27 of 1954, 24 and 437 of 1955, 256 of 1956, 12, 16, 17 and 73 of 1957.
Petition under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
M.S. K. Sastri, for the petitioners in Petitions Nos. 26 and 27 of 54 and 24 of 1955.
V.N. Swami and M. section K. Sastri, for the petitioners in Petitions Nos.
437 of 55 and 256 of 56.
341 L.K. Jha, J. M. Thakur, section N. Andley and J. B. Dadachanji, for the petitioner in Petition No. 12 of 1957.
N.S. Bindra and Harbans Singh, for the petitioners in Petitions Nos. 16 and 17 of 1957.
N.S. Bindra and Govind Saran Singh, for the petitioner in Petition No. 73 of 1957.
H. N. Sanyal, Additional Solicitor General of India, H.J. Umrigar and R. H. Dhebar, for the respondent in Petitions Nos. 26 and 27 of 1954, 24 and 437 of 1955, 256 of 1956 and 12 of 1957.
M.Adhikary, Advocate General for the State Of Madhya Pradesh and I. N. Shroff, for the respondent in Petitions Nos. 16, 17 and 73 of 1957.
March 9.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
The judgment in Petition No. 12 of 1957 shall also dispose of petitions Nos. 26 and 27 of 1954, 24 and 437 of 1955, 256 of 1956 and 16, 17 and 73 of 1957.
These petitions under article 32 arise out of alleged agreements by which some of the proprietors in the former State of Madhya Pradesh granted to one or other of the petitioners the right to take forest produce, mainly tendu leaves, from the forests included in Zamindari and Malguzari villages of the grantors.
Government has disclaimed these agreements and auctioned the rights afresh.
The petitioners state that this is an invasion of their fundamental rights.
The dates on which these alleged agreements were entered into, the terms thereof and the periods during which they were to subsist are different from case to case.
It is not necessary in this judgment to recite the terms of these documents, and it is sufficient to group them for purpose of decision on the bases whether the said agreements still subsist, and whether they are incorporated in a registered instrument or not.
Petitions Nos. 437 of 1955 and 256 of 1956 are founded on unregistered documents.
The answering respondent does not admit these documents, and contends that they cannot be looked into to prove their 342 terms, in view of the decision of this Court in Shri mathi Shantabai vs State of Bombay (1).
Petitions Nos. 16, 17 and 73 of 1957 form another group, inasmuch as the period during which the alleged agreements were to operate expired in 1955.
Additionally, the documents on which the 'claim is founded in those petitions are unregistered.
In the last mentioned case, it is pleaded that the answering State Government had recognised the agreements in favour of the petitioner but resiled from that position subsequently, which allegation has been adequately explained by the State Government in its affidavit.
The recognition was not in favour of the petitioner but in favour of one Thakur Kamta Singh, who claimed under an agreement entered into by one Vishwanath Singh on a date when he had already transferred his interest in the Zamindari to his son Onkar Prasad Singh.
This point was therefore not taken before us at the hearing, and nothing more Deed be said about it.
The main objection against these petitions is that the agreements having expired, there is nothing left to enforce either in favour of the petitioners or against the State Government, and the remedy, if any, of the petitioners is to sue the State and/or the proprietors for the breach.
The last group consists of Petitions Nos. 26 and 27 of 1954, 24 of 1955 and the present petition (No. 12 of 1957).
In these petitions, the agreements with the petitioners are made by registered documents and the terms during which they are to operate have yet to expire.
These cases, it is stated, fall outside the rule in Shantabai 's case (1), to which reference has already been made.
They are stated to fall within the decision of this Court reported in Firm Chhotabhai Jethabai Patel and Co. vs The State of Madhya Pradesh (2).
In all these petitions, counsel argue that the view expressed in the last mentioned case is correct, while the view in Shantabai 's case (1) needs further consider ation.
The argument of the petitioners in these several cases is that Government steps into the shoes of the (1) ; (2) ; 343 quondam proprietors, and is bound by the agreements into which the latter had entered, before their proprietary rights were taken over by Government.
They also raise the contention that the petitioners were not proprietors as defined in the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 (hereinafter called the Act), and thus sections 3 and 4 in terms do not apply to them.
These sections, it is contended, do not apply to profit a prendre, which the petitioners enjoy under these agreements.
In support of this contention, reference is made to the decision of this Court in Chhotabhai 's case (1), and to the definition of ' proprietor ' in the Act.
Reference is also made to some provisions of the C. P. Land Revenue Act to be mentioned hereafter, to prove that the persons on whom the right to collect forest produce was conferred by the proprietors can not be regarded as proprietors even under that Act.
This, in main, is the argument in these cases, and even those petitioners whose agreements are incorporated in unregistered documents or whose agreements have since expired, adopted the same line of argument denying the necessity for registration of such agreements.
The matter in so far as it relates to the first two groups is simple.
It has already been ruled in Shantabai 's case (2) that if the right be claimed on foot of an unregistered agreement, it cannot be entertained.
Such documents were examined from five different angles in that case, and it was held that the document if it conferred a part or share in the proprietary right, or even a right to profit a prendre needed registration to convey the right.
If it created a bare licence, the licence came to an end with the interest of the licensors in the forests.
If proprietary right was otherwise acquired, it vested in the State, and lastly, if the agreements created a purely personal right by contract, there was no deprivation of property, because the contract did not run with the land.
Bose, J., who delivered a separate judgment, also held that in the absence of registration no right was created.
(1) ; (2) ; 344 In view of the clear pronouncement of this Court, the first two groups of petitions must fail.
Petitions Nos. 16, 17 and 73 of 1957 also fail for the added reason that the agreements having expired, the only remedy, if any, is to sue for breach of contract and no writ to enforce expired agreements can issue.
This brings us to the arguments advanced in the last four petitions in the third group which were also adopted by the other petitioners, whose petitions we have just considered.
All these petitioners strongly relied upon Chhotabhai 's case (1).
It is therefore necessary to examine attentively what was decided there.
In that case, it was held at p. 483 that: " The contracts and agreements appear to be in essence and effect licenses granted to the transferees to cut, gather, and carry away the produce, in the shape of tendu leaves, or lac, or timber, or wood." Reference in this behalf was made to a decision of the Privy Council in Mohanlal Hargovind of Jubbalpore vs Commissioner of Income tax, Central Provinces and Berar (2), where it was observed: " The contracts grant no interest in land and no interest in the trees or plants themselves.
They are simply and solely contracts giving to the grantees the right to pick and carry away leaves, which, of course, implies the right to appropriate them as their own property.
The small right of cultivation given in the first of the two contracts is merely ancillary and is of Do more significance than would be, e.g., a right to spray a fruit tree given to the person who has bought the crop of apples.
The contracts are short term contracts.
The picking of the leaves under them has to start at once, or practically at once, and to proceed continuously.
" The Bench next observed that there was nothing in the Act to affect the validity of the several contracts and agreements, and that the petitioners were, neither proprietors within the meaning of the Act, nor persons having " any interest in the proprietary right through the proprietors ".
After quoting from Baden Powell 's (1) ; (2) I.L.R. , 898, 345 Land Systems of British India, Vol.
1,p. 217, as to what was meant by ' proprietorship ' in the Land Revenue Systems in India, it was observed that the definition of ' proprietor ' in the Act conveyed the same sense.
Finally, repelling the argument that the agreements concerned " future goods ", it was held on the basis of a passage in Benjamin on Sale, 8th Edition, page 136, that a present sale of the right to goods having a " potential existence " could be made.
Since possession was taken under the agreements and consideration had also passed, there could be " a sale of a present right to the goods as soon as they come into existence.
" Reference was also made (at pp. 480, 481) to section 6 of the Act, which provides: " (1) Except as provided in sub section (2), the transfer of any right in the property which is liable to vest in the State under this Act made by the pro prietor at any time after the 16th March, 1950, shall, as from the date of vesting, be void.
" It was observed in the case as follows: " The date, 16th March, 1950, is probably the date when legislation on these lines was actively thought of, and sub section (1) hits at transfers made after this date.
This means that transfers before that date are not to be regarded as void.
Even in the case of transfers after the said date, sub section (2) provides that the Deputy Commissioner may declare that they are not void after the date of vesting, provided they were made in good faith and in the ordinary course of management.
The scheme of the Act as can be gathered from the provisions referred to above makes it reasonably clear that whatever was done before 16th March, 1950, by the proprietors by way of transfer of rights is not to be disturbed or affected, and that what vests in the State is what the proprietors had on the vesting date.
If the proprietor had any rights after the date of vesting which he could enforce against the transferee such as a lessee or a licensee, those rights would no doubt vest in the State." 44 346 It was accordingly held that the State Government could not interfere with such agreements but had only the right to enforce rights arising therefrom " standing in the shoes of the proprietors.
" It is clear from the foregoing analysis of the decision in Chhotabhai 's case (1) that on a construction of the documents there under consideration and adopting a principle enunciated by the Privy Council in Mohanlal Hargovind of Jubbalpore vs Commissioner of Incometax, Central Provinces and Berar (2) and relying upon a passage each in Benjamin on Sale and the wellknown treatise of Baden Powell, the Bench came to the conclusion that the documents there under consi deration did not create any interest in land and did not constitute any grant of any proprietary interest in the estate but were merely contracts or licenses given to the petitioners " to cut, gather and carry away the produce in the shape of tendu leaves, or lac , or timber or wood ".
But then, it necessarily followed that the Act did not purport to affect the petitioners ' rights under the contracts or licenses.
But what was the nature of those rights of the petitioners ? It is plain, that if they were merely contractual rights, then as pointed out in the two later decisions, in Ananda Behera vs The State of Orissa (3), Shantabai 's case (4), the State has not acquired or taken possession of those rights but has only declined to be bound by the agreements to which they were not a party.
If, on the other hand, the petitioners were mere licensees, then also, as pointed out in the second of the two cases cited, the licenses came to an end on the extinction of the title of the licensors.
In either case there was no question of the breach of any fundamental right of the petitioners which could support the petitions which were presented under article 32 of the Constitution.
It is this aspect of the matter which was not brought to the notice of the Court, and the resulting omission to advert to it has seriously impaired, if not completely nullified, the effect and weight of the decision in Chhotabhai 's case (1) as a precedent.
(1)[1953] S.C.R. 476.
(3)[1955] 2 S.C.R. 265.
(2) I.L.R. , 898.
(4) ; 347 The argument of counsel in these cases followed the broad pattern of the decision in Chhotabhai 's case (1).
and we next proceed to consider it.
It is contended that what vests in the State is the right which the proprietors had on the date of vesting because section 3 of the Act is not retrospective, and that the agreements are " in essence and effect licenses granted to the transferees to out, gather and carry away the produce in the shape of tendu leaves, or lac or timber or wood ".
These agreements, it is submitted, grant no 'interest in land ' or I benefit to arise out of land ', the object of the agreements can only be described as sale of ' goods ' as defined in the Indian Sale of Goods Act, and the grant of such a right is not comprehended in the firstsub section of section 3 where it says : " . . all proprietary rights in an estate, mahal in the area specified in the notification, vesting in a proprietor of such estate, Mahal or in a person having interest in such proprietary right through the proprietor, shall pass from such proprietor or such other person to and vest in the State for the purposes of the State free of all encumbrances ".
It is finally contended that the interest of these peti tioners is not I proprietary right ' at all but a right to get I goods in the shape of leaves, lac, etc.
We have to examine these contentions critically.
Before we do so, it is necessary to set out in brief the terms of the agreements which have been produced in these cases.
In Petition No. 12 of 1957 there were two agreements, Annexures A and B. The first was executed in 1944 and granted the right from 1947 to 1956; the second was executed in 1946 and granted the right from 1957 to 1966.
These are long term agreements and they are typical from case to case.
Indeed, the second agreement was made even before the first began, and the total period is 20 years.
In addition to the right to the leaves the documents pro vided for many other matters.
It is convenient to quote only from Annexure 'B ': " Before this I had given you a similar contract selling Tendu leaves produce by contract dated (1)[1953] S C.R. 476.
348 7 7 1944 registered on 12 7 1944.
In pursuance of that registered contract, which is for five years from 1947 to 1951 and another for subsequent five years from 1952 to 1956 in all for ten years, you are to remain in possession and occupation of the areas and the Tendu leaves produce till the termination of the year 1956 for which time you continue your possession and thereafter in pursuance of this contract you continue for further period of ten years your possession and occupation from 1957 to 1966 as is usual and customary pruning and coppicing Tendu leaves plants, burning them, and instal Fadis for collection of Tendu leaves and construct Kothas (godowns) for storage of the leaves at your sweet will and choice on any open plot or land within the estate with my permission and you are allowed to take free of all costs any Adjat timber, bamboos, etc., from my forests for constructing them.
I shall charge you no further consideration.
In the same manner, for the purpose of constructing these godowns and such thing you may according to your convenience (you may) manufacture bricks at any place you like in the vicinity of any rivers, rivulet, Nala or pond at your costs.
I shall not receive from you any extra amount as rent for the use and occupation of land that will be used for construction of Kothas, for manufacturing bricks and for locating Fadis (Bidi leaves collection centres).
All those are included in the consideration fixed for this contract.
All these rights are already conferred on you in the previous contract dated 7 7 1944 and under this contract for the entire contract period.
It is also open to you to collect Tendu leaves not only those growing in the summer season but also those growing in Kartik.
During the term of this contract, if for one reason or another it becomes necessary for you to sell the Tendu leaves produce and assign this contract to any other person you can do so.
But you shall be responsible for me to give my consent after inquiring of the fitness of the intended transferee.
However, you shall continue to be responsible to pay to me the agreed amount of instalments on or before the agreed dates; and if the agreed amount of instalment is not paid to me on or 349 before the agreed date, I shall have full right to start proper proceedings in that connection ".
In Petition No. 26 of 1954, the period of the two agreements was from 1944 to 1963.
There too, the rights were similar to those in Petition No. 12 of 1957, and analogous terms are to be found in Petitions Nos. 27 of 1954 and 24 of 1955.
The question that arises is, what is the nature of this right? In English law, distinction was made between easements and profit a prendre and a right to take the produce of the soil was regarded as a profit a prendre.
While easements were not regarded as an interest in land, a right to take the produce of the soil or a portion of it was an interest in land: Fitzgerald vs Fairbanks (1).
Profit a prendre can be the subject of a grant.
Where they take the form of a grant, they are benefits arising from land.
In all these cases, there is not a naked right to take the leaves of Tendu trees together with a right of ingress and of regress from the land; there are further benefits including the right to occupy the land, to erect buildings and to take other forest produce not necessarily standing timber, growing crop or grass.
The right of ingress and of regress over land vesting in the State can only be exercised if the State as the owner of the land allows it, and even apart from the essential nature of the transaction, the State can prohibit it as the owner of the land.
Whether the right to the leaves can be regarded as a right to a growing crop has, however, to be examined with reference to all the terms of the documents and all the rights conveyed thereunder.
If the right conveyed comprises more than the leaves of the trees, it may not be correct to refer to it as being in respect of growing crop ' simpliciter.
We are not concerned with the subtle distinctions made in English law between emblements, fructus naturals and fructus industriales, but we have to consider whether the transaction concerns " goods " or "moveable property " or " immovable property ".
The law is made difficult by the definitions which exist in the General Clauses Act, the Sale of Goods Act, the (1)[1897] 2 Ch.
350 Transfer of Property Act and the Registration Act.
These definitions must be placed alongside one another to get their ambits.
If the definitions are viewed together, it is plain that they do not tell us what " immovable property " ' is.
They only tell us what is either included or not included therein.
One thing is clear, however, that things rooted in the earth as in the case of trees and shrubs, are immovable property both within the General Clauses Act and the Transfer of Property Act, but in the latter, " standing timber ", " growing crop " and " grass " though rooted in earth are not included.
Of these, " growing crop " and " grass form the subjectmatter of the sale of goods, and standing timber " comes within the last part of the definition of ' goods ' in the Indian Sale of Goods Act, to be subject thereto if the condition about severing mentioned in the definition of ' goods ' exists.
It has already been pointed out that the agreements conveyed more than the tendu leaves to the petitioners.
They conveyed other forest produce like timber, bamboos, etc., the soil for making bricks, the right to prune, coppice and burn tendu trees and the right to build on and occupy land for the purpose of their business.
These rights were spread over many years, and were not so simple as buying leaves, so to speak, in a shop.
The expression " growing crop " might appropriately comprehend tendu leaves, but would not include, Adjat timber ', bamboos, nor even tendu plants.
The petitioners were not to get leaves from the extant trees but also such trees as might grow in the future.
They could even burn the old trees, presumably, so that others might grow in their place.
In these circumstances, the agreements cannot be said to be contracts of sale of 'goods ' simpliciter.
It remains now to consider whether the rights enjoyed by the petitioners can be said to fall within section 3(1) of the Act.
That section divests the proprietors of their proprietary rights, as also any other person having an interest in the proprietary right through the proprietor and vests those rights in the State.
That section has to be read with the section which 351 follows, and which sets out the consequences of vesting of such rights in the State.
The rights which vest can be stated briefly to be (a) all proprietary rights in the proprietor, and (b) all proprietary rights in any person having interest in such proprietary rights through the proprietor.
These rights vest in the State free of all encumbrances.
Section 4 of the Act provides inter alia that after the notification has been issued, then, ' notwithstanding anything contained in any contract, grant or document or in any other law for the time being in force and save as otherwise provided in this Act ' the following consequences (among others) shall ensue: " (a) all rights, title and interest vesting in the proprietor or any person having interest in such proprietary right through the proprietor in such area including Land (cultivable or barren), grassland, scrubjungle, forest, trees, fisheries, wells, tanks, ponds, water channels, ferries, pathways, village sites, hats, bazars and melas; and in all subsoil, including rights, if any, in mines and minerals, whether being worked or not, shall cease and be vested in the State for purposes of the State free of all encumbrances; and the mortgage debt or charge on any proprietary right shall be a charge on the amount of compensation payable for such proprietary right to the proprietor under the provisions of this Act; (b)all grants and confirmation of title of or to land in the property so vesting or of or to any right or privilege in respect of such property or land revenue in respect thereof shall, whether liable to resumption or not, determine: ".
If these petitioners can be said to be possessing " an interest in the proprietary right ", then their rights, title and interest in the land determine under the Act, and vest in the State.
The petitioners, therefore, contend that their rights under the agreements cannot be described as 'proprietary right ' or even a share of it.
They rely on the definition of 'proprietor ' in the Act, and refer under the authority of section 2(b) of the Act to the Central Provinces Land Revenue Act, 1917.
The definition in the Act is not exhaustive.
It only 352 tells us who, besides the proprietor, is included in the term 'proprietor '.
Further, the definitions in the Act are subordinate to the requirements of the context and the subject matter of any particular enactment.
From the Act, we know that the proprietor 's interest in forest, trees, shrub, grass and the like passes to the State.
The question thus resolves into two short ones did the former proprietors own proprietary interest in these trees, and did they part with that proprietary interest and convey it to the petitioners ? There is but little doubt that in so far as the Act is concerned, it does contemplate cesser of all proprietary rights in land, grass land, scrub jungle, forest and trees, whether owned by the proprietor or through him by some other person.
The contention of the petitioners is that by the term " proprietor " is meant what that term conveys in the Central Provinces Land Revenue Act, and reference is made for this purpose to various sections therein.
The term " proprietor " is defined in the Central Provinces Land Revenue Act thus: " " Proprietor " except in sections 68, 93 and 94, includes a gaontia of a Government village in Sambalpur Territory.
" This definition does not advance the matter any further.
In several sections, special explanations are added to define " proprietors ".
In all those explanations, the term is not defined, but is said to include 'thekedars or headmen with protected status ', I mortgagee with possession ', I lessees holding under leases from year to year ' and the like.
In addition, there is invariably the inclusion of I a transferee of proprietary, rights in possession ', which again leaves the matter at large.
See sections 2(5), 2(21), 53 and 68.
Counsel faced with this difficulty rely upon the scheme of settlement in Ch.
VI of the Central Provinces Land Revenue Act , and the record of rights which consists of Khewat, a statement of persons possessing proprietary rights in the mahal including inferior proprietors or lessees or mortgagees in possession, specifying the nature and extent of the interest of each; and Khasra or field book and Jamabandi or list of persons 353 cultivating or occupying land in the village.
these documents are prepard separately.
The petitioners contend that by 'proprietary right ' is meant that right which can find, a place or be entered in the Khewat, and the rights enjoyed by the petitioners are not and cannot be entered in the Khewat because thay are not 'proprietary rights '.
They also refer to the schemes of settlement under which proprietors subproprietors etc.
, are determined and offered assessment.
In our opinion, these arguments, though attractive, do not represent the whole of the matter.
What these documents record and what the settlement operations determine are the kinds of ' proprietors ' among whom the entire bundle of rights is shared.
Every proprietor or sub proprietor enjoys proprietary rights over land, forests, etc., falling within his interest.
The right to forest trees, etc., is the consequence of proprietorship, and indeed, under section 47(3) the State Government can declare which rights and interest must be regarded as ' proprietary rights '.
That sub section provides: " The State Government may declare the rights and interests which shall be deemed to be proprietary rights and interests within the meaning of sub section (2).
" The second sub section provides: " The Deputy Commissioner shall cause to be recorded, in accordance with rules made under section 227, all changes that have taken place in respect of, and all transactions that have affected, any of the proprietary rights and interests in any land.
" The matter is made clear if one refers to the provisions of section 202 of the Land Revenue Act.
That section confers on Government the power to regulate the control and management of the forest growth on the lands of any estate or mahal.
A reading of sub sections
(4) to (8) of that section clearly shows that forests belong to the proprietors from whom under those sub sections they can be taken over for management, the profits of the management less expenses being paid to the proprietors or to superior and inferior proprietors as the case may be.
Sub sections (9) and (10) provide 45 354 (9)" No lease, lien, encumbrance or contract with respect to the forest land held under direct manage ment shall be binding upon the Government.
(10)On the expiration of the period fixed for the direct management, the forest land shall be restored to the proprietor thereof" Even here, the term ' proprietor ' is explained by the usual explanation showing the same category of persons as included in the section.
From this, it is quite clear that forests and trees belonged to the proprietors, and they were items of proprietary rights.
The first of the two questions posed by us, therefore, admits of none but an affirmative answer.
If then the forest and the trees belonged to the proprietors as items in their ' proprietary rights ', it is quite clear that these items of proprietary rights have been transferred to the petitioners.
The answer to the second question is also in the affirmative.
Being a 1 proprietary right ', it vests in the State under sections 3 and 4 of the Act.
The decision in Chhotabhai 's case (1) treated these rights as bare licenses, and it was apparently given per incuriam, and cannot therefore befollowed.
Even assuming that the documents in question do not amount to grant of any proprietary right by the proprietors to the petitioners, the latter can have only the benefit of their respective contracts or licenses.
In either case, the State has not, by the Act, acquired or taken possession of such contracts or licenses and consequently, there has been no infringement of the petitioners , fundamental right which alone can support a petition under article 32 of the Constitution.
The result is that these petitions fail, and are dismissed, but in view of the fact that they were filed because of the decision in Chhotabhai 's case (1), there shall be no order about costs.
Petitions dismissed.
| IN-Abs | Some of the proprietors of the former State of Madhya Pradesh granted to the several petitioners rights to take forest produce, mainly tendu leaves, from the forests included in the Zamindaris belonging to the proprietors.
The agreements conveyed to the petitioners in addition to the tendu leaves other forest produce like timber, bamboos, etc., the soil for making bricks, and the right to build on and occupy land for the purpose of their business.
These rights were spread over many years, but in the case of a few the period during which the agreements were to operate expired in 1955.
Some of the agreements were registered and the others unregistered.
After the coming into force of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950, the Government disclaimed the agreements and auctioned the rights afresh, acting under section 3 of the Act under which " all proprietary rights in an estate . . in the area specified in the notification, vesting in a proprietor of such estate. or in a person having interest in such proprietary right through the proprietor, shall pass from such proprietor or such other person to and vest in the State for the purposes of the State free of all encumbrances".
The petitioners filed petitions under article 32 of the Constitution of India challenging the legality of the action taken.
by the Government on the ground that it was an invasion of their fundamental rights.
They contended (1) that the Government stepped into the shoes of the quondam proprietors and was bound by the agreements into which the latter had entered, before their proprietary rights were taken over by the Government, (2) that the petitioners were not proprietors as defined in the Act and therefore sections 3 and 4 of the Act did not apply to them, (3) that the agreements were in essence and effect licenses granted to them to cut, gather and carry away the produce in the shape of 340 tendu leaves, or lac, or timber or wood, (4) that the agreements granted no 'interest in land ' or 'benefit to arise out of land ' and that object of the agreements could only be described as sale of goods as defined in the Indian Sale of Goods Act, and (5) that the interest of the petitioners was not proprietary right but only a right to get goods in the shape of leaves, etc The petitioners relied on the decision in Firm Chhotabhai jethabai Patel and Co. vs The State of Madhya Pradesh; , Held : (1) that the agreements required registration and in the absence of it the rights could not be entertained.
Srimathi Shantabai vs State of Bombay, ; , followed.
(2)that in cases where the period stipulated in the agree ment had expired, the only remedy, if any, was to sue for breach of contract and no writ to enforce expired agreements could issue.
, (3) that on their true construction the agreements in question were not contracts of sale of goods.
(4) that both under the Act in question and the Central Provinces Land Revenue Act, 1917, the forests and trees in the Zamindari area belonged to the proprietors and they were items of proprietary rights.
Consequently, the rights conveyed to the petitioners under the agreements were proprietary rights, which under sections 3 and 4 of the Act, became vested in the State.
(5)that assuming that the agreements did not amount to grant of any proprietary right by the proprietors to the petitioners, the latter could have only the benefit of their respective contracts or licenses.
In either case, the State had not, by the Act, acquired or taken possession of such contracts or licenses and, consequently, there had been no infringement of the petitioners ' fundamental rights which alone could support a petition under article 32 of the Constitution.
Chhotabai jethabai Patel and Co. vs The State of Madhya Pradesh, ; , not followed.
Ananda Behera vs The State of Orissa, [1955] 2 S.C.R. gig, followed.
|
mpt Petition No. 82 of 1992.
WITH Writ Petition No. 232 of 1992.
(Under Article 32 of the Constitution of India).
Vijay Kumar and Shiv Kumar Suri for the Petitioner/Applicant.
Milan K. Banerjee, Attorney General, D.P. Gupta, Solicitor General, V.C. Mahajan, Kapil Sibal, Mg.
A. Subhashii Gaurab Banarjee, K. Swamy, Ms. section Janani, S.K. Battacharya and L.K. Poonam for the Respondents.
The following Order of the Court was delivered: This matter came up for our consideration on December 8, 1992" pursuant to the order dated November 24, 1992, to decide the appropriate 774 order which needs to be made in the existing situation.
A brief resume of the events leading to the present stage may first be given.
This Court has held that the Speaker while deciding the question of disqualification of a Member of the Legislative Assembly under the Tenth Schedule to the Constitution acts as a statutory authority, in which capacity the Speaker 's decision is subject to judicial review by the High Court and this Court.
Pursuant thereto, certain orders were made by this Court in proceedings arising out of the order of disqualification of certain members, made by the contemner, Dr. H. Borobabu Singh who holds the office of Speaker of the Manipur Legislative Assembly, in spite of the clear decision of this Court that an order made under the Tenth Schedule by the Speaker relating to the disqualification of a Member of the Legislative Assembly is subject to judicial review and the Speaker while making an order under the Tenth Schedule acts merely as a statutory authority amenable to the court 's jurisdiction in that capacity, the contemner continued to resist the implementation of such orders made by this Court.
The petitioner, 1.
Manipal Singh was then the Secretary of the Manipur Legislative Assembly.
In his capacity as Secretary of the Assembly, the petitioner, 1.
Manilal Singh took steps to implement this Court 's orders.
The allegation made by 1.
Manilal Singh is that the contemner, Dr. H. Borobabu Singh got annoyed with him for or his attempt to secure obedience and implementation of this Court 's orders and, therefore, as an act of reprisal, the contemner has made an order of his compulsory retirement.
The petitioner, 1.
Manilal Singh, therefore, challenged the order of his compulsory retirement made by the contemner inter alia on the ground that it was mala fide being an act of reprisal by the contemner for the petitioner 's obedience of this Court 's orders.
This Court stayed the operation of the impugned order of compulsory retirement of the petitioner, I. Mandal Singh as well as the order of is sub is suspension passed by the contemner.
The petitioner then complained that in spite of this Court 's orders, the contemner was not permitting him of function as, the secretary of the Manipur Legislative Assewbly and was also not paying him his salary and other dues; and that another person had been appomted by the contemner to function as the Secretary.
On July 22, 1992, this Court made an order reiterating that the petitioner, 1.
Manilal Singh shall be allowed to function as the Secretary of the Manipur Legislative Assembly without delay and that all concerned with enable him to so function, and some further directions were also given 775 On August 4, 1992 another order was made by this Court as a result of the grievance made by the petitioner, I. Manilal Singh that in spite of the orders of this Court, he was neither allowed to function as the Secretary of the Legislative Assembly nor had he been paid his salary etc.
In that order, this Court further directed the Chief Secretary of the State of Manipur to ensure that the direction given for payment of dues to the petitioner was promptly obeyed.
When the matter was again taken up on August 25, 1992, the petitioner, I. Manilal Singh stated that another order had been made on August 19, 1992 declaring that the petitioner is to retire from service on August 31, 1992 as Joint Secretary which was in disobedience of this Court 's orders, and was a further act of reprisal against him by the contemner.
Accordingly, in the order dated August 25, 1992, this Court after recording that this action appears to be prima facie in violation of this Court 's order, stayed the operation of the order dated August 19, 1992.
The order after mentioning the statement made by the learned counsel for the Chief Secretary, H.V. Goswami expressed this Court 's concern at the apathy exhibited towards obedience of the mandate under Article 144 of the Constitution and after hearing all the counsel including Shri S.K. Bhattacharya, learned counsel for the contemner, directed that the Chief Secretary, H.V. Goswami, Deputy Secretary, Manipur Legislative Assembly, R.K. Chinglensana Singh and Dr. H. Borobabu Singh should be personally present in court at the next hearing which was fixed for September 8, 1992.
On September 8, 1992 the matter was adjourned to September 9, 1992.
On September 9, 1992, the Chief Secretary, Manipur, H.V. Goswami and R.K Chinglensana Singh, Deputy Secretary, Manipur Legislative Assembly were personally present.
On behalf of Dr. H. Borobabu Singh who did not appear, a request was made by his counsel, Shri Bhattacharya to adjourn the matter till after September 22, 1992 on the ground that the Manipur Legislative Assembly was in session.
The matter was, therefore, adjourned to September 25, 1992.
On September 25, 1992, in spite of earlier order in the contempt proceeding directing Dr. H. Borobabu Singh to appear in person, he did not appear.
His counsel.
Shri Bhattacharya filed an affidavit stating inter alia that Dr. H. Borobabu Singh is immune from such directions of the 776 court in view of his constitutional position as Speaker.
Accordingly, Shri Bhattacharya was heard on his objection which was found to be without substance.
On September 25, 1992, the Court while rejecting the contention of Shri Bhattacharya stated as under: ".
This is a case in which Dr. Singh 's function is not as a Speaker in the House.
The facts of the case which are on record in this matter clearly show that Dr. Singh was acting as Authority under the Tenth Schedule to the Constitution and in that capacity certain orders were passed which gave rise to the present contempt petition.
In a petition filed by the petitioner, Manilal Singh, directions issued by this Court relating to his service conditions which have, according to the allegations, not been respected by Dr. Singh.
In this context and background, we do not have any doubt that the capacity in which Dr. Singh was functioning was not that of the Speaker of the House, but as administrative head of the Secretariat of the Legislature in relation to the rights of one of the employees.
Accordingly, we hold that there is no merit at all in the plea raised regarding the jurisdiction of this Court and the objection is, therefore, rejected.
We asked Mr. G. Ramaswamy, learned Attorney General to examine the matter and indicate his opinion as to the enforceability of the directions of this Court requiring the personal appearance of Dr. H. Borobabu Singh in Court.
On earlier occasion also, learned Attorney General had indicated that this Court would have been justified in taking a far stricter view of the conduct of Dr. Singh and it is an appropriate case where it is not only within the power of this Court, but also its bounder duty to take such steps which will reassure the people of their faith in, and respect for the Institution, now that it is obvious that the indulgence granted so far to Dr. H. Borobabu Singh has been misplaced.
Mr. Altar Ahmed, learned Additional Solicitor General appearing for the Union of India fully supports the opinion and submission of learned Attorney General.
777 3.
Mr. Kapil Sibal who represents the Chief Secretary of Manipur also expressed his opinion on these lines. ' The remaining part of the order then considered the fact that Dr. H. Borobabu Singh was included as a Member of the Indian Parliamentary delegation to attend a conference abroad and the Court adjourned the matter to October 20, 1992 requiring the contemner, Dr. H. Borobabu Singh to give a written Undertaking, before he left the country that he would appear in the Court, and the Government of India was required to ensure compliance of that direction.
It is sufficient to mention that the contemner, Dr. H. Borobabu Singh did not give such an undertaking in spite of the persuasion of senior officers of the Government of India as well as the Union Home Minister, as appears from the documents filed on behalf of the Government of India.
Accordingly, the Government of India did not permit the contemner to leave the country.
When the matter was taken up on October 20, 1992, the contemner, Dr. H. Borobabu Singh did not appear in spite of the earlier direction given and the indulgence granted to him.
However, his counsel Shri Bhattacharya prayed for a short adjournment on the ground that he would be advising Dr. H. Borobabu Singh to file an unconditional affidavit to appear in person in court in pursuance to the direction of the court and to make a separate application for condoning his absence and exempting him from personal appearance in the court.
In spite of the background, we granted further indulgence to the contemner and accepting the request of Shri Bhattacharya adjourned the case to October 23, 1992 stating that if in addition to the unconditional affidavit to appear personally in the court pursuant, to the direction, a separate application, as indicated by Shri Bhattacharya, for condoning his absence and exempting him from personal appearance was filed by the contemner, the same would be considered on its merits.
At the request of Shri Bhattacharya, learned counsel for Dr. H. Borobabu Singh, we again adjourned the matter to November 12, 1992 recording his statement in the order as under : "Mr. S.K. Bhattacharya, the learned counsel for Dr. H. Borobabu Singh states that he has been instructed personally by Dr. H. B. Singh to make a statement in this Court that Dr. H.B. Singh will be filing his affidavit in the terms of our order of the last date.
We asked Mr. Bhattacharya 778 to clarify whether our order has been correctly understood that the affidavit has to be filed giving an unconditional undertaking to appear in this Court in pursuance of a direction by this Court and the application which Dr. H. B. Singh wants to make with a prayer for dispensing with his personal presence will be filed separately and be not a condition of the affidavit.
He states that the position has been correctly understood by Dr. H. B. Singh who has instructed Mr. Bhattacharya to state accordingly.
Mr. Bhat tacharya further states that the affidavit could not be filed today as Dr. H. B. Singh could not come to Delhi because of the prevailing deterioration of law and order situation due to insurgency in the eastern part of the country due to which he was advised by the authorities responsible for his security not to undertake a journey to Delhi at this stage.
He has also referred to the partial disruption in the air services between Manipur and Delhi.
Mr. Bhattacharya adds that the affidavit shall be filed by the 5th or the 6th November, 1992.
" When the matter was taken on November 12, 1992, the contemner, Dr. H. Borobabu Singh was again not present and the only thing done by him in the meantime was to file an affidavit dated November 6, 1992 indicating that he would not personally appear before the Court.
Thus, in spite of the clear statement made by Shri Bhattacharya on instructions of Dr. H. Borobabu Singh as stated by him and recorded in the order dated October 23, 1992, the contemner once again remained absent and neither filed the requisite affidavit containing his undertaking to appear nor made any application praying for condoning his absence and exempting him from personal presence for cogent reasons.
In these circumstances, it became necessary to consider the making of necessary consequential orders.
The matter was, therefore, adjourned to November, 24, 1992 to hear the learned Attorney General of India and all the other counsel appearing in the case for deciding the future course of action.
On November 24, 1992, the learned Solicitor General informed the Court that Mr. G. Ramaswamy had resigned from the office of Attorney General and, therefore, the matter may be adjourned to enable his successor in office to assist the court with his arguments.
The matter was, 779 therefore, adjourned to December 8, 1992.
On December 8, 1992 we have heard the learned Attorney General of India, the Solicitor General, on behalf of Union of India, Shri Kapil Sibal learned counsel for the Chief Secretary of the State of Manipur, Shri S.K Bhattacharya, learned counsel for the contemner, Dr. H. Borobabu Singh and learned counsel for the petitioner.
It may be mentioned that the contemner, Dr. H. Borobabu Singh has filed affidavits, the last being of December 7, 1992, making it amply clear repeatedly that he would not obey the orders of this Court directing his personal presence in the contempt matter nor would he make any application for condoning his absence and exempting him from personal presence for any cogent reasons.
The only reason indicated in the affidavit filed by Dr. H. Borobabu Singh and also reiterated by his counsel, Shri S.K. Bhattacharya is that by virtue of the office of Speaker of the Manipur Legislative Assembly held by Dr. H. Borobabu Singh, he is immune from the process of this Court even in a contempt proceeding where the direction for his personal presence has been given as a result of prima facie opinion formed by the court that he has wilfully disobeyed the orders of this Court in a capacity which does not relate to his functions as Speaker inside the House and has further deterred certain persons including the Chief Secretary of the State and officers of the Assembly Secretariat from acting in aid of this Court 's directions/orders in addition to taking ad ministrative action against the petitioner.
Manilal Singh, Secretary of the Manipur Legislative Assembly as an act of reprisal for his acting in aid of this Court 's orders.
This stand has been taken and continues to be persisted in spite of the contention being considered and rejected expressly on merits including in the order dated September 25, 1992.
The question, therefore, is of the action to be taken and the kind of order which it would be appropriate to make in these circumstances for implementation of this Court 's orders, to uphold the majesty of law for preservation of the 'rule of law.
The learned Attorney General submitted that the undisputed facts and the unequivocal stand taken by the contemner, Dr. H. Borobabu Singh leave no doubt about his wilful and contumacious disregard and disobedience of this Court 's orders which is without any doubt by itself sufficient to constitute criminal contempt of this Court.
The learned Attor 780 ney General submitted that apart from the power which this Court has under the and the Rules framed thereunder, the power of this Court under several provisions of the Constitution of India is wide enough to indicate that the procedure available to it for ensuring compliance of its orders directing the personal presence of the contemner, Dr. H. Borobabu Singh are not confined merely to the provisions in the and the Rules framed thereunder.
The learned Attorney General added that all steps considered necessary to ensure compliance of this Court 's order requiring the personal presence in this Court of the contemner, Dr. H. Borobabu Singh, are available to this Court which has a constitutional obligation to uphold the rule of law.
He submitted that the stage has now reached when this step can no longer be avoided due to the continuing contemptuous conduct of the contemner in persistently refusing to obey this Court 's orders requiring his personal presence in this contempt matter.
The learned Attorney General added that this Court also has the power to direct the Government of India to take the necessarily to produce the contemner, Dr. H. Borobabu Singh in this Court if the ordinary course of requiring a magistrate to produce him in the court is considered inappropriate in the present case.
The learned Solicitor General of India on behalf of the Government of India supported the submissions of the learned Attorney General of India and assured us that in case the Court considered it necessary to direct the Government of India to take the necessary steps to produce the contemner.
Dr. H. Borobabu Singh the direction would be duly and promptly complied with Shri Kapil Sibal on behalf of the Chief Secretary of the State of Manipur also supported the submission and so did the counsel for the petitioner, 1.
Manilal Singh, Shri S.K Bhattacharya, learned counsel for the contemner, Dr. H. Borobabu Singh reiterated the stand taken by the contemner that by virtue of the office of the Speakar which he holds, he is immune from the court 's process even in a contempt matter like this which does not relate to his function as Speaker inside the House.
The undisputed facts expose the conduct of the contemner, Dr. H Borobabu Singh, evident from the statement contained in his affidavits filed in this Court refusing to obey the orders of this Court directing him to appear in person in this Court to enable the hearing of the contempt proceedings against him, after the tentative opinion formed by this Court that his wilful and contemptuous violation of this Court 's orders and 781 deliberate obstruction of the persons acting in the aid of this Court 's orders coupled with his act of reprisal against the Secretary of the Legislative Assembly for obeying the orders made by this Court make out prima facie case of 'criminal contempt ', was recorded in the orders made in the presence of his counsel and known to him.
The contemner had refused to accept the notices sent to him directly but continued to be represented by counsel Shri S.K Bhattacharya through whom he communicated with the Court, in addition to filing some of his own affidavits to clearly indicate his refusal to appear in Court.
The only reason given by him, through counsel and in his affidavits is, that he being Speaker of a Legislative Assembly, is immune from process of court even in such a proceeding The present situation arises as a. result of repeated and emphatic refusal of the contemner to appear in person in this Court after due notice of the fact that his presence is required before the court on the date fixed for the hearing of the contempt proceeding to answer this charge of criminal contempt committed by him by acts done which were not per formed as a Speaker within the House.
Reference may now be made to some provisions of law applicable to the situation as indicated by the learned Attorney General and the other counsel supporting his submissions.
"The Rules to Regulate Proccedings for Contempt of the Supreme Court, 1975 ' framed by this Court provide in Rule 3 that the Court may take action even suo motu in such a matter.
Rule 6 requires the contemner, unless otherwise ordered, to appear in person before the Court as directed on the date fixed for hearing of the proceeding and to continue to remain present during hearing till the proceeding is finally disposed of by order of the Court.
Rule 10 provides that the Court may direct the Attorney General or the Solicitor General to appear and assist the Court.
It is in this manner that the Attorney General was directed to appear.
and assist the Court which the Solicitor General appeared in this matter for the Union of India.
Rule 11 provides that the Court may, if it has reason to believe, that the person charged is absconding or is otherwise evading service of notice, or if he fails to appear in person or to continue to remain present in person in pursuance of the directions, direct a warrant bailable or non bailable for his arrest, addressed to one or more police officers and the warrant shall be executed by the officer or officers to whom it is 782 directed.
These Rules, therefore, provides for procuring the personal appearance of the contemner in this Court if the Court has reason to believe that the contemner is evading service or he fails to appear in person in spite of the directions of this Court.
In the present case, the contemner 's repeated and categorical refusal to appear in this Court in spite of this Court 's orders and grant of considerable indulgence to him till now is clear from the statements made in his affidavits and through his counsel who has appeared for him throughout.
The learned Attorney General, the learned Solicitor General and Shri Kapil Sibal are right in their submission that the power of this Court in such matters is not confined merely to the provisions of the and the Rules framed thereunder but is plenary to punish any person for contempt of court, and for that purpose to require his presence in person in this Court in the manner considered appropriate in the facts of the case.
They refer particularly to Articles 129 and 142 apart from Article 145 of the Constitution of India.
Article 129 says that the Supreme Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself Article 142 provides for enforcement of decrees and orders of Supreme Court and lays down that the Supreme Court shall have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents, or the investigation or punishment of any contempt of itself, Article 141 declares the binding effect of the law declared by the Supreme Court which is a clear provision to indicate that the meaning of 'law ' is to be understood as declared by the Supreme Court.
Obviously, it is not for any one else including the Speaker to decide what the 'lay/ is, and make an interpretation of the 'law ' contrary to the declaration of law made by the Supreme Court.
Article 144 contains the constitutional obligation of all authorities in the territory of India to act in aid of the Supreme Court.
These provisions are well known and they are mentioned in this order once again in the, present case merely for the benefit of the contemner who has wilfully and deliberately refused to obey and ignored not merely the orders of this Court but has also chosen to ignore the provisions in the Constitution itself, to which he must have sworn allegiance before taking his seat as a Member 783 of the Manipur Legislative Assembly.
The contention of the contemner 's immunity from the process of this Court even in a contempt proceeding, wherein a prima facie case of criminal contempt is made out against him, requiring his personal presence to answer that charge and to be present at the hearing, hinted by the contemner in his affidavits and raised by his counsel is totally misconceived, and this was indicated to his counsel repeatedly.
The immunity given by Article 381 of the Constitution is not to a Speaker and no other provision supports this submission.
From the documents filed by the Union of India, it is evident that even the Union Home Minister has strongly advised the conteimner to desist from the course he has chosen to adopt and to obey the orders of this Court, which is his constitutional obligation.
The present Attorney General as well as his predecessor in office and the Solicitor General have also categorically and repeatedly expressed their opinion that it is the duty of the contemner to obey the orders of this Court and appear in this Court in person as directed.
Shri Kapil Sibal who appears for the Chief Secretary of the State of Manipur has also expressed the same view in his submissions.
After hearing learned counsel at laugh on December 8, 1992 we had reserved the order for further reflection.
On further and in depth consideration of this matter on account of the fact that the contemner also happens to occupy the office of Speaker of a Legislative Assembly, we find that there is no escape from the obvious and logical conclusion emerging from the submissions made by the learned Attorney General of India and endorsed by the learned Solicitor General of India and Shri Kapil Sibal.
While we reach this unfortunate decision in discharge of our constitutional obligation, we draw some solace from the fact that this situation is the creation of the contemner, Dr. H. Borobabu Singh himself who continues to persist in his contumacy by repeatedly declaring that he would not obey the orders of this Court directing his personal appearance to participate in the contempt proceedings against him.
It is unfortunate that a person who holds the constitutional office of Speaker of a Legislative Assembly has chosen to ignore the constitutional mandate that this country is governed by the 'rule of law and what the law is, is for this Court to declare in discharge of its constitutional obligation which binds all in accordance 784 with Article 141 of the Constitution of India and Article 144 then says that all authorities are to act in aid of the orders made by this Court.
The contemner has chosen to ignore also the obvious corollary of rule of law that no person is above law.
Having done our best to make the contemner see reason and be present by granting him indulgence repeatedly to the extent that the learned Attorney General of India at one of the earlier stages said that our indulgence and leniency was being construed as the weakness of the court, we are constrained to now take the only appropriate and logical course to which the court is driven in these circumstances.
That obvious course is to require the production of the contemner, Dr. H. Borobabu Singh in person before this Court, giving such a direction to the authority considered to be appropriate, in the circumstances of the case, to ensure compliance of this order.
It is our constitutional duty which requires us to make this order, to uphold the majesty of law and justify the confidence of the people, that no one in this country is above the law and governance is not of men but of the 'rule of law.
It is unfortunate that this action has to be taken against a person who happens to be the Speaker of a Legislative Assembly, but that does not permit us to apply the law differently to him when he was wilfully and contumaciouly driven the court to this course.
We must remind ourselves that the 'rule of law ' permits no one to claim to be above the law and it means 'be you ever so high the law is above you. ' It was said long back : 'to seek to be wiser than laws, is forbidden by the law.
We are also of the opinion that the issuance of a direction to any Magistrate to produce the contemner in this Court would be merely an exercise in futility in view of the obvious conduct of the contemner which includes the threat even to the Chief Secretary of the State as indicated by him.
The learned Solicitor General of India appearing for the Union of India submitted that in case it is considered appropriate to issue such a direction to the Government of India, necessary action in this behalf would be taken by the Government of India to comply with the order.
We have no doubt that in the existing situation to which this Court has been driven by the wilful and contumacious conduct of the contemner himself, the only appropriate order to make is to direct the Government of India to produce the contemner, Dr. H. Borobabu Singh in person in this Court on the next date of hearing, taking such steps as are necessary for the purpose direct, accordingly.
It is further clarified that the Government of India 785 would be entitled to take all such steps, which are necessary including the use of minimilm force which may be required, for compliance of this Court 's order directing the production of the contemner in this Court.
A copy of this order be sent forthwith by the Registrar (Judicial) to the Home Secretary, Government of India for prompt compliance.
The next date of hearing is fixed for March 23, 1993 on which date the Government of India must produce the contemner, Dr. H. Borobabu Singh before this Court.
List on March 23, 1993.
ORDER In obedience to the earlier directions of this Court, Dr. H. Borobabu Singh is present in person in Court.
We take note of his earlier affidavit filed on 18.3.93 that he has fully complied with all the orders and directions relating to the case of Manilal Singh.
Dr. Singh has also expressed regret for the unhappy events.
We appreciate this gesture on his part, though he could have done the same much earlier.
We take note of this and drop all further proceedings in the matter.
These contempt proceedings, therefore, come to an end.
N.V.K Petitions dropped.
| IN-Abs | Dr. H. Borobabu Singh, the first respondent in the Contempt Petition held the office of Speaker of Manipur Legislative Assembly.
This Court having held that the Speaker while deciding the question of disqualification of a Member of the Legislative Assembly under the Tenth Schedule to the Constitution acts as a statutory authority, in which capacity the Speaker 's decision is subject to judicial review by the High Court and this Court, made certain orders quashing the disqualification of certain members of the Manipur Legislative Assembly.
In spite of the clear decision of this Court it was submitted, the contemner continued to resist the Implementation of such orders made by this court.
petitioner In the contempt petition 1.
Manilal Singh was then the of the Manipur Legislative Assembly, and as the Secretary be took steps to implement this Court 's orders.
The allegation made by him was that the contemner Dr. H. Borobabu Singh got annoyed with him for his attempt to secure obedience and implementation of this Court 's orders and, therefore, as an act of reprisal, the contemner had made an 769 770 order of his compulsory retirement.
The petitioner challenged the aforesaid order of his compulsory retirement, alleging that it was mala fide being an act of reprisal by the contemner for the petitioner 's obedience of this Court 's orders.
This Court stayed the operation of the order of compulsory retirement as well as the order of suspension passed by the contemner.
The petitioner then complained that the contemner was not permitting him to function as the Secretary of the Manipur Legislative Assembly, and was also not paying him his salary and other dues; and that another person had been appointed by the contemner to function as the Secretary.
On July 22, 1992, this Court made an order reiterating that the petitioner shall be allowed to function as the Secretary of the Manipur Legislative Assembly without delay and that all concerned will enable him to so function.
Further directions were also given.
As a result of the grievance made by the petitioner that in spite of the orders of this Court, he was neither allowed to function as the Secretary nor paid his salary etc.
another order was made on August 4, 1992 directing the Chief Secretary of the State to ensure that the direction given for payment of dues was promptly obeyed.
On August 25, 1992 the Court after recording that the action to retire the petitioner from service on August 31, 1992 as Joint Secretary appeared to be prima facie in violation of the Court 's order, stayed the operation of the order, expression its concern at the apathy exhibited towards obedience of the mandate under Article 144 of the Constitution, and after hearing all the counsel made an order directing that the Chief Secretary, Deputy Secretary of the legislative Assembly and the contemner should be per sonally present in Court at the next hearing in September 9, 1992.
On the aforesaid date the Chief Secretary and the Deputy Secretary were personally present, but on behalf of the contemner his Counsel sought an adjournment till September 22, 1992 on "he ground that the Manipur Legislative Assembly was in session, which was granted.
On September 25, 1992 the contemner did not appear in person but his Counsel filed an affidavit that he is immune from the directions of the Court in view of his constitutional position as Speaker.
The Court heard 771 the Counsel and rejected the contention and adjourned the matter to 20, 1"2 the contemner to give a written undertaking before be left the country as a member of the Indian parliamentary delegation that he would appear in the court.
The contemner did not give the aforesaid undertaiking and when the matter was taken up on November 12, 1M, the contemner was not present and the only thing done by him was to Me an affidavit dated November 6, 1992 indicating that he would not personally appear before the Court In the aforesaid circumstances and having regard to the attitude adopted by the contemner It became necessary for the Court to consider the making of necessary consequential orders to secure the presence of the contemner.
It accordingly heard arguments on December 8, 1992.
The Attorney General of India submitted that the undisputed and the unequivocal stand taken by the contemner left no doubt about his wilful and contumacious disregard and disobedience of the Court 's orders which is without any doubt by Itself sufficient to constitute criminal contempt of this Court.
That, apart from the power which this Court has under the and the Rules framed thereunder, the powers of this Coon under several provisions of the Constitution of India is wide enough to indicate that the procedure available to It for ensuring compliance of it,; orders Includes the taking of all steps considered necessary to ensure compliance of this Court 's orders which is a constitutional obligation of the Court, to uphold the role of law , and that the Court also had the power to direct the Government of India to take the necessary steps to produce the contemner in the Court if the ordinary course of requiring a Magistrate to produce him In the Court Is considered inappropriate.
The Solicitor General of India on behalf of the Government of India; and the Counsel for the Chief Secretary and the petitioner supported the submissions of the Attorney General, while the Counsel for the contemner reiterated the stand taken by the contemner, that by virtue of the office of the Speaker which he holds, he is immune from the Court 's process even in a contempt matter which does not relate to his function as Speaker inside the House.
Directing the production of the contemner Dr. H. Borobabu Singh before the Court on March 23, 1"3.
HELD : 1.
The undisputed facts expose the conduct of the contemner, Dr. H. Borobabu Singh, in refusing to obey the orders of this Court 772 directing him to appear in person in this Court to enable the hearing of the contempt proceedings against him, after the tentative opinion formed by this Court that his wilful and contumacious violation of this Court 's orders and deliberate obstruction of the persons acting in the aid of this Courts orders coupled with his act of reprisal against the Secretary of the legislative Assembly for obeying the orders made by this Court, make out a prima facie case of ' contempt, as recorded in the orders made and known to him.
[780G H, 781A] 2.The contemner 's repeated and categorical refusal to appear in person in this Court in spite of this Court 's orders and grant of considerable indulgence to him is clear from the statements made in his affidavits and through his counsel, who has appeared for him throughout [782B] 3.
From the documents filed by the Union of India, it is evident that even the Union Home Minister has strongly advised the contemner to desist from the course he has chosen to adopt and to obey the orders of this Court, which is his constitutional obligation.
[783C] 4.
Articles 141, 142 and 144 of the Constitution are well known and they are mentioned for the benefit of the contemner who has wilfully and deliberately refused to obey and ignored not merely the orders of this Court but has also chosen to ignore the provisions in the Constitution itself, to which he must have sworn allegiance before taking his sent as a Member of the Manipur Legislative Assembly.
[782H] 5.
The immunity given by Article 361 of the Constitution is not to a Speaker and no other provision supports the submission made by the contemner.
It is unfortunate that a person who holds the constitutional officer of Speaker of a Legislative Assembly has chosen to ignore the constitutional mandate that this country is governed by the 'rule of law, and what the law is, is for this Court to declare in discharge of Its constitutional obligation which bind all in accordance with Article 141 of Constitution of India, and Article 144 then says that all authorities a are to act in aid of the orders made by this Court.
The contemner has chosen to ignore also the obvious corollary of rule of law that no person is above law.
[782F G] 773 7.
Having doen its best to make the contemner see reason and be present by granting indulgence repeatedly, to the extent that the Attorney General said that the indulgence and leniency was being construed as the weakness of the Court, this Court is constrained to now take the only appropriate and logical course to which the Court is driven in these circumstances, viz. to require the production of the contemner Dr. H. ' Borobabu Singh in person before this Court It is the constitutional duty ' of this Court to uphold the majesty of law and justify the confidence of the people, that no one in this country is above the law and governance is not of men but of the 'rule of law '.
[783B D] 8.The Government of India is directed to produce Dr. H. Borobabu ' Singh in person in this Court on the next date of hearing taking such steps as are necessary for the purpose.
The Government of India would be entitled to take all steps, which are necessary including the use of minimum force which may be required for compliance.
[784H, 795A] 9.
A copy of the order to be sent forthwith by the Registrar (judicial) to Home Secretary, Government of India for prompt compliance.
The next, date of hearing fixed for March 23, 1993.
[785B]
|
Appeal No. 502 of 1993.
From the Judgment and Order dated 29.5.92 of the Central Ad ministrative Tribunal, Principal Bench, New Delhi in O.A. No. 1252 of 1992.
V.C. Mahajan, C.V.S. Rao and V.B. Misra for the Appellant.
S.K. Mehta, Dhruv Mehta, Aman Vachhar and Arvind Verma for the Respondent.
ANAND, J. Aggrieved by an order passed by the Central Administrative Tribunal, Principal Bench, New Delhi in O.A. No. 1252/1992 on 29th of May, 1992, allowing an application filed by the respondent and directing the petitioner herein to correct the date of birth of the respondent in the service record and not to retire him before 30th of April, 1996, the petitioner Union of India has filed this special leave petition.
Leave granted.
The respondent joined Government service in the Ministry of Finance (Defence) in class IV post as a peon on 22nd of February, 1956.
At the time of entry into the Government service, his service book was prepared and the date of birth was recorded as 20th of May, 1934 and since he failed in the matriculation examination, against the column of educational qualification 'matric failed ' was recorded.
It appears that the respondent later on again appeared in the matriculation examination of the Punjab University under Roll No. 21653 and passed the said examination in May, 1956.
On passing the matriculation examination, the respondent was appointed as LDC in the Ministry of Home Affairs on 9.5.1957.
In the service book of the respondent, an entry was, accordingly, made showing his educational qualification as matric (Punjab University, Roll No. 21653, year 1956).
This entry was made underneath the earlier entry "matric failed" and the changed entry was signed by the SO of the Ministry of Home Affairs on 7.9.1957.
Though, the date of birth of the respondent, as 867 recorded in the matriculation certificate is 7.4.1938 but while amending the entry about his educational qualification, the entry relating to his date of birth was not altered to correspond to the date given in the matriculation certificate and it continued to be recorded as 20th of May, 1934.
In 1963, .the respondent was transferred to the Ministry of Human Resources Development, Department of Education.
On being notified about his date of superannuation as 31.5.1992, the respondent realised that he was being retired on the basis of his date of birth as originally recorded in the service record as 20.5.1934, ignoring the date of birth as reflected in the matriculation certificate.
He made a representation in September 1991 for the alteration of his date of birth but the same was rejected on 4.12.1991.
He submitted yet another representation of 3.1.1992, wherein a request was made, the consider his case for the correction of date of birth afresh on the basis of the date of birth as recorded in the matriculation certificate.
The request of the respondent was turned down vide O.M. dated 29.1.1992.
The respondent submitted yet another representation on 26.3.1992, wherein he asserted that he had submitted the matriculation certificate on 4.9.1957, when the entry about his educational qualification was altered and that thereafter since he did not hear anything to the contrary, he presumed that the appellants had also corrected his date of birth in the service book.
While making that representation, the respondent had also drawn attention of the Department to an order of the Central Administrative Tribunal in the case of one Darshan Singh, wherein the Department had been directed by the Principal Bench of CAT to correct the date of birth of Darshan Singh on the basis of the date of birth given in the matriculation certificate and it was submitted that his date of birth should also be corrected on the basis of the matriculation certificate.
That representation was rejected on 22.4.1992 by an order which reads thus: Subject:Request for alteration in the Date of Birth of Sh.
Harnam Singh, Asstt.
in the Service Book.
With reference to his representation dated 26th March, 1992 regarding alteration in his date of birth, Sh.
Harnam Singh, Asstt.
is informed that his representation has been considered once again and it has not been found possible to accede to his request for changing his date of birth from 20.5.1934 to 7.4.1938.
As regards his contention that he had submitted a copy of matriculation certificate 868 in 1956, Sh.
Harnam Singh, has already been informed vide OM dated 29.1.1992 about DOP & T 's ruling that furnishing a copy of matriculation certificate does not automatically imply change in date of birth unless the Govt.
servant specifically applies for it within the prescribed time limit and the appointing authority accepts his request.
In so far as CAT 's judgment in the case of Sh.
Darshan Singh, a copy of which has been enclosed by Sh.
Harnam Singh with his representation, it may be stated that in the said judgment the CAT 's order is based on the fact that Sh.
Darshan Singh had not been shown his service book even once during his entire service.
Harnam Singh had seen his service book several times latest being in 1976, and he has signed the Service Book in verification of the Correctness of the entries made therein and he had never pointed out the 'incorrectness ' in his date of birth.
The CAT 's Judgment enclosed by Sh.
Harnam Singh with his representation is thus distinguishable from the case of Sh.
Harnam Singh.
Apart from this Sh.
Harnarn Singh has not furnished any new grounds for reconsideration of his case.
Harnam Singh is also informed that no further representation on the subject will be considered.
unless he furnished any new facts/information.
" The respondent challenged the above order through OA No. 1252/92 dated 29.5.1992 before the CAT.
The application was contested by the appellant on various grounds including the plea of limitation.
It was urged by the appellant that the OA was barred under FR 56 (Note 5) and General Financial Rules 1979 and therefore, did not merit any consideration.
The appellant had further asserted that the respondent knew about the entry of his date of birth as 20.5.1934 in his service record since he had signed his service book on various occasions, ever since he joined the service, but his representation for correction of date of birth was made only in September 1991, much belatedly and even beyond a period of five years from the date of entry into Government service and as envisaged by SO 3997 dated 30th of November, 1979 the same could not therefore be 869 entertained.
The Tribunal, however, did not agree with the appellant and allowed the application filed by the respondent directing the appellant to correct his date of birth in the service record as per the date of birth recorded in the matriculation certificate.
Mr. V.C. Mahajan, the learned Senior Advocate appearing for the Union of India, has reiterated the arguments raised before the Tribunal and has further submitted that in view of the law laid down in Amulya Chandrakalita vs Union of India & Ors., the judgment in the present case rendered by only a single member of the Tribunal, is invalid and, therefore, the order deserves to be set aside and the case remanded to the Tribunal for its fresh disposal in accordance with law.
Learned counsel for the respondent has, on the other had argued for dismissal of the appeal and supported the impugned order of the Tribunal.
The fact that the date of birth was recorded on the first sheet of the service book when the respondent joined as a peon as well as in various seniority lists of UDC and LDC issued from time to time as 20.5.1934 is not in dispute.
It also is not disputed that the date of birth of the respon dent in the matriculation certificate issued by the Punjab University is 7.4.1938.
The fact that the matriculation certificate has been produced before the department by the respondent after he had passed the matriculation examination and an alteration of his educational qualification was made in the service book is also beyond controversy.
There is also no doubt that while submitting the matriculation certificate, the respondent had not requested for any alteration in the date of birth and that he had filed the representation for correction of his date of birth for the first time only in September, 1991, just a few months before his notified date of superannuation.
A Government servant, after entry into service, acquires the right to continue in service till the age of retirement, as fixed by the State in exercise of its powers regulating conditions of service, unless the services are dispersed with on other grounds contained in the relevant service rules after following the procedure prescribed therein.
The date of birth entered in the service records of a civil servant is, thus of utmost importance for the reason that right to continue in service stands decided by its entry in the service record.
A Government servant who has declared his age at the initial stage of the employment is, of course, not precluded from making a 870 request later on for correcting his age.
It is open to a civil servant to claim correction of his date of birth, if he is in possession of the irrefutable proof relating to his date of birth as different from the one earlier recorded and even if there is no period of limitation prescribed for seeking correction of date of birth, the Government servant must do so without any unreasonable delay.
In the absence of any provision in the rules for correction of date of birth, the general principle of refusing relief on grounds of latches or stale claims, is generally applied to by the courts and tribunals.
It is nonetheless competent for the Government to fix a time limit, in the service rules, after which no application for correction of date of birth of a Government servant can be entertained.
A Government servant who makes an application for correction of date of birth beyond the time, so fixed, therefore, cannot claim, as a matter of right, the correction of his date of birth even if he has good evidence to establish that the recorded date of birth is clearly erroneous.
The law of limitation may operate harshly but it has to be applied with all its rigour and the courts or tribunals cannot come to the aid of those who sleep over their rights and allow the period of limitation to expire.
Unless altered, his date of birth as recorded would determine his date of superannuation even if it amounts to abridging his right to continue in service on the basis of his actual age.
Indeed, as held by this Court in State of Assam & Anr.
vs Daksha Prasad Deka & Ors., ; a public servant may dispute the date of birth as entered in the service record and apply for its correction but till the record is corrected he can not claim to continue in service on the basis of the date of birth claimed by him.
This court said: "The date of compulsory retirement under F.R. 56(a) must in our judgment, be determined on the basis of the service record, and not on what the respondent claimed to be his date of birth, unless the service record is first corrected consistent with the appropriate procedure.
A public servant may dispute the date of birth as entered in the service record, and may apply for correction of the record.
But until the record is corrected, he cannot claim that he has been deprived of the guarantee under Article 311 (2) of the Constitution by being compulsorily retired on attaining the age of superannuation on the footing of the date of birth entered in the service record.
" 871 Note (5) to Fundamental Rule 56 governing correction of date of birth in the service record, substituted by Government of India, Ministry of Home Affairs, Department of Personnel and Administrative Reforms Notification No. 19017/79/Estt A dated 30th November, 1979 published as SO 3997 in the Government of India Gazette dated 15th of December 1979 limits the exercise of the right by the government servant to seek alteration of his date of birth only within the specified period.
The provision reads as under: "Note 5 The date on which a Government servant attains the age of fifty eight years or sixty years, as the case may be, shall be determined with reference to the date of birth declared by the Government servant at the time of appointment and accepted by the appropriate authority on production, as far as possible, of confirmatory documentary evidence such as High School or Higher Secondary or Secondary School Certificate or extracts from Birth Register.
The date of birth so declared by the Government servant and accepted by the appropriate authority shall not be subject to any alteration except as specified in this note.
An alteration of date of birth of a Government servant can be made, with the sanction of a Ministry or Department of the Central Government or the Comptroller and Auditor General in regard to persons serving in the Indian Audit and Accounts Department, or an administrator of a Union Territory under which the Government servant is serving if (a) a request in this regard is made within five years of his entry into Government service; (b) it is clearly established that a genuine bonafide mistake has occurred; and (c) the date of birth so altered would not make him ineligible to appear in any School or University or Union Public Service Commission examination in which he had appeared, or for entry into Government service on the date on which he first appeared at such examination or on the date on which he entered 872 Government service.
" According to the above amendment, it is obvious that the request for correction of date of birth is required to be made by the Government servant within five years of his entry into Government service and his date of birth may be corrected if it is established that, a genuine bona fide mistake had occurred while recording his date of birth at the time of his entry into Government service.
The CAT in the instant case was of the opinion that the bar of five years could only apply to such Government servants who joined service after 1979, when the amendment came into force and that the said period of limitation would not apply to Government servants who were in service for more than five years prior to 1979.
The Tribunal while allowing the application filed by the respondent and directing the appellant to correct his date of birth in the service record noticed the objection raised on behalf of the appellant to the effect that the mere filing of the matriculation certificate in 1956 did not imply that the date of birth already recorded in the service record stood altered by the appellants automatically even without the concerned Government servant making a prayer in that behalf or raising the issue at the relevant time after his posting as LDC.
CAT held that there was no period of limitation for the correction of date of birth and in so holding relied upon the judgment in the case of Darshan Singh vs Union of India, decided by the Principal Bench of CAT on 9.8.1990 and observed that only on the basis of coming very late for alteration of the date of birth, the State could not oust the claim of the respondent.
The Tribunal observed: "It is trite that at any time during the service, it is open to an employee to make a request for the alteration of the recorded date of birth and that if the request is supported by cogent evidence to establish that the recorded date is wrong, correction has to be made." The Tribunal also noticed the submission of the learned counsel for the appellant to the effect that the judgment in Darshan Singh 's case (supra) was not applicable because unlike in Darshan Singh 's case, who had no occasion to see his service book even once during his entire service career, the respondent herein had not only seen his service book several times but had also signed the same at various places in verification of the correctness of the entries made therein and had never objected to 873 the date of birth as contained in the first page of the service book or as given in various seniority lists prepared and published form time to time till September 1991.
The Tribunal disposed of the submission by observing: "A perusal of the service record does show that the pages which the applicant has signed is not the first page where the date of birth is recorded, but subsequent pages where other service particulars like pay fixation etc.
are mentioned.
As regards the entry of date of birth in the seniority list, that may be within the knowledge of the applicant, but seeing to the nature of the job on which the applicant is engaged, being ministerial, it is not expected that the seniority would have mattered much as the promotion is made only on the basis of seniority cum fitness in due course.
Moreover, there is no authenticity regarding the date of birth recorded in the seniority list and more emphasis is attached to the position of the person in the lis t vis a vis other similarly placed persons in the cadre.
" The approach of the Tribunal does not commend to us as it tends to create an invidious discrimination, unsustainable in law, by creating two artificial classes of Government Servants between those who joined service before and after 1979.
It is a too simplistic way of looking at the issue, ignoring the ground realities and the intention of the rule making authority to discourage stale claims and non suit such government servants who seek the alteration of their recorded date of birth belatedly and mostly on the eve of their superannuation.
To say that the respondent, even though he signed the service book at a number of places at different times and saw the seniority lists, may not have still come to know as to what his recorded date of birth was, is to ignore human conduct and put premium on negligence.
The observations of CAT quoted above are neither logical nor sound.
Of course, Note 5 to FR 56 (m) was incorporated only in 1979 and it provides for request to be made for correction of date of birth within five years from the date of entry into Service but what is necessary to be examined is the intention of the rule making authority in providing the period of limitation for seeking the correction of the date of birth of the Government Servant viz. to discourage stale claims and belated applications for alteration of date of birth recorded in the service book at the time of initial entry.
It is the duty of the courts and tribunals to promote that 874 intention by an intelligible and harmonious interpretation of the rule rather than choke its operation.
The interpretation has to be the one which advances the intention and not the one which frustrates it.
It would not be the intention of the rule making authority to give unlimited time to seek correction of date of birth, after 1979, to those government servant who had joined the service prior to 1979 but restrict it to the five year period for those who enter service after 1979.
Indeed, if a government servant, already in service for a long time, had applied for correction of date of birth before 1979, it would not be permissible to non suit him on the ground that he had not applied for correction within five years into service, but the case of government servant who applied for correction of date of birth only after 1979 stands on a different footing.
It would be appropriate and in tune with harmonious construction of the provision to hold that in the case of those government servants who were already in service before 1979, for a period of more than five years, and who intended to have their date of birth corrected after 1979, may seek the correction of date of birth within a reasonable time after 1979 but in any event not later than five years after the coming into force of the amendment in 1979.
This view would be in consonance with the intention of the rule making authority.
The interpretation which we have placed on the provision with regard to the cases of those government servants who were in service prior to 1979 but had not sought the alteration in the date of birth till after the amendment in 1979 is followed by the view which this court has taken earlier.
By way illustration we may refer to the case of New India Insurance Co. Ltd. vs Smt.
Shanti Misra, ; where the husband of the respondent in that case died in an accident in 1966.
A period of two years was available to the respondent for instituting a suit for recovery of damages.
In March, 1967 the Claims Tribunal under Section 110 of the was constituted, barring the jurisdiction of the civil court and prescribed 60 days as the period of limitation.
The respon dent filed the application in July 1967.
It was held that not having filed a suit before March, 1967 the only remedy of the respondent was by way of an application before the Tribunal.
So far the period of limitation was concerned, it was observed that a new law of limitation providing for a shorter period cannot certainly extinguish a vested right of action.
In view of the change of the law it was held that the application could be filed within a reasonable time after the constitution of the Tribunal; and, that the time of about four months taken by the respondent in approaching the 875 Tribunal after its constitution, could be held to be either reasonable time or the delay of about two months could be condoned under the proviso to Section 110 A(3).
Similarly in Vinod Gurudas Raikar vs National Insurance Co., ; the precise question which was considered by the Bench was: "The period of limitation for filing a claim petition both under the old Act and the new Act is six months from the date of the accident.
The difference in the two Acts, which is relevant in the present case, is in regard to the provisions relating to condonation of delay.
In view of the proviso to sub section (3) of Section 166 of the new Act, the maximum period of delay which can be condoned is six months, which expired on January 22, 1990.
If the new Act is held to be applicable, the appellant 's petition filed in March had to be dismissed.
The case of the appellant is that the accident having taken place before the new Act came into force, the proceeding is governed by the old Act, where there was no such restriction as in the new Act.
The question is as to which Act is applicable; the new Act or the old.
" The Bench opined: "If in a given case the accident had taken place more than a year before the new Act coming in force and the claimant had actually filed his petition while the old Act was in force but after a period of one year, the position could be different.
Having actually initiated the proceeding when the old Act covered the field a claimant could say that hi s right which has accrued on filing of the petition could not be taken away.
The present case is different.
The right or privilege to claim benefit of a provision for condonation of delay can be governed only the law in force at the time of delay.
Even the hope or expectation of getting the benefit of an enactment presupposes applicability of the enactment when the need arises to take its benefit.
In the present case the occasion to take the benefit of the provision for con donation of delay in filing the claim arose only after repeal of the old law.
Obviously the ground for condonation set 876 up as 'sufficient cause ' also relates to the time after the repeal.
The benefit of the repealed law could not, therefore, be available simply because the cause of action for the claim arose before repeal. 'Sufficient causes a ground of condonation of delay in filing the claim is distinct from ,cause of action ' for the claim itself The question of condonation of delay must, therefore, be governed by the new law.
We accordingly hold that the High Court was right in its view that the case was covered by the new Act, and delay for a longer period than six months could not be condoned.
" In the instant case, the date of birth recorded at the time of entry of the respondent into service as 20th May 1934 had continued to exist, unchallenged between 1956 and September 1991, for almost three and a half decades.
The respondent had the occasion to see his service book on numerous occasions.
He signed the service book at different places at different points of time.
Never did he object to the recorded entry.
The same date of birth was also reflected in the seniority lists of LDC and UDC, which the respondent had admittedly seen, as there is nothing on the record to show that he had no occasion to see the same.
He remained silent and did not seek the alteration of the date of birth till September 1991, just a few months prior to the date of his superannuation.
Inordinate and unexplained delay or laches on the part of the respondent to seek the necessary correction would in any case have justified the refusal of relief to him.
Even if the respondent had sought correction of the date of birth within five years after 1979, the earlier delay would not have non suited him but he did not seek correction of the date of birth during the period of five years after the incorporation of note 5 to FR 56 in 1979 either.
His inaction for all this period of about thirty five years from the date of joining service, therefore precludes him from showing that the entry of his date of birth in service record was not correct.
In the facts and circumstances of this case, we are not satisfied that the Tribunal was justified in issuing the direction in the manner in which it has been done.
The application for correction of date of birth, entered in the service book in 1956, for the first time made in September 1991, was hopelessly belated and did not merit any consideration.
As already noticed, it had not been made even within the period of five years from the date of coming into force of Note 5 to FR 56 (m) in 1979.
The Tribunal, therefore, 877 fell in error in issuing the direction to correct his date of birth and the impugned order of the Tribunal cannot be sustained.
Ordinarily, keeping in view of judgment of this Court in Amulya Chandra Kalita 's case (supra), we should have remanded the case to the Tribunal for a fresh disposal because of the fact that the order of the Tribunal was rendered by only one member or to have awaited the decision of some cases pending in this Court in which the validity of the order passed by single member of the tribunal is under consideration but since we have ourselves looked into all the facts and circumstances of the case and given an interpretation to Note 5 to FR 56 (m), we do not consider it.
expedient to adopt either of these course.
In view of the interpretation placed by us, the appeal succeeds and is allowed.
The impugned order of the Tribunal is set aside.
There shall however, be no order as to costs.
N.V.K. Appeal allowed.
| IN-Abs | The respondent in the appeal joined Government Service in the Ministry of Finance in a Class IV post as Peon on 22nd February, 1956.
At the time of entry his service book was prepared and the date of birth was recorded as 20th May, 1934 and since he failed in the matriculation examination against the column of educational qualification 'matric failed ' was recorded.
The respondent later on again appeared in the matriculation examination, passed the said examination in May, 1956, was appointed as LD.C. in the Ministry of Home Affairs on 9th May, 1957 and in his service book an entry was made showing his educational qualification as 'Matric ' underneath the earlier entry 'matric failed ' and this changed entry was signed by the Section Officer of the Ministry of Home Affairs on 7th September, 1957.
Though the date of birth of the respondent as recorded in the matriculation certificate was 7.4.1938, while amending the entry about his educational qualification, the entry relating to his date of birth was not altered to correspond to the date given in the matriculation certificate and continued to be recorded as 20th May, 1934.
The respondent was later transferred to the Ministry of Human Resources Development and on being notified about his date of superannuation as 31.5.1992, he realised that he was being retired on the basis of his date of birth as originally recorded in the service record as 20.5.1934 ignoring the date of birth as reflected in the matriculation certificate.
In view tot the aforesaid position the respondent made a representation in September, 1991 for alteration of his date of birth but the 863 same was rejected on 4.12.1991.
He submitted another representation on 3.1.1992 for correction on the basis of the date of birth as recorded in the matriculation certificate but this request was also turned down by the appellant in view of the Ministry of Home Affairs O.M. dated 29.1.1992.
Yet another representation dated 26th March, 1992 was submitted by the respondent wherein he had drawn the attention of the Department to the order of the Principal Bench of the Central Administrative Tribunal in the case of Darshan Singh vs Union of India, wherein the Tribunal had directed that the date of birth should be corrected on the basis of the matriculation certificate.
This representation was also rejected by the appellant on 22A.1992.
Being aggrieved the respondent challenged the aforesaid order by an application before the Central Administrative Tribunal and this was contested by the appellant on various grounds including the plea of limitation.
It was also urged that the application was barred by F.R. 56 (Note 5) and the General Financial Rules, 1979 and therefore did not merit and consideration.
It was submitted that the respondent knew about the entry of his date of birth as 20.5.1934 since he had signed his service book on various occasions, ever since he joined service, but his representation for correction of the date of birth was made only in September, 1991 much belatedly and even beyond the period of five years from the date of entry into Government Service as envisaged by S.O. 3997 dated 30th November, 1979.
The Tribunal did not agree with any of the aforesaid contentions of the appellant, allowed the application flied by the respondent and directed the appellant to correct the date of birth in the service record as per the date of birth recorded in the matriculation certificate.
In the appeal by the Union of India to this Court it was contented that in view of the law laid down in Amulya Chandrakalita vs Union of India & Ors., the judgment rendered by only a single member of the Tribunal is invalid and, therefore, the order deserves to be set aside and the case remanded to the Tribunal for fresh disposal.
The arguments raised before the Tribunal were also reiterated before this Court.
Allowing the appeal, this Court, HELD : 1.
A Government servant, after entry into service, acquires 864 the right to continue in service till the age of retirement, as fixed by the, State in exercise of its powers regulating conditions of service, unless the services are dispensed with on other grounds contained in the relevant service rules after following the procedure prescribed therein.
[869G] 2.
The date of birth entered in the service records of a civil servant is of utmost importance for the reason that the right to continue in service stands decided by its entry in the service record.
[869H] 3.
A Government servant who has declared his age at the initial stage of the employment is, of course, not precluded from making a request later on for correcting his age.
It is open to a civil servant to claim correction of his date of birth, if he is in possession of irrefutable proof relating to his date of birth as different from the one earlier recorded and even if there is no period of limitation prescribed for seeking correction of date of birth, the Government servant must do so without any un reasonable delay.
[869H 870B] 4.
A Government servant who makes an application for correction of date of birth beyond the time fixed by the Government, cannot claim, as a matter of right, the correction of his date of birth even if he has good evidence to establish that the recorded date of birth is clearly erroneous.
[870C] 5.
Unless altered date of birth as recorded would determine date of superannuation even if it amounts to abridging the right to continue in service on the basis of actual age.
[870D] State of Assam & Anr.
vs Daksha Prasad Deka & Ors., ; , referred to.
Note (5) to Fundamental Rule 56(m) governing correction of date of birth in the service record, as amended by Government of India, with effect from 30.11.1979 limits the exercise of the right by the Government servant to seek alteration of his date of birth only within the specified period viz. five years of entry into government service.
[871A B] In the instant case, the CAT was of the opinion that the bar of five years could only apply to such Government servants who joined service after 1979, when the amendment came into force and that the said period of limitation would not apply to Government servants who were in service 865 for more than five years prior to 1979.
The approach of the Tribunal tends to create an invidious discrimination, unsustainable in law, by creating two artificial classes of government servants between those who joined service before and after 1979.
It is too simplistic a way of looking at the issue ignoring the ground realities and the intention of the rule making authority to discourage stale claims and non suit such government servants who seek alteration of their recorded date of birth belatedly and mostly on the eve of their superannuation.
[872C, 873E] 7.
It would be appropriate and in tune with the harmonious construction of the provision if in the case of those government servants who were already in service before 1979, for a period of more than five years, and who intended to have their date of birth corrected after 1979, may seek the correction of date of birth within a reasonable time after 1979 but in any event not later than five years after the coming into force of the amendment in 1979.
This view would be in consonance with the intention of the rule making authority.
[874C D] New India Insurance Co. Ltd. vs Smt.
Shanti Misra, ; and Vinod Gurudas Raikar vs National Insurance Co., ; , referred to.
In the instant case, the date of birth recorded at the time of entry into service as 20th May, 1934 had continued to exist, unchallenged between 1956 and September, 1991, for almost three and a half decades.
The respondent had the occasion to see his service book at different places at different points of time.
Never did he object to the recorded entry.
The same date of birth was also reflected in the seniority lists of L.D.C. and U.D.C., which the respondent had admittedly seen.
He remained silent and did not seek alteration till September, 1991 just a few months prior to the date of his superannuation.
Inordinate and unexplained delay or laches on the part of the respondent to seek the necessary correction would in any case have justified the refusal of relief to him.
Even if the respondent had sought correction of the date of birth within five years after 1979 when Note 5 to FR 56 was incorporated the earlier delay would not have non suited him.
His inaction for all this period of about thirty five years from the date of joining service, therefore precludes him from showing that the entry of his date of birth in the service record was not correct.
The Tribunal, therefore fell in error in issuing the direction to correct his date 866 of birth.
[876C F, 876H, 877A] Darshan Singh vs Union of India, decided by Principal Bench of CAT on 9.8.1990, over ruled.
|
Appeal No. 3111 16 of 1991.
From the Judgment and Order dated 2.4.90 of the Allahabad High Court in W.P. No. 5627, 6163/88, 1193, 8415, 10360/89 and 1076 of 1990.
WITH Civil Appeal Nos. 580 to 606 of 1993 & 4416 of 1991 E.C. Agrawala, Anant V. Palli, Atual Sharma, Mrs. Purnima B at Kak, Mrs. Rekha Palli and Pradeep Misra for the Appellants.
1039 C.S. Vaidyanathan, R.K. Jain Ms. Bharti Sharma, Mrs. Rani Chhabra, K.B. Rohtagi and Ms. Aparna Rohtagi for the Respondents.
The Judgment of he Court was delivered by KASLIWAL, J. Computer Code No. 12964 of 1991.
(In S.L.P. (C) No. of 1991) Delinked.
See separate Order in the concerned file.
Special Leave granted in all the other petitions.
In all the above appeals the short controversy raised is whether gur lauta and raskat and rab galawat and rab salawat are liable to the levy of market fee under the U.P. Krishi Utpadan Mandi Adhiniyam of 1964 (hereinafter referred to as 'the Act ').
A Division Bench of the Allahabad High Court referred the question for being considered by a Full Bench.
The Full Bench of the High Court by decision dated 2.4.1990 held that gur lauta and raskat and rab galawat and salawat were not an agricultural produce within the meaning of the Act.
Subsequently other Benches followed the aforesaid decision of the Full Bench.
All the above appeals by grant of Special Leave are directed against the Judgment of the Full Bench dated 2.4.1990 as well as the subsequent decisions following the Full Bench case.
Section 2(a) of the Act defines 'agricultural produce ' and reads as under "2(a) 'agricultural produce ' means such items of produce of agriculture, horticulture, viticulature, apiculture, sericulture, pisciculture, animal husbandry, or forest as are specified in the Schedule and includes admixture of two or more of such items, and also includes any such item in processed form, and further includes gur, rub, shakkar, khandsari and jaggery".
It may be mentioned that the words gur, rab, shakkar, khandsari and jaggery were added in the above definition of agricultural produce by U.P. Act No.10 of 1970.
To decide the controversy raised in these cases the definition of agricultural produce has to be taken into consideration after the words added by the aforesaid U.P. Act No.10 of 1970.
Sugarcane is an agricultural produce out of which juice is extracted.
The said juice gets 1040 thickened by dehydration and when it reaches a particular pigment, it takes the form of rab which is a semi solid form of the sugarcane juice.
After the process of boiling this rab is put in a crystaliser where it is allowed to get cooled and crystals are formed when the same is rotated in the crystaliser.
The crystalised rab is then put into centrifugal machines in which through the process of infusion of sulphur, the sugarcane juice is cleaned and whitened.
The rab which is not put into the centrifugal machine but is dehydrated and is.
allowed to be hardened by the open pan process takes the shape of gur which is normally used for home consumption.
The rab which is not allowed to be hardened is also sold in semi solid form but those persons who desire to make further profits put the rab into centrifugal machines and by the process of infusion of sulphur they obtain khandsari in the dry powder/crystalised form and the waste of rab which is obtained in the liquid form is known as molasses.
The residue which is known as molasses is further utilised by many people by boiling in the open pans and the same is again re processed by cleaning and dehydrating and later by sulphitation is taken in powder form.
This first process out of molasses of rab in the semi solid form is also sold in the market because this inferior quality contains less content of sucrose and is called rab galawat.
Rab salawat is also prepared by the same process out of the molasses and is further inferior quality of rab.
It has been contended on behalf of the appellants that rab galawat and rab salawat are thus nothing but different forms of rab although a little and/or more inferior in quality.
It has been contended that the main ingredient being sugarcane out of which juice is extracted and when gur, rab, khandsari and shakkar have been added in the definition of agricultural produce, the rab galawat or rab salawat being the inferior forms of rab are necessarily an agricultural produce within the above definition of agricultural produce.
It has also been submitted that so far as gur lauta or other forms of gur like kala gur, gur budha etc., are also prepared from the molasses by re boiling the molasses in the open pans which is allowed to thicken after dehydration in the boiling pans.
Thus it has been submitted that gur lauta or gur raskat is nothing else except inferior form of gur.
On the other hand it has been contended on behalf of the respon 1041 dents that the Full Bench of the High Court was right in taking the view that molasses are a different product which looses its original character and being a residual article after solidification of the natural article i.e., sugarcane juice, it cannot be said to be an agricultural produce.
It has been contended that molasses itself being not an agricultural produce, gur lauta and raskat prepared from molasses cannot be held to be an agricultural produce.
We have considered the arguments advanced on behalf.
of the parties and have perused the record.
A perusal of the definition of agricultural produce under Section 2(a) of the Act shows that apart from items of produce of agriculture, horticulture, viticulture, apiculture, sericulture, pisciculture, animal husbandry or forest as are specified in the Schedule the definition further 'includes admixture of two or more such items and thereafter it further 'includes taking any such item in processed form and again for the third time the words used are 'and further includes gur, rab, shakkar, khandsari and jaggery '.
It is a well settled rule of interpretation that where the legislature uses the words 'means ' and 'includes ' such definition is to be given a wider meaning and is not exhaustive or restricted to the items contained or included in such definition.
Thus the meaning of ' agricultural produce ' in the above definition is not restricted to any products of agriculture as specified in the Schedule but also includes such items which come into being in processed form and further includes such items which are called as gur, rab, shakkar, khandsari and jaggery If we look the matter from another angle, U.P. Krishi Utpadan Adhiniyam is 'a beneficial legislation both for the agriculturists as well as the traders.
It provides for collecting market fee by the mandi samities from the agricultural produce brought for sale and purchase in the market areas.
We find no ground or justification to take the view that the legislature though intended to levy market fee by mandi samities on gur and rab but may have had no intention of charging of market fee on inferior qualities of gur called as gur lauta or raskat and similarly of inferior qualities of rab called rab galawat and rab salawat.
We do not find any good reason to take the view, as contended on behalf of the respondents, that the gur lauta or raskat being prepared from the molasses as such these items should not be considered as agricultural produce.
It cannot be denied that molasses is a syrup drained from the sugarcane juice in the process of manufacturing sugar.
Similarly rab is also a product prepared in the same process and 1042 rab salawat and galawat are inferior forms of rab.
It has been contended on behalf of the respondents that gur lauta or raskat is not fit for human consumption and the same is utilised for animal consumption as such cannot fall within the definition of gur.
Even if for arguments sake it may be admitted that the aforementioned inferior quality of gur is not fit for human consumption and is utilised for animal consumption, we do not see any reason to hold that on account of such use or consumption the item cannot be held as an agricultural produce within the meaning of its definition in Section 2(a) of the Act.
Thus in our view an kinds of rab and gur made from sugarcane or from molasses shall fall within the definition of rab and gur as contained in Section 2 (a) of the Act.
In Rathi Khandsari Udyog etc.
vs State of U.P. & Ors etc.
; , this court while considering the definition of khandsari under Section 2 (a) of the Act held as under : "The Legislature has in terms encompassed 'Khandsari ' within the definition of Section 2(a) of the Act.
And the term 'Khandsari ' is sufficiently wide to cover all varieties of khandsari including the article produced by the factories like those of the petitioners.
Besides the basic premise assumed by the petitioners that the object of the Act is merely to protect the producers from exploitation is fallacious.
of course one of the main objects of the Act is to protect the producers from being cheated by unscrupulous traders in the matter of price, weight, payment, unlawful market charges etc.
and to render them immune from exploitation as indicated by the 'prefatory note ' and by the provisions contained in Section 16(i), (ii), (iii), (iv), (viii) etc.
While this is one of the objects of the Act, it is not the sole or only object of the Act.
The Act has many more objects and a much wider perspective such as development of new market areas, efficient collection of data, and processing of arrivals in Mandis with a view to enable the World Bank to give substantial economic assistance to establish various markets in Uttar Pradesh as also protection of consumers and even traders from being exploited 1043 in the matter of quality, weight and price".
In Kishan Lal and Ors.
vs Slate of Rajasthan & Ors.
, ; it was held as under: "The definition of the word 'agricultural produce" in the Act includes all produce whether agricultural, horticultural, animal husbandry or otherwise as specified in the Schedule.
The legislative power to add or include and define a word even artificially, apart, the definition which is not exhaustive but inclusive, neither excludes any item produced in mill or factories nor it confines its width to produce from soil.
Nor switch over from indigenous method of producing anything to scientific or mechanical method changes its character.
To say, therefore, that sugar being produced in mill or factories could not be deemed to be agricultural produce is both against the statutory language and judicial interpretation of similar provisions of the Act in statutes of other States".
In Bharat Trading vs State of U.P. & Ors., Writ Petition (Civil) No. 9982 of 1983 decided on 31st March, 1992 it was held that 'raskat ' is nothing more than an inferior quality of gur and the same was held as an agricultural produce within the meaning of Section 2(a) of the Act.
Thus we hold that gur lauta or raskat and rab galawat and rab salawat fall within the definition of 'agricultural produce ' as contained in Section 2(a) of the Act and are exigible to market fee under the Act and the view taken by the Full Bench of the High Court is not correct.
In the result we allow all these appeals., set aside the impugned judgments of the High Court and as a result of which the writ petitions riled by tile respondents stand dismissed.
No order as to costs.
N.V.K. Appeals allowed.
| IN-Abs | Section 2(a) of the U.P. Krishi Utpadan Mandi Adhiniyam of 1964 defined 'agricultural produce '.
The words 'gur, rab, shakkar, Khandasari and jaggery ', were added in the said definition by U.P. Act No. 10 of 1970.
A Division Bench of the Allahabad High Court referred the question whether gur lauta and raskat and rab salawat are liable to the law, of market fee under the U.P. Krishi Utpadan Mandi Adhiniyam of 1964 to a Full Beach.
The Full Bench held that gur lauta and raskat and rabgalawat and salawat were not an 'agricultural produce ' within the meaning of the Act, and other Benches followed the Full Bench.
In the appeals to this Court, it was contended on behalf of the appellants that when gur khandsari and shakkar have been added in the definition of 'agricultural produce ' rab galawat.
or rab salawat being the inferior forms of the rab are necessary an agricultural produced within the definition of agricultural produce.
On behalf of the respondents it was contended that the Full Bench was right in taking the view that molasses are a different product which looses its original character and being a residual article after solidification of the natural article i.e., sugarcane juice, it cannot be said to be an agricultural produce, that molasses itself being not an agricultural produce, gur lauta and raskat prepared from molasses cannot be held to be an agricultural produce.
Allowing the appeals, this Court, HELD: 1.
A persual of the definition of agricultural produce ' under Section 2(a) of the Act shows that apart from items of produce of agriculture, horitculture, viticulture, apiculture, sericulture, pisciculture, 1037 1038 animal husbandry or forest as are specified in the Schedule, the definition further 'includes admixture of two or more such items ' and thereafter it further 'includes taking any such item in processed from ' and again for the third time the words used are land further includes gur, rab, shakkar, khandsari and jaggery.
[1041C] 2.
It is a well settled rule of interpretation that where the legislature used the words 'means ' and 'includes ' such definition is to be given a wider meaning and is not exhaustive or restricted to the items contained or included in such definition.
[1041D] 3.
The meaning of 'agricultural produce ' in the above definition is not restricted to any products of agriculture as specified in the Schedule but also includes such items which come into being in processed form and further includes such items which are called as gur, rab, shakkar, khandsari and jaggery.
[1041E] 4.
Gur lauta or raskat and rab salawat made from sugarcane or from molasses shall fall within the definition of 'agricultural produce ' as contained in Section 2(a) of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, and are exigible to market fee.
The view taken by the Full Bench of the High Court is not correct [1042C, 1043D] Rathi Khandsari Udyog etc.
vs State of U.P. & Ors. etc.
; , ; Kishan Lal and Ors.
vs State of Rajasthan & Ors.
, [1990) 2 S.C.R. 142; and Bharat Trading vs State of U.P. & Ors., WP (C) No. 9982 decided on 31st March, 1992, referred to.
|
minal Appeal No. 918 of 1981.
From the Judgment and Order dated 10.8.81 of the Punjab & Haryana High Court in Crl.
A. No. 417 DB of 1980.
U.R. Lalit, M. Qmaruddin and Mrs. M. Oumaruddin for the Appellant.
Ranbir Singh Yadav and R.S. Suri (NP) for the Respondent.
The Judgment of the Court was delivered by N.P. SINGH, J.
The appellant has been convicted under Section 302 of the Indian Penal Code and has been sentenced to undergo imprisonment for life, for causing the murder of Paramjit Singh.
It is said that the appellant and the deceased were intimate friends and they used to visit frequently each other 's house.
But Paramjit Singh (hereinafter referred to as 'deceased ') misbehaved with the wife of the appellant and because of that the appellant had nursed a grudge.
On July 8, 1979 in the morning the appellant asked the deceased to accompany him to Chandigarh and Mohali where he wanted to take some suitable shop for his business.
They boarded a bus of the Road Transport Corporation at Patiala for Chandigarh at about 9.59 A.M. Gurcharan Singh (PW 8) also came to Chandigarh by the same bus.
The appellant and the deceased reached Chandigarh at about 11.30 A.M. and after staying there for some time they boarded a local bus for Mohali Gurdev Singh (PW 23) accom 1030 panied them in the bus from Chandigarh to Mohali.
At Mohali after getting down from the bus the appellant went to Raj Kumar Singh (PW 711) brother of his wife and borrowed a bicycle from him.
During this period the deceased was sitting at a shop and taking aerated water.
Shortly thereafter, the appellant arrived with the bicycle at the said shop and both left on the bicycle.
The deceased was pedalling the bicycle and the appellant sat behind on the carrier.
Both were seen going on the bicycle by Jaimal Singh (PW 5) by the side of the Gurdwara, Sahib Singh Sabha, Mohali.
Jaimal Singh (PW 5) after taking his meals went to Gurdwara Sahib Singh Sabha at about 2.45 P.M. the same day.
One Om Parkash, came there and told him that a Sikh gentleman was lying on the ground in the campus of the said Gurdwara in an injured condition.
Jaimal Singh (PW 5) accompanied by Balwinder Singh, Sewadar, came to the spot and found the victim lying on the ground and bleeding profusely.
He identified him to be the same person whom he had seen earlier on the bicycle.
The victim could not speak.
Jaimal Singh (PW 5) left Om Parkash and Balwinder Singh, Sewadar, at the spot and summoned members of the Gurdwara Committee.
Some of the members who were available reached.
But in the meantime the victim succumbed to the injuries.
They searched for the assailant.
Thereafter Jaimal Singh (PW 5) accompanied by Chatter Singh went to the Police Station Mohali and lodged the first information report at 4.00 P.M. the same day.
It is further the case of the prosecution that near about the time of the occurrence the appellant was seen coming from the side of the Gurdwara Sahib Singh Sabha and was noticed on the way by Joginder Singh (PW 9) with blood on his hand.
On being asked the appellant gave out that he had a fight with someone.
and he was going to the hospital to get his injuries dressed.
Gurdev Singh (PW 23) on his way back from the hotel also saw the appellant going on the bicycle and found him puzzled.
He also saw the hand of the appellant stained with blood and blood marks on his clothes as well.
On querry the appellant said that he had got the injury through barbed wire and was going to the doctor to get his wounds dressed.
Last in the chain of events, the appellant reached the house of Raj Kumar Singh (PW 11) and returned him his bicycle.
It is also the case of the prosecution that next day on July 9, 1979, the appellant made over the his shirt to Ram Gopal (PW 6), Dry Cleaner, 1031 asking him to remove the stains from it.
A copy of the receipt prepared in connection with the aforesaid shirt was produced during the trial.
The doctor who held the post mortem examination found several incised wounds on the person of the deceased including injury on the abdomen.
There is no dispute that the prosecution case is based solely on the circumstantial evidence.
If at a trial the prosecution adduces direct evidence to prove the charge, the Court is primarily concerned whether the witnesses who have testified about the role of the accused are reliable.
Once the Court is satisfied that the witnesses who are said to have seen the occurrence are trustworthy and inspire confidence, the finding of guilt has to be recorded, if otherwise the accused has to be acquitted.
But in a case based on circumstantial evidence neither the accused nor the manner of occurrence is known to the persons connected with the victim.
The first information report is lodged only disclosing the offence, leaving to the investigating agency to find out the offender.
It is said that men lie but circumstances do not.
Under the circumstances prevailing in the society today, it is not true in many cases.
Sometimes the circumstances which are sought to be proved against the accused for purpose of establishing the charge are planted by the elements hostile to the accused who find out witnesses to fill up the gaps in the chain of circumstances.
In countries having sophisticated modes of investigation, every trace left behind by the culprit can be followed and pursued imme diately.
Unfortunately it is not available in many parts of the this country.
That is why Courts have insisted (i) the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established; (ii) all the facts so established should be consistent only with the hypothesis of the guilt of the accused and should be such as to exclude every hypothesis but the one sought to be proved; (iii) the circumstances should be of a conclusive nature; and (iv) the chain of evidence should not have any reasonable ground for a conclusion consistent with the innocence of the accused.
A note of caution has also been struck regarding the role of imagination.
In the case of Reg vs Hodge, (1838) 2 Lewin 227, it was said: "The mind was apt to take a pleasure in adapting circumstances to one another, and even in straining them a little, if need be, to force them to form parts of one 1032 connected while; and the more ingenious the mind of the individual, the more likely was it, considering such matter, to overreach and mislead itself, to supply some little link that is wanting, to take for granted some fact consistent with its previous theories and necessary to render them complete. ' It has been impressed that suspicion and conjecture should not take place of legal proof It is true that the chain of events proved by the prosecution must show that within all human probability the offence has been committed by the accused, but the Court is expected to consider the total cumulative effect of all the proved facts along with the motive suggested by the prosecution which induced the accused to follow a particular path.
The existence of a motive is often an enlightening factor in a process of presumptive reasoning in cases depending on circumstantial evidence.
Coming to the facts of the present case, Pritam Kaur (PW 12), mother of the deceased, has deposed that the appellant went to her house in the morning and took the deceased with him saying that he win be accompanying him to Mohali because the appellant had to select a suitable shop.
Thereafter both of them left together.
There does not appear to be any reason on the part of the mother of the victim to falsely state about the deceased going along with the appellant in the morning of July 8, 1979.
Gurcharan Singh (PW 8) has testified that at 9.30 A.M. he saw the appellant and the deceased at the bus stand.
He exchanged greeting with them.
They told him that they were going to Chandigarh or Mohali.
The deceased purchased two bus tickets for Chandigarh in his presence.
Gurcharan Singh (PW 8) travelled in the same bus with the appellant and the deceased and all the three came out from the bus at Chandigarh together.
Sahib Chand (PW 24), an employee of the Punjab Roadways Transport Corporation, had sold two tickets.
The yard control register was produced before the Court to prove in respect of sale of the two tickets which were recovered from the person of the deceased at the time to the post mortem examination.
The two tickets were recovered on July 8, 1979, on the date.
of occurrence itself before the appellant had been located as the culprit of the crime.
The two tickets recovered from the person of the deceased 1033 establish that the deceased had travelled from Patiala along with one another person who was close to him because the deceased was keeping both the tickets in his pocket.
This circumstances corroborates the evidence of Pritam Kaur (PW 12) as well as of Gurcharan Singh (PW 8).
The other circumstance in the chain of events, according to the prosecution, is that the appellant and the deceased boarded a local bus at Chandigarh for Mohali reaching there at about 1.30 P.M. Gurdev Singh (PW 23), who was then employee in Colonization Department, Sector 22, Chandigarh, and residing at Badheri, also travelled in the same local bus.
He belonged to Patiala.
Gurdev Singh (PW 23) saw the appellant and the deceased getting down from the local bus at Mohali.
They also exchanged greetings with him and on being asked the appellant told him that they were going to select a shop.
They walked together for a short distance and thereafter Gurdev Singh (PW 23) went to take his meals at a dhaba.
Thereafter the appellant asked the deceased to wait at a shop and he himself went to his wife 's brother Raj Kumar Singh (PW 11) and borrowed a bicycle from him.
Raj Kumar Singh (PW 11) although a close relation of the appellant has testified that the appellant took his red bicycle from his house at about 1.30 P.M. Jaimal Singh (PW 5) saw the deceased taking aerated water at the shop and later saw the appellant and the deceased both going together on a red bicycle.
The deceased was pedalling the bicycle and the appellant was sitting on the carrier.
Gurdev Singh (PW23) aforesaid who had left the appellant and the deceased while going to the dhaba for taking his meals, after taking his meals, at about 2.30 P.M. again saw the appellant coming on the same bicycle alone.
The appellant appeared to be puzzled and his hands were stained with blood.
There were also blood spots on his clothes.
Gurdev Singh (PW 23) asked him.
as to what had happened to him.
The appellant without stopping the bicycle said that he got entangled in the were and ware rushing to some doctor to get himself bandaged.
Yet another witness Joginder Singh (PW 9) who had gone to Mohali in search of some plot saw the appellant at about 2.15 P.M. coming on a red colour bicycle.
He also noticed the hand of the appellant stained with blood.
On query the appellant told Joginder Singh (PW 9) that he had a fight with some person and was going to hospital for dressing of his wounds.
Thereafter the appellant went to Raj Kumar Singh (PW 11) his brother in law to hand over the bicycle aforesaid.
1034 It may be mentioned that in the Court Raj Kumar Singh (PW 11) stated that this appellant had gone to his house at about 1.30 P.M. and taken his red colour bicycle which he returned the same day later.
But he denied that he had stated during investigation that he had seen injuries on the hand of the appellant.
He also denied that he had told the police during investigation that the appellant was mentally agitated.
Still the fact that the appellant had taken from him his red colour bicycle at about 1.30 P.M. which the appellant returned to him later the same day has been testified by him.
If this part of the evidence of Raj Kumar Singh (PW 11) is accepted which we find no reason to doubt then his evidence corroborates the evidence of Jaimal Singh (PW 5) and Gurdev Singh (PW 23) that the appellant was going with the deceased on a red colour bicycle at about 1.30 P.M. and about 2.30 P.M. the appellant was seen coming on the bicycle alone.
Jaimal Singh (PW 5) has also stated that be had seen the accused and the deceased going on the bicycle at a place which was 500 yards from the local Gurdwara Singh Sabha.
Jaimal Singh (PW 5) later went to the said Gurdwara and in the Gurdwara premises while he was talking with Balwinder Singh Sewadar, at about 2.45 P.M. one Om Parkash came there and informed that a Sikh gentlemen was lying on the ground in an injured condition.
All of them went towards the place where the injured was lying.
Jaimal Singh recognised the victim to be the same person whom he had seen earlier taking aerated water at the shop and later on the bicycle along with the appellant.
Blood was coming out from his abdominal region.
The victim was not in a position to speak.
Jaimal Singh (PW 5) went to call the members of the Gurdwara Committee.
Two members of the Gurdwara reached the spot.
But by that time victim had succumbled to his injuries.
Therefore they went to the Police Station Mohali where Jaimal Singh (PW 5) lodged the first information report at 4.00 P.M. Jaimal Singh (PW 5) did not know either the name of the appellant or that of the deceased but he stated in the first information report that he had gone to Dhaba and at about 1.30 P.M., while taking meals he saw a fair complexioned Sardar taking aerated water in the adjoining 'shop.
After taking meals when he was going on the road, again he saw the same Sardar pedalling a cycle going towards Gurdwara Singh Sabha Mohafi and behind him a young Hindu Mona was sitting on the cycle.
Then he gave the details as to how then at the Gurdwara, at about 2.45 P.M., one Om Parkash told him that one Sardar was lying in a comer of Gurdwara in an injured 1035 condition.
He went and identified that he was the same young man whom he had seen taking aerated water at the shop and then on the bicycle.
The first information report was lodged within one and a half hours of the occurrence giving the aforesaid details.
The statements made in the first information report corroborate fully the testimony of Jaimal Singh (PW 5) in Court.
Once the evidence of Jaimal Singh is accepted, it supports and corroborates the evidence of Gurdev Singh (PW 23) who had travelled with the appellant and deceased in local bus from Chandigarh to Mohali and had got down at Mohali at 1.30 P.M.
He later saw the appellant at about 2.30 P.M. returning on the bicycle with injuries on hand and blood on clothes.
Gurdev Singh (PW 23) knew the appellant as well as deceased from before.
Apart from the evidence of the witnesses, who have proved the different links in the chain of events, the shirt which the appellant was wearing and on which blood had been noticed by witnesses as already mentioned above was recovered from the laundry of Ram Gopal (PW 6).
According to Ram Gopal (PW 6) on July 9, 1979 the appellant had given that shirt to remove certain stains.
He had issued a receipt to the appellant and one chit was tagged with the shirt for identification.
The third was kept by way of record.
The shirt was seized and sent to the chemical examiner who found human blood on the said shirt.
The shirt as well as the bicycle were produced as exhibits before the Trial Court and have been identified by the witnesses who were examined on behalf of the prosecution.
None of the witnesses examined on behalf of the prosecution appear to have been set up or planted by any inimical source.
They are neither interested in the deceased nor have any bias against the appellant.
So far the motive which impelled the appellant to commit the murder, it has been suggested on behalf of the prosecution that the appellant and the deceased were intimate friends but the appellant had a suspicion that the deceased was misbehaving with his wife, for which the appellant had a resentment.
The resentment was never allowed to be surfaced by the appellant by way of strong protest or confrontation.
However, he had mentioned this to Darshanjit Singh (PW 13), Kanwaljit Singh (PW 14) and Sarup Lal (PW 15). 'rile three witnesses aforesaid have deposed as to how the appellant was carrying a suspicion and was tense from inside in respect of the conduct of tile deceased.
There is nothing on the record to show that the aforesaid three witnesses were either inimical to the appellant or 1036 interested in the deceased because of that they could have concocted a motive for commission of the crime by the appellant.
According to us the evidence adduced on behalf of the prosecution is clear, unambiguous and in unmistakable terms establish that the appellant is the perpetrator of the crime and nothing has been brought to our notice which leaves any gap in the circumstances to establish the guilt of the appellant.
The facts of the case stands the scrutiny and tests as laid down by this Court in the cases of Hanumant Govind Nargundkar vs State of Madhya Pradesh, AIR 1952 SC 343; Deonandan Mishra vs The State of Bihar, ; ; Govinda Reddy vs State of Nysore, AIR 1960 SC 29; Sharad Birdhichand Sarda vs State of Maharashtra, ; Ashok Kumar Chatterjee vs State of Madhya Pradesh, AIR 1989 SC 1890 and State of UP vs Ashok Kumar Srivastava, The appeal is accordingly dismissed.
V.P.R. Appeal dismissed.
| IN-Abs | The prosecution case was that the appellant and the deceased were intimate friends.
The appellant nursed a grudge against the deceased, as he misbehaved with the wife of the appellant.
On July 8, 1979 in the morning the deceased accompanied the appellant to Mohali, where the appellant wanted to do business.
At Mohali, the appellant went to the brother of his wife (P.W. 11) and borrowed a bicycle, leaving the deceased at a shop.
later both left the shop on the bicycle.
The deceased was pedalling the bicycle while the appellant was sitting behind on the carrier of the bicycle.
P.W. 5 saw them going by the side of the Gurdwara, Sahib Singh Sabha.
At about 2.45 P.M. on the same day, P.W. 5 when went to the Gurdwara, one Om Parkash came there and told P.W.5 that an injured Sikh gentleman was lying on the ground in the campus of the Gurdwara.
P.W. 5 accompanied by one Balwinder Singh came to the spot.
He identified the victim lying on the ground bleeding profusely.
The members of the Gurdwara Committee were summoned.
The members who were available reached.
The victim succumbed to the injuries in the meantime.
P.W. 5 accompanied by one Chatter Singh lodged the First Information Report at 4.00 p.m., the same day.
The prosecution case was based solely on the circumstantial evidence and it could prove the chain events beyond reasonable doubt by the evidences of its witnesses.
The appellant was convicted under section 302 of the Indian Penal Code and was sentenced to undergo imprisonment for life by the trial Court.
1027 1028 Dismissing the appeal, this Court, HELD : 1.01.
It is said that men lie but circumstances do not.
Under the circumstances prevailing in the society today, it is not true in many cases.
Sometimes the circumstances which are sought to be proved against the accused for purpose of establishing the charge are planted by the elements hostile to the accused who find out witnesses to fill up the gaps in the chain of circumstances.
[1031D] 1.02.
In countries having sophisticated modes of investigation, every trace left behind by culprit can be followed and pursued immediately.
Unfortunately it is not available in many parts of this country.
That is why Courts have insisted (i) the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established; (ii) all the facts so established should be consistent only with the hypothesis of the guilt of the accused and should be such as to exclude every hypothesis but the one sought to be proved; (iii) the circumstances should be of a conclusive nature; and (iv) the chain of evidence should not have any reasonable ground for a conclusion consistent with the innocence of the accused.
[1031E F] 1.03.
If at a trial the prosecution adduces direct evidence to prove the charge, the Court is primarily concerned whether the witnesses who have testified about the role of the accused are reliable.
Once the Court is satisfied that the witnesses who Pre said to have seen the occurrence are trustworthy and inspire confidence, the finding of guilt has to be recorded, if otherwise the accused has to be acquitted.
But in a case based on circumstantial evidence neither the accused nor the manner of occurrence is known to the persons connected with the victim.
[1031B C] 1.04.
Suspicion and conjecture should not take place of legal proof.
It is true that the chain of events proved by the prosecution must show that within all human probability the offence has been committed by the accused, but the Court is expected to consider the total cumulative effect of all the proved facts along with the motive suggested by the prosecution which induced the accused to follow a particular path.
The existence of a motive is often an enlightening factor in a process of presumptive reasoning in cases depending on circumstantial evidence.
[1032C D] 1.05.
The evidence adduced on behalf of the prosecution is clear, 1029 unambiguous and in unmistakable terms establish that the appellant is the perpetrator of the crime and nothing has been brought to Court 's notice which leaves any gap in the circumstances to establish the guilt of the appellant [1036B] Reg vs Hodge, (1838) 2 Lewin 227; Hanumant Govind Nargundkar vs State of Madhya Pradesh AIR 1952 SC 343; Deonandan Mishra vs The State of Bihar, ; ; Govinda Reddy vs State of Mysore, AIR 1960 SC 29; Sharad Birdhichand Sarda vs State of Maharashtra, ; Ashok Kumar Chatterjee vs State of Madhya Pradesh, AIR 1989 SC 1890 and State of U. P. vs Ashok Kumar Srivastava, , referred to.
|
Appeal Nos.
636 37 of 1993 From the Judgment and Order dated 20.2.
1992 of the Calcutta High Court in Appeal No. 493 of 1.990.
Harish Salve and Indranil Ghosh for the Appellants.
P. Chidambarani.
Lahoty Ms. section Khazanchi, K.( '.
J. Heard the counsel for the parties.
Leave granted in both the S.L.Ps.
We shall first deal with the appeal arising from S.L.P.(c) No, 5377/92 1068 The appeal is directed against the order dated 4.3.1992 passed by a Division Bench of the Calcutta High Court modifying its earlier order of November 13, 1990.
The controversy in this appeal pertains to the terms of sale of the assets of a Company in liquidation.
A few facts are necessary to be stated to appreciate the controversy.
Neptune Paper Mills (N.P.M.) was directed to be wound up by the Company Court on August 4,1987.
The Official Liquidator took possession of the assets of the company under the orders of the Court.
N.P.M. had borrowed huge amounts from several financial institutions including Industrial Finance Corporation of India, I.C.I.C.I., W.B.I.D.C. and I.D.B.I. on security of its assets.
In view of the default committed by it in repayment, the financial institutions (F.Is.) recalled their loans in April, 1988 with the result all the loans in their entirety became due at once.
On August 8, 1988 the F.Is. were granted leave to file a suit under Section 446 of the .
A suit was filed by them in September, 1990 in the Calcutta High Court wherein a direction was given to the official liquidator to function as a receiver too.
In January 1990, the company court directed the sale of the assets of the company in liquidation.
Before making the said order the court had obtained a valuation of the said assets.
The valuation was at Rs. 4 crores.
Sale notices were published from time to time in response to which certain offers were received, the highest of them being Rs. 6.90 crores.
For one or the other reason, no offer was accepted and sale notice published again.
It would be appropriate at this stage to notice the terms of the sale notice, which led to the sale in favour of the respondent, Buxa Holdings Limited since re named as Kanoi Agrotech Limited (hereinafter referred to as "Buxa").
The Sale notice published in the newspaper "The Hindu ' dated 10th April, 1990 reads as follows: "PUBLIC NOTICES Sale Notice Sale Notice Sale Notice In the matter of Neptune Paper Mills Ltd (in Liquidation) That in terms of the order of the Hon 'ble High Court, Calcutta dated 3.4.90, take notice the sale of the above 1069 named company as going concern and "as is where is and whatever there is basis" will be held at 2.00 pm on 17.4.90 in the open Court of the Hon 'ble Company Judge, High Court, Calcutta.
The bids of such sale will be started from 6.90 crores.
The successful bidders must deposit 10% of his/their bids in the Court at the time of sale.
The balance amount of the sale price may be paid by instalments as would be fixed by the Hon 'ble Court, Calcutta i.e., deferred payments of instalments will be considered.
The Purchaser shall have to enter into an agreement and or memorandum of understanding with the employees ' union in the same line with which has already been entered into with one of the bidders in court.
The bidder may have inspection of the assets of the company on applications to Official Liquidator before the sale of date.
Terms and condition along with the list of assets will be available at the office of the undersigned during the office hours.
Official Laiquidator High Court Calcutta Dated the 10th April, 1990.
" The significant thing to notice is that the sale notice did not specify the number of instalments nor did it specify the period within which the entire consideration was to be remitted.
All that it stated was that (1) the said company in liquidation will be sold as a going concern on "as is where is and whatever there is basis", (2) the bids will start from 6.90 crores, (3) the successful bidder must deposit 10% of his bid at the time of the sale, (4) the balance amount of the sale price may be paid by instruments as would fixed by the Hon 'ble Court, Calcutta i.e., deferred payment of instalments will be considered and (5) the purchaser shall have to enter into an agreement and understanding with the employees ' union on the same lines as has been entered into previously by one of the bidders.
In pursuance of the said sale notice, certain offers were received including the one by Buxa.
Its offer was in a sum of Rs.6 crores subject to certain terms and conditions stipulated therein.
In short, it proposed to pay the said amount in instalment @ Rs.45 lakhs per annum with a moratorium of one year immediately following the confirmation of sale.
When the matter 1070 was taken up by the learned Company Judge on 17th September, 1990, only two parties remained in the field.
They were asked to raise their bids.
Buxa raised its offer to Rs. 8 crores, the higher of the two.
The learned Judge accepted its offer subject to the condition that the balance consideration (after deduction 10% earnest money which was to be deposited immediately) shall be paid in instalments prescribed by him.
The learned Judge directed that for the first two years following the sale, Rs. 60 lakhs shall be paid each year.
Thereafter, half yearly instalments of Rs.30 lakhs shall be paid until the entire eat nest money is paid off.
No interest was stipulated.
It was provided that on default of payment in any one instalment yearly or half yearly the official liquidator shall forthwith take possession of the assets and the earnest money paid shall stand forfeited.
Certain other conditions were also stipulated but it is not necessary to notice them for the purpose of this appeal.
Complaining that the terms settled by the learned Company Judge were too liberal to the purchaser and prejudicial to the interest of the F.Is., an appeal was preferred by them before the Division Bench.
On a consideration of relevant circumstances, the Division Bench came to the opinion that it would not be appropriate for it to set aside the sale, and that no useful purpose will be served by postponing the sale of the assets any further.
At the same time, it was of the opinion that some more safeguards should be provided to protect the interest of the F.1s: Accordingly, it effected the following modifications in the terms of sale: (i) The balance consideration namely Rs.7 crores 20 lakhs (the earnest money of Rs. 80 lakhs was already deposited) shall be paid in the following manner: for the first two years, the instalments payable each year shall be Rs. 60 lakhs; thereafter half yearly instalments in a sum of Rs. 40 lakhs each shall be paid till the entire consideration is paid off.
The first instalment shall be paid by 10th June, 1993 and the last instalment by 30th June, 2000 A.D. (ii) In case of default in payment of any one instalment, the official liquidator 'shall be entitled to take possession of the assets sold.
In such an eventuality the entire earnest money and other instalments paid till then shall stand forfeited.
(iii) Buxa shall provide a revolving bank guarantee in favour of the official liquidator for a sum of Rs. 60 lakhs till all the instalments are paid.
The bank guarantee shall be furnished within three weeks from the date of the order and shall be kept alive till the entire consideration is paid off.
It Is not necessary to notice the other terms and conditions.
This order was made on November 13, 1990.
1071 Aggrieved by the order of the Division Bench, F.Is.
approached this Court by way of a Special Leave Petition (S.L.P. 14929/90), which was disposed of on 19.11.1990 under the following order : "Taken on Board on being mentioned.
We have heard Mr. Gopal Subramanium for the petitioner and counsel for the respondents.
We are of the view that some of the allegations which Mr. Subramanium makes can be appropriately dealt with by the High Court in the case the High Court is moved again but at present we do not think it would be advisable to interfere with the order of the High Court.
We gather today is fixed as the date of which the possession of property would be transfered from the official liquidator to the purchaser.
To secure the interest of the Financial institutions the petitioner we are of the view that until the High Court makes its order the purchaser shall be taken to be the receiver and shall be accountable to be a receiver." Accordingly the financial institutions filed an application before the Division Bench requesting it to reconsider its order.
In this application, the F.Is. prayed that the order dated 13th November, 1990 be recalled, the sale in favour of Buxa be set aside or in the alternative Buxa be directed to deposit the entire balance consideration of Rs. 7.2 crores at once.
It was submitted by the F.Is.
that the company in liquidation has been directed to be sold by the company court free from all encumbrances that the financial institutions have a charge for Rs. 8 crores on the assets of the company in liquidation and the granting a period of 10 years for paying the balance consideration in instalments is highly prejudicial to the interest of the F. Is.
Not taking adequate security from the Buxa for proper payment of balance consideration, it was submitted, was also prejudicial to their interest.
At the time of arguments, however, their counsel did not press the request for setting aside the sale.
His main submission was that Buxa be directed to pay the entire balance consideration immediately and that till the payment is made, it should be directed to furnish a bank guarantee besides interest @ 15% per annum.
Alternately, it was submitted that the number of instalments granted be reduced sharply with a provision for interest thereon.
The Division Bench disposed of the said application by its order dated 20.2.1992.
It held that (1) the F.Is.
(secured creditors) by their acts and conduct have come within the winding, up and.
therefore the 1072 assertion of their right as secured creditors outside winding up proceedings cannot be accepted or sustained at that stage.
(2) The purchaser Buxa has taken possession of the assets sold, has re employed the workmen after entering into an understanding with them and has also invested substantial amounts in recommencing the production in the factory.
(3) In the above circumstances, the F.Is.
cannot insist upon repayment of the entire money due to them under the deeds of hypothecation executed by the company in liquidation.
(4) The only question that survives for consideration is whether the time for making the payment should be curtailed and whether some interest should be directed to be paid by the purchaser.
The application was disposed of with the following directions: (a) The purchaser (Buxa) shall pay in the year 1992 a sum of Rs. 80 lakhs in six bimonthly instalments payable on the last day of February, April, June, August, October and December.
(b) In the year 1993, the sum payable shall be Rs. 85 lakhs.
In 1994, it shall be Rs. 90 lakhs and in 1995, Rs. 95 lakhs.
In the year 1996 and thereafter, the annual amount payable shall be Rs. one crore till the entire consideration is paid off.
(c) The revolving bank guarantee shall be equal to the amount payable in each of the said years.
(d) Along with the last instalment, the purchaser shall pay a lumpsum of Rs. 25 lakhs as and by way of interest.
(e) The purchaser shall not encumber, alienate or transfer assets purchased by him so long as the entire consideration is not paid.
This does not, however, prevent it from raising monies by hypothecation, mortage or by creating charge on the said assets.
(f) In default of payment in any two of the bimonthly instalments, the Official Liquidator shall take possession of the assets sold and all the amounts paid till then shall stand forfeited.
A few other directions were made which, not being relevant herein, need not be noticed.
In this appeal it is contended by Sri Salve, learned counsel for the appellants that the procedure followed by the High Court for selling the 1073 assets of the company in liquidation is not fair and proper and that its has caused grave prejudice to the interest of financial institutions.
He submitted that by granting such liberal instalments, the "present price" of the assets sold is no more than Rs. 4 crores, whereas the total amount due to the financial institutions is more than Rs. 12 crores.
He submitted that either the sale should be set aside and a fresh sale be held or the instalments prescribed should be drastically reduced coupled with a provision for reasonable interest on the balance consideration.
On the other hand, Sri P. Chidambaram, learned counsel for the purchaser submitted that it is not open to this court at this stage to effect any modification in the terms of the sale.
The purchaser in any event is not agreeable to any further modification.
If this court proposes to effect any modification in the terms of sale, the purchaser should be left free to withdraw his offer and to walk out.
The learned counsel submitted that Buxa 's offer of Rs. 6 crores, which was ultimately raised to Rs. 8 crores, was subject to the conditions contained in its offer.
True it is that Buxa accepted the terms and conditions stipulated by the Company Judge which were different from those stipulated by it.
But this was by its consent.
As a matter of fact, with a view to save its investment which it had already made by the date of the judgment of the Division Bench, it even agreed to certain further modifications being made by the Division Bench on both the occasions.
The purchaser is not now agreeable to any further modification since in such a case it would not be possible for it to run the industry or to pay the consideration.
He submitted that the purchaser has invested huge sums of money and has reemployed almost all the workers and that it is not in a position to bear any further financial burden.
(11) Before we deal with the contentions urged by the learned counsel, we feel constrained to make certain observations with respect to the terms of the sale notice issued by the court.
While we agree that there is no standard or uniform pattern to be followed in such matters, it would be appropriate for the court to adopt such procedure as would avoid a situation where the courts is put to the task of negotiating the terms of sale with the parties.
That would not be consistent with the dignity of the court.
It would also give room for avoidable criticism and comment.
It would have been better if the sale notice itself had prescribed the number of instalments which would be granted to the purchaser, besides other terms and conditions and then invited offers on that basis.
Alternately, the court could have invited the offers subject to such conditions as the offerers may 1074 prescribe and then have them evaluated by a qualified person and select the most appropriate one.
If none of them are found acceptable and if the court thought it appropriate, it could also allow the bidders to submit revised offers and then have them evaluated.
We are not saying that these are the only two methods.
There may be others.
Our object is only to emphasise that any method devised should be such as to obviate the necessity or occasion for the court to negotiate the terms and conditions of sale with the party or parties.
The sale notice in this case merely stated that the balance consideration may be paid in instalments as would be fixed by the court.
The number and duration of instalments and other allied terms like bank guarantee, nature and terms of default clause, payment of interest on instalments were all left to be determined by the court.
It is true that in this case the bid of Rs. 6 crores was got enhanced to Rs. 8 crores, with lesser number of instalments that offered by the purchaser all as a result of persuasive efforts by the Company Judge.
Even so, it has given room for the argument that had it been known beforehand that so many instalments would be granted without stipulation of interest, several higher offers could have been received.
We are not prepared to agree with Mr. Chaidambaram, learned counsel for Buxa that this court has no power at this stage to modify the number of instalments.
Nor do we see any basis for Buxa to take up the stand that either the existing terms should be affirmed by this court or it should be allowed to walk out of the deal altogether along with its investment.
This it cannot do for more than one reason.
Firstly, the sale notice itself stated that "the balance amount of the sale price may be paid by instalments as would be fixed by the Hon 'ble court, Calcutta i.e., deferred payment of instalments will be considered".
What the High Court of Calcutta could do, can equally be done by this court sitting in appeal.
Secondly, the purchaser had repeatedly submitted before the Calcutta High Court that it is prepared to abide by such conditions as may be imposed by the Court.
We may refer to the stand taken by the counsel for the purchaser before the Division Bench as recorded in its order dated 13th November, 1990.
It reads thus: "Mr. Mukherjee, learned Advocate appearing on behalf of the purchaser has submitted that the sale in this case was sale of assets of the Mill as a going concern and not merely sale as scrap.
The Court had power to grant such instalments whether it was specifically provided in the terms and conditions as advertised or not.
In this connection he has drawn our attention to clause (10) of the Terms.
He has 1075 submitted in the present case the court had granted such instalments for such period and on such terms after considering all the facts. (para 7).
He has submitted that in any event if this court is not inclined to approve the confirmation of the sale on the terms and conditions as prescribed by the Trial Court, it may allow such confirmation in favour of his clients to remain but provide for some modification and/or addition to such term and conditions if this court think it fit and proper.
In this context, he has submitted that so far as the instalments are concerned, the quantum may be increased so that all the instalments are paid by the year 2000 A.D instead of 2002 A.D. as directed by the impugned order.
So far as the guarantee is concerned, he has submitted that the court can provide for similar guarantee as provided for in other cases for sale by court in cast of default.
He also submitted that it may be provided that the charge of the secured creditors be shifted to the sale proceeds and that the sale, which was free from encumbrances, should be subject to this that his clients should approach the financial institutions for further financial held (para 8) . " Even before the second Division Bench which passed the impugned order, the purchaser did not take up the stand that the court has no power to modify the terms and conditions of sale.
All that its counsel submitted was that having regard to the facts and circumstances of the case, the instalments should not be reduced.
The impugned order records the contention of the purchaser 's counsel in the following words: "It is submitted by Mr. Mukherjee, learned counsel for the purchaser that having regard to the commitments of the company and the fact that former employees have been re employed and the company has to consistently run on a profitable basis, it would not be possible to reduce the instalments any further.
" Having considered and taken into account all the relevant facts and circumstances of the case including the interest of the financial institutions, the interest of the workers who have since been re employed by the purchaser and the fact that the purchaser has already invested substantial amount to revive the company, we are of the opinion that certain modifications should be made in the number of instalments in which the balance consideration shall be paid.
But before we do so, we must refer to a particular fact which discloses the unfair conduct of the purchaser (Buxa).
According to the impugned order the purchaser had to pay a sum of Rs. 80 lakhs in the year 1992 in bimonthly instalments.
It paid only a total sum of Rs. 28 lakhs.
The excuse now put forward for nonpayment of the 1076 balance of 52 lakhs is the order of 'status quo ' passed by this court Having entertained the S.L.P. filed by the financial institutions, this court (K. Jayachandra Reddy and late R.C. Patnaik, JJ.) passed the following order on 14.5.1992: "Heard both the parties.
Status quo to be maintained.
The second respondent in SLP(C) 5377/92 shall not encumber, alienate or transfer the assets of the company in liquidation purchased by him.
Respondent No.2, shall, however, maintain accounts and, as and when required, produce the same before the Court.
Post the matter before an appropriate Bench on 21.7.1992.
Meanwhile, if the parties alone chose to file affidavits, they may file.
As the matter before us is at an interlocutory stage, it need not be treated as part heard.
" It is evident from a reading of the order that the order to maintain status quo did not and could never have meant stay of instalments payable by the purchaser in accordance with the impugned order.
To say so would amount to placing a totally unreasonable and unwarranted interpretation upon the said order.
It would be unfair above all.
The purchaser has been put in possession of the assets purchased by him and no fetter whatsoever was ever placed by the said order upon his possession or enjoyment of the property purchased by him.
The idea behind the order was that the purchaser should not transfer, alienate or encumber assets purchased and that he should maintain the accounts and produce them before the court.
The order directing that status quo to be maintained has to be understood in the said context.
We must say that after some debate, Mr. Chidambaram agreed fairly that his client 's interpretation of the said order was wrong, that he retreats his default and that he is prepared to pay the said amount of Rs. 52 lakhs along with such interest as may be prescribed by this Court.
It is directed that the purchaser shall pay the said amount of Rs. 52 lakhs due for the year 1992 in terms of the impugned order along with an amount 107 of Rs. 6 lakhs representing the interest on the said amount, consolidated i.e., a total of Rs. 58 lakhs on or before 5th March, 1993.
This payment shall be in addition to such other amounts as may be payable in accordance with the impugned order as modified by us herein.
Now coming to the modification of the terms imposed in the order under appeal, the only modification we wish to make is in the number of instalments.
After the payment of the aforesaid Rs. 52 lakhs due in the year 1992, the total balance consideration will be Rs. 5.80 crores.
This amount shall be paid in full by the end of the year 1996 in equal bi monthly instalments.
The instalments shall be payable by the last day of February April, June, August, October and December in each year.
This means that each instalment, excepting the last instalment, shall be in a sum of Rs.24,16,000.
The last instalment shall be in such sum as to make up the total shortfall payable on that date i.e., Rs. 20,16,000.
There shall be no other modification in the terms and conditions prescribed in the order under appeal including those relating to default and interest.
Having regard to the facts and circumstances of the case, there shall be no order as to costs.
For the reasons given above, the appeal arising from S.L.P. (C) No. 6736/92 filed by the purchaser is dismissed.
No costs.
G.N.R. Appeal dismissed.
| IN-Abs | Neptune Paper Mills (N.P.M.) was directed to be wound up by the Company Court on August 4, 1987.
The Official Liquidator took possession of the assets of the company under the orders of the Court N.P.M. had borrowed huge amounts from several financial institutions including Industrial Finance Corporation of India, I.C.I.C.I., W.B.I.D.C. and I.D.B.I. on security of its assets.
In view of the default committed by it in repayment, the financial institutions (F.Is.) recalled their loans in April, 1988 with the result all the loans in their loans in April, 1988 with the result all the loans in their entirety became due at once.
On August 8, 1988 the F.Is. were granted leave to rile a suit under Section 446 of the A suit was filed by them in September 1990 in the Calcutta High Court wherein a direction was given to the official liquidator to function as a receiver too.
In January 1990, the company court directed the sale of the assets of the company in liquidation.
Before making the said order the court had obtained a valuation of the said assets.
The valuation was at Rs. 4 crores.
Sale notices were published from time to time in response to which certain offers were received, the highest of them being Rs. 6.90 crores.
For one or the other reason, no offer was accepted and sale notice was published again.
The sale notice would state that (1) the said company in liquidation will be sold as a going concern on "as is where is and whatever there is basis", (2) the bids will start from 690 crores, (3) the successful bidder must deposit 10% of his bid at the time of the sale, (4) the balance amount of the sale price may be paid by instalments as would be fixed by tile 1064 Hon 'ble Court, Calcutta i.e., deferred payment of instalments will be considered and (5) and purchaser shall have to enter into an agreement and understanding with the employees union on the same lines as has been entered into previously by one of the bidders.
In pursuance of the said sale notice, certain offers were received including the one by Buxa.
Its offer was in a sum of Rs. 6 crores subject to certain terms and conditions stipulated therein.
In short, it proposed to pay the said amount in instalments @ Rs. 45 lakhs per annum with a moratorium of one year immediately following the confirmation of sale.
On the date of sale before the learned company Judge only two parties remained in the field.
They were asked to raise their bids.
Buxa raised its offer to Rs. 8 crores, the higher of the two.
The learned Judge accepted its offer subject to the condition that the balance consideration (after deducting 10% earnest money which was to be deposited immediately) shall be paid in instalments prescribed by him.
It was directed that for the first two years following the sale, Rs. 60 lakhs shall be paid each year.
Thereafter, half yearly instalments of Rs. 30 lakhs shall be paid until the entire earnest money is paid off.
No interest was stipulated.
It was provided that on default of payment in any one instalment yearly or half yearly the official liquidator shall forthwith take possession of the assets and the earnest money paid shall stand forfeited.
Complaining that the terms settled by the learned Company Judge were too liberal to the purchaser and pre judicial to the interest of the F.Is., an appeal was preferred by them before the Division Bench.
The Division Bench finding that it would be inappropriate to set aside the sale, effected modifications in the terms of sale thereby providing some more safeguards to protect the interest of the F.Is.
Aggrieved by the order of the Division Bench, F.Is.
approached this court by way of a Special Leave Petition (S.L.P. 14929/90).
This Court, taking the view that the allegations made on behalf of F.Is. can be dealt with by the High Court if it is moved again declined to interfere with the order of the High Court.
But with a view to secure the interest of the Financial institutions it passed an order on 19.11.90 that until the High Court makes its order the Purchaser shall be taken to be the receiver and shall be accountable as a receiver.
Accordingly the financial institutions filed an application before the Division Bench requesting it to reconsider its order with a prayer that the 1065 sale in favour of Buxa be set aside or in the alternative Buxa be directed to deposit the entire balance consideration of Rs. 7.2 crores at once.
They further submitted that they have a charge for Rs. 8 crores on the assets of the company in liquidation and that granting a period of 10 years for paying the balance consideration in instalments and not taking adequte security from Buxa for proper payment of balance consideration, was prejudicial of their interest.
The Division Bench disposed of the said application by its order dated 20 2 1992, holding that (1) the F.Is.
(Secured creditors) by their acts and conduct have come within the winding up and. therefore, the assertion of their right as secured creditors outside winding up proceedings cannot be accepted or sustained at that stage.
(2) the purchaser Buxa has taken possession of the assets sold, has re employed the workmen after entering into an understanding with them and has also invested substantial amounts in recommencing the production in the factor%?.
(3) In the above circumstances, the F.Is.
cannot insist upon repayment of the entire money due to them under the deeds of hypothecation executed by the company in liquidation.
However, it passed directions curtailing the time for payment and providing for payment of interest by the purchaser.
In these appeals by special leave it was contended for the Appellants that (a) the procedure followed by the High Court for selling the assets of the company in liquidation is not fair and proper and that it has caused grave prejudice to the interest of financial institutions, (b) By granting liberal instalments, the "present price" of the assets sold is no more than Rs. 4 crores, whereas the total amount.
due to the financial institutions is more than Rs. 12 crores, (c) either the sale should be set aside and a fresh sale be held or the instalments prescribed should be drastically reduced coupled with a provision for reasonable interest on the balance consideration.
On the other hand the purchaser/Respondent submitted that it is not open to this court at this stage to effect any modification in the terms of the sale; that though with a view to save its investment which it had already made by the date of the judgment of the Division Bench, it agreed to certain further modifications being made by the Division Bench; it is not now agreeable to any further modification since in such a case it would not be possible for it to run the industry or to pay the consideration and 1066 that as the purchaser has invested huge sums of money and has reemployed almost all the workers; it is not in a position to bear any further financial burden.
Modifying the order and dismissing the appeal, the Court, HELD: 1.
Though there is no standard or uniform pattern to be followed with respect to the terms of the sale notice issued by the Court, it would be appropriate for the court to adopt such procedure as would avoid a situation where the court is put to the task of negotiating the terms of sale with the parties.
That would also give room for avoidable criticism and comment.
It would have been better if the sale notice itself had prescribed the number of instalments which would he granted to the purchaser, besides other terms and conditions and then invited offers on that basis.
Alternately, the court could have invited the offers subject to such conditions as the offerers may prescribe and then have them evaluated by a qualified person and select the most appropriate one.
If none of them are found acceptable and if the court thought it appropriate, it could also allow the bidders to submit revised offers and then have them evaluated.
These are not the only two methods.
But it has to be emphasised that any method devised should be such as to obviate the necessity or occasion for the court to negotiate the terms and conditions of sale with the party or parties.
The sale notice in this case.
merely stated that the balance consideration may be paid in instalments as would be fixed by the court The number and duration of instalments and other allied terms like bank guarantee, nature and terms of default clause, payment of interest on instalments were all left to be determined by the Court.
In this case the bid of Rs. 6 crores was got enhanced to Rs. 8 crores, with lesser number of instalments than offered by the purchaser all as a result of persuasive efforts by the Company Judge.
But it has given room for the argument that had it been known before hand that so many instalments would be granted without stipulation of interest, several higher offers could have been received.
[1073G H, 1074A D] 2.
The contention that the Supreme Court has no power at this stage to modify the number of instalments is untenable.
Nor there is any basis for Buxa to take up the stand that, either the existing terms should be affirmed by this court or it should be allowed to walk out of the deal altogether along with its investment.
This it cannot do for the following 1067 reasons; Firstly, the sale notice itself stated that "the balance amount of the sale price may be paid by instalments as would be fixed by the Hon 'ble Court, Calcutta i.e., deferred payment of instalments will be considered".
what the High Court of Calcutta could do, can equally be done by this Court sitting in appeal.
Secondly, the purchaser has repeatedly submitted before the Calcutta High Court that it is prepared to abide by such conditions as may` be imposed by the Court.
[1074E F] 3.
Having considered and taken into account all the relevant facts and circumstances of the case including the interest of the financial institutions, the interest of the workers who have since been re employed by the purchaser and the fact that the purchaser has already invested substantial amount to revive the company, the following modification was made in the number of instalments in which the balance consideration has to be paid: [1075F G] The total balance consideration of Rs. 5.80 crores, remaining due after payment of Rs. 52 lakhs due in the year 1992 shall be paid in full by the end of the year 1996 in equal bimonthly instalments.
The instalments shall be payable by the last day of February, April, June, August, October and December in each year.
Each instalment excepting the last instalment shall be in a sum of Rs. 24, 16,000.
The last instalment shall be in such sum as to make up the total short fall payable on that date i.e. Rs. 20,16,000.
[1077C]
|
minal Appeal No. 398 of 1984.
From the Judgment and Order dated 16.11.83 of the Himachal Pradesh High Court in Crl.
A. No. 32 of 1983.
Ms. Kusum Choudhury and Ms. Bina Gupta for the Appellant.
Dr. N.M. Ghatate and S.V. Deshpande for the Respondent.
20 The following Order of the Court was delivered: On special leave being granted, the State of Himachal Pradesh has preferred this appeal against the judgment and order dated 16.11.1983, acquitting the respondent of an offence under Section 376, IPC earlier recorded by the learned Sessions Judge.
Briefly stated the prosecution case is that on 2.8.1982, the prosecutrix, Raksha Devi PW4 alongwith her father Nikkoo Ram PW5 and an elder sister by name Samti were in their fields.
It started to rain all of a sudden and the prosecutrix, her father and her sister, ran towards their house.
The prosecutrix got separated from her father and elder sister and was following them when the respondent Raghubir Singh, then aged about 16 years, came to her and caught hold of her hand and took her under a mango tree.
The prosecutrix, who was 7/8 years old at that time was wearing a frock and having a shawl with her.
The respondent spread the shawl on the ground and making the prosecutrix lie on that shawl committed rape on her.
Since, the prosecutrix had not reached her home, Nikkoo Ram her father after waiting for about half an hour returned towards the field and saw the respondent lying on top of the prosecutrix, Raksha Devi, under the mango tree.
He raised alarm and the respondent ran away carrying with him his underwear.
The prosecutrix was crying and was bleeding per vagina.
The occurrence took place at about 2.30 p.m. and the First Information Report exhibit PE was lodged at the Police Station at 5.50 p.m.
The prosecutrix was got examined by the doctor, who found her hymen ruptured and slight bleeding coming out of the vaginal edges.
Blood clott was also present and the external genitals of the prosecutrix were found to be tender and red.
The vagina admitted one finger with difficulty, which got smeared with blood.
The doctor who had examined the prosecutrix, namely, Dr. Urmil Gupta, Medical Officer, Rural Hospital Nalagarh at about 7 p.m. on the same day, appearing as PWI at the trial had also testified that when the prosecutrix was brought to her by her father, he had also brought with him a shawl, which was found to be having some mud and bloodstains.
According to the opinion of Dr. Urmil Gupta PWI, the prosecutrix had been subjected to sexual intercourse and the probable duration of the injuries on her private parts.
, including the vagina, was about 6 to 12 hours.
During the cross examination, a suggestion was put to the doctor that the injuries found on the prosecutrix could have been caused by a fall on some bushes or on the stem of a 'beree ' tree but the doctor had categorically denied the suggestion.
It was also suggested to her that the venginal in jury could also be caused by inserting 21 a finger in the vagina.
The X Ray, the skiagrams and the examination of her teeth by Dr. Subhash Chandra Aggarwal PW2 established the age of the prosecutrix to be between 6 to 8 years.
The respondent was also examined by doctor C.L. Sharma PW3, medical officer at the Rural Hospital, Nalagarh.
He had found the respondent to be potent and capable of sexual intercourse.
He denied the suggestion that injuries would necessarily be caused to the penis in case of sexual intercoures by a grown up male with a virgin when during the act her hymen gets torn.
The father of the prosecutrix Nikkoo Ram PW5, the prosecutrix Raksha Devi PW4 and Taru PW7, who had rushed to the scene of occurrence on hearing the alarm and had also seen the respondent running away therefrom carrying with him his underwear supported the prosecution case in its totality.
The learned Sessions Judge after a careful appraisal of the evidence on record found that the respondent had committed the offence of rape and sentenced him to suffer R.I. for a period of five years for the offence under Section 376 IPC.
While awarding the sentence, the learned Sessions Judge took into account the age of the prosecutrix, the age of the accused and the other attending circumstances and directed that it would be appropriate if the accused was kept in the open air jail in Bilasput during the term of five years R.I.
The respondent appealed to the High Court of Himachal Pradesh and on 16.11.1983.
The High Court acquitted him.
We have heard learned counsel for the parties at length and have gone through the evidence on the record.
The statement of the prosecutrix, Raksha Devi PW4 is clear, cogent and specific.
The learned Sessions Judge before recording her statement was conscious of her age and had, therefore, taken all the precautions required by law to ascertain whether she was capable of giving evidence or not and on being satisfied that she was so capable, recorded her, statement.
She narrated the occurrence in a simple and straight forward manner.
The prosecution case as noticed in the earlier part of the judgment was fully supported by her during her statement and nothing has been brought out in the cross examination from which any doubt could be caused about her veracity.
Her statement receives ample corroboration from the testimony of Nikkoo Ram PW5, her father who even otherwise would be the last person to come forward with a false accusation of the type of rape on his young unmarried daughter.
22 His testimony has impressed us and we find him to be a truthful and reliable witness.
The medical evidence of Dr. Urmil Gupta has supported the prosecutrix in all material particulars.
She has also testified to the presence of mud and blood stain, , on the shawl.
The evidence of Taru PW7 who had also seen the accused running away from the scene of crime carrying his underwear, further lends credence to the prosecution version.
The learned Sessions Judge, in our opinion, was therefore justified in relying upon the prosecution evidence and recording an order of conviction against the respondent for an offence under Section 376 IPC.
His findings were based on proper appreciation of evidence and were not unreasonable much less perverse.
The learned single Judge of the High Court in our opinion, without appreciating or properly discussing the evidence set aside the findings recorded by the Sessions Judge.
The High Court appears to have embarked upon a course to find some minor contradictions in the oral evidence with a view to disbelieve the prosecution version.
In the opinion of the High Court, conviction on the basis of uncorroborated testimony of the prosecutrix was not safe.
We cannot agree.
There is no legal compulsion to look for corroboration of the evidence of the prosecutrix before recording an order of conviction.
Evidence has to be weighed and not counted.
Conviction can be recorded on the sole testimony of the prosecutrix, if her evidence inspires confidence and there is absence of circumstances which militate against her veracity.
In the present case the evidence of the prosecutrix is found to be reliable and trustworthy.
No corroboration was required to be looked for, though enough was available on the record.
The medical evidence provided sufficient corroboration.
The High Court, however, while dealing with the medical evidence observed as follows: "Lady doctor Urmil Gupta PW1, who had examined the prosecutrix, had admitted in so many words towards the end of her cross examination that the injury found on the private part of the prosecutrix and which is the only injury found in the instant case, could be caused by insertion of a finger by a grown up person like the parents of the prosecutrix It is true that normally no parents would not do so but in the peculiar circumstances of this case, this possibility may not be ruled out altogether.
In any case the mere fact that the hymen of the prosecutrix had been found ruptured, would not prove the prosecution version 23 and connect the appellant with the offence charged against him.
" The above approach to say the least was highly improper.
What were the 'peculiar circumstances ' of the case from which the learned single Judge of the High Court thought that the possibility could not be ruled out that the parents of the prosecuted would have themselves caused injury to the prosecutrix by inserting finger in her vagina rupturing her hymen is not at all understandable.
There is no suggestion that on account of any enmity, the parents of the girl would go to that length to falsely implicate the respondent.
Dr. Ghatate, the learned senior counsel was also unable to point out any such 'circumstances ' from the record which could show that there was any possibility of the hymen of the prosecutrix having been ruptured in the manner suggested by the High Court or any reason to falsely implicate the respondent.
In fairness to Dr. Ghatate it must be recorded that he did not support the observations of the High Court noticed above.
The learned single Judge of the High Court also drew an inference against the prosecution from the fact that only two blood stains had been found on the shawl by the Chemical Examiner and doubted the prosecution version on that account.
According to the learned single Judge: "In natural course if this shawl had been used under the prosecutrix at the time of the alleged offence, the same should have been drenched with blood in the meddle.
Moreover, this shawl should have been full of mud as it remained lying on the ground under the prosecutrix for such a long time and when it had rained throughout.
" In making the above observations, obviously the High Court ignored the testimony of Doctor Urmil Gupta who had found the presence of blood stains and the mud on the shawl and who had opined that the bleeding from the edges of the vagina was slight and that some amount of clotted blood was also present.
The prosecutrix was a girl of tender age and on account of the rape committed on her, there was bleeding from her vagina but to expect that the shawl should have got "drenched with blood" as if the large blood arteries had been cut, is letting the imagination run wild and ignoring the circumstances of the case.
The absence of spermatoza on the vaginal slide, which was also pressed into aid by the High 24 Court to acquit the respondent, was not based on proper scrutiny of the evidence.
The prosecution case itself was that on being surprised while the respondent was in the act of committing sexual intercourse on the prosecutrix, he ran away carrying his underwear.
The absence of spermatoza under the circumstances could not be said to be a circumstance in favour of the respondent at all.
The judgment of the High Court, in our opinion, is based more on surmises and conjectures than on proper appreciation of evidence.
It exposes the insensitivity of the learned Judge to the serious crime committed against human dignity.
We are not impressed by the manner in which the High Court dealt with the case.
Courts must be wary, circumspect and slow to interfere with reasonable and proper findings based on appreciation of evidence as recorded by the lower courts, before upsetting the same and acquitting an accused involved in the commission of heinous offence of rape of hapless girl child.
Dr. Ghatate, learned senior counsel for the respondent submitted, by reference to Rahim Beg & Anr.
vs State of U.P., , that the absence of injuries on the penis of the respondent should be treated as sufficient to the negative prosecution case.
We are afraid we cannot agree.
Inferences have to be drawn in every case from the given set of facts and circumstances.
There is no inflexible axiom of law which lays down that the absence of injuries on the male organ of the accused would always be fatal to the prosecution case and would discredit the evidence of the prosecutrix, otherwise found to be reliable.
The presence of injuries on the male organ may lend support to the prosecution case, but their absence is not always fatal.
Rahim Beg 's case (supra) was based on its peculiar facts and the observations mate therein were in a totally different context and cannot advance the case of the respondent.
The observations in Rahim Beg 's case (supra) cannot be mechanically pressed into aid in every case regardless of the specific circumstances of the crime and absence of the fact situation as existing in that case.
Every case has to be approached with realistic diversity based on peculiar facts and circumstances of that case.
Doctor Sharma who had examined the respondent had found him to be capable of sexual intercourse and according to his opinion the absence of injury on his male organ was not suggestive of the fact that he had not indulged in sexual intercourse with the prosecutes then of tender years of age.
His evidence was not at all challenged on this aspect by the defence.
Thus, considered on the whole.
we are of the opinion that the 25 judgment of the High Court is based on conjectural findings and cannot be sustained.
The same deserves to be set aside and is hereby set aside.
The reasoning given by the learned Sessions Judge and the findings recorded by him on appreciation of evidence have appealed to us and we find no reason to take a view different than the one taken by the learned Sessions Judge.
We, accordingly, set aside the acquittal of the respondent and hold him guilty of the offence under Section 376 IPC for having committed rape on the prosecutrix, Raksha Devi, on the date and in the manner alleged by the prosecution.
Having recorded the conviction of the respondent for the offence under Section 376 IPC, the next question is about the awarding of proper sentence.
The occurrence took place on 2.8.1982, more than a decade ago.
The learned Sessions Judge after recording the conviction under Section 376 IPC had sentenced the respondent to suffer RI for five years.
The State did not move the High Court for any enhancement of the sentence.
We, therefore, feel that the ends of justice would be met if the sentence to be imposed on the respondent is confined to five years RI as was awarded by the learned Sessions Judge for cogent reasons recorded by him.
We may emphasise that though for such an offence a more severe sentence would have been desirable but we have restricted ourselves to the maintenance of the sentence as imposed by the learned Sessions Judge for the reason that the State did not seek any enhancement of the sentence by filing an appropriate petition in the High Court or in this Court and for over a period of seven years, while the case has remained pending here, no notice had been issued to the acquitted respondent to show cause as to why in the event of his acquittal being set aside, a more deterrent sentence, than the one imposed by the Sessions Judge, be not imposed upon him and without putting him on such a notice, the Court cannot enhance the sentence.
If the notice were to issue now, it would further delay the disposal of the case and we do not consider that to be a proper course to be adopted.
The more stringent minimum sentence prescribed for an offence under Section 376 IPC was also incorporated in the Code by an amendment only with effect from December, 1982, after the offence in the present case had been committed.
The appeal is consequently allowed and the judgment of the High 26 Court is set aside.
The respondent is held guilty of an offence under Section 376 IPC and sentenced to suffer rigorous imprisonment for a period of five years.
The respondent shall be taken into custody to suffer the term of imprisonment.
R.P. Appeal allowed.
| IN-Abs | The respondent accused was prosecuted for committing rape on a child of 8/9 years of age.
The prosecution case was that: while the prosecutrix (P.W.4), her father (P.W.5) and elder sister (P.W.7) were in their fields, it suddenly started raining and all the three ran towards their house; P.W.4 got separated from the two kins and was following them when the accused, then aged about 16 years, took her under a mango tree and committed rape on her; P.W.5, who in the meantime returned to the fields in search of P.W.4, saw the accused lying on her, he raised an alarm whereupon P.W.7, rushed to the spot and the accused ran away leaving P.W.4 crying and bleeding per vagina.
The victim was got medically examined the same day and the doctor (P.W.1), besides mentioning the injuries on the private part of the prosecutrix, reported that she had been subjected to sexual intercourse.
At the trial P.W.5, P.W.7 and the doctor (P.W.1) who had medically examined the prosecutrix, supported the prosecution case in its totality.
The trial court held that the accused had committed an offence of rape under s.376, I.P.C. on the prosecutrix, and sentenced him to suffer R.I. for a period of five years.
18 The accused riled an appeal before the High Court which acquitted him.
The State filed the appeal by special leave to this Court.
Allowing the appeal, this Court, HELD: 1.I. Courts must be wary, circumspect and slow to interfere with reasonable and proper findings based on appreciation of evidence as recorded by the lower courts, before upsetting the same and acquiring an accused involved in the commission of heinous offence of rape of hapless girl child.
[p.24B C] 1.2.
The High Court without appreciating or properly discussing the evidence committed an error in setting aside the findings recorded by the trial court which were based on proper appreciation of evidence and were not unreasonable much less perverse.
The judgment of the High Court is based on conjectural findings and cannot be sustained.[pp.22B C; 25A] 3.
The statement of prosecutrix (PW4) is clear, cogent and specific.
The Sessions Judge recorded her statement on being satisfied that she was capable of giving evidence.
She narrated the occurrence in a simple and straight forward manner.
The prosecution case was fully supported by her during her statement and nothing has been brought out in the cross examination from which any doubt could be caused about her veracity.
Her statement receives ample corroboration from the testimony of her father (PW5) who is found to be a truthful and reliable witness.
The medical evidence of PWl has supported the prosecutrix in all material particulars.
The evidence of PW7 who had also seen the accused running away from the scene of crime further lands credence to the prosecution version.
[pp.21E H; 22A] 2.1.
There is no legal compulsion to look for corroboration of the evidence of the prosecutrix before recording an order of conviction.
Evidence has to be weighed and not counted.
Conviction can be recorded on the sole testimony of the prosecutrix, if her evidence inspires confidence and there is absence of circumstances which militate against her veracity.
[p.22D] 2.2.
In the instant case the evidence of the prosecutrix is found to be reliable and trustworthy.
No corroboration was required to be looked for, though enough was available on the record.
The medical evidence provided sufficient corroboration.
[p.22E] 19 3.1.
There is no inflexible axiom of law which lays down that the absence of injuries on the male organ of the accused would always be fatal to the prosecution case and would discredit the evidence of the prosecutrix, otherwise found to be reliable.
Every case has to be approached with realistic diversity based on peculiar facts and circumstances of that case and inferences have to be drawn from the given set of facts and circumstances.
[p.24D F] Rahim Beg & Anr.
vs State of UP.
, , distinguished.
The doctor (PW3), who had examined the respondent, found him to be capable of sexual intercourse and according to him the absence of injury on the male organ of the accused was not suggestive of the fact that he had not indulged in sexual intercourse with the prosecutrix, then of tender years of age.
His evidence was not at all challenged on this aspect by the defence.
[p.24F G] 4.1.
The judgment of the High Court acquitting the accused is set aside.
The accused is convicted under S.376 IPC for having committed rape on the prosecutrix and sentenced to suffer regorous imprisonment for a period of five years.
[pp. 25H; 26A] 4.2.
Though for such an offence a more severe sentence would have been desirable but neither the State sought enhancement of the sentence by filing an appropriate petition nor any notice in this regard had been issued to the accused, and without putting him on such a notice, the Court 'cannot enhance the sentence. 'Me provision prescribing more stringent minimum sentence under Section 376 was also incorporated in the Code by an amendment only with effect from December, 1982, after the offence in the instant case had been committed.
[p.25D G]
|
Appeal No. 690 of 1993.
From the Judgment and Order dated 21.5.1992 of the Patna High 13 Court in Civil Writ Jurisdiction Case No. 1317 of 1990.
A.K. Sen and M.P. Jha for the Appellant.
Uday Singh, A.K. Sinha and A. Sharan for the Respondents.
The following Order of the Court was delivered: Leave granted.
The admitted facts in the present case are that by an order dated 16th August, 1969 the appellant was appointed by the respondent 2.
Bihar School Examination Board ( 'Board ') as a Special Officer (Stores) for a period not exceeding six months, in the pay scale of Rs. 300 20 400 EB 20 500 with usual allowances.
His services, however, were continued till 10th March, 1971, when he was intimated that the said post of Special Officer would be abolished w.e.f 1st April, 1971 and consequently his services would stand terminated.
The appellant filed a suit and obtained an injunction against the abolition of the post and the termination of his services.
In the suit, a compromise was arrived at between the Board and the appellant whereby he was to be appointed as Section Officer in the General Cadre and his pay as a Special Officer was to be protected.
Pursuant to this compromise, the Board passed an Office Order on 20th March, 1972 which stated as follows: "Shri Tej Narain Tiwary who is at present working as Special Officer (Stores) on purely temporary basis, is appointed on the vacant post of Sectional Head (Section Officer) in the initial pay of the pay scale of Rs. 230 15350 EB 20 450 besides dearness allowance.
Besides pay he is sanctioned reducible personal pay at the rate of Rs. 70 per month".
By the same order, another Special Officer (Vigilance) was also appointed to one more vacant post of Sectional Head (Section Officer) in the same pay with an additional reducible personal pay of Rs. 20 per month.
The order further stated as follows: "As per the decision dated 18.12.1971 of the Board, the posts of Special Officer (Stores) and Assistant Vigilance Officer are abolished from the date of issue of this order: 14 We are not concerned with the post of Special Officer (Vigilance).
What is obvious from the above order is that the appellant was working as Special Officer till that time and was appointed in one of the vacant posts of Section Officers with the protection of his pay.
We do not know how the amount of Rs. 70 per month was arrived at.
Read with the note put up by the Secretary of the Board, it is apparent that appellant 's then pay as Special Officer was to be protected entirely.
We presume that it was wholly protected.
The point to note is that his pay could be protected, whether partially or fully, only if he was transferred from one post to another whether on account of the abolition of the former post or as a matter of compulsory transfer.
Read with the Office Order dated 20th March, 1972, it appears that the Board had adopted the device of first transferring the appellant from the post of Special Officer to the post of Section Officer and then abolishing the post of the Special Officer.
It is necessary to note this fact, since the Board has interpreted this device as amalgamation of the posts of Special Officer with that of the Section Officer and not as a compulsory transfer from the post of Special Officer to that of Section Officer.
Further, whether it is construed as amalgamation or as compulsory transfer, the legal consequences are the same, viz., that the appellant would have to be absorbed in the post of Section Officer from the date of his appointment in the post of Special Officer.
Since further the Board itself regularised the appointment from the date of appointment as Special Officer, viz., 16th August, 1969, as is evident from its Order of 11th November, 1986, no objection can be raised in that behalf However, respondents who was promoted to one of the posts of Section Officers on 27th August, 1970 has contended that the seniority given to the appellant in the post of Section Officer w.e.f 16th August, 1969 i.e., from the day on which he was appointed as Special Officer, was illegal.
We may now deal with the said contention.
Respondent 5 was an Assistant in the Office of the Board and as stated above, was for the first time, promoted as Section Officer on 27th August, 1970.
It appears that for the first time in 1983, a seniority list of Section Officers was prepared but not circulated.
In that list respondents was shown at No. 23 whereas, the appellant was shown at No. 33.
This was so because two representations made by the appellant to give him seniority from 16th August, 1969 stood rejected on 20th April, 1977 and 13th March, 1978 respectively.
It appears that it was for the first time that by the order 15 dated 11th November, 1986, the appellant 's representation was accepted and he was given seniority from 16th August, 1969.
Against the said order, respondents filed a writ petition which was withdrawn by him on 22nd December, 1986 since the learned Advocate General appearing for the Board stated before the Court that by the order dated 11th November, 1986 the Board had merely given seniority to the appellant from 16th August, 1969 and that grant of this seniority to the appellant had nothing to do with the inter se seniority in the cadre of Section Officers which would be determined later.
It appears that, thereafter, & seniority list of Section Officers was prepared by the Board in which the appellant was shown above respondent 5 and was granted promotion to the post of Assistant Secretary on 20th March, 1982 and to that of Deputy Secretary on 29th November, 1989.
Against the said list of seniority, the respondents filed the present writ petition in the High Court primarily challenging the order of llth November, 1986 in terms of which the inter se seniority list was prepared.
The High Court held that the post of Special Officer occupied by the appellant was a temporary post and was not a cadre post; since the said post was abolished and thereafter the appellant was appointed as a Section Officer on 20th March, 1972 he would have to rank below respondent 5 who was appointed as Section Officer on 27th August, 1970.
The High Court also relied on the fact that the Board 's case before it was that as a consequence of the abolition of the post, the appellant was appointed as a Section Officer.
We are of the view that the approach of the High Court is not correct.
As stated above, the facts reveal that the appellant was appointed in a higher post with a higher salary scale.
He was in fact compulsorily transferred from that post to the post of Section Officer, and after the transfer, by the same order of the 20th March, 1972, the post of Special Officer was abolished.
The order is also capable of being interpreted as an order of amalgamation of the ex cadre post of Special Officer with the cadre posts of Section Officers.
As stated earlier, the consequence of both the interpretations of the said order is the same, viz., that the appellant would get seniority from the date of his appointment as the Special Officer.
That it is a case of a compulsory transfer or of the amalgamation of post is evident from the fact that the appellant 's salary as Special Officer was 16 protected on the said transfer.
It is true that there is nothing on record except the order of 20th March, 1972 to show that the temporary post of Special Officer which was created for the first time on 16th August, 1969 with the appointment of the appellant to it, was ever regularised and the appellant was appointed regularly to the same.
However, on this aspect, we must go by the intention revealed in the resolutions and the orders of the Board itself.
It cannot be suggested that the Board could not regularise the post and the appointment retrospectively by passing resolutions which in the absence of rules and regulations are equally valid.
The Board 's intentions in that behalf are clear.
It treated the post as regular.
The appellant was appointed to it in a substantive vacancy and in accordance with the conditions governing it.
There is, therefore, nothing in the decisions relied upon by the learned Counsel for respondent 5, viz., The Direct Recruit Class II Engineering Officers ' Association and Ors.
vs State of Maharashtra and Ors.
, ; and State of Bihar & Ors. etc.
vs Akhouri Sachindra Nath & Ors., [1991] Suppl.
1 SCC 334 which militates against the seniority given to the appellant.
We accordingly allow the appeal.
There will be no order is to costs.
S.L.S. Appeal allowed.
| IN-Abs | By an order dated 16th August 1969, the appellant was appointed by respondent 2 the Bihar School Examination Board as a Special Officer (Stores) for a period not exceeding six months in the pay scale of Rs. 300 20400 EB 20 500, with usual allowances.
The services were, however, continued till 10th March, 1971, when it was intimated that the said post of Special Officer would be abolished with effect from 1st April 1971, and consequently his services were terminated.
The appellant riled a suit and obtained an injunction against the abolition of the post and the termination of his services.
In the suit, a compromise was arrived at between the Board and the appellant, whereby he was appointed as Section Officer in the General Cadre and his pay as Special Officer was to be protected.
Pursuant to this compromise, the Board by order dated 20th March, 1972 appointed him on the vacant post of Section Officer, with a personal pay of Rs. 70 per month.
Later, by an order dated 11.11.86, respondent No. 2 regularised the appointment from the date of his appointment as Special Officer viz. 16.8.69.
However, respondent No. 5 promoted to one of the posts of Section officers on 27 8 70, contended that the seniority given to the appellant in the post of Section Officer w.e.f. 16 8 69, ie.
from the date of his appointment as Special Officer was illegal.
In the Seniority list of Section Officers prepared by respondent No. 2, the appellant was shown above respondent No. 5 and he was granted promotion to the post of Asstt.
Secretary on 20th March, 1982, and to that of Deputy Secretary on 29.11.87.
12 Against the said list of seniority, respondent No. 5 filed a writ petition in the High Court, formally challenging the order of dt 11th Nov., 1986 in terms of which the inter se seniority list was prepared.
The High Court held that the post of Special Officer occupied by the appellant was a temporary post, which was abolished, and therefore, he would have to rank below respondent No. section The appellant came to this Court.
Allowing the Appeal, HELD: The approach of the High Court was not correct.
The appellant was appointed in a higher post with a higher salary scale.
He was in fact compulsorily transferred from that post to the post of Section Officer and after that transfer by the same order of 20th March, 1972, the post of Special Officer was abolished.
The order is also capable of being interpreted as an order of amalgamation of the ex cadre post of a Special Officer with the cadre post of Section Officer.
[15H G] The consequence of both the interpretations of the said order is the same, viz. that the appellant would get seniority from the date of his appointment as Special Officer.
[15G] It is true that there is nothing on record except the order of 20th March, 1972, to show that in the temporary post of Special Officer which was created for the first time on 16th August, 1969, that the appointment of appellant was ever regularised and the appellant was appointed regularly to the same.
However, on this aspect, we must go by the intention revealed in the resolutions and orders of the Board itself.
The Board 's intention is clear.
It treated the post as regular.
The appellant was appointed to it in a substantive vacancy and in accordance with the condition governing it.
There is accordingly nothing, which militates against the seniority given to the appellant.
[16A D] The Direct Recruit Class II Engineering Officers ' Association and Ors.
vs State of Maharashtra & Ors.
, ; and State of Bihar& Ors. etc.
vs Akhouri Sachindra Nath & Ors., [1991] Suppl. 1 SCC 334, referred to.
|
y Application No. 1 of 1992.
IN Writ Petition No. 1165 of 1986.
(Under Article 32 of the Constitution of India).
M.C. Bhandare, P.P. Rao, N.N. Goswamy, C.K Sucharita, Ms. Shashi Kiran, Ms. Manjula Gupta, R. Shashi Prabhu, V.K. Verma and Raj Kumar Gupta for P.C. Kapur for the appearing parties.
The Judgment of the Court was delivered by SAWANT, J.
The petitioner applicants are some of the Medical Officers who were recruited by the Railways on ,id hoc basis as Assistant Divisional Medical Officers between 1968 and 1st October, 1984.
They were appointed as such ad hoc employees by way of a stop gap arrangement pending the regular recruitment to the said posts through the Union Public Service Commission [UPSC ' for short], according to the rules.
It appears that although from time to time the UPSC recruited candidates on regular basis, there remained some vacancies unfilled, either because the doctors recruited were less in number than the number of vacancies since suitable candidates were not available or some of those who were selected did not join the service or between the date of advertisement by the UPSC and that of the empanelling, some more vacancies occurred.
Whatever the reasons, the fact was that even after the UPSC undertook the exercise of recruiting the doctors from time to time, some vacancies always remained unfilled.
The result was that every time the petitioner applicants and others like them were continued on ad hoc basis as a stop gap arrangement till the next recruitment by the UPSC.
It may be mentioned in this connection that the ad hoc appointees were always at liberty to appear before the UPSC for their regular recruitment.
Some of them in fact did so appear and were selected; others like the petitioner applicants either failed to be selected or did not care to appear.
The fact, however, remains that the petitioner applicants and others like them continued to serve on ad hoc 4 basis since 1968.
Hence they filed writ petitions in this Court for their regularisation in service.
By an order dated 24th September, 1987 passed in the case of Dr. A.K Jain & Ors.
vs Union of India & Ors.
, [1987] Supp.
SCC 497 at 500 this court directed as follows: "(1) The services of all doctors appointed either as Assistant Medical Officers or as Assistant Divisional Medical Officers on ad hoc basis up to October 1, 1984 shall be regularised in consultation with the Union Public Service Commission on the evaluation of their work and conduct on the basis of their confidential reports in respect of a period subsequent to October 1, 1982.
Such evaluation shall be done by the Union Public Service Commission.
The doctors so regularised shall be appointed as Assistant Divisional Medical Officers with effect from the date from which they have been continuously working as Assistant Medical Officer/Assistant Divisional Medical Officer.
The Railway shall be at liberty to terminat e the services of those who are not so regularised.
If the services of any of the petitioners appointed prior to October 1, 1984 have been terminated except on resignation or on disciplinary grounds, he shall be also considered for regularisation and if found fit his services shall be regularised as if there was not break in the continuity of service but without any back wages.
(2) The petitions of the Assistant Medical Officers/Assistant Divisional Medical Officers appointed subsequent to October 1, 1984 are dismissed.
But we however direct that the Assistant Divisional Medical Officers who may have been now selected by the Union Public Service Commission shall first be posted to the vacant posts available wherever they may be.
If all those selected by the UPSC cannot be accommodated against the available vacant posts they may be posted to the posts now held by the doctors appointed on ad hoc basis subsequent to October 1, 1984 and on such posting the doctor holding the post on ad hoc basis shall vacate the same.
While making such postings the principle of 'last come, first go ' shall be 5 observed by the Railways on zonal basis.
If any doctor who is displaced pursuant to the above direction is willing to serve in any other.
zone where there is a vacancy he may be accommodated on ad hoc basis in such vacancy.
(3) All Assistant Medical Officers/Assistant Divisional Medical Officers working on ad hoc basis shall be paid the same Wary and allowances as Assistant Divisional Medical Officers on the revised scale with effect from January 1, 1986.
The arrears shall be paid within four months.
(4) No ad hoc Assistant Medical Officer/Assistant Divisional Medical Officer who may be working in the Railways shall be replaced by any newly appointed AMO/ADMO on ad hoc basis.
Whenever there is need for the appointment of any AMO/ADMOs on ad hoc basis in any zone the existing ad hoc AMO/ADMOs who are likely to be replaced by regularly appointed candidates shall be given preference.
(5) If the ad hoc doctors appointed after October 1, 1984 apply for selection by the Union Public Service Commission the Union of India and the Railways Department shall grant relaxation in age, to the extent of the period of service rendered by them as ad hoc doctors in the Railways.
All the Writ Petitions are disposed of in the above terms.
" It appears that since they experienced difficulty in adjusting the seniority of the petitioner applicants the Union of India moved an application before this Court and this court on 1st November, 1988 made the following order in that application: "We have heard learned counsel for the Union of India (the applicant in this Civil Miscellaneous Petition) and the learned counsel for the petitioners in the Writ Petition.
In the circumstances of the case we feel that the Union 6 Government should be directed to implement the order passed by us in the writ petition Nos. 522, 875, 180 & 200 of 1987 and connected cases on 24th September, 1987 in full except to the extent of fixing the inter se seniority between the petitioners in the Writ Petition and the direct recruits.
We accordingly make an order in this case.
The question of seniority, however, is left to be decided by the Government in the light of the decision to be rendered by this Court in the cases which are pending before the Constitution Bench involving similar questions.
If any person is aggrieved by the decision of the Government on the question of seniority he is at liberty to question it in an appropriate forum.
The order passed by us in the Writ Petition subject to the above modification shall be complied with by the Union Government within two months without failure.
The Civil Miscellaneous Petition is disposed of accordingly.
" The present application has been moved in Writ Petition No. 1165 of 1986 which has been disposed of on 24th September, 1987 along with other writ petitions in which also the aforesaid order of 1st November, 1988 was made by this Court.
Thus we are concerned in this application with those Assistant.
Divisional Medical Officers who were appointed between 1968 and 1st October, 1984 and who have been regularised by the aforesaid two orders but whose seniority remains to be fixed.
After the order of 1st November, 1988, the Constitution Bench of this Court delivered its judgment in Direct Recruit Class II Engineering Officers ' Association & Ors.
vs State of Maharashtra & Ors.
, ; pending ' which decision the fixation of seniority of the petitioner applicants was kept pending.
In that case the Constitution Bench has laid down certain guidelines for fixing the seniority.
Two of them, viz., (A) & (B), which are relevant for our purpose are as follows: "(A) Once an incumbent is appointed to a post according to rule, his seniority has to be counted from the date of 7 his appointment and not according to the date of his confirmation.
The corollary of the above rule is that where the initial appointment is only ad hoc and not according to rules and made as a stop gap arrangement, the officiation in such post cannot be taken into account for considering the seniority.
(B)If the initial appointment is not made by following the procedure laid down by the rules but the appointee continues in the post uninterruptedly till the regularisation of his service in accordance with the rules, the period of officiating service will be counted.
" Before we discuss as to which of the above two guidelines would be applicable in this case, it is necessary to state the relevant facts relating to the applicants ' appointment.
Firstly, it is an admitted fact that the UPSC introduced the Combined Medical Services Examination for the first time in the year 1977.
Prior to 1977, the method of recruitment was otherwise than by examination.
As stated earlier, some of the petitioner applicants were recruited between 1968 and 1977.
Secondly, the petitioner applicants were given three chances for their selection through the UPSC but they did not avail of them.
Some of those who were appointed with them, however, had availed of the chances and have been appointed as regular direct recruits and they have been given their seniority from the date they were regularly appointed through the UPSC.
Thirdly, it appears that although in 1977 the written examination was introduced, on account of exigencies, the UPSC held two special selections in the years 1982 and 1985 based on interviews only and by relaxing the age limit.
In these two special selections respectively 100 and 67 ad hoc doctors like the petitioner applicants were selected and absorbed in the regular cadre.
They have also been given their seniority from the date they were so absorbed regularly.
The petitioner applicants either failed to appear in these examinations also or after appearing in the same, had failed Thus, while fixing the seniority of the petitioner applicants we have to keep in mind that there are three classes of Assistant Divisional Medical Officers (i) the outsiders who have been directly recruited through the UPSC either on the basis of the written examination or the interview; (ii) 8 those who were ad hoc appointees like the applicants but who came to be regularly recruited through the UPSC by appearing in the written examination or in the interview; and (iii) the present petitioner applicants who either did not appear in any written examination/interview or had failed to get through them but who have been regularised in service because of the orders of this Court dated 24th September, 1987 and 1st November, 1988.
Since the petitioner applicants are admittedly not regularly appointed through the UPSC according to the rules but have been directed to be regularised by following the procedure laid down by this Court it is obvious that they are not appointed to their posts according to the rules.
Under no circumstances, therefore, they fall within the scope of guideline (A) laid down in Direct Recruit Class II Engineering Officers Association 's case (supra).
In fact, they do not fall under guideline (B) given therein either, since their regularisation is not in accordance with the rules but as a consequence of special procedure laid down by this Court.
The expression "in accordance with the rules ' or "according to rules" used in the said guidelines (A) and (B) means the rules of recruitment and not the special procedure laid down by this Court.
The petitioner applicants thus fall in an altogether different category not covered under any of the guidelines given in Direct Recruit Class II Engineering Officers ' Association 's case (supra).
We have, therefore, to evolve a procedure for fixing their seniority.
That procedure cannot be in violation of the guidelines laid down in Direct Recruit Class II Engineering Officers Association 's case (supra).
Secondly, the seniority given to the petitioner applicants will have to be below the seniority of the outsiders directly recruited through the UPSC as well as below that of the directly recruited erstwhile ad hoc Medical Officers This is not and cannot be disputed on behalf of the petitioner applicants.
This matter was heard earlier on 14th September, 1992 and was reserved for judgment.
At that time, neither the in service direct recruits nor the outsider direct recruits were made parties to the application.
They made separate applications, being I.A. Nos. 2 and 3 respectively for im pleadment/intervention and requested that they be heard in the matter before judgment is pronounced.
Hence, this matter was set down for a fresh hearing and all the parties were heard on 11th and 18th January, 1993.
The anxiety of the interveners, was obvious.
In no case their seniority should be disturbed and they be penalised for passing the examinations/interview tests and for coming into the cadre according to the rules through 9 the UPSC, and no premium should be given to the applicants for their refusal to appear for the tests or for their failure to pass the same.
This contention of their is unexceptionable and whether they had appeared in the case or not, the Court was bound to protect their interests particularly when the matter was heard in their absence.
The petitioner applicants, however, relied upon a decision of this Court in Dr. P.P.C Rawani & Ors. etc vs Union of India & Ors., (JT 1991 (6) 534).
Shri Bhandare, appearing for the petitioner applicants, made a very fervent plea that in the circumstances, the course adopted by this Court in Dr. Rawani 's case (supra) should be followed which will do no injustice to both the categories of direct recruits.
We have gone through the said decision and have anxiously considered whether the course adopted there should be adopted in the present case.
We are conscious of the fact that the petitioner applicants have been serving the Railways from the year 1968.
It is also possible, as contended on their behalf that many of the outside direct recruits have joined the service long after 1968 and some of them might have even taken initial instructions from the petitioner applicants.
We are also conscious of the fact that candidates in service have a disadvantage as against the fresh candidates in the tests particularly when they face the tests after a long lapse of time.
As against this, however, we cannot lose sight of the fact that the recruitment rules made under Article 309 of the Constitution have to be followed strictly and not in breach.
If a disregard of the rules and the by passing of the Public Service Commissions are permitted, it will open a back door for illegal recruitment without limit.
In fact this Court has, of late, been witnessing a constant violation of the recruitment rules and a scant respect for the Constitutional provisions requiring recruitment to the services through the Public Service Commission.
It appears that since this Court has in some cases permitted regularisation of the irregularly recruited employees, some Governments and authorities have been increasingly resorting to irregular recruitments.
The result has been that the recruitment rules and the Public Service Commissions have been kept in cold storage and candidates dictated by various considerations are being recruited as a matter of course.
What is further, in the present case, some of those like the petitioner applicants who were initially recruited on ad hoc basis, have exerted themselves and taken pains to appear for the tests before the UPSC and have enrolled themselves through regular channel unlike in Dr. Rawani 's case (supra).
We have thus on hand three classes of 10 employees as pointed out earlier, viz., the outside direct recruits, the in service direct recruits and the ad hoc employees like the petitioner applicants who were regularised through the Court 's order.
Further, Dr. Rawani 's case (supra), as has been pointed out on behalf of the respondents, pertains to the Central Government Health Services which has a larger component both at the initial and promotional stages.
The course adopted by this Court to direct creation of supernumerary promotional posts at every higher promotional stage there, may not be feasible in the medical service in the Railways.
The creation of supernumerary posts has its own limitations, both physical and financial.
The burden of additional posts even when they are not necessary and cannot be accommodated, is not easy to carry.
We are, therefore, of the view that the direction given in Dr. Rawani 's case (supra) has to be confined to the special facts of that case and cannot be extended to other cases.
In any case, this court should not give any such direction to the Railways.
If, however, the Railways decide to follow that course, they can do so and nothing prevents them from doing it.
We would rather refrain from creating a precedent by giving such directions.
In the result, we direct that the seniority of the direct recruits both outsiders and insiders should be determined according to the dates of their regular appointment through the UPSC and the petitioner applicants should be placed in the seniority list after those direct recruits who are recruited till this date.
Among themselves, their seniority will be governed by the dates of their initial appointment.
The interlocutory application is disposed of in the above terms.
G.N. Application disposed of.
| IN-Abs | The petitioner applicants were recruited by the Railways on ad hoc basis as Assistant Divisional Medical Officers between 1968 and 1984.
Though UPSC recruited candidates on regular basis from time to time, either due to non availability of number of candidates or non joining of selected candidates, vacancies remained and persons like the petitioners continued in such vacancies on ad hoc basis.
The petitioners riled Writ Petitions before this Court for regularisation of their services.
By orders of this Court, the services of the petitioners have already been regularised.
The present application is for fixing the seniority of the Writ Petitioners whose services were regularised.
Disposing of the application, this Court, HELD: 1.
Since the petitioner applicants are admittedly not regularly appointed through the UPSC according to the rules but have been directed to be regularised by following the procedure laid down by this Court, it is obvious that they are not appointed to their posts according to the rules.
Under no circumstances, therefore, they fall within the scope of guidelines in Direct Recruit Class II Engineering Officers 'Association 's case.
The expression "in accordance with the rules ' or 'according to rules" used in the said guidelines means the rules of recruitment and not the special procedure laid down by this Court The petitioner applicants thus fall in an altogether different category.
Therefore, a procedure for fixing their seniority has to be evolved.
That procedure cannot be in violation of the guidelines laid down in Direct Recruit Class II Engineering Officers ' 2 Association 's case.
Further, the seniority given to the petitioner applicants will have to be below the seniority of the outsiders directly recruited through the UPSC as well as below that of the directly recruited erstwhile ad hoc Medical Officers.
[8C F] Direct Recruit Class II Engineering Officers Association & Ors.
vs State of Maharashtra & Ors.
, ; , referred to.
Of late this Court has been witnessing a constant violation of the recruitment rules and a scant respect for the Constitutional provisions requiring recruitment to the services through the Public Service Commission.
Since this Court has in some cases permitted regularisation of the irregularly recruited employees, some Governments and authorities been increasingly resorting to irregular recruitments.
The result has been that the recruitment rules and the Public Service Commissions have been kept In cold storage and candidates dictated by various considerations an being recruited as a matter of course.
[9E G] 2.2.
What is further, in the present case, some of those like the petitioner applicants who were initially recruited on ad hoc basis, have themselves and taken pains to appear for the tests before the UPSC and have enrolled themselves through regular channel.
There are three classes of employees viz., the outside direct recruits, the in service direct recruits and the ad hoc employees like the petitioner applicants who were regularised through the Court 's order.
The direction given In Dr. Rawani 's case for creation of supernumerary posts has to be confined to the special facts of that case and cannot be extended to other cases.
In any case, this Court should not give any such direction to the Railways.
If, however, the Railways decide to follow that course, they can do so and nothing prevents them from doing it.
This Court would rather refrain from creating a precedent by giving such directions.
[9G H; 10A D] Dr A.K Jain & Ors.
vs Union of India & Ors.
[1987] Sapp.
SCC 497 and Dr. P.P. C. Rawani & Ors etc.
vs Union of India & Ors.
, JT 1991 (6) 534, referred to.
The seniority of the direct recruits both outsiders and insiders ,should be determined according to the dates of their regular appointment through the UPSC and the petitioner applicants should be placed in the seniority list after those direct recruits who are recruited till date.
Among 3 themselves, their seniority will be governed by the dates of their initial appointment [10E]
|
r Case (C) No. 78 of 982 etc.
(Under Article 139A of the Constitution of India.) Vepa Sharathy, Attorney General, G. Ramaswamy, Additional Solicitor General, R.K. Jain, B.N. Bhat, K. Lahiri, K. Parasaran, A.K. Ganguli.
F.S. Nariman, Uday Lalit, A.C. Manoj Goel, K.M.K. Nair, Kailash Vasudev, Sudhir Walia, Mohit Mathur, Ms. A. Subhashini, K. Swamy, T. Topgay, Rathin Das, Ajit Kumar Sinha, S.C. Sharma, Amlan Ghosh, Ms. J.S. Wad, Mayakrishnan, D.P. Mukherjee, G.S. Chatterjee, and K. N. Bhat for the appearing Parties.
The Judgments of the Court were delivered by SRARMA, CJ.
The two constitutional questions of vital importance which arise in this case are : (i) whether a seat can be earmarked at all in the Legislature of a State after its complete merger in India for a repre 914 sentative of a group of religious institutions to be elected by them, and (ii) whether seats can be reserved in favour of a particular tribe far in excess of its population.
My answer to both the questions is in the negative.
These cases relate to the constitution of Legislative Assembly of Sikkim which merged with India in 1975.
They were instituted as writ petitions under Article 226 of the Constitution before the Sikkim High Court and have been later transferred to this court.
The main case being Writ Petition No. 4 of 1980 registered as Transfer Case No. 78 of 1982 after transfer to this Court was filed by the petitioner R.C. Poudyal in person and he was conducting this case himself, and will be referred to as the petitioner or the writ petitioner in this judgment.
During the course of the hearing of the case, Mr. R.K. Jain assisted the Court as amicus curiae and pressed the writ petition on his behalf.
Transfer Case No. 84 of 1982 was filed by Somnath Poudyal as Writ Petition No. 12 of 1980 in the High Court, taking a similar stand as in writ petition No. 4 of 1980.
The third case being Writ Petition No. 15 of 1990 filed by Nandu Thapa, also challenging the impugned reservations, is Transfer Case No. 93 of 1991.
During the hearing, however, the stand taken by his counsel, Mr. K.N. Bhat was substantially different from the case of the main writ petitioner, and he lent support to some of the arguments of the contesting respondents.
The case in Writ Petition No. 16 of 1990 of the High Court (Transfer Case No. 94 of 1991 here) is similar to that in Transfer Case No. 93 of 1991.
The writ petition has been defended mainly by the State of Sikkim, represented by Mr. K. Parasaran, Union of India appearing through Mr. Attorney General and by Mr. F. section Nariman on behalf of certain other parties.
The relevant provisions relating to the impugned reservations are those as included in the Representation of the People Acts, 1950 and 1951, by the Representation of the People (Amendment) Act, 1980 (Act 8 of 1980)) purportedly made by virtue of Article 371F(f), inserted in the Constitution in 1975 by the Constitution (Thirty Sixth Amendment) Act, 1975 and consequential amendments in the Delimitation of Parliamentary and Assembly Constituencies Order, 1976.
The writ petitioner contends that the impugned provisions of the Representation of the People Acts arc ultra times of ' the Constitution and cannot be saved by Article 37IF(f).
Alternatively it has been argued that if the provision,; of Article 371F(f) are interpreted as suggested on behalf of the respondents, the same would be violative of the basic features of the Constitution and would, therefore, itself be rendered invalid.
Another line which was pursued during the argument was that assuming the inter 915 pretation of the Act and the Constitution as put by the respondents is correct, still the circumstances do not justify the impugned reservations in the Assembly which are, therefore, fit to be struck down.
The case of the respondents who are challenging the stand of the writ petitioner, is that the constitutional amendment bringing in Article 371F(f), as also the relevant amended provisions of the Representation of the People Acts are legal and valid, and having regard to all the relevant circumstances in which Sikkim became a part of the Indian Union the writ petition of the petitioner is fit to be dismissed.
For appreciating the points arising in the case and the arguments addressed on behalf of the parties it will be necessary to briefly consider the historical background of and the constitutional position in Sikkim before and after its merger with India.
Sikkim, during the British days, was a princely State under a hereditary monarch called Chogyal, subject to British paramountcy.
The Chogyal, also described as Maharaja, was a member of the chamber of Princes entitled to gun salute of 15.
The provisions of the Government of India Act, 1935 were applicable and Sikkim thus did not have any attribute of sovereignty of its own.
On the independence of India in 1947 there was a public demand in Sikkim for merger with India which was resisted by the Rulers.
The statements made in paragraph 3 (v) in the counter affidavit of the Union of India, respondent No. 1, sworn by the Deputy Secretary, Ministry of Home Affairs, is illuminating.
It has been inter alia said that there was a strong and clearly expressed sentiment on the part of the people of Sikkim favouring closer relations with India and ' growth of genuine democratic institutions which led to large scale agitations demanding merger with India.
However, the Government of India did not favour an immediate change in Sikkim 's status, and, therefore, only a treaty was entered into between Sikkim and the Government of India whereunder the latter assumed the responsibility with respect to the defence, external affairs and communication of Sikkim on the terms detailed in the document dated 3.12.1950.
Chogyal, thereafter, took several steps towards sharing his power with the people by providing for elections, which will be dealt with later.
The public demand developed into violent demonstrations leading to complete breakdown of law and order, which forced the then Chogyal to request the Government of India to assume the responsibility for establishment of law and order and good administration in Sikkim.
Ultimately a formal agreement was signed on May 8, 1973 to which the Government of India, the then 916 Chogyal and the leaders of the political parties representing the people of Sikkim, were parties.
I will have to refer to this agreement in greater detail later but it will be useful even at this stage to see one of the clauses of the Agreement which reads as follows: "(1) The three parties hereby recognize and undertake to ensure the basic human rights and fundamental freedoms of the people of Sikkim.
The people of Sikkim will enjoy the right of election on the basis of adult suffrage to give effect to the principles of one man one vote." (emphasis added) 6.
The population of Sikkim has bee., constituted mainly by three ethnic groups known as Lepchas, Bhutias and Nepalis.
People from India also have been going to and settling in Sikkim but their number was small before 1973.
Although the population of Nepalis has been far larger than the Lepchas and the Bhutias, their influence in the polity was considerably less as Chogyal was a Bhutia and with a view to perpetuate his hold, there was a consistent policy for uniting Lepchas and Bhutias as against the rest.
On the lapse of British paramountcy and in its place the substitution of the protectorate of India, Chogyal in an attempt to assuage the public sentiment, issued a Proclamation providing for establishment of a State Council of 12 members, allocating 6 seats to Bhutia and Lepchas and 6 to Nepalis, all to be elected by the voters divided in 4 territorial constituencies.
Only after a few months a second Proclamation followed on March 23, 1953, adding seats for 6 more members with one of them as President of the Council to be nominated by the Maharaja, i.e., Chogyal.
Thus the total number rose to 18.
Maharaja, however, reserved his right to veto any decision by the Council and to substitute it by his own.
Another Proclamation which was issued in 1957 again maintained the parity of 6 seats each for Bhutia Lepchas and Nepalis.
By a further Proclamation dated 16.3.1958, there was an addition of 2 more seats to the Council, one described as Sangha seat earmarked for religious Budhist Monasteries run by Monks who arc Lamas, and another declared as general seat.
Thus, for the first time in 1958 Chogyal, by creating a general seat took note of the presence of the immigrants who were neither Bhutia Lepchas nor Nepalis and were mostly Indians.
He also introduced the Lamas in the Council as he was sure of their support for him, as will be seen later.
Appended to the Proclamation, there was a Note of the Private Secretary to 917 the Chogyal which has been referred to by the respondents in their arguments in support of the impugned reservations.
The Note is in three sub paras dealing with the Sangha seat, the general seat and the question of parity between the Bhutia Lepchas and the Nepalis.
It has been mentioned in the first sub para (a) that the Sangha constituted a vital and important role in the life of the community in Sikkim and had played a major part in taking of decisions by the Councils in the past.
In sub para (b) it has been stated that the political parties have been demanding one third of the total seats in the Council to be made available to all persons having fixed habitation in Sikkim although not belonging to any of the categories of Bhutias Lepchas and Nepalis, and the Maharaja by a partial concession had allowed one seat for the general people.
The last sub para declares the desire of the Maharaja that the Government of Sikkim should be carried on equally by the two groups of the Bhutia Lepchas and Nepalis, without one community imposing itself or encroaching upon the other.
By a later Proclamation dated December 21, 1966 the Sikkim Council was reconstituted with a total number of 24 members, out of whom 14 were to be elected from 5 territorial constituencies, reserving 7 seats for Bhutia Lepchas and 7 seats for Nepalis; one by the Scheduled Castes, one by the Tsongs, and one was to be treated as a general seat.
The Sangha seat was maintained, to be filled up by election through an electoral College of the Sang has and the remaining 6 seats to be nominated by the Chogyal as before.
It appears that it was followed by another similar Proclamation in 1969, which has not been placed before us by the parties.
In spite of the establishment of the Sikkim Council, the ultimate power to govern remained concentrated in the hands of Chogyal, who besides having the right to nominate 6 members in the Council, reserved to himself the authority to veto as also of taking final decision in any matter.
The people could not be satisfied with this arrangement, and as said earlier, there was widespread violent demonstrations and complete collapse of law and order which forced the Chogyal to approach the Government of India to take control of the situation.
The 3 parties namely the Chogyal, the people of Sikkim represented by the leaders of the political parties, and the Government of India were ultimately able to arrive at the terms as included in the Tripartite Agreement of 8.5.1973 and the authority of Chogyal was considerably reduced.
The preamble in the agreement specifically mentioned that the people of Sikkim had decided to adopt, 918 "A system of elections based on adult suffrage which will give equitable representation to all sections of the people on the basis of the principle of one man one vote." (emphasis supplied) It was further said that with a view to achieve this objective, the Chogyal as well as the representatives of the people had requested the Government of India to take necessary steps.
The first paragraph dealing with the Basic Rights declared that the people of Sikkim would enjoy the right of election on the basis of adult suffrage to give effect to the principle of one man one vote.
Another provision of this agreement which is highly important for decision of the issues in the present case is to be found in the 5th paragraph which reads as follows: "The system of elections shall be so organised as to make the Assembly adequately representative of the various sections of the population.
The size and composition of the Assembly and of the Executive Council shall be such as may be prescribed from time to time, care being taken to ensure that no single section of the population acquires a dominating position due mainly to its ethnic origin, and ' that the rights and interests of the Sikkimese Bhutia Lepcha origin and of the Sikkimese Nepali, which includes Tsong and Scheduled Caste origin, are fully protected." Strong reliance has been placed on the above paragraph on behalf of the respondents in support of their stand that the Bhutia Lepchas who contribute to less than one fourth of the total population of the State, are entitled to about 40% of the seats in the Council as allowed by the impugned provisions.
The next Proclamation which is relevant in this regard was issued on the 5th of February, 1974 and was named as the Representation of Sikkim Subjects Act, 1974.
It directed the formation of Sikkim Assembly consisting of 32 elected members 31 to be elected from 31 territorial constituencies and one Sangha constituency to elect one member through an electoral College of Sanghas.
The break up of the 32 seats is given in section 3, directing that 16 constitutencies including one for the Sangha 919 were to be reserved for Bhutia Lepchas, and the reamining 16 including one for Tsongs and another for the Scheduled Castes for Nepalis.
As a result the general seat disappeared.
A further Act was passed the same year in the month of July by the newly constituted Sikkim Assembly emphasising once more the decision of the people to hold the elections to the Assembly "on the basis of one man one vote", that is to say every person who on the prescribed date was a Subject of Sikkim, was not below the prescribed age and was not otherwise disqualified under the Act was entitled to be registered as voter at any future election.
The Assembly which was established under the 1974 Act was vested with larger powers than the Council earlier had, and the fight for effective power between Chogyal and the people entered the crucial stage.
The main party, Sikkim Congress, representing the people captured 31 out of 32 seats at the poll at the election held in pursuance of the agreement, and it is significant that its elections manifesto went on to state: "We also aspire to achieve the same democratic rights and institutions that the people of India have enjoyed for a quarter of century." (emphasis added) Ultimately a special opinion poll was conducted by the Government of Sikkim and an unambiguous verdict was returned by the people in favour of Sikkim 's joining and becoming a part of the Indian Union.
In pursuance of this development the Constitution of India was amended by the Constitution (Thirty Fifth Amendment) Act, 1974, inserting Article 2A which made Sikkim associated with the Union of India on certain terms and conditions.
The amendment came into force in February 1975.
On the 10th of April, 1975 the Sikkim Assembly passed another momentous resolution abolishing the institution of Chogyal and declaring that Sikkim would henceforth be a constituent unit of India, enjoying a democratic and fully responsible government.
A request was made in the resolution to the Government of India to take the necessary measures.
Accordingly the Constitution was further amended by the Constitution (Thirty Sixth Amendment) Act, 1975 which became effective in May, 1975.
As a result of this constitutional amendment Sikkim completely merged in the Union of India.
By the Thirty Fifth Amendment of the Constitution, Sikkim was, 920 as mentioned earlier, merely associated with the Union of India by insertion of Article 2A on the terms and conditions set out separately in a schedule added as the Tenth Schedule.
Certain amendments were made in Articles 80 and 81 also.
By the Thirty Sixth Amendment of the Constitution, a full merger of Sikkim with Union of India was effected by adding Sikkim as Entry 22 in the First Schedule of the Constitution under the heading "1.
The State '.
Further, some special provisions were made in a newly added Article 371F, and strong reliance has been placed on behalf of the respondents on the provisions of clause (f) in Article 371F as authorising the impugned amended provisions in the Representation of the People Acts.
Article 2A, the Tenth Schedule, and certain other provisions in some of the Articles were omitted.
In 1978 the Bhutia Lepchas were declared as Scheduled Tribes in relation to the State of Sikkim by a Presidential Order issued under clause (1) of Article 342 of the Constitution of India, and they thus became entitled to the benefits of reservation of seats in the State legislature in accordance with Article 332.
The consequential reservation in the state legislature were made in the Representation of the People Act, 1950 and the Representation of the People Act, 1951, twice by the Act 10 of 1976 and the Act 8 of 1980, but not consistent with clause (3) of Article 332 which is in the following terms "332 Reservation of seats for Scheduled Castes and Scheduled Tribes in the Legislative Assemblies of the States. (1). . . . . . . (2). . . . . . . . (3) The number of seats reserved for the Scheduled Castes or the Scheduled Tribes in the Legislative Assembly of any State under clause (1) shall bear, as nearly as may be, the same proportion to the total number of seats in the Assembly as the population of the Scheduled Castes in the State or of the Scheduled Tribes in the State or part of the State, as the case may be, in respect of which seats are so reserved, bears to the total population of the State." 921 Out of the total seats of 32 in the House, 12 have been reserved for Sikkimese of Bhutia Lepcha origin and one seat for the Sanghas by clauses (a) and (c) respectively of the newly inserted sub section (1A) in section 7 of the Representation of the People Act, 1950.
Dealing further with the Sangha seat it is provided in section 25A of the 1950 Act that there would be a Sangha constituency in the State and only Sanghas belonging to Monasteries recongnised for the purpose of elections held in Sikkim in April, 1974 shall be entitled to be registered in the electoral roll, and the said electoral roll shall be prepared or revised in such a manner as may be directed by the Election Commission.
Consequently amendments were made by inserting section 5A in the Representation of the People Act, 1951.
The extent of each constituency and the reservation of seats were initially directed to follow the position immediately before the merger under the Thirty Sixth Amendment of the Constitution, and later amendments were made in this regard in the Delimitation of Parliamentary and Assembly Constituencies Order, 1976.
The amended provisions of sub section (3) of section 7 dealt with (besides dealing with Arunachal Pradesh) this matter.
These special provisions have been challenged by the writ petitioner on various grounds.
The first objection taken on behalf of the respondents is to the maintainability of the writ petitions on the ground that the dispute raised by the petitioner is of political nature and the issues are not justiciable.
The argument proceeds thus.
To acquire fresh territories is an inherent attribute of sovereignty and this can be done by conquest, treaty or otherwise on such conditions which the sovereign considers necessary.
Any question relating thereto entirely lies within the political realm and is not amenable to the court 's jurisdiction.
Referring to Articles 2 and 4 of the Constitution it has been urged that the admission into the Union of India is permissible without a constitutional amendment and the terms and conditions of such admission are not open to scrutiny by the courts.
Article 371F must, therefore, be respected, and the impugned amendments of the Representation of the People Acts must be held to be legally valid on account of the provisions of clause (f) of Article 371F.
I am afraid this argument fails to take into account the vital difference between the initial acquisition of additional territory and the admission to the same as a full fledged State of the Union of India similar to the other States.
Special provisions for any State can certainly be made by an 922 amendment of the Constitution, as is evident by Articles 371A. 371B, 371C et cetera, but it is not permissible to do so in derogation of the basic features of the Constitution.
So far the power of sovereignty to acquire new territories is con territories is concerned, there cannot be any dispute.
The power is inherent, it was, therefore, not considered necessary to mention it in express terms in the Constitution.
It is also true that if an acquisition of new territories is made by a treaty or under an agreement the terms of the same will be beyond the scrutiny of the courts.
The position, however, is entirely different when new territory is made part of India, by giving it the same status as is enjoyed by an existing State under the Constitution of India.
The process of such a merger has to be under the Constitution.
No other different process adopted can achieve this result.
And when this exercise is undertaken, there is no option, but to adopt the procedure as prescribed in conformity with the Constitution.
At this stage the court 's jurisdiction to examine the validity of the adopted methodology cannot be excluded.
So far the present case in concerned the decision does not admit of any doubt that when the Thirty Sixth Amendment of the Constitution was made under which Sikkim joined India as a full fledged State like other States, power of amendment of the Constitution was invoked, and this had to be done only consistent with the basic features of the Constitution.
As mentioned earlier when Sikkim became associated with India as a result of the Thirty Fifth Amendment of the Constitution, it did not become a State of the Union of India.
A special status was conferred on Sikkim by Article 2A read with Tenth Schedule but, without amending the list of the States in the First Schedule.
Although the Status, thus bestowed on Sikkim then, was mentioned as Associate, it could not be treated as a mere protectorate of India.
The protectorateship had been there in existence from before under the earlier treaties and by Article 2A read with Tenth Schedule something more was achieved.
This, however, was short of Statehood.
Consequently Sikkim was not enjoying all ,he benefits available under the Constitution of India.
By the Thirty Sixth Amendment there came a vital change in the Status of Sikkim.
It was included as the 22nd Entry in the list of the States in the First Schedule without any reservation.
Article 2A. the Tenth Schedule and other related provisions included in the Constitution by the Thirty Fifth Amendment, were omitted from the Constitution.
Thus, as a result of the Thirty Sixth Amendment Sikkim became as much 923 a State as any other.
Considered in this background, the objection to the maintainability of the writ petitions cannot be upheld.
Further, the challenge by the writ petitioner is to the amendments introduced in the Representation of the People Acts by the Central Act 8 of 1980 as being unconstitutional and not protected by Article 371F(f) and this point again has to be decided by the Court.
If the conclusion be that clause (f) of Article 371F permits such amendments the further question whether clause (f)) itself is violative of the basic features of the Constitution will have to be examined.
In my view the position appears to have been settled by the Constituted Bench of this Court in Mangal Singh and Anr.
vs Union of India, ; , at page 11.2 in the following terms : "The law referred to in articles 2 & 3 may therefore alter or amend the First Schedule to the Constitution which sets out the names of the States and description of territories thereof and the Fourth Schedule allotting seats to the States in the Council of States in the Union Parliament.
Power with which the Parliament is invested by articles 2 and 3, is power to admit, establish, or form new States which conform to the democratic pattern envisaged by the Constitution and the power which the Parliament may exercise by law is supplemental, incidental or consequential to the admission, establishment or formation of a State as contemplated by the Constitution, and is not power to override the constitutional scheme.
(emphasis added) 16.
It would be of considerable help to refer also to several observations made by Gajendragadkar, J. on behalf of the Bench of 8 learned Judges of this Court in Re: The Berubari Union and Exchange of Enclaves: , although the facts of that case were not similar to those before us.
Dealing with the treaty making power of a sovereign State the learned Judge observed at pages 283 284 of the report that it is an essential attribute of sovereignty that a State can acquire foreign territory and in case of necessity cede the parts of its territory in favour of the foreign State, but this power is of course subject to the limitations which the Constitution of the State may either expressly of by necessary implication impose in that 924 behalf Article 1 (3) (c) does not confer power or authority in India to acquire territories, and what the clause purports to do is to make a formal provision for absorption and integration of any foreign territories which may be acquired by virtue of its inherent rights to do so.
In this background Articles 1, 2, 3 and 4 were examined and the question was concluded thus: "The crux of the problem, therefore, is: Can Parliament legislate in regard to the Agreement under article 3?" "There can be no doubt that foreign territory which after acquisition becomes a part of the territory of India under article 1 (3) (c) is included in the last clause of article 3 (a) and that such territory may, after its acquisition, be absorbed in the new State which may be formed under article 3 (a).
Thus article 3 (a) deals with the problem of the formation of a new State and indicates the modes by which a new State can be formed.
" Dealing with the nature of the power of ceding a part of the territory, it was held that such a power cannot be read in Article 3 (c) by implication, and in the case of a part of the Union Territories there can be no doubt that Article 3 does not cover them.
The conclusion arrived at was that this was not possible by a law under Article 3 and an amendment of the Constitution was essential.
It is true that in case of acquisition Article 2 comes into play but that is only at the initial stage when the new territory joins and becomes the territory of India under Article 1 (3)(c).
In the present case the power under Article 2 was not exercised at any point of time.
Initially, as pointed out earlier, Sikkim joined India as an Associate State by Article 2A introduced in the Constitution by an amendment.
When further steps of its complete merger with India were taken, the methodology under Article 3 was not available in view of the observations in Berubari case.
Correctly assessing the situation, fresh steps for amendment of the Constitution once more were taken and Sikkim was granted the status of a full Statehood at par with the other States by the Thirty Sixth Amendment of the Constitution.
Once this was done it had to be consistent with the basic features of the Constitution.
If we assume that the stand of the respondents as mentioned earlier on this aspect is correct, the result %ill be that in a part of India, 925 joining the nation later, a different rule may have to be allowed to prevail.
This is not a fanciful hypothesis.
Even during this last decade of the present century there are Tribes, in isolation from the rest of the world, maintaining a social order of primitive nature completely oblivious of the long strides of civilisation through history.
In case of illness, the treatment is entrusted to the witch doctor and the trial of an alleged crime is left to certain persons supposed to be having super natural powers employing bizzare methods for decision on the accusation.
Without any regard for human dignity, women accused of being possessed of witchery are burnt alive and many such customs are followed which are highly abhorrent to every concept of justice, liberty, equality and every other quality for which our civilisation stand,, today.
If steps are taken to grant legitimacy to a state of affairs repulsive to the basic features of our Constitution, the Courts are under a duty to judicially examine the matter.
Mr. Parasaran, in the course of his argument fervently appealed lo this Court to decline to consider the questions raised by the petitioner on merits, on the ground that the issues are political.
He proceeded to contend, in the form of a question, that if one of our neighbouring countries (he discreetly omitted to identify it) wishes to join India on certain conditions inconsistent with the philosophy of our Constitution, should we deny ourselves the opportunity of forming a larger and stronger country, and in the process, of eliminating the unnecessary tension which is causing grave concern internationally.
If I may say so, the fallacy lies in this line of thought due to the assumption that there is only one process available in such a situation and that is by way of a complete merger under our Constitution, as has been adopted in the case of Sikkim, by the Thirty Sixth Amendment.
The plea ignores other alternatives which may be adopted, for example, by forming a confederation.
However, this question is highly hypothetical and is surely political in nature and I do not think it is necessary to answer it in precise terms.
The maintainability of the writ petitions has also been questioned by Mr. Attorney General and Mr. Nariman on similar grounds.
I have considered the plea of unjusticiability of the dispute raised in the light of all the arguments addressed before us, but since I do not find any merit therein, I hold that the courts are not only vested with the jurisdiction to consider and decide the points raised in the writ petitions, but are under 926 a duty to do so. 20.
On the merits of the writ petitions let us first consider the position with respect to Sangha seat.
It is not in dispute that the reserved seat is earmarked for the representative of a number of Buddhist Monasteries to be elected by an electoral college of Lamas in which the entire population of Sikkim excepting the registered Buddhist Priests, have been denied any say.
For the purpose of explaining Sangha, Mr. Parasaran has referred to the book on Hindu law of Religious and Charitable Trusts by B.K. Muk herjee, dealing with Buddhism and stating that Buddhism was essentially a monastic religion and the Buddhist Order or congregation of monks was known by the name of Sangha and this Sangha together with Buddha and Dharma (sacred law) constituted three jewels which were the highest objects of worship among the Buddhists.
With a view to show that the Sangha could be given an exclusive voting right to a seat reserved for this purpose, further reliance was placed on a passage saying that the Sangha was undoubtedly a juristic person and was capable of holding property in the same way as a private person could.
Further as a corporation the Sangha enjoyed a sort of immortality and was consequently fit to hold property for ever.
In other words, Sangha also described as a Buddhist congregation has, like the Christian Chruch, a corporate life and a jural existence.
Maths were founded by Adi Shankaracharya and other Hindu ascetics on the model of these Buddhist vihars.
Now, coming to the impugned provision of the Act it will be seen that section 7(1A)(c) of the Representation of the People Act, 1950 allots one seats for Sanghas referred to in section 25A. Section 25A states that notwithstanding anything contained in sections 15 and 19, the Sanghas belonging only to such Monastries as were recongnised for the purpose of elections held in April 1974 for forming the Assembly for Sikkim, shall be entitled to be registered in the electoral roll.
The Election Commission has to prepare or revise the same in consultation with the Government of Sikkim.
Before Sikkim joined India, Buddhism was the State religion.
The Gazetteer 1864 of Sikkim stated that "Lamas or Tibetan Buddhism is the State religion of Sikkim".
The position continued till 1974 when the elections for Constituent As sembly were held.
The case of the writ petitioner is that the reservation in favour of the Sangha based on religious with a separate electorate of the religious monasteries is violative of the basic structure of the Constitution of India, and is not permissible after Sikkim joined India as a full fledged State.
It is further contended that the number of the persons actually 927 entitled to exercise the right being considerably very small (about 30 only).
their share works out to be disproportionately very high.
In reply Mr. Parasaran contended that Sangha has played a vital role in the life of the community for a long time in the past, and a body consisting of Lamas and laity Lhade Medi has contributed towards cultural, social and political development of the people of Sikkim.
The Sangha seat was, therefore, introduced in order to provide for their representation.
Their interest is synonymous with the interest of the minority communities and this reservation, which is coming from the time of Chogyal, should be maintained.
He quoted from the Book 'the Himalayan Gateway ' by George Kotturan, dealing with the history and culture of Sikkim, which states that the author found the monasteries everywhere looking after the spiritual needs of a small community.
The Chogyal also allowed the Lamas to play a role in the administration and this arrangement is, therefore, not fit to be disturbed.
The learned counsel explained the position in his own way as asserting that in substance the reservation is not in favour of a religious body and it is not based solely on religious consideration.
The Buddhist priests were rendering useful service to the people and the reservation must, therefore.
be upheld as valid and the fact that they belong to a particular religious body should be ignored.
Similar was the approach of the Attorney General and Mr. Nariman but no further light was thrown during their arguments.
Mr. Phur Ishering Lepcha who was added later in these cases as a party respondent on an intervention application, filed his written argument inter alia stating that Sangha is a distinct identity which has played a very vital role in the life of the community since the earliest known history of Sikkim and has played a major part in deciding the important issues.
The Lhadi Medi, a body consisting of all the Lamas and laity has contributed towards cultural,, social and political development of the people of Sikkim, and the reservation in favour of Sangha was introduced in order to provide for the representation of ' a section which was responsible for the basic culture of the Sikkimese Bhutia Lepchas including some sections of the Nepali community of Sikkim.
Reliance has been placed on many passages from the book 'Himalyan Gateway ' by Georage Kotturan, referred to earlier.
In substance the stand taken in the argument by Mr. Parasaran and supplemented by his written submissions, has been re emphasised by Phur Ishering Lepcha.
The excerpts from the book give the history of Buddhism, and 928 described how the religion got modified from time to time under the guidance of many Saints going to Sikkim from India.
It is further stated that the culture of Sikkim under the Chogyal was essentially religious and the patron saint of Sikkim Lhatsum Chhembo, believed to be an incarna tion of an Indian Saint, is according to the traditional belief, incarnated more than once; and that the late 12th Chogyal of Sikkim, Palden Thondup Namgyal (referred to in the book as 'Present Chogyal ') was (according to the belief) and incarnate of Chogyal Sidkeong who himself was an incar nate Lama.
There is a list of Monasteries of Sikkim as given at page 481 which indicates that the separate electorate contains only a little more than 30 Sanghas.
Some passages from other books have also been quoted in the written argument and what is stated at page 15 of 'Sikkim and Bhutan Twenty One years on the North East Frontier 1887 1908" by J.C. White, C.I.E. (Political Officer of Sikkim 1889 1908) indicates that 'as a rule the Lamas are ignorant, idle and useless, living at the expense of the country, which they are surely dragging down.
There are, of course, exceptions to every rule and I have met several lamas" who appeared to be thoroughly capable, 'but I am sorry to say that such men were few and far between.
The majority generally lead a worldly life and only enter the priesthood as, a lucrative profession and one which entails no trouble to themselves".
Another book 'The Himalaya Aspects of Change, 1981 ' by J.S. Lall (Dewan of Sikkim, 1949 1952) mentions at pages 228 229 that 'Though Lamaist Buddhism continues to be the official religion, it is professed mainly by the Butias, Lepchas and Newars, along with a few of the other tribal groups such as Tamangas, and the Buddhistic overlay wears thin in Dzongu where nun traditions survive".
It is further mentioned that the influence of the Monasteries was diminishing and fewer and fewer young boys were being sent by their families as novices for the priesthood.
The last Chogyal, who was himself an incarnate Lama was greatly concerned at this loss of interest and set up a training school for attracting more novices.
Fresh impetus in a different way was also given to the "Buddhist revival ' through the presence of a renowned teacher and mystic from Tibet.
All this was happening quite late probably in 19.50s.
Reliance has also been placed on 'Himalayan Village ', a book by Geoffrey Gorer which at pages 192 193 reads thus "Finally lamaism is a social Organisation.
The lamas (to a 929 lesser extent the nuns) are arranged in a disciplined hierarchy.
They are a section of society which performs for the whole society its religious functions; in return the rest of society should give material support to the lamas.
In Tibet this social aspect is extremely important, the lamas possess the greater part of the temporal power and are also as a group an exploiting class; the monasteries own land and the peasants attached to the land are practically monastery serfs.
The lower ranking lamas also work for the benefit of those of higher rank and are possibly as much exploited as the peasants, but they have, at least in theory, the possibility of rising to the higher ranks, which possibilities are completely shut out from the laymen.
In Sikkim, as far as I can learn, the social influence of the lamas is considerably less;".
(emphasis added) Another book by A.C. Sinha "Politics of Sikkim A Sociological Study" describes the system of Sikkim thus "The political system of Sikkim is a typically Himalayan theocratic feudalism parallel to the Tibetan Lamaist pattern.
The ruler is not only the secular head of the State, but also an incarnate lama with responsibility to rule the subjects in accordance with the tenets of the "Choos" the Dharma.
The basic tenets of the Lamaist polity in Sikkim ever since 1642 are the Chos (Chhos) as the established religion and the rulers (rGyalpo) who are instrumental in upholding the doctrine justifying the appellation, the "Chos rGyal" (Chogyal).
" (emphasis added) This book goes on to record how the Buddhist Monasteries having the patronage of the Chogyal came to wield authority in Sikkim.
The Monks, however, "Were drawn from the high born Bhotias and Lepchas".
The Lamas did not confine their participation only to the administration but also controlled the electorate.
At page 78 it is stated that the major portion 930 of the trans Himalayan trade was in the hands of Marwaris, the aristocracy and some of the Lamas.
Another intervenor which placed its case is Sikkim Tribal Welfare Association, a registered Organisation for the purpose of inter alia "to effectively and efficiently establish and promote a strong and healthy Organisation of the Bhutias, Lepchas and Sherpas of Sikkim at Gangtok, and subsequently to build up similar organisations in the four districts of Sikkim".
In its written argument very long excerpts have been given from a book by Joseph Dalton Hooker who visited Sikkim in 1848 (the book was published in 1854), giving detailed descriptions of the features, habits, customs et cetera of the Lepchas which are certainly very interesting but, of little relevance in the present cases.
The intervenor has relied on this book for showing that the Lepchas were inhabiting Sikkim earlier than the arrival of the Nepalis who were inducted by the British rulers and others.
The customs followed by them, as mentioned in the book, indicate that "their existence was primitive in nature so much so that every tribe had a priest doctor; who neither knew or practised the healing art, but was a pure exorcist; all bodily ailments being deemed the operations of devils, who are cast out by prayers and invocations".
On the question as to who are the early settlers in Sikkim there is serious controversy, the other view being that so far the Bhutias are concerned they could not be treated as aboriginals.
I do not think anything turns on the question as to the order in which the different sections of the population settled in Sikkim and I, therefore, do not propose to consider the affidavits filed by the parties on this aspect.
From the records, however, it is clear that a seat in the Council was allotted to the Sanghas for the first time in 1958 and the Lamas manning the Sanghas are drawn from the minority section of the population (less than 25%) belonging to Bhutia and Lepcha tribes.
The reason given by the different respondents in support of the reservation of the Sangha seat is the historical background showing that the Lamas, besides performing the religious rites and discharging the religious and spiritual duties were rendering social service and with the patronage of Chogyal were permitted to take part in the administration.
It is argued that although the Chogyal might have disappeared, the participation by these Buddhist Monks in the administration should not be denied.
The issue is whether this is permissible after Sikkim joined India as a full fledged State.
931 24.
It is firmly established and needs no elaboration that an amendment of the Constitution which violates the basic features of the Constitution is not permissible.
It has been contended on behalf of the respondents that the provisions of clause (f) of Article 371F do not in any way offence any of the basic features and since the clause permits the impugned reservations in the Representation of the People Acts, they have to be.
upheld.
So far the reservation of Sangha seat is concerned, the question is whether this violates Article 15 as also several other provisions of the Constitution; and further whether these constitutional provisions are unalterable by amendment.
If they are basic in nature they will have to be respected and clause (f) must be construed not to have violated them in spite of the non obstante clause with which the Article begins.
Let us first consider Article 15 which prohibits discrimination on the ground of religion.
The Buddhist Monasteries, which are the beneficiaries of the reservation, are admittedly religious institutions.
What the respondents have tried to suggest is that although basically the Monasteries are religious in nature, they form a separate section of the society on account of the social services they have been rendering mainly to the Bhutia Lepcha section of the population.
Further emphasis has been laid on the fact that they were participating in the administration by the blessings of the Chogyals for about 17 years yes, only 17 years as the, seat in their favour was created for the first time in 1958 before the merger with India.
The argument is that in this background they should not be treated as merely religious institutions for the purposes of reservation, and in any event religion is not the only basis for putting them in a separate group.
The classification, therefore, is not unconstitutional.
I do not find.
myself in a position to agree with the respondents.
The Buddhist, Monasteries are religious in nature out and out, and, besides taking care, of the spiritual needs of the people and looking after the ritual side of the Buddhist religion, they are also trying to do all what their religion expects, from them.
The concern for the people and the society stands high on the agenda of Buddhism, and for that matter, of all religions.
But it is only in the capacity of Monks that they have been trying to help a minority section ' of the people of Sikkim and that is their true identification.
The position could have been different if the reservation had been in favour of a social group devoted to public service, which for identification had led to 032 religious groups including these Monks as well.
But that is not so.
The position is just the other way.
The attempt of the respondents is to defend reservation in favour of a particular religious body and by way of justification for the same to bring in the element of social service.
They forget that the role of the Sanghas in rendering social service to a section of the public is not a feature special for these Monasteries.
The self less services rendered by the Christian Missionaries to the helpless sick persons, specially in many under developed parts of the world, and to the badly injured soldiers in the war; or, for that matter, the all round care of the society which has been taken by the innumerable Hindu Maths and temples trusts) in the different parts of India for ages cannot be ignored.
A very large number of charitable institutions run by Hindu and Muslim religious bodies have been always helping the people in many ways.
Learned and selfless religious saints and leaders have made significant contributions in establishment of civilised society for centuries and history shows that this has been done through the instrumentality of religious institutions and organisations.
Similar is the position with respect to the other religions in India.
The positive role religion has played in lifting humanity from barbaric oblivion to the present enlightened and cultured existence should not be belittled.
But, at the same time, it cannot be forgotten that religion has been from time to time, misused to bring on great misfortunes on mankind.
In modern times, therefore, social and political thinkers do not hold unanimous view on the question of the desirability to allow religion to influence and control politics and the State instrumentality.
The difference in the two perceptions is vital and far reaching in effect, and generally one view or the other has been accepted as national commitment, not subject to a change.
When I proceed to examine the issue further I will not be using the expression 'religion ' in its pure and true sense spreading universal compassion and love, but in the ordinary concept as it is popularly understood today and accepted by the general man in the modern time, sometimes as a spiritual experience, sometimes as customary rituals but most of .he time as a social and political influence on one segment of the population or other, bringing with it (although not so intended) mutual distrust between man and man, and hostility amongst different religious groups.
In .his process the very welfare of the society, which is of prime consideration becomes the casualty.
It has to be remembered that if the Constitution is so interpreted as to permit, by an amendment a seat to be reserved in the legislature for 933 a group of religious institutions like the Buddhist Monasteries, it will follow that such a reservation would be permissible for institutions belonging to other religions also.
There will not be any justifiable reason available against a similar provision for the Christian Missionary institutions in the country on the ground of their services, to the cause of upliftment of Adivasis, their contribution in the field of education, and their efforts for medical assistance to the underprivileged; or, for the innumerable other religious institutions of Hindus, Muslims, Sikhs and other religions providing invaluable relief to the helpless.
And all this may ultimately change the very complexion of the legislatures.
The effect that only one seat has been reserved today for the Monasteries in Sikkim is the thin edge of the wedge which has the potentiality, to tear apart, in the course of time, the very foundation, which the democratic republic is built upon.
In this background the question to ask is whether all this is prohibited as being abhorrent to the basic feature of the Constitution.
I have no hesitation in answering the issue in the positive.
Now let us have a brief survey of the relevant provisions of the Constitution.
The Preamble, which is the key to understand the Constitution, emphasises by the very opening words, the democratic nature of the Republic guaranteeing equality of status to all which the people of India had resolved to constitute by adopting, enacting and giving to themselves the Constitution.
The personality of the Constitution is developed in Part III dealing with the Fundamental Rights, and the framers of the Constitution, even after including Article 14 ensuring equality before law, were not satisfied unless they specifically prohibited religion as a ground for differential treatment.
The freedom of propagation of religion and the right to manage religious affairs et cetera were expressly recognised by Articles 25 to 28 but when it came to deal with the State, the verdict was clear and emphatic that it must be free from all religious influence.
Mr. Nariman claimed that a prohibition against discrimination on the ground of religion is not a basic feature of a democratic State.
He placed strong reliance on the constitutions of several countries with special emphasis on the Constitution of Cyprus.
The argument is that although Cyprus is an independent and sovereign republic with a democratic Constitution, the seats in the legislature are divided between the Greek population following the Greek Orthodox Church and the Muslim Turkish community.
There is a division even at the highest level, the President 934 always to be a Greek Christian and the vice president a Muslim Turk.
Mr. Nariman emphasised on the separate electorate provided by Cyprus Constitution and urged that these provisions do not render the Constitution undemocratic or illegal.
He also referred to the Statesman 's Year Book (containing statistical and historical annual of the States of the world for the year 1985 86) showing that the population of the Christian community following Greek Orthodox Church was in 1983, 5,28,700 but was allotted only 70% of the seats in the legislature, and the Turkish Muslims with a population of only 1,22,900, the remaining 30% of seats.
In other words the Muslims forming only about 20% of the total population., were allotted 30% of the seats.
The fallacy in the argument of the learned counsel is the erroneous assumption that fundamental features of all constitutions are same or similar.
The basic philosophy of a constitution is related to various elements including culture and tradition, social and political conditions, and the historical background.
If the partition of India had not taken place in 1947 and the people belonging to all the religious communities had decided to agree on some arrangement like the people of Cyprus.
by adopting a constitution providing for sharing of power on religious basis, the Constitution of Cyprus could have been relevant.
There was a sustained effort on the part of the Indian National Congress and of ' several other political and social groups, by and large representing the people who remained in divided India and proceeded to frame the present Constitu tion, to avoid the partition of the country on the basis of religion, but they could not succeed.
Unfortunately the struggle for maintaining the unity of the country was defeated by religion used as a weapon.
The country was visited by a grave national tragedy resulting in loss of human life on a very big magnitude.
Religious fundamentalism triumphed, begetting and encouraging more such fundamentalism.
In the shadow of death and destruction on an unprecedented scale the making of the Constitution was taken up.
The Constitution of Cyprus or any other constitution framed in circumstances different from those obtaining in this country, therefore cannot be relevant for understanding the basic philosophy and ethos of our Constitution.
Although it is not strictly relevant for the decision in the present case, it may be noted that this patchwork Constitution of Cyprus of which the parties represented by Mr. Nariman seem to be so enamoured of, has completely failed to keep the country together.
The learned counsel also referred to the provisions contained in Articles 239A, 240 and 371A with respect to the Union Territories and 935 State of Naggaland; and Article 331 permitting the President to nominate one or two members of Anglo Indian Community to the House of People if he is of the opinion that the Community is not adequately represented in the House.
I do not see how these Articles can be of any help to the respondents in the present case.
None of these provisions are linked with any particular religion at all.
There should not be any misapprehension that an 'Anglo Indian ' has to be a Christian [see the definition of the expression in Article 366 (2)].
Religion not only became the cause of partition of the country, it led to wide spread bloodshed which continued even later and in which people belonging to the different communities died in very large numbers.
The people of India are convinced that this tragedy was the direct result of the policy of the British rulers to divide the people on the basis of the religion and give them differential political treatment.
During their earlier resistance to the establishment of the British rule, the Hindus and the Muslims were working together, and the combination was proving to be dangerous to the foreigners, and in 1857 the Empire had to face a serious threat.
That in this background the principles of divide and rule was adopted and an atmosphere of distrust and hatred between the main communities of the country on the basis of religion was created, are undisputed facts of history.
The people, who made exemplary sacrifices, unfortunately failed in their fight for independence of the undivided nation and were left with no alternative but to be reconciled with partition of the country.
These were the people who proceeded to frame the present Constitution, and despite the Net back they had suffered, they reiletrated their firm belief in a democratic republic where religion has no role to play.
All this is what has been described as 'Enacting History, ' by jurists and is available as aid to the interpretation of the Constitution.
If we proceed to consider the entire Constitution harmoniously along with all the other materials, relevant in law for this purpose including the 'Enacting History, there is no escape from the conclusion that any weightage at the poll in favour of a group on the ground of religion is strictly prohibited and further, that this is a basic feature, which is not amenable to amendment.
The provisions of section 7 (1A)(c) and the other connected amendments must, therefore, be held to be ultra vires.
There is also another serious flaw in the reservation for the 936 Sangha rendering the same to be unconstitutional.
By the impugned provisions of the 1950 Act, a special electorate has been created for this seat which is highly abhorrent to the fundamental tenets of the Constitution.
Much thought was bestowed in the Constituent Assembly on the question whether separate electorate could be permitted under the Constitution.
An Advisory Committee was constituted on January 24, 1947 for determining the fundamental rights of citizens, minorities, et cetera.
The Advisory Committee was empowered to appoint sub committees see B. Shiva Rao 's Framing of Indian Constitution, Vol.
II, pp.
56 571 and accordingly a Sub Committee on Minorities was appointed on February 27, 1947, to consider and report, inter alia, on the issue whether there should be joint or separate electorates.
The Sub Committee by a majority of 28 to 3 decided that there should be no separate electorates for election to the legislatures.
Shiva Rao 's Vol.
II, p 3921 The Report of the Sub Committee was accepted by the Advisory Committee and the following observations were made : "The first question we tackled was that of separate electorates; we considered this as being of crucial importance both to the minorities themselves and to the political life of the country as a whole.
By an overwhelming majority, we came to the conclusion that the system of separate electorates must be abolished in the new Constitution.
In our judgment, this system has in the past sharpened communal differences to a dangerous extent and has proved one of the main stumbling blocks to the development of a healthy national life.
It seems specially necessary to avoid these dangers in the new political conditions that have developed in the country and from this point of view the arguments against separate electorates seem to us absolutely decisive.
We recommend accordingly that all elections to the Central and Provincial Legislatures should be held on the basis of joint electorates." (emphasis added) [Shiva Rao 's Vol.
II, p. 412] I think that the Advisory Committee was right in suggesting that the decision against separate electorates was absolutely decisive for all times 937 to come.
Sardar Patel, after referring to the suffering and the heavy penalty the nation had to pay on this count, expressed his satisfaction "that there has been unanimity on the point that there should be no more separate electorates and we should have joint electorates hereafter.
So this is a great gain".
Replying to the Debate Sardar Patel expressed his views in the following words : "I had not the occasion to hear the speeches which were made in the initial stages when this question of communal electorates was introduced in the Congress; but there are many eminent Muslims who have recorded their views that the greatest evil in this country which has been brought to pass is the communal electorate.
The introduction of the system of communal electorates is a poison which has entered into the body politic of our country.
Many Englishmen who were responsible for this also admitted that.
But today, after agreeing to the separation of the country as a result of this communal electorate, I never thought that that proposition was going to be moved seriously, and even if it was moved seriously, that it would be taken seriously.
(emphasis added) (Constituent Assembly Debates; Vol.
V, p. 225) I, however, find that the impugned amendment was made without bestowing serious thought and the respondents are supporting the same so determinedly that it has become necessary for this Court to consider the proposition 'seriously '.
Pandit Govind Ballabh Pant, opposing an amend ment moved by B. Pocker Sahib Bahadur of the Muslim League providing for separate electorate for Muslims, expressed his indignation thus We all have had enough of this experience, and it is somewhat tragic to find that all that experience should be lost and still people should hug the exploded shibboleths and slogans." (emphasis added) 938 [Constituent Assembly Debates; Vol.
V, p.224] Shri V.I. Muniswami Pillai, on this occasion reiterated these sentiments and said with a sigh of relief : ".
Sir, which I would like to tell this House is that we got rid of the harmful mode of election by separate electorates.
It has been buried seven fathom deep, never more to rise in our country.
The conditions that were obtaining in the various provinces were the real cause for introducing the system of separate electorates.
The Poona Pact gave us both the separate and joint electorates but now we have advised according to this report that has been presented here that the Depressed Classes are doing to enjoy joint electorates.
It is hoped, Sir, that, in the great Union that we are all envisaging that this Country will become in the years to come, joint elector ates will give equal opportunity for the Caste Hindus and the Minority communities to come together and work together and produce a better India." [Constituent Assembly Debates; Vol.
V,p.202] Unfortunately, the firm belief of Mr. Pillai was not shared when the reservation in question was introduced by amendment three decades later in 1980.
It will be helpful, for appreciating the reference by Sardar Patel to the opinions of even Englishmen in his reply and to the Poona Pact by Shri Pillai, to recall briefly the developments during the British Rule relevant to this aspect.
In order to break the united front of the Indians against foreign domination, one of the most effective steps taken on behalf of the regime was to introduce separate electorates with weightage for the Muslims.
The occasion was provided by the demand of the separate electorate for the Muslims by a deputation headed by Aga Khan presented to the then, Viceroy, Lord Minto, in 1906.
Lord Minto not only supported him but added that in view of the service that the Muslims had rendered to the Empire, their position deserved to "be estimated not merely on "their" 939 numerical strength but in respect of the political importance of "the" community and the service that it had rendered to the Empire".
The demand was accepted in 1909 by Minto Morley Reforms.
The matter was again considered in 191.9 by the Montague Chenisford Committee.
Their report disapproved the idea of separate electorates by stating that such electorates "were opposed to the teaching of history : that they perpetuated class division : that they stereotyped existing relations; and that they constituted a very serious hindrance to the development of the self governing principle".
Sardar Patel was, in his reply, presumably referring to these expressions and similar other opinions: Unfortunately, however, the principle of communal electorates was adopted for the Muhammadans in the country and in Punjab for Sikhs.
Having, thus succeeded in introducing this highly undesirable system of separate electorates on the basis of religion, the British rulers proceeded to extend the same with a view to divide the people further by proposing separate elector ate.% for the "Depressed Classes" in 1932 under the, Communal Award of Prime Minister Ramsay MacDonald.
By that time the leadership of the country was in the hands of Mahatma Gandhi, who fully realised the dangerous fall out of the proposed measure.
Rejecting the suggestion of the British Prime Minister to accept the same even for a temporary period, he staked his life for fighting out the menace by deciding to go on fast unto death.
The rulers conceded and backed out, and the matter was sorted out by the famous Yarvada Pact.
Separate electorate for the Muslims, however, could not be undone, and was given effect to in the Government of India Act, 1935, ultimately leading to the partition of the Country.
In this background the Debate in the Constituent Assembly took place, and the recommendations of the Advisory Committee in favour of joint electorate both at the Central and the State levels were accepted.
It is significant to note here that in the original draft Constitution there was no express pro vision declaring that the elections to the Parliament and to the State legislatures would be on the basis of joint electorates and the matter had been left to be dealt with by auxiliary legislation under Articles 290 and 291 of the draft Constitution Shiva Rao, Framing of India 's Constitution, Vol.
IV, p. 1411.
On a deep deliberation on the issue it was realised that any provision for separate electorates would be a deadly virus for the health of the nation.
The Constituent Assembly considered it right 940 to reject the idea once for all and not leave the.
matter to be dealt with later.
Accordingly Article 325 adopted in the following terms: "325.
No person to be ineligible for inclusion in, or to claim to be included in a special, electoral roll on grounds of religion, race, caste or sex There shall be one general electoral roll for every territorial constituency for election to either House of Parliament or to the House of either House of the Legislature of a State and no person shall be ineligible for inclusion in any such roll or claim to be included in any special electoral roll for any such con stituency on grounds only of religion, race, caste, sex or any or them.
During the hearing it was also contended that if the Constitution permits nominations to be made in the legislatures how can the creation of a separate electorates for the Sangha seat be objected to.
I do not find any parallel between the two.
After the establishment of a democratic government at every level in the country in one from or the other, nomination under the Constitution amounts to exercise of a power to induct a member in the legislature by an authority, who ultimately represents the people, although the process of the representation may be a little involved.
So far a handful of the Buddhist Monasteries in Sikkim are concerned, they cannot be said to represent the people of Sikkim in any sense of the term.
Allotting a seat in the legislature to represent these religious institutions is bad enough by itself; and then, to compound it by vesting the exclusive right in them to elect their representative to occupy the reserved seat is to aggravate the evil.
I do not think this can be compared with any of the provisions in the Constitution relating to nominations.
From the entire scheme of the Constitution, it is clear that its basic philosophy eloquently rejects the concept of separate electorate in India.
This conclusion is reinforced by the historical background referred to above, the delebrations of the Advisory Committee, and the discussion which took place in the Constituent Assembly before giving final shape to the Constitution.
I do not discover any reason for assuming that while inserting Article 371F(f) in the Constitution there was complete reversal of faith on this basic and vital matter, which was otherwise also not permissible.
It follows that consistent with the intention of the rest of the Con 941 stitution the provision regarding the delimitation of the Assembly constituencies in Article 371F(f) has to be interpreted in the same sense, as the expression has been used in the other provisions.
Clause (f) of Article 371F neither by its plain language nor intendment permits separate electorates and any attempt to give a different construction would not only be highly artificial and speculative but also would be violative of a basic feature of the Constitution.
I, accordingly, hold that the provisions of section 25A of the Representation of the People Act, 1950 are also ultra vires the Constitution and this furnishes another ground to strike down section 7 (1 A) (c).
So far the reservation of 12 seats in favour of the Bhutia Lepchas is concerned, the ground relied upon by the respondents for upholding the same is the historical background coupled with the 5th term under the head BASIC RIGHTS in the Tripartite agreement of the 8th May, 1973, which reads as follows: "(5) The system of elections shall be so organised as to make the Assembly adequately representative of the various sections of the population.
The size and composition of the Assembly and of the Executive Council shall be such as may be prescribed from time to time, care being taken to ensure that no single section of the` population acquires a dominating position due mainly to its ethnic origin, and the rights and interests of the Sikkimese Bhutia Lepcha origin and of the Sikkimese Nepali, which includes Tsong and Scheduled Caste origin, are fully protected.
" It is further said that in view of this Tripartite Agreement the Proclamation dated 5.2.1974 was made reserving 16 constituencies out of the total number of 32 in favour of Bhutia Lepchas, and when the Government of Sikkim Act, 1974 was passed, which came into force on 4.7.1974, the following provision was included in section 7: "7.
(1) For the purpose of elections to the Sikkim Assembly Sikkim shall be divided into constituencies in such manner as may be determined by law.
(2) The Government of Sikkim may make rules for the purpose of providing that the Assembly adequately repre 942 sents the various sections of the population, that is to say, while fully protecting the legitimate rights and interests of Sikkimese of Lepcha or Bhutia origin and of Sikkimese of Nepali origin and other Sikkimese, including Tsongs and Scheduled Castes no single section of the population is allowed to acquire a dominating position in the affairs of Sikkim mainly by reason of its ethnic origin. ' In these circumstances the Thirty Fifty Amendment of the Constitution of India was made which became effective from 23.2.1975 and Sikkim was thus Associated with the Union of India.
The Thirty Sixth Amendment of the Constitution inserting the new Article 371F was thereafter made with clause (f) which reads as follows: "(f) Parliament may, for the purpose of protecting the rights and interests of the different sections of the population of Sikkim make provision for the number of seats in the Legislative Assembly of the State of Sikkim which may be filled by candidates belonging to such sections and for the delimitation of the assembly constituencies from which candidates belonging to such sections alone may stand for election to the Legislative Assembly of the State of Sikkim".
and clause (k) in the following terms: "(k) all laws in force immediately before the appointed day in the territories comprised in the State of Sikkim or any part thereof shall continue to be in force therein until amended or repealed by a competent Legislature or other competent authority '.
The argument is that the impugned provisions of the Representation of the People Acts are thus fully protected by the Thirty Sixth Constitutional Amendment.
I have not been able to persuade myself to accept the contention made on behalf of the respondents for several reasons.
Before proceeding further it will be useful to have a survey of the relevant circumstances and the documents relevant to this aspect at a glance.
Chogyal was an autocratic ruler anxious to relain his absolute 943 power, while the people were becoming more aware of their rights in the changing world.
By the middle of this century, encouraged by the developments in India which was not only neighboring country but on which Sikkim was solely dependent for its vital needs including defence, they were able to build up a formidable force demanding establishment of a truly democratic government.
The materials on record fully establish that in this struggle of power, Chogyal had to heavily rely on Bhutia Lepchas, who were close to him as he was one from that group.
According to the case of the respondents the Bhutia Lepchas had arrived in Sikkim earlier than the Nepalis and the Nepalis were inducted in the area mainly on account of the policy followed by the British paramountcy.
The records also show that protest in vain was made to the British General posted in the area, long time back when the Nepalis were arriving on the scene.
The BhutiaLepchas, who were following the Buddhist religion, were paying high respect for the Lamas who were enjoying the patronage of Chogyal.
Appreciating their usefulness the Chogyal later earmarked a seat for them on the basis of a separate electorate in 1958.
When public demand for effective participation in the administration grew stronger, the Chogval adopted the line of appeasement by establishing a Council where initially 12 members were divided half and half (vide the Proclamation of 28th December, 1952) between the Bhutia Lepchas on the one hand and the Nepalis on the other.
But soon he appreciated that unless he reserved to himself the right to induct some more nominees of his own, his position would be jeopardised.
He, therefore, hurriedly issued another Proclamation within 3 months, on the 23rd March, 1953, declaring that 6 more members would be included in the Council to be nominated by him in his discretion including the President of the Council.
In Article 26 he expressly declared that notwithstanding the provisions of the other Articles he would be retaining his power to veto any decision made by the Council and substitute his own decision therefore.
The steps taken by the Chogyal could not control the demand for democracy and the public agitation gathered more support.
Ultimately the people came out victorious, not only in getting rid of the Chogyal, but also in their demand for democracy to be established on the lines as in India.
The Chogyal, of course, in his vain attempt to retain his authority, was trying to scuttle away the overwhelming public opinion by one method or the other and with that view, was trying, to give weightage to BhutiaLepchas, to which group he himself belonged and on whose support he 944 could count, and in this situation the Tripartite Agreement of 8th May, 1973 came to be executed.
The fact that Chogyal was going to be a party to it and was desperately trying to have something in the terms, to build his strategy on, cannot be ignored while assessing the meaning and effect of paragraph 5 of the Agreement.
The Tripartite Agreement described itself in the very opening sentence as envisaging a democratic set up for Sikkim, and the Chogyal joined the people of Sikkim in declaring that he was also convinced and was in favour of the establishment of a fully responsible Government in Sikkim.
The other provisions of the Agreement unmistakably indicate that the intention was to have a democratic government in Sikkim exactly similar to the one in India.
It (Agreement) provided guarantee of Fundamental Rights, the rule of law and independent judiciary, as also.
"a system of elections based on adult suffrage which will give equitable representation to all sections of the people on the basis of the principle of one man one vote".
(emphasis added) All the three parties expressly recognised and undertook to ensure the basic human rights and fundamental freedoms of the people and that "the people of Sikkim will enjoy the right of election on the basis of adult suffrage to get effect to the principle of one man one vote." (emphasis supplied) Equality before law and independence of the judiciary were assured.
It further recited that the Chogyal as well as the representative of the people had requested the Government of India to assume responsibility for the establishment of law and order and good administration and "to ensure the further development of a constitutional Government", as also to provide the head of the administration described as Chief Executive to help and achieve the State 's objectives.
A firm decision was taken to hold fair and free elections under the supervision of a representative of the Election Commission of India.
The Chief Executive was to be nominated by the Government of India and it was only the passing of the formal order in this regard which was left to the Chogyal.
Towards the end of the Agreement 945 it was emphasised that the Government of India was solely responsible for the defence and territorial integrity of Sikkim and for the conduct and regulation of the external relations whether political, economic or financial, and necessary powers for carrying out these responsibilities were reaffirmed.
A perusal of the document clearly indicates that the spirit of the Indian Constitution pervaded through out the entire Agreement and the terms thereof were drafted respecting the main principles embodied in our Constitution.
It must, therefore, be held that an interpretation cannot be given to the Agreement which will render it as deviating from the constitutional pattern of the Indian Constitution.
A question may be raised that since the Agreement included paragraph (5) which has been quoted earlier, does that inject in this Agreement an element incompatible with the Indian Constitution.
In my opinion the answer is in the negative.
The safeguard under the scheme envisaged in paragraph (5) was capable of being provided by the Indian Constitution.
Many provisions in the different parts of the Constitution including Part III are relevant in this regard.
Their representation of all sections has been the concern of the Constitution also; and with that view provisions have been made for reservation of seats in favour of certain classes in the Parliament and the state Legislatures and some special rights have been given to the minority.
In my view these constitute adequate guarantee against unfair dominance by the majority.
This of course does not lead to the conclusion that power would be concentrated in the hands of the minority, or that their would be division of the authority in the matter of ' carrying on the affairs of the State, on mathematically equal terms, between the different groups; because the first will result in the abnegations of democracy itself, and the second will lead to an unworkable situation ending in chaos.
The principle of adult suffrage with one man one vote rule, as repeated again and again in the documents referred to above, indicates the concept of democracy which had to be established in Sikkim.
In the Proclamation of the 5th February 1974 total number of 32 seats in the Assembly were divided half and half between the two groups, but it is significant to note that as soon as the Assembly was constituted after election.
it immediately modified the provision fixing the parity of seats by declaring in section 6(2) of the Government of Sikkim Act, 1974 that the matter would be determined by law.
The intention that no single section of the population should acquire a "dominating position due mainly to its 946 ethnic origin" does not mean that the majority hold by a particular section would not be allowed to be reflected in the legislature.
The word 'dominating" indicates something more than merely forming a majority.
What was intended was to eliminate the chance of a particular section of the population misusing its position to the prejudice of the legitimate rights of the others.
The risk of such an undesirable situation could and should have been eliminated by adopting such methods as provided in the Indian Constitution.
It cannot be legitimately contended that the safeguard in this regard under the Indian Constitution is in any way inadequate.
If at all, the minority in this country are in certain matters enjoying special benefits not available to the majority '.and this is the reason that repeated attempts have been and are being made by various groups to claim minority status, as is evident by reported cases.
The necessary consequence of assuming otherwise would be to hold that under the Constitution applicable to the rest of the country, the minorities here have no protection again the "dominance of the majority, and our stand about the rule of law and equality of status to all in this country is an empty claim made before the world.
The further point is as to whether the provisions of clause (f) of Article 371F envisage and authorise the Parliament to exercise its power only in such a manner which would be consistent with the relevant provisions of the Constitution applicable to the rest of the country if the same is capable of achieving the object with reference to the special conditions of Sikkim; or, that they allow the Parliament to take any decision in this regard, including such measures which would perpetuate the situation obtaining in Sikkim in the past, on the ground of historical background.
For the reasons indicated earlier, I am of the view that clause (f) permits the Parliament to take only such steps which would be consistent with the provisions of the Constitution coming from before, so that Sikkim could completely merge with India and be placed at per with the other States.
This conclusion is irresistible if the facts and circumstances which led to the ultimate merger of Sikkim in India are kept in mind.
They have been briefly referred to earlier in paragraph 10 above.
After the Proclamation of the 5th of February, 1974, Sikkim went to polls.
The main representative of the people was Sikkim Congress as was proved by the result of the election.
Sikkim Congress winning 31 out of the total of 32 seats.
The election manifesto on the basis of which the people almost unanimously 947 voted in favour of Sikkim Congress, inter alia, declared thus "We also aspire to achieve the same democratic rights and institutions that the people of India has enjoyed for a quarter of century. ' (emphasis added) Respecting this pledge, solemnly given to the people, the Assembly passed a unanious resolution dated 10.04.1975 and submitted it to the people for their approval.
A plebiscite was thus held in which about 64% of the electorate cast their votes.
The Resolution was approved by the 62% of the total electorate and only less than 2% went against the same.
The Statement of Objects and Reasons of the Constitution (Thirty Sixth Amendment) Act, 1975 refers to the unanimous Resolution of the State Assembly, which after taking note of the persistent anti people activities of the Chogyal decided to abolish the institution of the Chogyal and to make Sikkim a constituent unit of India in the following terms : "The institution of the Chogyal is hereby abolished and Sikkim shall henceforth be a constituent unit of India, enjoying a democratic and fully responsible Government.
" In this background, the Statement of Objects and Reasons further proceeds to declare : "5.
Accordingly, it is proposed to include Sikkim as a full fledged State in the First Schedule to the Constitution and to allot to Sikkim one seat in the Council of States and one seat in the House of the People.
It is also proposed to insert a new article containing the provisions considered necessary to meet the special circumstances and needs of Sikkim." (emphasis added) 43.
The intention was clear that the people of Sikkim, by a near unanimous verdict, decided to join India as a full fledged State with the aspiration of participating in the affairs of the country on the same terms applicable to the rest of India.
The decision to insert a new Article was considered necessary only the limited purpose to meet the special cir 948 cumstances and needs of Sikkim.
The question is whether a provision for granting a disproportionately higher representation of the Bhutia Lepchas in the State legislature was necessary.
If it was not, clause (f0 of Article 371F must be construed as not protecting the impugned statutory amendments.
If we examine the different clauses of Article 371F, we find that several additional provisions deviating from the original, have been incorporated in the Constitution, in view of the special circumstances peculiar to Sikkim.
By Article 170 the minimum size of the Assembly of the States .is fixed at 60 seats which was too large for a small State like Sikkim with a total population of only three lacs.
This was a special feature which distinguished it from the other States.
The ratio of the number of the representatives to the population did not justify a House of 60 and, therefore, by clause (.a) the minimum number was fixed only at 30.
For obvious reasons clauses (c) and (e) had to be inserted in the Article as the appointed day with reference to Sikkim could not have been the same as the appointed day with reference to the other States.
Clause (d) also became relevant for allotting a seat to the State of Sikkim in the House of the People.
So far clause (b) is concerned, the same became necessary for a temporary period for the smooth transition of Sikkim from merely to associate" status to a full fledged State of the Union.
In order to avoid a bumpy ride during the period that the effect of merger was being constitutionally worked out, there was urgent need of special temporary provisions to enables the State functionaries to discharge their duties.
If the other clauses are also examined closely it will be manifest that they were necessary in view of the special needs of the Sikkim.
The point is whether for the protection of the Bhutia Lepcha Tribe, the safeguards already provided in the Constitution were inadequate so as to call for or justify special provisions of reservation, inconsistent with the Constitution of India as it stood before the Thirty Sixth Amendment.
The problem of Bhutia Lepcha Tribe is identical to that of the other Tribes of several States where they are greatly out numbered by the general population, and which has been effectively dealt with by the provisions for reservation in their favour included in Part XVI of the Constitution.
It cannot be justifiably suggested that by subjecting the provisions of the reservations to the limitations in clause (3) of Article 332, the Tribes in India have been left unprotected at the mercy of the overwhelming majority of the general population.
The reservations in Part XVI were considered adequate protection to them and 949 it had not been proved wrong for about three and a half decades before 1975, when Sikkim merged with India.
It must, therefore, be held that the adequate safeguard in favour of the Bhutia Lepchas was already available under the Constitution and all that was required was to treat them as Tribes like the other Tribes.
As a matter of fact this position was correctly appreciated in 1978 when the Presidential Order was issued under Article 342 of Part XVI.
The interpretation of Article 371.F (f), as suggested on behalf of the respondents, is inconsistent with the issuance of the said Order. 1, therefore, hold that the object of clause (f) was not to take care of this problem and it did not authorise the Parliament to pass the Amendment (Act 8 of 1980) inserting section 7(1A) (a) in the Representation of the People Act, 1.950 and section 5A in the Representation of the People Act, 1951 and other related amendments.
They being violative of the constitutional provisions including those in Article 371F (f) are ultra vires.
The next point is as to whether clause (f) of Article 371F will have to be struck down on the ground of violation of the basic features of the Constitution, if it is interpreted as suggested on behalf of the respondents.
The Preamble of the Constitution of India emphatically declares that.
we were giving to ourselves the Constitution with a firm resolve to constitute a sovereign, democratic, republic; with equality of status and of opportunity to all its citizens.
The issue which has direct bearing on the question under consideration is as to what is the meaning of 'democratic republic '.
The expressions 'democracy ' and 'democratic ' have been used in varying senses in different countries and in many places have been subjected to denote the state of affairs which is in complete negation of the meaning in which they are understood.
During the present century it progressively became more fashionable and profitable to frequently use those terms and accordingly they have been grossly misused.
We are not concerned with that kind of so called democracy, which is used as a stepping stone for the establishment of a totalitarian regime, or that which is hypocritically dangled before the people under the name of democracy but is in reality an oligarchical set up concentrating the power in a few.
We are also not concerned with the wider theoretical conception in which the word can be understood.
In our Constitution, it refers to denote what it literally means.
that is, 'people 's powers. ' It stands for the actual, active and effective exercise of power by the people in this regard.
Schumacher gives 950 a simple definition of democracy as "the ability of a people to choose and dismiss a government".
Giovanni Sartori translates the same idea in institutional form and says that democracy is a multi party system in which the majority governs and respects the right of minority.
In the present context it refers to the political participation of the people in running the administration of the government.
It conveys the state of affairs in which each citizen is assured of right of equal participation in the polity.
The expression has been used in this sense, both in the Indian Constitution and by the people of Sikkim as their goal to achieve.
The repeated emphasis that was given to the rule of one man one vote in the various documents preceding Sikkim 's merger with India, clearly defines the system of government which the people of Sikkim.
by an overwhelming majority decided to establish and which was exactly the same as under the Indian Constitution.
This goal cannot be achieved by merely allotting each person one vote which they can cast in favour of a particular candidate or a special group of persons, selected for this purpose by others, in which they have no say.
The result in such a case would be that while one man of this class is assigned the strength of one full vote, others have to be content with only a fraction.
If there is 90% reservation in the seats of a House in favour of 10% of the population in the State, and only the remaining 10% of the seats are left to the majority population, then the principle of adult suffrage as included in Article 326 is sacrificed.
By permitting the 90% of the population to vote not only for 10% seats available to them, but also for the 90% reserved seats the basic flaw going to the root of the matter is not cured.
The choice of the candidate and the right to stand as a candidate at the election arc inherent in the principle of adult suffrage, that is, one man one vote.
By telling the people that they have a choice to elect any of a select group cannot be treated as a free choice of the candidate.
This will only amount to lip service, to thinly veiled to conceal the reality of an oligarchy underneath.
It will be just an apology for democracy, a subterfuge; and if it is permitted to cross the limit so as to violate the very core of the principle of one man one vote, and is not controlled by the constitutional safeguards as included in clause (3) of Article 332 (see paragraph 12 above) of the Constitution it will amount to a huge fraud perpetrated against the people.
So far the Sangha seat is concerned even this transparent cloak has been shed off.
It has to be appreciated that the very purpose of providing reservation in favour of a weaker class is to aid the elemental principle of democracy based on one man one vote to succeed.
The disproportionately 951 excessive reservation creates a privileged class, not brought to the same plane with others but put on a higher pedestal, causing unhealthy competition, creating hatred and distrust between classes and fostering divisive forces.
This amounts to abnegations of the values cherished by the people of India (including Sikkim), as told by their story of struggle and sufferings culminating into the framing of the Indian Constitution (and the merger of Sikkim as one of the State in 1975).
This is not permissible even by an amendment of the Constitution.
In a search for constitutions similar to ours, one may look towards Canada and Australia and not to Cyprus.
But the Canadian and Australian Constitutions also differ from our Constitution in many respects, including some of the fundamental principles and the basic features.
The unalterable fundamental commitments incorporated in a written constitution are like the soul of a person not amenable to a substitution by transplant or otherwise.
And for identifying what they are with reference to a particular constitution, it is necessary to consider, besides other factors, the historical background in which the constitution has been framed, the firm basic commitments of the people articulated in the course of and by the contents of their struggle and sacrifice preceding it (if any), the thought process and traditional beliefs as also the social ills intended to be taken care of.
These differ from country to country.
The fundamental philosophy therefore, varies from Constitution to Constitution.
A Constitution has its own personality and as in the case of a human being, its basic features cannot be defined in the terms of another Constitution.
The expressions 'democracy ' and 'republic ' have conveyed not exactly the same ideas through out the world, and little help can be obtained by referring to another Constitution for determining the meaning and scope of the said expressions with reference to our Constitution.
When we undertake the task of self appraisal, we cannot afford to forget our motto of the entire world being one big family (Vasudhaiva Kutumbkam) and consequent commitment to the cause of unity which made the people suffer death, destruction and devastation on an unprecedented scale for replacing the foreign rule by a democratic government on the basis of equal status for all.
The fact that they lost in their effort for a untitled independent country is not relevant in the present context, because that did not shake their faith in democracy where every person is to be treated equal, and with this firm resolve, they proceeded to make the Constitution.
An examination of the provisions of the Constitution does not leave room from any doubt that this 952 idea has been kept as the guiding factor while framing the Constitution. 'Democracy ' and 'republic ' have to be understood accordingly.
Let us now examine the Constitution in this light.
As explained by the Preamble the quality of democracy envisaged by the Constitution does not only secure the equality of opportunity but of status as well, to all the citizens.
This equality principle is clearly brought out in several Articles in the different parts of the Constitution, including Part III dealing with Fundamental Rights, Part IV laying down the Directive Principles of State policy and Part XVI having special provisions relating to certain classes.
The spirit pervades through the entire document as can be seen by the other provisions too.
When the question of the qualification for election as President arises, all classes of citizens get same treatment by Articles 58 and 59 (subject to certain qualifications which are uniformly applied) and similar is the position with respect to the Vice President and the other constitutional functionaries.
The protection in Part III is available to all, and the State has to strive to promote the welfare of the people and the right to adequate means of livelihood, to justice and free legal aid, and to work et cetera with respect to everybody.
Certain special benefits are, however, extended or may be extended to certain weaker classes, but this again is for the sake of placing them on equal footing with the others, and not for defeating the cause of equality.
So far the question of equality of opportunity in matter of employment is concerned, provisions for reservation of posts are included in favour of backward classes who may be inadequately represented in the services.
Welfare measures also are permitted on the same line, but, when it comes to the reservation of seats in the Parliament or the State Legislature, it is given a different treatment in Part XVI.
Clause (2) of Article 330 and clause (3) of Article 332 lay down the rule for maintaining the ratio, which the population of the class bears to the total population.
This is significant.
The sole objective of providing for reservations in the Constitution is to put the principle of equal status to work.
So far the case of inadequate repre sentation of a backward class in State services is concerned, the problem is not susceptibly to be solved in one stroke: and consequently the relevant provisions are kept flexible permitting wider discretion so as to attain the goal of adequate proportionate representation.
The situation in respect to representation in the legislature is entirely different.
As soon as an election takes place in accordance with the provisions for proportionate repre sentation, the objective is achieved immediately, because there is no prob 953 lem of backlog to be tackled.
On the earlier legislature disappearing, paving the way for new election, the people get a clean slate before them.
The excessive reservation in this situation will bring in an imbalance of course of another kind but defeating the cause of equal status all the same.
The pendulum does not stand straight it swings to the other side.
The casualty in both cases is the equality clause.
Both situations defeat the very object for which the democratic forces waged the war of independence; and they undo what has been achieved by the Constitution.
This is clearly violative of the basic features of the Constitution.
I hold that if clause (f) of Article 371F is so construed as to authorise the Parliament to enact the impugned provisions it will be violative of the basic features of the Constitution and, therefore, void.
The views expressed above are adequate for the disposal of the present cases, but it may be expedient to examine the matter from one more angle before concluding the judgment.
It was very strongly contended by the learned advocates for the respondents that the impugned provisions should be upheld and the writ petitions dismissed by reason of the historical background of Sikkim.
It was repeatedly emphasised that in view of the 5th term of the Tripartite Agreement and in view of the fact that the Sangha seat was created by Chogyal as far back as in 1958, the arrangements agreed upon by the parties are not liable to be disturbed.
Reference was made to the several Proclamations of Chogyal by the counsel for the different respondents and intervenors one after the other.
In my view the impact of the historical background on the interpretation of the situation is to the contrary.
During the period, referred to, the fight between the despotic Chogyal trying to retain his authority and the people demanding installation of a democratic rule was going on.
No importance can, therefore, be attached to the terms included in the Agreement at the instance of the ruler or to his Proclamations.
On the other hand, what is relevant to be considered is the demand of the people which ultimately succeeded.
It ' we proceed to interpret the situation by respecting and giving effect to the acts and omissions of Chogyal in his desperate attempt to cling to, power and subvert to the democratic process set in motion by the people, we may have to rewrite the history and deprive the people of Sikkim of what they were able to wrest from his clutches from time to time ultimately ending with the merger.
The reservation of the Sangha seat was also one of such anti people acts.
So far the Note to the Proclamation of 16 May, 1968 is concerned if it has to be enforced, the Nepalis shall also be entitled 954 to reservation of equal number of seats as the, Bhutia Lepchas and same number of seats should be earmarked for nomination by the authority in power.
Actually Mr. Bhatt appearing for some of the respondents seriously pressed before us the claim of Nepalis for reservation in their favour.
This entire line of thought is wholly misconceived.
We can not ignore the fact that as soon as the Assembly vested with effective authority was constituted it proceeded to undo what is being relied upon before us on behalf of the respondents.
When they passed the historic resolution dated April 10, 1975, discussed earlier in detail the 5th terms of the Agreement was given up, and when the people were invited to express.
their opinion by holding a plebiscite, they gave their verdict, unburdened by any such condition, by a near unanimous voice.
I presume that this was so because it was known that the in built safeguards of the Indian Constitution were adequate for taking care of this aspect.
This is a complete answer to such an argument.
The history, so far it may be relevant, condemns in no uncertain terms the excessive reservation in favour of the Bhutia Lepchas and the Sangha.
The Thirty Sixth Amendment in the Constitution has to be understood in this light.
My conclusion, therefore, is that the impugned provisions are ultra vires the Constitution including Article 371F (f).
Consequently the present Sikkim Assembly constituted on the basis of the election, held under the impugned provisions has to be declared illegally constituted.
Therefore, the concerned authorities must take fresh and immediate steps under the law consistent with the Constitution as applied to the rest of the country.
The writ petitions are accordingly allowed with costs payable to the writ petitioners.
Before finally closing, I would like to say a few words in the light of the opinion of my learned Brothers as expressed in the majority judgment disagreeing with my conclusions.
In view of this judgment all the petitions have now to be dismissed, but I want to emphasize that what has been held therein is that the Parliament has not exceeded its Constituent and Legislative Powers in enacting the impugned provisions and consequently the writ petitions have to be dismissed.
This does not mean that the Parliament is bound to give effect to the discriminatory provisions by reason of the historical background in which Sikkim joined India.
It is within the 'wisdom ' (to borrow the expression from paragraph 30 of the 955 majority judgment) of the Parliament to take a decision on the issue and as hinted in the same paragraph, the present situation hopefully may be a transitory passing phase.
The provisions in clause (f) of Article 371F have been, in paragraph 31 of the judgment, described as 'enabling ', that is, not obligatory.
It, therefore, follows that although this Court has not jurisdiction to strike down the impugned provisions, it is perfectly within the domain of the Parliament to undo, what I prefer to call, 'the wrong '.
The unequal apportionment of the role in the polity of the country assigned to different groups tends to foster unhealthy rivalry impairing the mutual feeling of goodwill and fellowship amongst the people, and encouraging divisive forces.
The reservation of a seat for the Sanghas and creation of a separate electorate have a still greater pernicious portent.
Religion, as it has come to be understood, does not mix well with governance; the resultant explosive compound of such an ill suited combination has proved to be lethal for the unity of the nation only a few decades ago leading to the partition.
The framing of our Constitution was taken up immediately thereafter.
Our country has suffered for a thousand years on account of this dangerous phenomenon resulting in large scale internecine struggles and frequent blood spilling.
Today a single seat in the legislature of one State is not conspicuously noticeable and may not by itself be capable of causing irreparable damage, but this seed of discord has the potentiality of developing into a deadly monster.
It is true that some special rights have been envisaged in the Constitution for handicapped classes but this has been done only to off set the disadvantage the classes suffer from, and not for bringing another kind of imbalance by making virtue out of minority status.
The Constitution, therefore. has taken precaution to place rigid limitations on the extent to which this weightage can be granted, by including express provisions instead of leaving the matter to be dealt with by subsequent enactments limitations both by putting a ceiling on the reservation of seats in the legislatures and excluding religion as the basis of discrimination.
To ignore these limitations is to encourage small groups and classes which are in good number in our country on one basis or the other to stick to and rely on their special status as members of separate groups and classes and not to join the mainstream of the nation and be identified as Indians.
It is ', therefore, absolutely essential that religion, disguised by any mask and concealed within any cloak must be kept out of the field exclusively reserved for the exercise of the State powers.
To my 956 mind the message has been always dear and loud and now it remains for the nation to pay heed to and act through its elected representatives.
VENKATACHALIAH, J. These petitions under Article 226 of the Constitution of India which where originally filed in the High Court of Sikkim and now withdrawn by and transferred to this Court under Article 139 A raise certain interesting and significant issues of the constitutional limitations on the power of Parliament as to the nature of the terms and conditions that it could impose under Article 2 of the Constitution for the admission of the new States into the Union of India.
These issues arise in the context of the admission of Sikkim into the Indian Union under the Constitution (36th Amendment) Act, 1975 as the 22nd State in the First Schedule of the Constitution of India.
Earlier, in pursuance of the resolution of the Sikkim Assembly passed by virtue of its powers under the Government of Sikkim Act, 1974, expressing its desire to be associated with the political and economic institutions of India and for the representation of the people of Sikkim in India 's Parliamentary system, the Constitution [35th Amendment] Act, 1974 had come to be passed inserting Article 2A which gave the State of Sikkim the status of an 'Associate State '; but later Sikkim became, as aforesaid, an integral part of the Indian Union as a fill fledged State in the Union by virtue of the Constitution (36th Amendment) Act, 1975, which, however, provided for special provisions in Article 371 F to accommodate certain historical incidents of the evolution of the political institutions of Sikkim.
It is the constitutionality of the incidents of this special status, particularly in the matter of reservation of seats for various ethnic and religious groups in the Legislative Assembly of the State that have been assailed as "unconstitutional" in these petitions.
Sikkim is a mountain State in the North East of India of an area of about 7200 sq.
on the Eastern Himlayas.
It has a population of about four lakhs.
Sikkim is of strategic location bounded, as it is, on the West by Nepal, on the North by Tibet, on the East by Bhutan and on the Southern and Western sides by the State of West Bengal in the Indian Union.
It lies astride the shortest route from India to Tibet.
The State is entirely mountainous.
Covered with dense forests, it lies in the Northern most Areas in Lachen and Lachung.
Mountains rise to 7000 m and above Kanchenjunga (8,579 m) being World 's Third Highest Peak.
Sikkim has several hundred 957 varieties of orchids and is frequently referred to as botanist 's paradise '.
("India 1991" page 930).
To the historian, Sikkim 's history, lore, culture and traditions are a fascinating study.
The early history of this mountainous land is lost in the mists of time.
But it is said that in 1642, Phuntsog Namgyal became the first Chogyal, the spiritual and temporal Ruler in the Namgyal dynasty which ruled Sikkim till it joined the mainstream of Indian polity in 1975.
The main inhabitants of Sikkim are the Lepchas, the Bhutias and the later immigrants from Nepal.
The Lepchas were the original indigenous inhabitants.
The Bhutias are said to have come from Kham in Tibet during the 15th and 16th centuries.
These people of Tibetan origin are called Bhutias said to be a derivative from the word "Bod" or "Tibet" and as the tradition has it took refuge in the country after the schism in Tibet in 15th and 16th centuries.
One of their Chieftains was crowned the 'Chogyal ' of Sikkim in 1642.
It would appear that Sikkim was originally quite an extensive country but is stated to have lost large chunks of its territories to Nepal and Bhutan and finally to the British.
Lepchas and Bhutias are Buddhists by religion.
Sikkim was a British protectorate till 1947 when the British paramountancy lapsed whereafter under a Treaty of the 3rd December, 1950 with India, Sikkim continued as a protectorate of India.
Over the past century there was large migration into Sikkim of people of Nepalese origin.
The influx was such that in the course of time, Sikkimese of Nepalese origin constituted almost 2/3rd of Sikkim 's population.
There has been, accordingly, a clamour for protection of the original Bhutias Lepchas now an ethnic majority from the political voice and expression being sub merged by the later immigrants from Nepal.
These ethnic and demographic diversities of the Sikkimese people; apprehensions of ethnic dimensions owing to the segmental pluralism of the Sikkimese society and the imbalances of opportunities for political expression are the basis of and the claimed justification for the insertion of Article 371 F. The phenomenon of deep fragmentation, societal cleavages of pluralist societies and recognition of these realities in the evolution of pragmatic adjustments consistent with basic principles of democracy are the recurrent issues in political Organisation.
958 In his "Democracy in Plural Societies", Arend Lijphart makes some significant observations at Page 16.
"A great many of the developing countries particularly those in Asia and Africa, but also some South American countries, such as Guyana, Surinam, and Trinidad are beset by political problems arising from the deep divisions between segments of their populations and the absence of a unifying consensus.
The theoretical literature on political development, nation building, and democratization in the new states treats this fact in a curiously ambivalent fashion.
On the one hand, many writers implicitly refuse to acknowledge its importance.
"Such communal attachments are what Cliffor Geertz calls primordial" loyalties, which may be based on language, religion, custom, region, race, or assumed blood ties.
The subcultures of the European consociational democracies, which are religious and ideological in nature and on which, two of the countries, linguistic divisions are superim posed, may also be regarded as primordial groups if one is willing to view ideology as a kind of religion." "At the same time, it is imperative to be alert to qualitative and quantitative differences within the broad category of plural societies: differences between different kinds of segmental cleavages and differences in the degree to which a society is plural.
The second prominent characteristic of non Western politics is the breakdown of democracy.
After the initial optimism concerning the democratic prospects of the newly independent countries, based largely on the democratic aspirations voiced by their political leaders, a mood (if disillusionment has set in.
And, according to many observers, there is a direct connection between the two fundamental features of non Western politics: a plural society is incapable of sustaining a democratic government." 959 Pluralist societies are the result of irreversible movements of history.
They cannot be washed away.
The political genius of a people should be able to evolve within the democratic system, adjustments and solutions.
Pursuant to Article 371 F and the corresponding consequential changes brought about in the Representation of the People Act, 1950, Representation of the People Act, 1951, as amended by the and the Representation of the People (Amendment) Act, 1980, 12 out of the 32 seats in the Sikkim Assembly are reserved for the Sikkimese of "Bhutia Lepcha" origin and one seat for the "Sangha", Buddhist Lamaic monasteries the election to which latter being on the basis of a separate Electoral roll in which only the "Sanghas" belonging to the Lamaic monasteries recognised for the purposes of elections held in Sikkim in April, 1974, are entitled to be registered.
These reservations of seats for the ethnic and religious groups are assailed by the petitioners who are Sikkimese of Nepali origin as violative of the fundamentals of the Indian constitutionalism and as violative of the principles of republicanism and secularism forming the bedrock of the Indian constitutional ethos.
The basic contention is that Sikkim citizen is as much as citizen of the Union of India entitled to all the Constitutional guarantees and the blessings of a Republican Democracy.
It is necessary here to advert to the movement for the establishment of a responsible Government in Sikkim and of the evolution of its political institutions.
By a Royal Proclamation of 28th December, 1952, State Council was set up in which out of the 12 elected members, 6 were to be Bhutias Lepchas and the other 6 Sikkimese of Nepalese origin.
Sikkim was divided into four constituencies with the following break down of the distribution of seats between Bhutias Lepchas and the Nepalis : (i) Gangtok Constituency 2 Bhutia Lepcha 1 Nepali (ii) North Central Constituency 2 Bhutia Lepcha 1 Nepali (iii) Namchi Constituency 1 Bhutia Lepcha 2 Nepalis (iv) Pemayangtse Constituency 1 Bhutia Lepcha 2 Nepalis 960 By "the State Council and Executive Council Proclamation, 1953" dated 23rd March, 1953, a State Council of 18 members consisting of 12 elected members, 5 nominated members and a President to be nominated by the Maharaja was constituted.
Out of the 12 elected members, again 6 were to be Bhutias Lepchas and the other 6 of Nepalese origin.
Clauses 1. 2 and 3 of the Proclamation read "1 This Proclamation may be cited as the State Council and Executive Council Proclamation, 1953, and shall come into operation immediately on its publication in the Sikkim Government Gazette.
There shall be constituted a State Council for the State of Sikkim. 3.
The State Council shall consist of (a) A president who shall be nominated and appointed by the Maharaja; (b) Twelve elected members, of whom six shall be either Sikkim Bhutia, or Lepcha and the remaining six shall be Sikkim Nepalese; and, (c) Five members nominated by His Highness the Maharaja in his discretion." In 1958, the strength of the council was increased to 20.
The break up of the its composition was as under : (1) Seats reserved for Bhutia & Lepchas 6 (2) Seats reserved for Nepalis 6 (3) General seat 1 (4) Seat reserved for the Sangha 1 (5) Nomination by His Highness 6 By the "Representation of Sikkim Subjects Regulation, 1966" dated 21.12.1966 promulgated by the then Chogyal, the State Council was to 961 consist of territorial constituencies as under 1.
Bhutia Lepchas 7 2.
Sikkimese Nepalese 7 3.
The Sanghas 1 4.
Scheduled Caste 1 5.
Tsong 1 6.
General seat 1 7.
Nominated by the Chogyal 6 Total =24 8.The year 1973 saw the culmination of a series of successive political movements in Sikkim towards a Government responsible to the people.
On 8th May, 1973, a tripartite agreement was executed amongst the Ruler of Sikkim, the Foreign Secretary to the Government of India and the political parties representing the people of Sikkim which gave expansion to the increasing popular pressure for self Government and democratic institutions in Sikkim.
This tripartite agreement envisaged the right of people of Sikkim to elections on the basis of adult suffrage.
It also contemplated the setting up of a Legislative Assembly in Sikkim to be re constituted by election every four years.
The agreement declared a commitment to free and fair elections to be overseen by a representative of the Election Commission of India.
Clause 5 of the Tripartite agreement said : "(5) The system of elections shall be so organised as to make the Assembly adequately representative of the various sections of the population.
The size and composition of the Assembly and of the Executive Council shall be such as may be prescribed from time to time, care being taken to ensure that no single section of the population acquires a dominating position due mainly to its ethnic origin, and that the rights and interests of the Sikkimese Bhutia Lepcha origin and of the Sikkimiese Nepali, which includes Tsong and Scheduled Caste origin, are fully protected." This agreement was effectuated by a Royal Proclamation called the Representation of Sikkim Subjects Act.
The reservations of seats 962 under this dispensation were as under "3.
The Assembly shall consist of thirty two elected members.
A(i) Sixteen Constituencies shall be reserved for Sikkimese of Bhutia Lepcha origin.
A(ii) Out of these sixteen constituencies, one shall be reserved for the Sangha.
B(i) The remaining sixteen constituencies shall be reserved for Sikkimese of Nepali, including Tsong and Scheduled Caste, origin.
B(ii) Out of the above mentioned sixteen constituencies of reserved for Sikkimese of Nepali origin, one constituency shall be reserved for persons belonging to the Scheduled Castes notified in the Second Schedule annexed hereto." 9.The Sikkim Assembly so elected and constituted, passed the Government of Sikkim Act, 1974 "for the progressive realisation of a fully responsible Government in Sikkim and for further strengthening close ties with India".
Para 5 of the Tripartite agreement dated 8.5.1973 was incorporated in Section 7 of the said Act.
Sections 30 and 33 of the said Act further provided "30.
For the speedy development of Sikkim in the social, economic and political field, the Government of Sikkim may (a)request the Government of India to include the planned development of Sikkim within the ambit to the Planning Commission of India while that Commission is preparing plans for the economic and social development of India and to appropriately associate officials from Sikkim in such work; (b) request the Government of India to provide facilities for students from Sikkim in institutions for higher learning and for the employment of people from Sikkim in the public 963 services of India (including All India Services), at par with those available to citizens of India; (c) seek participation and representation for the people of Sikkim in the political institutions of India." "33.
The Assembly which the has been formed as a result of the elections held in Sikkim in April, 1974, shall be deemed to be the first Assembly duly constituted under this Act, and shall be entitled to exercise the powers and perform the functions conferred on the Assembly by this Act.
" 10.Article 2A of the Constitution introduced by the Constitution (35th Amendment) Act, 1974 was the Indian reciprocation of the aspirations of the Sikkimese people and Sikkim was given the status of an "Associate State" with the Union of India under terms and conditions set out in the 10th Schedule inserted in the Constitution by the said Constitution (35th Amendment) Act, 1974.
The year 1975 witnessed an uprising and dissatisfaction of the people against the Chogyal.
The Sikkim Assembly, by an unanimous resolution, abolished the institution of "Chogyal" and declared that Sikkim shall thenceforth be "a constituent unit of India enjoying a democratic and fully responsible Government".
The resolution also envisaged an opinion poll the matter.
Its resolution was endorsed by the people of Sikkim in the opinion poll conducted on 14.4.1975.
The Constitution (36th Amendment) Act, 1975 came to be passed giving statehood to Sikkim in the Indian polity Article 2A was repealed.
Article 371 F introduced by the 36th Constitutional Amendment, envisaged certain special conditions for the admission Sikkim as a new State in the Union of India.
Certain legislative measures for amendments to the Electoral Laws considered necessary to meet the special situation of Sikkim, were also brought into force.
Clause(f) Article 371F reads : "(f) Parliament may, for the purpose of protecting the rights and interests of the different sections of the population of Sikkim, make provision for the number of seats in the Legislative Assembly of the State of Sikkim which may be 964 filled by candidates belonging to such sections and for the delimitation of the assembly constituencies from which candidates belonging to such sections alone may stand for election to the Legislative Assembly of the State of Sikkim. ' The sought to extend, with certain special provisions, the Representation of the People Act, 1950 and the Representation of the People Act, 1951 to Sikkim.
Section 25A of the said Act provides : "25 A. Conditions of registration as elector in Sangha Constituency in Sikkim Notwithstanding anything contained in sections 15 and 29, for the Sangha Constituency in the State of Sikkim, only the Sanghas belonging to monasteries, recognised for the purpose of the elections held in Sikkim in April, 1974, for forming the Assembly for Sikkim, shall be entitled to be registered in the electoral roll, and the said electoral roll shall, subject to the provisions of sections 21 to 25, be prepared or revised in such manner as may be directed by the Election Commission, in consultation with the Government of Sikkim.
" By the "Representation of the People (Amendment) Ordinance, 1979" promulgated by the President of India on 11.9.1979, amendments were introduced to the Representation of the People Act, 1950 and the Representation of the People Act, 1951 to enable fresh elections to the Sikkim Assembly on certain basis considered appropriate to and in conformity with the historical evolution of the Sikkim 's political institutions.
the Ordinance was later replaced by Representation of the People Amendment) Act, 1980 by which subsection (1 A) was inserted in Section of the Representation of the People Act, 1950.
That sub section provides: "(1 A).
Notwithstanding anything contained in sub section
(1), the total number of seats in the Legislative Assembly of the State of Sikkim, to be constituted at anytime after the commencement of the Representation of the People (Amendment) Act 1980 to be filled by persons chosen by direct election from assembly constituencies shall be thirty two, of which 965 (a)twelve seats shall be reserved for Sikkimese of Bhutia Lepcha origin; (b)two seats shall be reserved for the Scheduled Caste of that State; and (c)one seat shall be reserved for the Sanghas referred to in Section 25 A. Explanation : In this sub section 'Bhutia ' includes Chumbipa, Dopthapa, Dukpa, Kagatey, Sherps, Tibetan, Tromopa and Yolmo." Section 5 A was also introduced in the Representation of the People Act, 1951.
Sub section (2) of Section 5A provides : "5A (2) Notwithstanding anything contained in Section 5, a person shall not be qualified to be chosen to fill a seat in the Legislative Assembly of the State of Sikkim, to be constituted at any time after the commencement of the Representation of the People (Amendment) Act, 1980 unless (a)in the case of a seat reserved for Sikkimese of BhutiaLepcha origin, he is a person either of Bhutia or Lepcha origin and is an elector for any assembly constituency in the State other than the constituency reserved for the Sanghas ' (b)in the case of a seat reserved for the Scheduled Castes, he is a member of any of those castes in the State of Sikkim and is an elector for any assembly constituency in the State; (c)in the case of a seat reserved for Sanghas, he is an elector of the Sangha constituency; and (d)in the case of any other seat, he is an elector for any assembly constituency in the State." 12.Petitioners assail the constitutionality of the provisions for reservation of seats in favour of Bhutias Lepchas and the "Sangha".
966 On the contentions urged in support of the petitions, the points that fall for consideration, are the following (a)Whether the questions raised in the petitions pertaining as they do to the terms and conditions of accession of new territory are governed by rules of public international law and are non justiciable on the "political questions doctrine"? (b)Whether clause (f) of Article 371 F of the Constitution of India, introduced by the Constitution (36th Amendment) Act, 1975 is violative of the basic features of democracy? (c)Whether Secton 7(1A) and Section 25A of the Representation of the People Act, 1950 as inserted by , 19761 and Representation of the People (Amendment) Act, 1980 respectively and Section 5A(2) of the Representation of the People Act, 1951 as inserted by the Representation of the People (Amendment) Act, 19801 providing for reservation of 12 seats, out of 32 seats in the Sikkim Legislative Assembly in favour of Bhutias Lepachas, are unconstitutional as violative of the basic features of democracy and republicanism under the Indian Constitution? (d)Whether the aforesaid provisions and the reservations made thereunder are violative of Article 14,170(2) and 332 of the Constitution? Whether they violate 'one person one vote ' rule? Or are these differences justified in the historical background of Sikkim and are incidental to the political events culminating in the cession of Sikkim? (e)Whether the reservation of 12 seats out of 32 seats reserved for Bhutias Lepchas is ultra vires of clause (f) of Article 371 F in that while that provision enabled the protection of the rights and interests of different ' sections of population of Sikkim and for the number of seats in the Legislative Assembly which may be filled by the candidates belonging to such sections, the impugned provisions pro 967 vide for one section alone, namely, the Bhutias Lepchas.
(f)Whether, at all events in view of the Constitution (Sikkim) Scheduled Tribes Order, 1978 declaring Bhutias and Lepchas as a Schedule Tribe, the extent of reservation of seats is disproportionate and violative of Article 332(3) of the Constitution which requires that the number of seats to be reserved shall bear as nearly as may be, the same proportion to the total number of the seats in the Assembly as the population of the Scheduled Tribe in the State bears to the total population of the State.
(g)Whether the reservation of one seat for Sangha to be elected by an Electoral College of Lamaic monasteries is based purely on religious distinctions and is, therefore, unconstitutional as violative of Articles 15(1) and 325 of the Constitution and as violative of the principle of secularism? Re Contention (a) 13.
The territory of Sikkim was admitted into the Indian Union by an act of voluntary cession by the general consent of its inhabitants expressed on a Referendum.
Referring to the acquisition of title to territory by cession, a learned author says : "(f) Title by Cession Title to territory may also be acquired by an act of cession, which means, the transfer of sovereignty over State territory by the owner (ceding) State to the acquiring State.
It rests on the principle that the right of transferring its territory is a fundamental attribute of the sovereignty of a State.
" "Plebiscite The method of plebiscite in certain cases was adopted by the Treaties of Peace after the First World War, and it had the buoyant blessing of President Wilson who told the Congress: "No peace can last or ought to last, which does not recognise and accept the principle that government drive all their just powers from the consent of the governed, and that no right anywhere exists to hand peoples 968 about from sovereignty as if they were property.
" Article 26 of the Constitution of France (1946) provides that no new territory shall be added to France without a plebiscite.
In certain cases, cession may be made conditional upon the result of a plebiscite, which is held to give effect to the principle of self determination.
In other words, no cession shall be valid until the inhabitants have given their consent to it by a plebiscite.
It is often only a technicality, as in Outer Mongolia, in 1945, and in South West Africa, in 1946.
As Oppenheim observes, it is doubtful whether the law of nations will ever make it a condition of every cession that it must be ratified by a plebiscite." [See : Substance of Public International Law Western and Eastern : A.K. Pavithran First Edition, 1965 at pp.
281 21] Sri Parasaran urged that the rights of the inhabitants of a territory becoming part of India depend on the terms subject to which the territory is admitted and Article 2 confers wide powers on the Parliament.
Sri Parasaran urged that the considerations that guide the matter are eminently political and are outside the area of justiciability.
Sri Parasaran said that the inhabitants of a territory can claim and assert only those rights that the succeeding sovereign expressly confers on them.
Sri Parasaran relied upon the following observations of Chief Justice Chandrachud in Vinod Kumar Shantilal Gosalia vs Gangadhar Narsingdas Agarwal & Ors., ; "Before considering the merits of the respective contentions bearing on the effect of the provisions of the Administration Act and the Regulation, it is necessary to reiterate a well settled legal position that when a new territory is acquired in any manner be it by consent, annexation or cession following upon a treaty the new " sovereign" is not bound by the rights which the residents of the conquered territory had against their sovereign or by the obligations of the old sovereign towards his subjects.
The rights of the residents of a territory against their state of sovereign come to an end with the conquest, annexation or cession of that territory and do not pass on to the new environment.
The inhabitants of the acquired territory 969 bring with them no rights which they can enforce against the new State of which they become inhabitants.
The new state is not required, by any positive assertion or declaration, to repudiate its obligations by disowning such rights.
The new state may recongnise the old rights by re granting them which, in the majority of cases, would be a matter of contract or of executive action; or, alternatively, the recognition of old rights may be made by an appropriate statutory provisions whereby rights which were in force immediately before an appointed date are saved.
Whether the new state has accepted new obligations by recognising old rights, is a question of fact depending upon whether one or the other course has been adopted by it.
And, whether it is alleged that old rights are saved by a statutory provision, it becomes necessary to determine the kind of rights which are saved and the extend to which they are saved.
" But, we are afraid these observations are inapposite in the present context as the situation is different here.
What the argument overlooks is that the petitioners are not seeking to enforce such rights as vested in them prior to the accession.
What they seek to assert and enforce, are the rights which the Indian Constitution confers on them upon the accession of their territory into the Indian Union and as arising from the conferment on them of Indian citizenship.
In the present cases the question of recognition and enforcement of the rights which the petitioners, as residents of the ceded territory had against their own sovereign or by the obligations of the old sovereign its people, do not arise.
The principal questions are whether there are any constitutional limitations on the power of Parliament in the matter of prescription of the terms and conditions for admission of a new State into the Union of India; and if so, what these limitations are.
Articles 2 and 4 of the Constitution provide "2.
Parliament may by law admit into the Union.
or establish, new States on such terms and conditions as it thinks fit." 970 "4.
(1) Any law referred to in article 2 or article 3 shall contain such provisions for the amendment of the First Schedule and the Fourth Schedule as may be necessary to give effect to the provisions of the law and may also contain such supplemental, incidental and consequential provisions (including provisions as to representation in Parliament and in the Legislature or Legislatures of the State or States affected by such law) as Parliament may deem necessary.
(2) No such law as aforesaid shall be deemed to be an amendment of this Constitution for the purpose of article 368.
Can the Parliament in imposing terms and conditions in exercise of power under Article 2 stipulate and impose conditions inconsistent with the basic and fundamental principles of Indian Constitutionalism? Or is it imperative that the newly admitted State should be treated exactly similar to the States as at the time of the commencement of the Constitution? If not, what is the extent of the permissible departure and latitude and do the conditions in clause (f) of Article 371 F and as expressed in the electoral laws as applicable to Sikkim go beyond these constitutionally permissible limits? These are some of the questions.
15.The learned Attorney General for the Union of India and Sri Parasaran sought to contend that the terms and conditions of admission of a new territory into the Union of India are eminently political questions which the Court should decline to decide as these questions lack adjudica tive disposition.
This political thickets doctrine as a restraint on judicial power has been the subject of forensic debate, at once intense and interesting, and has evoked considerable judicial responses.
16.In "The Constitution of the United States of America" (Analysis and Interpretation; Congressional Research Service: Library of Congress 1982 Edn.
at p.703), the following statement of the law on the subject occurs: " It may be that there will be a case assuredly within the Court 's jurisdiction presented by the parties with standing 971 in which adverseness and ripeness will exist, a case in other words presenting all the qualifications we have considered making it a justiciable controversy, which the Court will nonetheless refuse to adjudicate.
The "label" for such a case is that it presents a "political question".
Tracing the origins and development of this doctrine, the authors refer to the following observations of Chief Justice Marshall in Marbury vs Madison, US 137, 170 (1803) : "The province of the court is, solely, to decide on the rights of individuals, not to inquire how the executive, or executive officers, perform duties in which they have a discretion.
Questions in their natural political, or which are, by the constitution and laws, submitted to the executive can never be made in this court.
(emphasis supplied) The authors further say "But the doctrine was asserted even earlier as the Court in Ware vs Hylton, US 199 (1796) refused to pass on the question whether a treaty had been broken.
And in Martin vs Mott, US 19 (1827) the Court held that the President acting under congressional authorization had exclusive and unreviewable power to determine when the militia should be called out.
But it was in Luther vs Borden US 1 (1849) that the concept was first enunciated as a doctrine separate from considerations of interference with executive functions.
" 17.Prior to the decision of the Supreme Court of the United States in Baker vs Carr, ; the cases challenging the distribution of political power through apportionment and districting, weighed voting, and restrictions on political action were held to present non justiciable political questions.
The basis of this doctrine was the "seeming conviction of the courts that the issues raised were well beyond the judicial responsibility".
In Baker vs Carr, the Court undertook a major rationalisation and formulation of the 'political question doctrine ' which led to considerable narrowing 972 of its application.
The effect Baker vs Carr., and the later decision in Poweel vs McCormack, ; is that in the United States of America certain controversies previously immune from adjudication were held justiciable and decided on the merits.
The rejection of the political thickets arguments in these cases marks a narrowing of the operation of the doctrine in other areas as well.
In Japan Whaling Ass 'n vs American Cetacean Society, 478 the American Supreme Court said "We address first the Japanese petitioners ' contention that the present actions are unsuitable for judicial review because they involve foreign relations and that a federal court, therefore, lacks the judicial power to command the Secretary of Commerce, an Executive Branch official, to dishonor and repudiate an international agreement.
Relying on the political question doctrine, and quoting Baker vs Carr., ; , 217 ; , (1969) the Japanese Petitioners argue that the danger of "embar rassment from multifarious pronouncements by various departments on one question" bars any judicial resolution of the instant controversy." (Page 178) "We disagree.
Baker carefully pointed out that not every matter touching on politics is a political question, id., at 209; , , , and more specifically, that it is "error to suppose that every case of controversy which touches foreign relations lies beyond judicial cognizance." Id., at 211; , , The political question doctrine excludes from judicial review those controversies which revolve around policy choices and value determinations constitutionally committed for resolution to the halls of Congress or the confines of the Executive Branch.
The Judiciary is particularly ill suited to make such decisions, as "courts are fundamentally under equipped to formulate national policies or develop standards for matters not legal in nature." (P. 178) 973 "As Bakerplainly held, however, the courts have the authority to construe treaties and executive agreements, and it goes without saying that interpreting congressional legislation is a recurring and accepted task for the federal courts.
It is also evident that the challenge to the Secretary 's decision not to certify Japan for harvesting whales in excess of IWC quotas presents a purely legal question of statutory interpretation.
The Court must first determine the nature and scope of the duty imposed upon the secretary by the Amendments, a decision which calls for applying no more than the traditional rules of statutory construction, and then applying this analysis to the particular set of facts presented below.
We are cognizant of the interplay between these Amendments and the conduct of this Nation 's foreign relations, and we recognize the premier role which both Congress and the Executive play in this field.
But under the Constitution, one of the Judiciary 's characteristic roles is to interpret Statutes, and we cannot shirk this responsibility merely because our decision may have significant political overtones." (PP.
178 9) (emphasis supplied) 18.Our Court has received and viewed this doctrine with a cautious reservation.
In A.K Roy vs Union of India, ; at 296 7, Chief Justice Chandrachud recognised that the doctrine, which was essentially a function of the separation of powers in America, was to be adopted cautiously and said "It must also be mentioned that in the United States itself, the doctrine of the political question has come under a cloud and has been the subject matter of adverse criticism.
It is said that all that the doctrine really means is that in the exercise of the power of judicial review, the courts must adopt a 'prudential ' attitude, which requires that they should be wary of deciding upon the merit of any issue in which claims of principle as to the issue and claims of expediency as to the power and prestige of courts are in sharp conflict.
The result, more or less, is that in America 974 the phrase "political question ' has become 'a little more than a play of words".
There is further recognition of the limitation of this doctrine in the pronouncement of this Court in Madhav Rao vs Union of India; , and State of Rajasthan vs Union of India; , 19.It is urged for the respondents that Article 2 of the Constitution empowers the Parliament, by law, to admit into the Union new States "on such terms and conditions as it finds fit" and that these considerations involve complex questions of political policy and expedience; of international relations; of security and defence of the realm etc.
which do not possess and present judicially manageable standards.
Judicial response to these questions, it is urged, is judicial restraint.
The validity of clause (f) of Article 371 F introduced by the Constitution (36th Amendment) Act, 1975 is assailed on the ground that the said clause provides for a reservation which violates 'one person one vote ' rule which is essential to democracy which latter is itself a basic feature of the Constitution.
The power to admit new States into the Union under Article 2 is, no doubt, in the very nature of the power, very wide and its exercise necessarily guided by political issues of considerable complexity many of which may not be judicially manageable.
But for that reason, it cannot be predicated that Article 2 confers on the Parliament an unreviewable and unfettered power immune from judicial scrutiny.
The power is limited by the fundamentals of the Indian constitutionalism and those terms and conditions which the Parliament may deem fit to impose, cannot be inconsistent and irreconcilable with the foundational principles of the Constitution and cannot violate or subvert the Constitutional scheme.
This is not to say that the conditions subject to which a new State or territory is admitted into the Union ought exactly be the same as those that govern all other States as at the time of the commencement of the Constitution.
It is, however, urged that Article 371F starts with a non obstante clause and therefore the other provisions of the Constitution do not limit the power of impose conditions.
But Article 371 F cannot transgress the basic features of the Constitution.
The non obstante clause cannot be construed as taking clause (f) of Article 371F outside the limitations on the 975 amending power itself The provisions of clause (f) of Article 371 F and Article 2 have to be construed harmoniously consistent with the foundational principles and basic features of the Constitution.
Whether clause (f) has the effect of destroying a basic feature of the Constitution depends, in turn, on the question whether reservation of seats in the legislature based on ethnic group is itself destructive of democratic principle.
Whatever the merits of the contentions be, it cannot be said the issues raised are non justiciable.
In Mangal Singh & Anr.
vs Union of India, ; at 112 this Court said : ".
Power with which the Parliament is invested by articles 2 and 3, is power to admit, establish, or form new States which conform to the democratic pattern envisaged by the Constitution; and the power which the Parliament may exercise by law is supplemental, incidental or consequential to the admission, establishment or formation of a State as contemplated by the Constitution, and is not power to override the constitutional scheme".
Even if clause (f) of Article 371 F is valid, if the terms and conditions stipulated in a law made under Article 2 read with clause (f) of Article 371F go beyond the constitutionally permissible latitudes, that law can be questioned as to its validity.
The contention that the vires of the provisions and effects of such a law are non justiciable cannot be accepted.
Contention (a) requires to be and is rejected.
Re : Contentions (b), (c) and (d) 20.The objection of non justiciability thus out of their way, he petitioners urge that the provisions in clause (f) of Article 371F enabling reservation of seats for sections of the people and law made in exercise of that power providing reservation of seats to Bhutias Lepchas violate fundamental principles of democracy and republicanism under the Indian Constitution and violate the 'one person one vote ' rule which, it is urged, is a basic to the republican principle found in Article 170(2) of the Constitution.
976 Sri R.K. Jain, learned senior counsel for the petitioners said that apart from the invalidity of the power itself the exercise of the power in the matter of the extent of the reservations made for Bhutias Lepchas has the effect of whittling down, correspondingly, the value of the votes of the Sikkimese of Nepalese origin and is destructive of the equality principle and the democratic principle.
Clauses (1) and (2) of Article 170 provide "170.
(1) Subject to the provisions of article 333, the Legislative Assembly of each State shall consist of not more than five hundred, and not less than sixty, members chosen by direct election from territorial constituencies in the State.
(2)For the purposes of clause (1), each State shall be divided into territorial constituencies in such manner that the ratio between the population of each constituency and the number of seats allotted to it shall, so far as practicable be the same throughout the State.
Explanation.
In this clause, the expression "population" means the population as ascertained at the last preceding census of which the relevant figures have been published:" This provision incorporates the rule of 'fair and effective representation '.
Though the rule 'one person one vote ' is a broad principle of democracy, it is more a declaration of a political ideal than a mandate for enforcement with arithmetical accuracy.
These are the usual problems that arise in the delimitation of constituencies.
In what is called "First past thepost" system of elections, the variations in the size and in the voting populations of different constituencies, detract from a strict achievement of this ideal.
The system has the merit of preponderance of "decisiveness" over "representativeness".
Commenting on this phenomenon Keith Graham in "The Battle of Democracy.
Conflict, Consensus and the Individual" says : "This, in existing systems where voters are electing representatives, examples of gross inequality between the powers of different votes occur, either because of disparities in constituency size or because of the anomalies produced in a first past the post system.
There was, for instance, an 977 occasion when one Californian State Senator represented six million electors and another one fourteen thousand electors (Portter 1981:114); in February, 1974 constituencies in England varied from 96,380 to 25,007 electors (Hansard Society Commission 1976:7); and in the United Kingdom between 1945 and 1976 nine out of ten of the elected governments acquired more than 50 per cent of the seats, but none acquired 50 per cent of the votes cast (ibid.:9).
When the United States Supreme Court asserted that it had jurisdiction in the matter of huge disparities in the value of citizens ' votes.
it did so, significantly, by referring to the Fourteenth Amendment, which guarantees equal protection of the laws." (Page 55) 21.The concept of political equality underlying a democratic system.
is a political value.
Perfect political equality is only ideological.
Indeed, a, Rodney Brazier points out in his "Constitutional Reform: Reshaping the British Political System" : "Inextricably linked in the voting system with unfairness is the supremacy of decisiveness over representativeness.
The first past the post system has developed into a mighty engine which can be relied on to produce a government from one of the two principal parties.
But in that development the purpose of gathering a House of Commons which is broadly representative of the electorate has rather faded.
This would be possibly not be as important as it is if the elective function worked on the basis of a majority of voters conferring a parliamentary majority on the winning party.
Patently, however, it does not do so.
Mrs. Thatcher 's 144 seat landslide majority in 1983, and her huge 102 seat majority in 1987, were achieved even though on both occasions some 57 per cent of votes were given to other parties.
Almost 60 per of voting citizens voted against the Conservative Government.
This is by no means a recent phenomenon.
Attlee 's 146 seat majority in 1945 was won on under 48 per cent of the vote, and indeed no winning party has been supported by half or more of those going to the polls since the general election of 1935.
Are the 978 virtues of the British electoral system simplicity, decisiveness, its ability to produce stable governments, and so on so self evident as to justify such distortions of the electoral will? It is really necessary to have voting system predicated either on the representative function, or (as in Britain) on the elective function?" (Page 46) Again, Brazier in "Constitutional Practice ' (Clarendon Press Oxford) says "The first past the post system usually has the advantage of producing a majority government at a general election: it is decisive, simple, and familiar to the electorate.
Yet it is also unfair.
No one could say that a scheme which gives one political group three per cent of the seats from 22.6 per cent of the national vote, but which gives another party 36 per cent of the seats with a mere eight per cent more of the votes, does anything but violence to the concept of fair play as the British understand it.
The present system also underspins elective dictatorship in a way that different electoral rules, Which would return more MPs from third (and perhaps fourth) parties, would undermine.
And we speak of 'majority governments ' by reference to seats won in the House, but no government has been returned with a majority of the popular vote since 1935." (Page 191) Arend Lijphart in "Democracy in Plural Societies" observes "Formidable though the classic dangers are of a plurality of sovereign states, these have to be reckoned against those inherent in the attempt to contain disparate communities within the framework of a single government.
In the field of peace research, there is a similar tendency to frown on peace which is achieved by separating the potential enemies significantly labeled "negative ' peace and to strive for peace based on fraternal feeling within a single integrated and just society: "positive" peace.
(P. 47) The problem of equality of the value of votes is further complicated by a progressive rural depopulation and increasing urbanisation.
In the 979 work "Legislative Apportionment : Key to Power" (Howard D. Hamilton) the learned author says : "But even the right to vote, and its exercise does not in itself insure equal voice in the affairs of government.
Today more than 175 years after the nation was founded the votes of millions of citizens are worth only one half, one quarter and even one one hundredth the value of votes of others because of the unfair formulas by which we elect the Unites States Congress and the legislatures of the forty eight states.
As our population grows and moves continuously toward urban centres, the ballots of millions become less and less equal to the votes of others.
Our system of representative government is being sapped at its roots." "Who are the second class citizens in this under represented majority? They are the millions living in our towns and cities, says the United States Conference of Mayors, pointing to the fact that the 59 per cent of all Americans who were living in urban centers in 1947 elected only 25 percent of the state legislators." (Page 74) Gordon E. Baker writing on "One Person, One Vote : "Fair and Effective Representation?" [Representation and Misrepresentation Rand McNally & Co. Chicago] says : "While population inequality among legislative districts is hardly new, its has become a major source of controversy primarily in the twentieth century." "A statistical analysis of the New Jersey Senate by Professor Ernest C. Reock, Jr., revealed that "The average relative population deviation rose from 27.7.
per cent in 1791 to 80.0 per cent in 1922.
The ratio between the largest and smallest counties only 7.85 at the.
beginning of that period reached 33.51 at the end.
The minimum percentage of the state 's population residing in counties electing a majority of the Senate dropped from 41.0 per cent to 15.9 per cent." (PP.
72 3) 980 22.
Sri Jain, however, relied upon the decision in B 4.
Reynolds vs M. O. Sims, at 527 in which it was observed : "Undoubtedly, the right of suffrage is a fundamental matter in a free and democratic society.
Especially since the right to exercise the franchise in a free and unimpaired manner is preservative of other basic civil and political rights, any allege infringement of the right of citizens to vote must be carefully and meticulously scrutinized." " Legislators represent people, not trees or acres.
Legislators are elected by voters, not farms or cities or economic interests.
As long as ours is a representative form of government, and our legislatures are those instruments of government elected directly by and directly representative of the people, the right to elect legislators in a free and unimpaired fashion is a bedrock of our political system." "And, if a State should provide that the votes of citizens in one part of the State should be given two times, or five times, or 10 times the weight of votes of citizens in another part of the State, it could hardly be contended that the right to vote of those residing in the disfavored areas had not been effectively diluted.
It would appear exordinary to suggest that a State could be constitutionally permitted to enact a law providing that certain of the State 's voters could vote two, five or 10 times for their legislative representatives, while voter s living elsewhere could vote only once.
" Even so, Chief Justice Warren observed ".
We realize that it is a practical impossibility to arrange legislative districts so that each one has an identical number of residents, or citizens, or voters.
Mathematical exactness or precision is hardly a workable constitutional requirement." (p.536) ".
So long as the divergences from a strict population standard are based on legitimate considerations incident to the 981 effectuation of a rational state policy some deviations from the equal population principle are constitutionally permissible with respect to the apportionment of seats in either or both of the two houses of a bicameral state legislature." (p.537) (emphasis supplied) 23.Section 24 of the Australian Constitution requires that "the House of Representatives shall be composed of members directly chosen by the people of Commonwealth".
The High Court of Australia considered the principle of Reynolds vs Sims, (supra) somewhat inapposite in the Australian context.
In Attorney General (CTH) exhibit Rel Mckinlay vs The Commonwealth,[1975] ; at p.22 Barwick CJ observed : "It is, therefore, my opinion that the second paragraph of s.24 cannot be read as containing any guarantee that there shall be a precise mathematical relationship between the number of members chosen in a State and the population of that State or that every person in Australia or that every elector in Australia will have a vote, or an equal vote.
" Mason, J. said : "The substance of the matter is that the conception of equality in the value of a vote or equality as between electoral divisions is a comparatively modern development for which no stipulation was made in the system of democratic representative government provided for by our Constitution." (p.62) 24.It is true that the right to vote is central to the right to participation in the democratic process.
However, there is less consensus amongst theorists on the propriety of judicial activism in the voting area.
In India, the Delimitation Laws made under Article 327 of the Constitution of India, are immune from the 'judicial test of their validity and the process of allotment of seats and constituencies not liable to be called in question in any court by virtue of Article 329(a) of the Constitution.
But the laws providing reservations are made under authority of other provisions of the Constitution such as those in article 332 or clause (f) of Article 371F which ' 982 latter is a special provision for Sikkim.
25.The rationale and constitutionality of clause (f) and the other provisions of the electoral laws impugned in these petitions are sought to be justified by the respondents on grounds that first, a perfect arithmetical equality of value of votes is not a constitutionally mandated imperative of democracy and, secondly, that even if the impugned provisions make a departure from the tolerance limits and the constitutionally permissible latitudes, the discriminations arising are justifiable on the basis of the historical considerations peculiar to and characteristic of the evolution of Sikkim 's political institutions.
This, it is urged, is the justification for the special provisions in clause (f) which was specifically intended to meet the special situation.
It is sought to be pointed out that throughout the period when the ideas of responsible Government sprouted in Sikkim, there has been a vigilant political endeavour to sustain that delicate balance between Bhutias Lepchas on the one hand and the Sikkimese of Nepalese origin on the other essential to the social stability of that mountain State.
Clause (f) of Article 371F was intended to prevent the domination of the later Nepali immigrants who had, in course of time, outnumbered the original inhabitants.
What Article 371 F(f) and the electoral laws in relation to Sikkim seek to provide, it is urged, is to maintain this balance in the peculiar historical setting of the development of Sikkim and its political institutions.
26.So far as the 'Sangha ' is concerned it is urged that though it was essentially a religious institution of the Buddhists, it however occupied a unique position in the political, social and cultural fife of the Sikkimese society and the one seat reserved for it cannot, therefore, be said to be based on considerations 'only ' of religion.
In the counter affidavit filed by the Sikkim Tribal Welfare Association, certain special aspects of the position of the 'Sangha ' in Sikkim 's polity are emphasised.
Reference to and reliance has been placed on the extracts from "The Himalayan Gateway ' (History and Culture of Sikkim) in which the following passages occur: "The reservation for the Sangha is the most unique feature of the political set up in the State.
It is a concession to continuity and is admittedly short term.
Before the revolu tion the Buddhist Sangha of the Lamas wielded immense power, both religious and political.
The people have come to have great faith in their wisdom and justice.
They are 983 universally respected and still command considerable influence with a section of the people who would be called poor and politically backward.
The presence of onle of their representatives in the Assembly could possibly give the illiterate masses a greater faith in its deliberations.
"(P.149) "Finally lamaism is a social Organisation.
The lamas (to a lesser extent the nuns) are arranged in a disciplined hierarchy.
They are a section of society which performs for the whole society its religious functions; in return the rest of society should give material support to the lamas. (PP.
192 193) "It is calculated that about ten per cent of the combined Bhutia Lepcha population are monks.
Could there be anything more telling for the spiritual heritage of the people.
According to tradition the second son of every Bhutia house hold is to be called to the Sangha the order of Buddhist monks.
No matter where one goes, one can come across a monastery called Gompa.
For a small state like Sikkim in which the Buddhist Bhutia Lepcha population hardly exceed thirty thousands, there are more than thirty famous monasteries.
In fact most of the prominen t hilltops of the country are crowned with a monastery shrine or a temple.
Apart from these at every village there is a Gompa or a village monastery with a resident lama looking after the spiritual needs of a small community.
Frequently, Chorten, the lamaist version of the original Buddhist stupa, are also seen." (pp. 112 3) "Life in the countryside centres round the monastery of the Buddhist monks, the lamas.
Birth, death, sickness all are occasions for the lamas to be called in for the performance of appropriate ceremonies.
Just putting up a prayer flag even needs the attendance of lamas.
"(p. 115) Since the rulers were also monk incarnates constantly in transaction with the high Lamas of Tibet and the DebRaja of Bhutan, these monks were used as emissaries, 984 medioators, and settlers of various state affairs.
In internal administration also, the monks held important positions.
They were appointed to the State Council, they managed the monastery estates, administered justice and even helped the laity in fighting against the enemies.
Though economically dependent, they were very much influential both in the court and in public life.
In fact, it was these clergymen who managed the affairs of the state in collaboration with Kazis." (p. 18, 19) 27.As is noticed earlier Article 2 gives a wide latitude in the matter of prescription of terms and conditions subject to which a new territory is admitted.
There is no constitutional imperative that those terms and conditions should ensure that the new State should, in all respects, be the same as the other States in the Indian Union.
However, the terms and conditions should not seek to establish a form or system of Government or political and governmental institutions alien to and fundamentally different from those the Constitution envisages.
Indeed, in "Constitutional Law of India", [Edited by Hidayatullah, J. published by the Bar Council of India Trust], it is observed "Foreign territories, which after acquisition, become a part of the territory of India under Article 1(3) (c) can be admitted into the Union of India by a law passed under Article 2.
Such territory may be admitted into the Union of India or may be constituted into new States on such terms and conditions as Parliament may think fit.
Such territory can also be dealt with under clause (a) or (b) of Article 3.
This means that for admitting into the Indian Union or establishing a new State, a parliamentary, law is necessary and the new State so admitted or established cannot claim complete equality with other Indian States, because Parliament has power to admit or establish a new State "on such terms and conditions as it thinks fit".
I, Page 58) (Emphasis supplied] 985 28.In judicial review of the vires of the exercise of a constitutional power such as the one under Article 2, the significance and importance of the political components of the decision deemed fit by Parliament cannot be put out of consideration as long as the conditions do not violate the constitutional fundamentals.
In the interpretation of constitutional document, "words are but the framework of concept and concepts may change more than words themselves".
The significance of the change of the concepts themselves is vital and the constitutional issues are not solved by a mere appeal to the meaning of the words without an acceptance of the line of their growth.
It is aptly said that 'the intention of a Constitution is rather to outline principles than to engrave details '.
Commenting on the approach appropriate to a Constitution, a learned author speaking of another federal document says (The Australian Law Journal, Vol. 43 at p.256) : "A moment 's reflection will show that a flexible approach is almost imperative when it is sought to regulate the affairs of a nation by powers which are distributed, not always in the most logical fashion, among two or more classes of political agencies.
The difficulties arising from this premise are much exacerbated by the way in which the Australian Constitution came to be formed : drafted by many hands, then subjected to the hazards of political debate, where the achievement of unanimity is often bought at the price of compromise, of bargaining and expediency." 29.An examination of the constitutional scheme would indicate that the concept of 'one person one vote ' is In its very nature considerably tolerant of imbalances and departures from a very strict application and enforcement.
The provision in the Constitution indicating proportionality of representation is necessarily a broad, general and logical principle but not intended to be expressed with arithmetical precision.
Articles 332 (3A) and 333 are illustrative instances.
The principle of mathematical proportionality of representation is not a declared basic requirement in each and every part of the territory of India.
Accommodations and adjustments, having regard to the political maturity, awareness and degrees of political development in different parts of India, might supply the justification for 986 even non elected Assemblies wholly or in part, in certain parts of the country.
The differing degrees of political development and maturity of various parts of the country, may not justify standards based on mathematical accuracy.
Articles 371A, a special provisions in respect of State of Negaland, 239A and 240 illustrate the permissible areas and degrees of departure.
The systemic deficiencies in the plenitude of the doctrine of fun and effective representation has not been understood in the constitutional philosophy as derogating from the democratic principle.
Indeed the argument in the case, in the perspective, is really one of violation of the equality principle rather than of the democratic principle.
The inequalities in representation in the present case are an inheritance and compulsion from the past.
Historical considerations have justified a differential treatment.
Article 371F (f) cannot be said to violate any basic feature of the Constitution such as the democratic principle.
30.From 1975 and onwards, when the impugned provisions came to be enacted, Sikkim has been emerging from a political society and monarchical system into the mainstream of a democratic way of life and an industrial civilisation.
The process and pace of this political transformation is necessarily reliant on its institutions of the past.
Mere existence of a Constitution, by itself, does not ensure constitutionalism or a constitutional culture.
It is the political maturity and traditions of a people that import meaning to a Constitution which otherwise merely embodies political hopes and ideals.
The provisions of clause (f) of the Article 371F and the consequent changes in the electoral laws were intended to recognise and accommodate the pace of the growth of the political institutions of Sikkim and to make the transition gradual and peaceful and to prevent dominance of one section of the population over another on the basis of ethnic loyalties and identities.
These adjustments and accommodations reflect a political expediencies for the maintenance of social equilibrium.
The political and social maturity and of economic development might in course of time enable the people` of Sikkim to transcend and submerge these ethnic apprehensions and imbalances and might in future one hopes sooner usher in a more egalitarian dispensation.
Indeed, the impugned provisions, in their very nature, contemplate and provide for a transitional phase in the political evolution of Sikkim and are thereby essentially transitional in character.
987 It is true that the reservation of ' seats of the kind and the extent brought about by the impugned provisions may not, if applied to the existing States of the Union, pass the Constitutional muster.
But in relation to a new territory admitted to the Union, the terms and conditions are not such as to fall outside the permissible constitutional limits.
Historical considerations and compulsions do justify in equality and special.
treatment.
In Lachhman Dass etc.
vs State of Punjab & Ors.
, ; this court said "The law is now well settled that while Article 14 prohibits discriminatory legislation directed against one individual or class of individuals, it does not forbid reasonable classification, and that for this purpose even one person or group of persons can be a class.
Professor Willis says in his Constitutional Law p.580 "a law applying to one person or one class of persons is constitutional if there is sufficient basis of reason for it. .
And if after reorganisation of States and integration of the Pepsu Union in the State of Punjab, different laws apply to different parts of the State, that is due to historical reasons, and that has always been recognised as a proper basis of classification under Article 14.
" In State of Madhya Pradesh vs Bhopal Sugar Industries Ltd., ; at 850 this court said: The Legislature has always the power to make special laws to attain particular objects and for that purpose has authority to select or classify persons, objects or transactions upon which the law is intended to operate.
Differential treatment becomes unlawful only when it is arbitrary or not supported by a rational relation with the object of the statute. . where application of unequal laws is reasonably justified for historical reasons, a geographical classification founded on those historical reasons would be upheld.
" We are of the view that the impugned provisions have been found in the wisdom of Parliament necessary in the admission of a strategic border 988 A State into the Union.
The departures are not such as to negate fundamental principles of democracy.
We accordingly hold and answer contentions (b), (c) and (d) also against the petitioners.
Re : Contentions (e) and (f) 31.
Sri Jain submitted that clause (f) of Article 371F would require that wherever provisions for reservation of seats are considered necessary for the purpose of protecting the rights and interests of different sections of the population of Sikkim, such reservations are to be made for all such sections and not, as here, for one of them alone.
This contention ignores that the provision in clause (f) of article 371 F is merely enabling.
If reservation is made by Parliament for only one section it must, by implication, be construed to have exercised the power respecting the other sections in a negational sense.
The provision really enables reservation confined only to a particular section.
Sri Jain contended that Bhutias and Lepchas had been declared as Scheduled Tribes under the Constitution [Sikkim Scheduled Tribes] Order, 1978 and that the extent of the reservation in their favour would necessarily be governed by the provisions of Article 332(2) of the Constitution which requires that the number of seats to be reserved shall bear, as nearly as may be, the same proportion to the total number of seats in the Assembly as the population of the Schedule Tribes in the State bears to the total population of the State.
But, in our opinion, clause (f) of Article 371F is intended to enable, a departure from article 332(2).
This is the clear operational effect of the non obstante clause with which Article 371F opens.
Sri Jain pointed out with the help of certain demographic statistics that the degree of reservation of 38% in the present case for a population of 20%, is disproportionate.
This again has to be viewed in the historical development and the rules of apportionment of political power that obtained between the different groups prior to the merger of the territory in India.
A parity had been maintained all through.
We are of the opinion that the provisions in the particular situation and the permissible latitudes, cannot be said to be unconstitutional.
Re : Contention (g) 989 The contention is that the reservation of one seat in favour of the 'Sangha ' which is Bhuddhist Lamaic religious monasteries, is one purely based on religious considerations and is violative of Articles 15(1) and 325 of the Constitution and offends its secular principles.
The reservation of one seat for the 'Sangha ', with a special electorate of its own, might at the first blush appear to resuscitate ideas of separate electorates considered pernicious for the unity and integrity of the country.
The Sangha, the Buddha and the Dharma are the three fundamental postulates and symbols of Buddhism.
In that sense they are religious institutions.
However, the literature on the history of development of the political institutions of Sikkim adverted to earlier tend to show that the Sangha had played an important role in the political and social life of the Sikkimese people.
It had made its own contribution to the Sikkimese culture and political development.
There is material to sustain the conclusion that the 'Sangha ' had long been associated itself closely with the political developments of Sikkim and was inter woven with the.
social and political life of its people.
It view of this historical association, the provisions in the matter of reservation of a seat for the Sangha recognises the social and political role of the institution more than its purely religious identity.
In the historical setting of Sikkim and its social and political evolution the provision has to be construed really as not invoking the impermissible idea of a separate electorate either.
Indeed, the provision bears comparison to Articles 333 providing for representation for the Anglo Indian community.
So far as the provision for the Sangha is concerned, it is to be looked at as enabling a nomination but the choice of the nominee being left to the 'Sangha ' itself We are conscious that a separate electorate for a religious denomination would be obnoxious to the fundamental principles of our secular Constitution.
If a provision is made purely on the basis of religious considerations for election of a member of that religious group on the basis of a separate electorate, that would, indeed, be wholly unconstitutional.
But in the case of the Sangha, it is not merely a religious institution.
It has been historically a political and social institution in Sikkim and the provisions in regard to the seat reserved admit to being construed as a nomination and the Sangha itself being assigned the task of and enabled to indicate the choice of its nominee.
The provision can be sustained on this construction.
Contention (g) is answered accordingly.
990 33.For the foregoing reasons, all the petitions are dismissed without any order as to costs.
S.C. AGRAWAL, J. With due deference to my learned brethren for whom I have the highest regard, I regret my inability to concur fully with the views expressed in either of these judgments.
It has, therefore, become necessary for me to express my views separately on the various questions that arise for consideration.
These cases arise out of Writ Petitions which were originally filed under Article 226 of the Constitution in the High Court of Sikkim and have been transferred to this Court for disposal under Article 139A of the Constitution.
They involve challenge to the validity of the provisions in serted in the Representation of the People Act, 1950 (hereinafter referred to as the '1950 Act ') and the Representation of the People Act, 1951 (hereinafter referred to as the '1951 Act ') by the (10 of 1976) (hereinafter referred to as the '1976 Act ') and the Representation of the People (Amendment) Act, 1980 (Act No. 8 of 1080) (hereinafter referred to as the '1980 Act '), whereby (i) twelve seats out of thirty two seats in the Legislative Assembly of Sikkim have been reserved for Sikkimese of Bhutia Lepcha origin; and (ii) one seat has been reserved for Sanghas and election to the seat reserved for Sanghas is required to be conducted on the basis of a separate electoral roll in which only the Sanghas belonging.
to monasteries recognised for the purpose of elections held in Sikkim in April, 1974 for forming the Assembly for Sikkim are entitled to be registered.
For a proper appreciation of the questions that arise for consideration, it is necessary to briefly refer to the historical background in which the impugned provisions were enacted.
Sikkim is mainly inhabited by Lepchas, Bhutias and Nepalese.
Lepchas are the indigenous inhabitants.
Bhutias came from Kham in Tibet some time during fifteenth and sixteenth centuries and one of the chieftains was crowned Chogyal, or religious and secular ruler, in 1642.
Lepchas and Bhutias are Buddhists.
By the end of the last century, Sikkim became a British protectorate and it continued as such till 1947 when British rule came to an end in India.
During this period, while it was British protec 991 torate, there was immigration of Nepalese on a large scale and as a result, by 1947, Sikkimese of Nepali origin out numbered other people in a ratio of 2:1.
After the end of the British rule in 1947, Sikkim came under the protection of the Government of India.
On December 3, 1950, the Maharaja of Sikkim entered into a treaty with the President of India whereby it was agreed that Sikkim shall continue to be a Protectorate of India and subject to the provisions of the Treaty, shall enjoy autonomy in regard to its internal affairs.
On December 28, 1952, the Ruler of Sikkim issued a Proclamation to make provision for election of members of the State Council.
The said Proclamation envisaged twelve elected members in the Council out of which six were to be Bhutia Lepcha and six were to be Nepalese.
On March 23, 1953, another Proclamation known as the State Council and Executive Council Proclamation, 1953, was issued.
It provided for a State Council consisting of eighteen members (a President to be nominated and appointed by the Maharaja twelve elected members and five nominated members).
Out of the elected members six were to be either Sikkimese Bhutia or Lepcha and the remaining six were to be Sikkimese Nepalese.
By Proclamation dated March 16, 1958, the strength of the Council was raised to twenty.
The six seats for nominated members were retained and while maintaining the reservation of six seats for Bhutias and Lepchas and six seats for Nepalese, it was provided that there shall be one general seat and one seat shall be reserved for the Sangha.
It was provided that voting for the seat reserved for the Sangha will be through an electoral college of the Sanghas belonging to monasteries recognised by the Sikkim Darbar (Ruler of Sikkim).
Certain adaptations and modifications in the laws relating to election to and composition of the Sikkim Council were made by the Proclamation dated December 21, 1966 (known as the Representation of Sikkim Subjects Regulation, 1966) issued by the Chogyal (Ruler) of Sikkim.
Under the said Proclamation, for the purpose of election to the Sikkim Council, Sikkim was divided into five territorial constituencies, one General Constituency and one Sangha Constituency.
The General Constituency was to comprise the whole of Sikkim and the Sangha Constituency was to comprise the Sanghas belonging to the monasteries recognised by the Sikkim Darbar.
It was also declared that, besides the President who was to be appointed by the Chogyal, the Sikkim Council was to consist of twenty four members out 992 of which seven were to be Bhutia Lepcha and seven were to be Sikkimese Nepali who were to be elected from five territorial constituencies; three members were to be elected from the general constituency out of which one seat was to be a General seat, the second from the Scheduled Castes as enumerated in the Second Schedule annexed to the Proclamation, and the third from Tsongs; and the Sangha Constituency was to elect one member through an electoral college of the Sanghas.
Six seats were to be filled in by nomination made by the Chogyal at his discretion.
On May 8, 1973, a tripartite agreement was entered into by the Chogyal of Sikkim the Foreign Secretary to the Government of India and the leaders of the political parties representing the people of Sikkim, whereby it was agreed that the people of Sikkim would enjoy the right of election on the basis of adult suffrage to give effect to the principal of one man one vote and that there shall be an Assembly in the Sikkim and that the said Assembly shall be elected every four years and the elections shall be fair and free, and shall be conducted under the supervision of a representative of the Election Commission of India, who shall be appointed for the purpose by the Government of Sikkim.
Para (5) of the said agreement provided as under : "(5) The system of elections shall be so organised as to make the Assembly adequately representative of the various sections of the population.
The size and composition of the Assembly and of the Executive Council shall be such as may be prescribed from time to time, care being taken to ensure that no single section of the population acquires a dominating position due mainly to its ethnic origin, and that the rights and interests of the Sikkimese Bhutia Lepcha origin and of the Sikkimese Nepali, which includes Tsong and Scheduled Caste Caste origin, are fully protected '.
This tripartite agreement was followed by Proclamation dated February 5, 1954 issued by Chogyal of Sikkim.
The said Proclamation known as the Representation of Sikkim Subjects Act, 1974, provided that for the purpose of election to the Sikkim Assembly, Sikkim would be divided into thirty one territorial constituencies and one Sangha constituency and the Sangha constituency would comprise the Sanghas belong 993 ing to monasteries recognised by the Chogyal of Sikkim.
The Assembly was to consist of thirty two elected members.
Sixteen Constituencies were to be reserved for Sikkimese of Bhutia Lepcha origin, out of which one was reserved for the Sangha.
The remaining sixteen constituencies were to be reserved for Sikkimese of Nepali, including Tsong and Scheduled Caste, origin out of which one constituency was to be reserved for persons belonging to the Scheduled Castes notified in the Schedule annexed to the Proclamation.
The elections to the thirty one territorial constituencies were to be held on the basis of adult suffrage and the Sangha constituency was to elect one member through an electoral college of the Sanghas and a member of the electoral college for the Sanghas was not eligible to vote for any other constituency.
Elections for the Sikkim Assembly were held in accordance with the Representation of Sikkim Subjects Act, 1974 in April 1974.
The Sikkim Assembly thus elected, passed the Government of Sikkim Bill, 1974, and after having received the assent of the Chogyal of Sikkim the said Bill was notified as the Government of Sikkim Act, 1974.
As stated in the Preamble, the said Act was enacted to provide "for the progressive realisation of a fully responsible Government in Sikkim and for further strengthening its close relationship with India".
Section 7 of the said Act relating to elections to the Sikkim Assembly gave recognition to paragraph 5 of the tripartite agreement dated May 8, 1973 in sub section
(2) wherein it was provided: "(2) The Government of Sikkim may make rules for the purpose of providing that the Assembly adequately represents the various sections of the population, that is to say, while fully protecting the legitimate rights and interests of Sikkimese of Lepcha or Bhutia origin and of Sikkimese of Nepali origin and other Sikkimese, including Tsongs and Scheduled Castes no single section of the population is allowed to acquire a dominating position in the affairs of Sikkim mainly by reason of its ethnic origin".
Section 30 of the said Act made provision for association with the Government of India for speedy development of Sikkim in the social, ,economic and political fields.
By section 33 of the said Act, it was declared that the Assembly which had been formed as a result of the elections held in April, 1.974 shall be deemed to be the first Assembly duly constituted 994 under the said Act.
In order to give effect to the wishes of the people of Sikkim for strengthening Indo Sikkim cooperation and inter relationship, the Constitution of India was amended by the Constitution (Thirty Fifth Amendment) Act, 1974, as a result of which Article 2 A was inserted and Sikkim was associated with the Union on the terms and conditions set out in the Tenth Schedule inserted in the Constitution by the said amendment.
It appears that on April 10, 1975, the Sikkim Assembly unanimously passed a resolution wherein, after stating that the activities of the Chogyal of Sikkim were in violation of the objectives of the tripartite agreement dated May 8, 1973 and that the institution of Chogyal not only does not promote the wishes ' and expectations of the people of Sikkim but also impeded their democratic development and participation in the political and economic life of India, it was, declared and resolved : "The institution of the Chogyal is hereby abolished and Sikkim shall henceforth be a constituent unit of India, enjoying a democratic and fully responsible Government".
It was further resolved : "1.
The Resolution contained in part A" shall be submitted to the people forthwith for their approval.
The Government of India is hereby requested, after the people have approved the Resolution contained in part "A" to take such measures as may be necessary and appropriate to implement this Resolution as early as possible".
In accordance with the said Resolution, a special opinion poll was conducted by the Government of Sikkim on April 14, 1975 and in the said poll, 59, 637 votes were cast in favour and 1496 votes were cast against the Resolution out of a total electorate of approximately 97,000.
In view of the said resolution adopted unanimously by the Sikkim Assembly which was affirmed by the people of Sikkim in special opinion poll, the Constitution was further amended by the Constitution (Thirty Sixth Amendment) Act, 1975 whereby Sikkim was included as a full 995 fledged State in the Union and Article 371 F was inserted whereby special provisions with respect to the State of Sikkim were made.
By virtue of Clause (b) of Article 371 F the Assembly of Sikkim formed as a result of the elections held in Sikkim in April 1974 was to be deemed to be the Legislative Assembly of the State of Sikkim duly constituted under the Constitution and under Clause (c) the period of five years for which the Legislative Assembly was to function was to be deemed to have commenced on the date of commencement of the Constitution (Thirty Sixth Amendment) Act, 1975.
Clause (f) of Article 371 F empowers Parliament to make provision for reservation of seats in the Legislative Assembly of the State of Sikkim for the purpose of protecting the rights and interests of the different sections of the population of Sikkim.
Thereafter Parliament enacted the 1976 Act to provide for the extension of the 1950 Act and the 1951 Act to the State of Sikkim and introduced certain special provisions in the 1950 Act and the 1951 Act in their application to Sikkim.
Many of those provisions were transitory in nature being applicable to the Sikkim Assembly which was deemed to be the Legislative Assembly of the State of Sikkim under the Indian Constitution.
The only provision which is applicable to future Legislatures of Sikkim is that contained in Section 25 A which reads as under : "25 A. Conditions of registration as elector in Sangha Constituency in Sikkim Notwithstanding anything contained in sections 15 and 19, for the Sangha Constituency in the State of Sikkim, only the Sanghas belonging to monasteries, recognised for the purpose of the elections held in Sikkim in April 1974, for forming the Assembly for Sikkim, shall be entitled to be registered in the electoral roll, and the said electoral roll shall, subject to the provisions of sections 21 to 25, be prepared or revised in such manner as may be directed by the Election Commission, in consultation with the Government of Sikkim".
In exercise of the powers conferred on him by Cl.
(1) of Article 342 of the Constitution of India, the President of India promulgated the Constitution (Sikkim) Scheduled Tribes Order, 1978 (C.O.11) on June 22, 1978 and it was prescribed that Bhutias And Lepchas shall be deemed to be Scheduled Tribes in relation to the State of Sikkim.
996 Since the 1976 Act did not make provision for fresh elections for the Legislative Assembly of Sikkim and the term of the said Assembly was due to expire, the Representation of the People (Amendment) Bin, 1979 was introduced in Parliament on May 18, 1979 to amend the 1950 Act and the 1951 Act.
While the said Bill was pending before Parliament, Lok Sabha was dissolved and the said Bill lapsed.
Thereafter the Legislative Assembly of Sikkim was also dissolved on August 13, 1979 and fresh elections for the Assembly were to be held.
The Representation of the People (Amendment) Ordinance, 1979 (No.7 of 1979) was, therefore, promulgated by the President on September 11, 1979 whereby certain amendments were introduced in the 1950 Act and the 1951 Act.
Elections for the Sikkim Legislative Assembly were held in October, 1979 on the basis of the amendments introduced by the said Ordinance.
Thereafter, the 1980 Act was enacted to replace the Ordinance.
By the 1980 Act, sub section (1 A) was inserted in Section 7 of the 1950 Act and it reads as under : "(1 A).
Notwithstanding anything contained in sub s.(1), the total number of seats in the Legislative Assembly of the State of Sikkim, to be constituted at any time after the. commencement of the Representation of the People (Amendment) Act, 1980 to be filled by persons chosen by direct election from assembly constituencies shall be thirty two, of which (a) twelve seats shall be reserved for Sikkimese of BhutiaLepcha origin; (b) two seats shall be reserved for the Scheduled castes of that State; and (c) one seat shall be reserved for the Sanghas referred to in Section 25 A. Explanation : In this sub section 'Bhutia ' includes Chumbipa, Dopthapa, Dukpa, Kagatey, Sherpa, Tibetan, Tromopa, and Yohmo".
Similarly, the following provision was inserted in Section 5 A of the 1951 Act : 997 "(2) Notwithstanding anything contained in Section 5, a person shall not be qualified to be chosen to fill a seat in the Legislative Assembly of the State of Sikkim, to be constituted at any time after the commencement of the Representation of the People (Amendment) Act, 1980 unless (a) in the case of a seat reserved for Sikkimese of BhutiaLepcha origin, he is a person either of Bhutia or Lepcha origin and is an elector for any assembly constituency in the State other than the constituency reserved for the Sanghas; (b) in the case of a seat reserved for the Scheduled Castes, he is a member of any of those castes in the State of Sikkim and is an elector for any assembly constituency in the State; (c) in the case of a seat reserved for Sanghas, he is an elector of the Sangha constituency; and (d) in the case of any other seat, he is an elector for any assembly constituency in the State.
" The petitioners in these cases are Sikkimese of Nepali origin and they are challenging the validity of Section 25 A introducted in the 1950 Act by the 1976 Act and sub section (1 A) of Section 7 of the 1950 Act and sub section (2) of Section 5 A of the 1951 Act which were introduced by the. 1980 Act insofar as they relate to : (1) Reservation of 12 seats out of 32 seats in the Sikkim Legislative Assembly for Sikkimese of Bhutia Lepcha origin; and (2) Reservation of one seat for Sanghas.
The petitioners have not challenged the validity of the Constitution (Thirty Sixth Amendment) Act, 1975 whereby Article 371 F was inserted in the Constitution.
In Transferred Cases Nos. 78 of 1982 and 84 of 1982, the case of the petitioners is that Article 371 F should be construed in a manner that it is 998 consistent with the general philosophy of the Constitution particularly democracy and secularism and they have challenged the provisions of the 1976 Act and the 1980 Act providing for reservation of 12 seats in the Legislative Assembly of Sikkim for Sikkimese of Bhutia and Lepcha origin and reservation of one seat for Sanghas on the ground that the said provisions fall outside the ambit of Article 371 F and are violative of the provisions contained in Articles 332, 14 and 15 and 325 of the Constitution.
In the alternative, the case of the petitioners is that if Article 371 F is given a wider construction, it would be unconstitutional being violative of the basic features of the Constitution.
The petitioners in Transferred Cases Nos. 93 and 94 of 1991 have taken a different stand.
Instead of challenging the reservation of seats for Sikkimese of Bhutia and Lepcha origin as well as Sanghas, they have relied upon clause (f) of Article 371 F to claim similar reservation of ' seats in the Assembly for Sikkimese of Nepali origin.
Before I proceed to deal with contentions urged by the learned counsel on behalf of the petitioners in these matters, it is necessary to deal with the submissions of Shri K. Parasaran appearing for the State of Sikkim and the learned Attorney General appearing for the Union of India that the matters in issue being political in nature are not justiciable.
It has been urged that admission of Sikkim as a State of Indian Union constitutes acquisition of territory by cession in international law and the terms and conditions on which the said cession took place as contained in Article 371 F, are intended to give effect to the tripartite agreement dated May 3, 1973 which was political in nature.
It is further urged that under Article 2 of the Constitution, Parliament is empowered by law to admit into Union of India and establish new States on such terms and conditions as it thinks fit and that Article 371 F prescribing the terms and conditions on which the State of Sikkim was admitted into the Union of India is a law under Article 2 of the Constitutions and merely because it was introduced in the Constitution by the Constitution (Thirty sixth Amendment) Act enacted under Article 368 of the Constitution.
by way of abundant caution, is of no consequence and that it does not alter the true character of the law.
The submission is further that since the terms and conditions on which Sikkim was admitted in Union of India, are political in nature, the said terms and conditions cannot be made the subject matter of challenge before this Court because the law is well settled that courts do not adjudicate upon questions which are political in nature.
999 The political question doctrine has been evolved in the United States to deny judicial review in certain fields.
The doctrine received a set back in the case of Baker vs Carr.
; , , wherein Brennan, J., rejecting the contention that the challenge to legislative apportionment raises a non justiciable political question, has observed : ".
The non justiciability of a political question is primarily a function of the separation of powers.
Much confusion results from the capacity of the "political question" label to obscure the need for case by case inquiry.
Deciding whether a matter has in any measure been committed by the Constitution to another branch of government, or whether the action of that branch exceeds whatever authority has been committed, is itself a delicate exercise in constitutional interpretation, and is a responsibility of this Court as ultimate interpreter of the Constitution".
(pp. 210 211) xx xx xx xx ".
Yet it is error to suppose that every case or controversy which touches foreign relations lies beyond judicial congnizance.
Our cases in this field seem invariably to show a discriminating analysis of the particular question posed, in terms of the history of its management by the political branches, of its susceptibility of judicial handling in the light of its nature and posture in the specific case, and of the possible consequences of judicial action." (pp. 211 212) xx xx xx ".
Prominent on the surface of any case held to involve a political question is found a textually demonstrable constitutional commitment of the issue to a coordinate political department; or a lack of judicially discoverable and manageable standards for resolving it.
or the impossibility of deciding without an initial policy determination of a kind 1000 clearly for nonjudicial discretion; or the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; or the impossibility of a court 's undertaking independent resolution without expression lack of the respect due coordinate branches of government; or an unusual need for unquestioning adherence to a political decision already made; or the potentiality of embarrassment from multifarious pronouncements by various departments on one question.
Unless one of these formulations is inextricable for the case at bar, there should be no dismissal for non justiciability on the ground of a political question 's presence '.
(p. 217) In Powell vs McCormack, , after reiterating the observations of Brennan, J. In Baker vs Carr (Supra),Warren, CJ has stated "In order to determine whether there has been a textual commitment to a co ordinate department of the Government, we must interpret the Constitution.
In other words, we must first determine what power the Constitution confers upon the House through article I, 5, before we can determine to what extent, if any, the exercise of that power is subject to judicial review.
If examination of 5 disclosed that the Constitution gives the House judicially unreviewable power to set qualifications for memebership and to judge whether prospective members meet those qualifications, further review of the House determination might well be barred by the political question doctrine.
On the other hand, if the Constitution gives the House power to judge only whether elected members possess the three standing qualifications set forth in the Constitution, further con sideration would be necessary to determine whether any of the other formulations of the political question doctrine are inextricable from the case at bar".
(p. 516) In A.K Roy vs Union of India, ; , Chandrachud, CJ, has thus explained the doctrine as applicable in the United States: "The doctrine of the political question was evolved in the United States of America on the basis of its Constitution 1001 which has adopted the system of a rigid separation of powers, unlike ours.
In fact, that is one of the principal reasons why the U.S. Supreme Court had refused to give advisory opinions.
In Baker vs Carr, Brennan, J. said that the doctrine of political question was "essentially a function of the separation of powers".
There is also a sharp difference in the position and powers of the American President on one hand and President of India on the other.
The President of the United States exercises executive power in his own right and is responsible not to the Congress but to the people who elect him.
In India, the executive power of the Union is vested in the President of India but he is obliged to exercise it on the aid and advice of his Council of Ministers.
The President 's "satisfaction" is therefore nothing but the satisfaction of his Council of Ministers in whom the real executive power resides.
It must also be mentioned that in the United States itself, the doctrine of the political question has come under a cloud and has been the subject matter of adverse criticism.
It is said that all that the doctrine really means is that in the exercise of the power of judicial review, the courts must adopt a 'prudential ' attitude, which requires that they should be wary of deciding upon the merit of any issue in which claims of principle as to the issue and claims of expediency as to the power and prestige of courts are in sharp conflict.
The result, more or less, is that in America the phrase "political question" has become "a little more than a play of words".
(pp. 296 297) In Madhav Rao vs Union of India, ; , it was contended that in recognising or de recognising a person as a Ruler the President exercises "political power" which is a sovereign power and that the relevant covenants under which the rights of the Rulers were recognised were 'political agreements '.
Rejecting the said contention, Shah, J. (as the learned Chief Justice then was) speaking for the majority, observed "The functions of the State are classified as legislative, judicial and executive: the executive function is the residue which does not fall within the other two functions.
Con 1002 stitutional mechanism in a democratic policy does not contemplate existence of any function which may qua the citizens be designated as political and orders made in exercise whereof are not liable to be rested for their validity before the lawfully constituted courts" (p.75) Similarly, Hedge, J. has stated "There is nothing like a political power under our Constitution in the matter of relationship between the executive and the citizens.
Our Constitution recognises only three powers viz. the legislative power, the judicial power and the executive power.
It does not recognise any other power.
(p.169) In State of Rajasthan vs Union of India, ; , Bhagwati, J. as the learned Chief Justice then was, has observed : "It will, therefore, be seen that merely because a question has a political colour, the Court cannot hold its hands in despair and declare judicial hands off.
So long as a question arises whether an authority under the Constitution has acted within the limits of its power or exceeded it, it can certainly be decided by the court.
Indeed, it would be its constitutional obligation to do so." (p.80) Relying upon these observations and after taking note of the decisions in Baker vs Carr (supra) and Powell vs McConmack (supra), Venkataramiah, J., as the learned Chief Justice then was, in S.P. Gupta vs Union of India, [1982] 2 SCR 365 has laid down : "In our country which is governed by a written Constitution also many questions which appear to have a purely political colour are bound to assume the character of judicial questions.
In the State of Rajasthan & Ors. etc.
etc, vs Union of India etc.
, (supra) the Government 's claim that the validity of the decision of the President under Article 356(1) of the Constitution being political in character was not justiciable on that sole ground was rejected by this Court." (p. 1248) 1003 The same view has been reiterated by Verma, J. speaking for the majority in Mrs. Sarojini Ramaswami vs Union of India & Ors., Writ Petition (Civil) No. 514 of 1992 decided on August 27, 1992.
Sikkim was not admitted in the Indian Union on the basis of any treaty or agreement between the Chogyal of Sikkim and the Government of India.
It was so admitted in pursuance of the unanimous resolution that was passed by the Assembly of Sikkim on April 10, 1975, after the said resolution had been approved by majority of the people of Sikkim at the special opinion poll conducted on April 14, 1975.
The said resolution does not contain any terms and conditions on which the people of Sikkim wanted to join the Indian Union except stating that "Sikkim shall henceforth be a Constituent unit of India enjoying a democratic and fully responsible Government".
The Tripartite Agreement of may 8, 1973 was also not an agreement containing terms and conditions for admission of Sikkim in the Indian Union.
It contains the framework for "establishment of a fully responsible Government in Sikkim with a more democratic Constitution".
This agreement was implemented by the enactment of the Government of Sikkim Act, 1974.
It cannot, therefore, be said that Article 371 F contains a political element in the sense that it seeks to give effect to a political agreement relating to admission of Sikkim into the Indian Union.
It is, however, urged that a law made under Article containing the terms and conditions on which a new State is admitted in the Indian Union is, by its very nature, political involving matters of policy and, therefore, the terms and conditions contained in such law are not justiciable.
In this context, emphasis is laid on the words "on such terms and conditions as it thinks fit" in Article 2 and it is contended that Parliament has complete freedom to lay down the terms and conditions for admission of a new State in the Indian Union and such terms and conditions are outside the scope of judicial review.
I find it difficult to subscribe to this proposition.
It is no doubt true that in the matter of admission of a new State in the Indian Union, Article 2 gives considerable freedom to Parliament to prescribe the terms and conditions on which the new State is being admitted in the Indian Union.
But at the same time, It cannot be said that the said freedom is without any constitutional limitation.
In may view the power conferred on Parliament under Article 2 is circumscribed by the overall constitutional scheme and Parliament, while prescribing, the terms and conditions on 1004 which a new State is admitted in the Indian Union, has to act within the said scheme.
Parliament cannot admit a new State into the Indian Union on terms and conditions which derogate from the basic features of the Constitution.
It cannot make a law permitting the said State to continue as a monarchy because it would be in derogation to the republican form of Government established under the Constitution.
Similarly it would not be permissible for Parliament to prescribe that the new State would continue to have an autocratic form of administration when the Constitution en visages a democratic form of Government in all the States.
So also it would not be open to Parliament to provide that the new State would continue to be a theocratic State in disregard of the secular set up prevailing in other States.
To hold otherwise would mean that it would be permissible for Parliament to admit to the Union new States on terms and conditions enabling those States to be governed under systems which are inconsistent with the scheme of the Constitution and thereby alter the basic feature of ' the Constitution.
It would lead to the anomalous result that by an ordinary law enacted by Parliament under Article 2 it would be possible to bring about a change which cannot be made even by exercise of the constituent power to amend the Constitution, viz., to alter any of the basic features of the Constitution.
The words "as it thinks fit" in Article 2 of the Constitution cannot, therefore, be construed as empowering Parliament to provide terms and conditions for admission of a new State which are inconsistent with the basic features of the Constitution.
The said words can only mean that within the framework of the Constitution, it is permissible for Parliament to prescribe terms and conditions on which a new State is admitted in the Union.
With regard to the power conferred on Parliament under Articles and 3 of the Constitution, this Court in Mangal Singh vs Union of India, ; , has laid down ".
Power with which the Parliament is invested by articles 2 and 3, is power to admit, establish, or form new States which conform to the democratic pattern envisaged by the Constitution; and the power which the Parliament may exercise by law is supplemental, incidental or consequential to the admission, establishment or formation of a State as contemplated by the Constitution, and is not power to 1005 override the constitutional scheme".
P. 112 in this context, it may also be mentioned that Article 2 of the Constitution is modelled on Section 121 of the Commonwealth of Australia Constitution Act which provides : "section 121 The Parliament may admit to the Commonwealth or establish new States, and may upon such admission or establishment make or impose such terms and conditions, including the extent of representation in either House of Parliament, as it thinks fit." This provision has not yet been used and there has been no occasion for the Courts to construe this provision.
A learned Commentator on the Australian Constitution has, however, expressed the view that under Section 121 "no terms and conditions could be imposed which are inconsistent with the provisions of the Constitution, e.g., nothing could be done to prevent the Judicature chapter of the Constitution from applying to the new State ' (R.D. Lumb : The Constitution of the Commonwealth of Australia (1986) 4th Ed.
p. 736) I am, therefore, of the view that while admitting a new State in the Union, Parliament, while making a law under Article 2, cannot provide for terms and conditions which are inconsistent with the scheme of the Constitution and it is open to the Court to examine whether the terms and conditions as provided in the law enacted by Parliament under Article 2 are consistent with the constitutional scheme or not.
This would mean that power conferred on Parliament under Article 2 is not wider in ambit than the amending power under Article 368 and it would be of little practical significance to treat Article 371 F as a law made under Article 2 of the Constitution or introduced by way of amendment under Article 368.
In either event, it will be subject to the limitation that it cannot alter any of the basic features of the Constitution.
The scope of the power conferred by Article 371 F, is therefore, subject to judicial review.
So also is the law that is enacted to give effect to the provisions contained in Article 371 F. The contention, raised by Shri Parasaran as well as the learned Attorney General, that such an examination is outside the scope of judicial review, cannot.
therefore be accepted.
1006 Shri Parasaran and the learned Attorney General have laid emphasis on the use of the expression "notwithstanding anything in this Constitution" which precedes clauses (a) to (p) of Article 371 F. The submission is that as a result of the said non obstante clause in Article 371 F, it is permissible for parliament to enact a law in derogation of the other provisions of the Constitution while giving effect to clauses (a) to (p) of Article 371 F and the said law would not be open to challenge on the ground that it is violative of any of the other provisions of the Constitution.
There is no doubt that the non obstante clause in a statute gives overriding effect to the provisions covered by the non obstante clause over the other provisions in the statute to which it applies and in that sense, the non obstante clause used in Article 371 F would give overriding effect to clauses (a) to (p) of Article 371 F over other provisions of the Constitution.
But at the same time, it cannot be ignored that the scope of the non obstante clause in Article, 371 F cannot extend beyond the scope of the legislative power of Parliament under Article 2 or the amending power under Article 368.
As pointed out earlier, the legislative power under Article 2 does not enable Parliament to make a law providing for terms and conditions which are inconsistent with the Constitutional scheme and in that sense, the said power is not very different from the amending power under Article 368, which does not extend to altering any of the basic features of the Constitution.
The non obstante clause in Article 371 F, has therefore, to be so construed as to conform to the aforesaid limitations or otherwise Article 371 F would be rendered unconstitutional.
A construction which leads to such a consequence has to be eschewed.
This means that as a result of the non obstante clause in Article 371 F, clauses (a) to (p) of the said Article have to be construed to permit a departure from other provisions of the Constitution in respect of the matters covered by clauses (a) to (p) provided the said departure is not of such a magnitude as to have the effect of ' altering any of the basic features of the Constitution.
In order to avail the protection of Article 371 F, it is necessary that the law should not transcend the above mentioned limitation on the scope of the non obstante clause.
This takes me to the question whether the impugned provisions contained in the 1976 Act and the 1980 Act make such a departure from he provisions of the Constitution as to render them inconsistent with the 1007 Constitutional scheme and have the effect of altering any of the basic features of the Constitution.
As indicated earlier the challenge to the impugned provisions relates to two matters, viz., (i) reservation of twelve seats for Sikkimese of Bhutia Lepcha origin; and (ii) reservation of one seat for Sanghas.
With regard to the reservation of twelve seats for Sikkimese of Bhutia and Lepcha origin under sub s.(1 A) inserted in Section 7 of the 1950 Act by Act No. 8 of 1980, Shri R.K. Jain, the learned Senior counsel, appearing as amicus curiae for the petitioner in T.C. No. 78 of 1982, has advanced a two fold argument.
In the first place, he has urged that the reservation of seats for Sikkimese of Bhutia Lepcha origin without making a corresponding reservation for Sikkimese of Nepali origin is violative of the right to equality guaranteed under Article 14 of the Constitution.
The other contention turns on the extent of such reservation.
Shri Jain has submitted that Bhutias and Lepchas have been declared as Scheduled Tribes under the Constitution (Sikkim) Scheduled Tribes Order, 1978 dated June 22, 1978 and reservation of seats for Scheduled Tribes in the Legislative Assembly of a State is governed by Article 332 of the Constitution.
Shri Jain has referred to Cl.
(3) of Article 332 which prescribes that the number of seats reserved for the Scheduled Castes or the Scheduled Tribes in the Legislative Assembly of any State under Cl.
(1) shall bear, as nearly as may be, the same proportion to the total number of seats in the Assembly as the population of the Scheduled Castes in the State or of the Scheduled Tribes in the State.
Shri Jain has pointed out that according to the 1971 census, the total population was about 2,09,843 out of which Bhutias and Lepchas were around 51,600 and according to 1981 census, the total population was around 3,16,385 out of which Bhutias and Lepchas were around 73,623.
The submission of Shri Jain is that keeping in view the fact that Bhutias and Lepchas constitute about 25% of the total population, reservation of twelve out of thirty two seats in the Legislative Assembly for Bhutias and Lepchas, which constitute 38% of the total number of seats in the Assembly, is far in excess of the ratio of the population of Bhutias and Lepchas to the total population of Sikkim and, therefore, the aforesaid reservation of twelve seats for Bhutias and Lepchas is violative of Clause (3) of Article 332 of the Constitution.
Shri Jain has contended that the said provision for reservation is destructive of Democracy which is a basic feature of the 1008 A Constitution.
In support of the aforesaid submission, Shri Jain has placed reliance on the decision of the U.S. Supreme Court in Reynolds vs Sims, 19641 ; In my view, both these contentions of Shri Jain cannot be accepted.
The reservation of seats for Bhutias and Lepchas is necessary because they constitute a minority and in the absence of reservation they may not have any representation in the Legislative Assembly.
Sikkimese of Nepali origin constitute the majority in Sikkim and on their own electoral strength they can secure representation in the Legislative Assembly against the unreserved seats.
Moreover, Sikkimses of Bhutia and Lepcha origin have a distinct culture and tradition which is different from that of Sikkimese of Nepali origin.
Keeping this distinction in mind Bhutias and Lepchas have been declared as Scheduled Tribes under Article 342 of the Constitution.
The said declaration has not been questioned before us.
The Constitution in Article 332 makes express provision for reservation of seats in the Legislative Assembly of a State for Scheduled Tribes.
Such a reservation which is expressly permitted by the Constitution cannot be challenged on the ground of denial of right to equality guaranteed under Article 14 of the Constitution.
The second contention relating to the extent of the reservation of seats for Bhutias and Lepchas is based on the provisions of Article 332 (3) of the Constitution.
Clause (3) of Article 332 postulates that the number of seats reserved for Scheduled Castes or Scheduled Tribes in the Legislative Assembly of the State shall bear, as nearly as may be, the same proportion to the total number of seats in the Assembly as the population of the Scheduled Castes or the Scheduled Tribes in the State bears to the total population of the State.
The said provision has, however, to be considered in the light of Clause (f) of Article 371 F which provides "(f) Parliament may, for the purpose of protecting the rights and interests of the different sections of the population of Sikkim make provision for the number of seats in the Legislative Assembly of the State of Sikkim which may be filled by candidates belonging to such sections and for the delimitation of the assembly constituencies from which candidates belonging to such sections alone may stand for 1009 election to the Legislative of the State of Sikkim.
" This provision empowers Parliament to make provision prescribing the number of seats in the Legislative Assembly in the State of Sikkim which may be filled in by candidates belonging to the different sections of the population of Sikkim with a view to protect the rights and interests of those sections.
The non obstante clause in Article 371 F enables Parliament to make a departure from the ratio contemplated by Article 332 (3) within the limitation which is inherent in the power conferred by Article 371 F, i.e., not to alter any of the basic features of the Constitution.
It is, therefore, necessary to examine whether in providing for reservation of twelve seats out of thirty two seats for Bhutias and Lepchas Parliament has acted in disregard of the said limitation.
While examining this question, it has to be borne in mind that Lepchas are the indigenous inhabitants of Sikkim and Bhutias migrated to Sikkim long back in fifteenth and sixteenth centuries and they follow the same faith (Budhism).
They have a culture which is distinct from that of Nepalese and others who migrated to Sikkim much later.
Since the proportion of Nepalese in the population of Sikkim was much higher than that of Bhutias and Lepchas, it became necessary to provide for reservation of seats for Bhutias and Lepchas in the State Council of Sikkim when representative element through elected members was introduced in the administration of Sikkim in 1952.
Ever since then, till Sikkim was admitted as a new State in the Indian Union, there was reservation of seats for Bhutias and Lepchas in the Sikkim Council which later became the Sikkim Assembly.
Since the Ruler of Sikkim was of Bhutia origin following the Budhist faith, there was reservation of seats in the Sikkim Council and Sikkim Assembly for Sikkimese of Nepali origin on the same lines as Bhutias and Lepchas and in such reservations a parity was maintained between the seats reserved for Sikkimese of Bhutia Lepcha origin on the one hand and Sikkimese of Nepali origin on the other.
On the date when Sikkim was admitted in the Indian Union, Sikkim Assembly was consisting of thirty two elected members out of which sixteen seats (including one Sangha seat) were reserved for Sikkimese of Bhutia Lepcha origin and sixteen seats (including one seat for Scheduled Castes) were reserved for Sikkimese of Nepali origin.
This parity in the reservation of seats in the Sikkim Council and Sikkim Assembly between Sikkimese of Bhutia and Lepcha origin and Sikkimese of Nepali origin was with a view 1010 to ensure that neither of two sections of the population of Sikkim acquires a dominating position due mainly to their ethnic origin.
This was expressly provided in para 5 of the Tripartite Agreement of May 8, 1973 and Section 7(2) of the Government of Sikkim Act, 1974.
Clause (f) of Article 371 F seeks to preserve the said protection which was envisaged by Clause (5) of the Tripartite Agreement because it also provides for protecting the rights and interests of the different sections of population of Sikkim.
The impugned provision contained in clause (a) of sub section (1 A) of s.7 of the 1950 Act by providing for reservation of twelve seats for Sikkimese of Bhutia Lepcha origin seeks to give this protection in a more limited manner by reducing the ratio of the seats reserved for Sikkimese of Bhutia and Lepcha origin from 50% prevalent in the Assembly in the former State of Sikkim to about 38% in the Assembly for the State of Sikkim as constituted under the Constitution of India.
It would thus appear that by providing for reservation to the extent of 38% of seats in the Legislative Assembly for Sikkimese of Bhutia lepcha origin Parliament has sought to strike a balance between protection to the extent of 50% that was available to them in the former State of Sikkim and the protection envisaged under Article 332(3) of the Constitution which would have entitled them to reservation to the extent of 25% seats in accordance with the proportion of their population to the total population of Sikkim.
It is argued that this departure from the provisions of Article 332(3) derogates from the principle of one man, one vote enshrined in the Constitution and is destructive of Democracy which is a basic feature of the Constitution.
This argument proceeds on the assumption that for preservation of Democracy, the principle of one man, one vote is inviolable and it fails to take note of the non obstante clause in Article 371 F which when read with clause (f) of Article 371 F envisage that Parliament may, while protecting the rights and interests of the different sections of the population of Sikkim (which would include Sikkimese of Bhutia Lepcha origin), deviate from the provisions of the Constitution, including Article 332.
The principle of one man, one vote envisages that there should be parity in the value of votes of electors.
Such a parity though ideal for a representative democracy is difficult to achieve.
There is some departure in every system following this democratic path.
In the matter of delimitation of constituencies, it often happens that the population of one constituency 1011 differs from that of the other constituency and as a result although both the constituencies elect one member, the value of the vote of the elector in the constituency having lesser population is more than the value of the vote of the elector of the constituency having a larger population.
Take the instance of Great Britain.
There a statutory allocation of seats between England, Scotland, Wales and Northern Ireland whereunder Scotland is to have not less than 71 seats; Wales not less than 35 and Northern Ireland 17.
It has been found that Scotland is over represented to the extent of 14 seats and Wales to the extent of 5 seats and England is under represented to the extent of 14 seats.
The justification that has been offered for these inequalities is that constituencies in sparsely populated areas such as the Highlands would otherwise be inconveniently large geographically.
Prof. Wade has questioned this justification (H.W.P. Wade : Constitutional Fundamentals, The Hamlyan Lectures, 32nd series, 1980, p.5).
He has pointed out that within the constituent counties of the United Kingdom, there are great inequalities in the size of individual constituencies and that the smallest constituency contains only 25,000 voters and the largest 96,000, nearly four times as many.
He has referred to the Report of the Blake Commission on Electoral Reforms (1976) wherein it is recommended that, the discrepancy should never exceed two to one, and has observed "this is surely the maximum which should be regarded as tolerable" (p.7).
Criticising the existing state of affairs, Prof. Wade has said "The British Parliament, addicted though it is to the pursuit of equality in so many other ways, does not seem interested in equality of representation between voters any more than between the different parts of the United Kingdom.
Since 1948 it has insisted rigidly on the principle of one man, one vote.
When will it accept the correlative principle one vote, one value? ' (p.8) The matter of apportionment of seats in the State Legislatures has come up for consideration before U.S. Supreme Court in a number of cases.
In Reynolds V. Sims (supra), the Court, while examining the said matter on the touch stone of the equal protection clause, has held that the equal protection clause requires that the seats in both houses of a bicameral State Legislature be apportioned on a population basis and that such deviations from the equal population principle are constitutionally 1012 permissible so long as such deviations are based on legitimate considerations incident to the effectuation of a rational state policy.
Chief Justice Warren, expressing the views of six members of the Court, has observed ".
We realize that it is a practical impossibility to arrange legislative districts so that each one has an identical number of residents, or citizens, or voters.
Mathematical exactness or precision is hardly a workable constitutional requirement." (p.577) xx xx xx ".
So long as the divergences from a strict population standard are based on legitimate considerations incident to the effectuation of a rational state policy, some deviations from the equal population principle are constitutionally permissible with respect to the apportionment of seats in either or both of the two houses of a bicameral state legislature".
(p.579) Variance to the extent of 16% has been upheld by the Court.
(See: Mahan vs Howell, ; The High Court of Australia, in Attorney General (CTH) exhibit Rel.
Mckinlay vs The Commonwealth; , has considered the issue in the context of Section 24 of the Australian Constitution which provides that "the House of Representatives shall be composed of members directly chosen by the people of the Commonwealth".
It was argued that the words "chosen by the people of Commonwealth" required each electoral division within a State so far as practicable to contain the same number of people or, alternatively, the same number of electors.
The said contention was rejected and it was held (by Majority of six to one) that Section 24 of the Constitution did not require the number of people or the number of electors in electoral divisions to be equal.
The decisions of the U.S. Supreme Court on apportionment were held to be inapplicable in the context of the Australian Constitution.
Barwick C.J., has observed: "It is, therefore, my opinion that the second paragraph of s.24 cannot be read as containing any guarantee that there shall be a precise mathematical relationship between the 1013 numbers of members chosen in a State and the population of that State or that every person in the Australia or that every elector in Australia will have a vote, or an equal vote. ' (p.22) Similarly, Mason, J., as the learned Chief Justice then was, has stated: "The substance of the matter is that the conception of equality in the value of a vote or equality as between electoral divisions is a comparatively modern development for which no stipulation was made in the system of democratic representative government provided for by our Constitution." (p.62) In this regard, the scheme of our Constitution is that under Article 327 Parliament is empowered to make a law relating to delimitation of constituencies and under Article 329 (a) the validity of such a law or the allotment of seats to such constituencies cannot be called in question in any court.
In exercise of the power conferred on it under Article 327 Parliament has enacted the Delimitation Act, 1962 which provides for constitution of a Delimitation Commission to readjust on the basis of the latest census figures the allocation of seats in the House of the People to the several States, the total number of seats in the Legislative Assembly of each State and the division of each State into territorial constituencies for the purpose of elections to the House of People and to the State Legislative Assembly.
In Section 9(1) of the said Act it is prescribed that the Commission shall delimit the constituencies on the basis of the latest census figures but shall have regard to considerations referred to in clauses (a) to (d).
Clause (a) requires that all constituencies shall, as far as practicable, be geographically compact areas, and in delimiting them regard shall be had to physical features, existing boundaries of administrative units, facility of communication and public convenience.
Clause (b) requires that every assembly constituency shall be so delimited as to fall wholly within on parliamentary constituency.
Clauses (c) and (d) relate to location of constituencies in which seats are reserved for Scheduled Castes and Scheduled Tribes.
This shows that population, though important, is only one of the factors that has to be taken into account while delimiting constituencies which means that there need not be uniformity of population and electoral strength in the matter of delimitation of constituencies.
In other words, 1014 there is no insistence on strict adherence to equality of votes or to the principle one vote one value.
In clause (3) of Article 332, the words "as nearly as may be" has been used.
These words indicate that even in the matter of reservation of seats for Scheduled Castes and Scheduled Tribes it would be permissible to have deviation to some extent from the requirement that number of seats reserved for Scheduled Castes or the Scheduled Tribes in the Legislative Assembly of any State shall bear the same proportion.
to the total number of seats as the population of the Scheduled Castes or the Scheduled Tribes in the State in respect of which seats are so reserved, bears to the total population of the State.
The non obstante clause in Article 371 F read with clause (f) of the said Article enlarges the filled of deviation in the matter of reservation of seats from the proportion laid down in Article 332(3).
The only limitation on such deviation is that it must not be to such an extent as to result in tilting the balance in favour of the Scheduled Castes or the Scheduled Tribes Tribes for whom the seats are reserved and thereby convert a minority in majority.
This would adversely affect the democratic functioning of the legislature in the State which is the core of representative Democracy.
Clause (a) of sub section
(I A) of s.7 of the 1950 Act provides for reservation of twelve seats in an Assembly having thirty two seats, i.e., to the extent of about 38% seats for Sikkimese of Bhutia Lepcha origin.
The said provision does not, therefore, transgress the limits of the power conferred on Parliament under Article 371 F(f) and it cannot be said that it suffers from the vice of unconstitutionality.
The other challenge is to the reservation of one seat for Sanghas.
With regard to this seat, it may be mentioned that Section 25 A of the 1950 Act makes provision for an electoral roll for the Sangha constituency wherein only the Sanghas belonging to monasteries recognised for the purpose of elections held in Sikkim, in April 1974 for forming the Assembly for Sikkim.
are entitled to be registered.
Clause (c) of sub s.(2) of section 5 A of the 1951 Act prescribes that a person shall not be qualified to be chosen to fill a seat in the Legislative Assembly of Sikkim to be constituted at any time after the commencement of the 1980 Act unless, in the case of the seat reserved for Sanghas, he is an elector of the Sangha constituency.
The aforesaid provisions indicate that for the one seat in the Legislative Assembly of Sikkim which is reserved for Sanghas.
a separate electoral roll 1115 has to be prepared under Section 25 A of the 1950 Act and only the Sanghas belonging to monasteries recognised for the purpose of elections held in April 1984 for forming the Assembly for Sikkim are entitled to be registered in the said electoral roll and, in view of Section 5 A(2)(c), no person other than an elector for the Sangha constituency is qualified to be chosen to fill the said reserved seat for Sanghas.
To assail the validity of these provisions Shri Jain has urged that the provision in s.7(1 A)(c) of the 1950 Act is violative of the right guaranteed under Article 15(1) of the Constitution inasmuch as by reserving one seat for Sanghas (Budhist Lamas), the State has discriminated against a person who is not a Budhist on the ground only of religion.
Shri Jain has also urged the provisions contained in S.25 A of the 1950 Act and S.5 A(2)(c) of the 1951 Act are violative of Article 325 of the Constitution inasmuch as these provisions provide for election to the seat reserved for Sanghas on the basis of a separate electoral roll in which Sanghas alone are entitled to be registered and exclude others from being registered as electors on that electoral roll on the ground only of religion.
The submission of Shri Jain is that these provisions are inconsistent with the concept of secularism which is a basic feature of the Constitution.
The reservation of one seat for Sanghas and election to the same through a separate electoral roll of Sanghas only has been justified by Shri Parasaran on the basis of historical reasons.
He has argued that the Sangha has played a vital role in the life of community since the earliest known history of Sikkim and have also played a major part in deciding important issues in the affairs of the State.
It has been pointed out that Lhade Medi, a body consisting of the Lamas and laity, has contributed towards cultural, social and political development of the people of Sikkim and that the Sangha seat was introduced in order of provide for the representation of a section which was responsible for the preservation of the basic culture of the Sikkimese Bhutias and Lepchas including some sections of the Nepali community of Sikkim who are Budhists.
It has been submitted that their interests are synonymous with the interests of the minority communities of Sikkim and that as such a seat for the Sangha has always been nominated and later reserved in the Sikkim State Council and the State Assembly respectively.
1016 Clause (1) of Article 15 prohibits discrimination by the State against any citizen on the ground only of religion, race, caste, sex or any of them.
Clause (3), however, permits the State to make special provision for women and children.
Similarly, Clause (4) permits the State to make special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes.
Clauses (3) and (4) do not, however, permit making of special provisions in derogation of the prohibition against discrimination on the ground of religion.
This Court has laid down that this constitutional mandate to the State contained in Article 15(1) extends to political as well as to other rights and any law providing for elections on the basis of separate electorates for members of different religious communities offends against this clause.
(See Nain Sukh Das and Anr.
vs The State of Uttar Pradesh and Others, ; Similarly Article 325 requires that there shall be one general electoral roll for every constituency for election to either House of Parliament or to the house of either House of Legislature of a State and precludes a person being rendered ineligible for inclusion in any such roll or to be included in any special electoral roll for any such constituency on the grounds only of religion, race, caste, sex or any of them.
The provisions which permit election on the basis of separate electorates are, those contained in Clauses (a), (b) and (c) of Clause (3) of Article 171 relating to Legislative Council of a State.
The said provisions provide for separate electorates of members of municipalities, district boards and local authorities Cl.
(a), graduates of universities Cl.
(b), and teachers Cl.
They do not provide for preparation of separate electoral rolls on the ground of religion.
The question for consideration is whether the impugned provisions providing for reservation of one seat for Sanghas, preparation of a special electoral roll for the Sangha constituency in which Sanghas alone can be registered as electors and a person who is an elector in the said electoral roll alone being eligible to contest for the Sangha seat, can be held to be violative of the provisions of Articles 15(1) and 325 on the ground that in relation to one seat reserved for Sanghas in the Legislative Assembly of the State of Sikkim a person who is a non Budhist is being discriminated on the ground of religion only and similarly in the preparation of the special electoral roll for Sangha constituency a person who is a non Budhist is rendered ineligible for 1017 inclusion in the said electoral roll on the ground only of religion.
For this purpose it is necessary to construe the words "on grounds only of religion. " in Articles 15(1) and 325.
In this context, it may be pointed out that sub s.(1) of s.298 of the Government of India Act, 1935 contained the words "on grounds only of religion, place of birth, discent, colour. .
In Punjab Province vs Daulat Singh and Ors., the provisions of section 13 A of the Punjab Alienation of Land Act, 1900 were challanged as contravening sub s.(1) of section 298 of the Government of India Act, 1935.
In the Federal Court, Beaumont J., in his dissenting judgment, has taken view that in applying the terms of sub section (1) of Section 298, it was necessary for the Court to consider the scope and object of the Act which was impugned so as to determine the ground on which such Act is based.
This test was not accepted by the Judicial Committee of the Privy Council.
Lord Thankerton, delivering the opinion of the Judicial Committee has observed: "Their Lordship are unable to accept this as the correct test.
In their views, it is not a question of whether the impugned Act is based only on one or more of the grounds specified in section 298, sub section 1, but whether its operation may result in a prohibition only on these grounds.
The proper test as to whether there is a contravention of the sub section is to ascertain the reaction of the impugned Act on the personal right conferred by the sub section, and, while the scope and object of the Act may be of assistance in determining the effect of the operation of the Act on a proper construction of its provisions, if the effect of the Act so determined involves an infringement of each personal right, object of the however laudable, will not obviate the prohibition of sub s.1".
(p.18) In State of Bombay vs Bombay Education Society and Others, ; , this Court, in the context of Article 29(2) wherein also the expression "on grounds only of religion. . has been used, has accepted the test laid down by the Judicial Committee of the Privy Council in Punjab Province vs Daulat Singh and Others (supra).
I may, in this context, also refer to the decision of this Court in The 1018 State of Madras vs Srimathi Champakam Dorairajan, ; , wherein, the question was whether there was denial of admission to Srinivasan, one of the petitioners, on the ground only of caste.
It was found that the denial of admission to the said petitioner, who was a Brahmin and had secured higher marks than the Anglo Indian and Indian Christians but could not get any of the seats reserved for the said communities for no fault of his except that he was a Brahmin and not a member of the said communities, could not but be regarded as made on ground only of his caste.
(p.532) The validity of the impugned provisions has, therefore, to be considered by applying the aforesaid test of effect of operation of the said provisions.
It is not disputed that Sangha, (Budhist order ' or congregation of monks) has an important place in Budhism.
Sangha together/with the Buddha and Dharma (sacred law) constituted the three Jewels which were the highest objects of worship among the Buddhists and a monk at the time of his ordination had to declare solemnly that he had taken refuge in Buddha, Dharma and Sangha.
[B.K. Mukherjea on The Hindu Law of Religious and Charitable Trusts ', Tagore Law Lectures : Fifth Ed.
(1983), p.181.
In Sikkim, Lamaistic Buddhism was the official religion and Sanghas (Bhudhist Lamas) staying in the Budhist monasteries played an important role in the administration.
Since only a Budhist can be a Sangha, the effect of the reservation of a seat for Sanghas and the provision for special electoral roll for the Sangha constituency wherein only Sanghas are entitled to be registered as electors, is that a, person who is not a Budhist cannot contest the said reserved seat and he is being discriminated on the ground only of religion.
Similarly a person who is not a Budhist is rendered ineligible to be included in the electoral roll for Sangha constituency on the ground only of religion.
The historical considerations to which reference has been made by Shri Parasaran do not, in my view, justify this discrimination of non Budhists because the said considerations which had significance at the time when Sikkim was governed by the Chogyal who professed Lamaistic Budhism and ran the administration of Sikkim in accordance with the tenets of his religion, can no longer have a bearing on the set up of the functioning of the State after its admission into the Indian Union.
In this regard, it may 1019 be pointed out that the reason for the reservation of one seat for Sanghas, as set out in cl.
(a) of the note that was appended to the Proclamation of March 16, 1958, was as follows : "(a) It has long been felt that, as the Monasteries and The Sangha have constituted such a vital and important role in the life of the community since the earliest known history of Sikkim, and have played a major part in the taking of decisions in the Councils of the past, there should be a seat specifically reserved for The Sangha in the Sikkim Council.
It is for this reason that a seat has been provided specifically for their representation".
This shows that the reservation of one seat for Sanghas in Sikkim Council and subsequently in the Sikkim Assembly was in the context of the administrative set up in Sikkim at the time wherein Sanghas were playing a major part in the taking of decisions in the Council.
The said reason does not survive after the admission of Sikkim as a new State in the Indian Union.
The continuation of a practice which prevailed in Sikkim from 1958 to 1976 with regard to reservation of one seat for Sanghas and the election to the said seat on the basis of a special electoral college composed of Sanghas alone cannot, therefore, be justified on the basis of historical considerations and the impugned provisions are violative of the Constitutional mandate contained in Article 15 (1) and Article 325 of the Constitution.
The next question which arises for consideration is whether the departure as made by the impugned provisions from the provisions of Articles 15(1) and 325 of the Constitution is permitted by Article 371 F of the Constitution.
It has already been pointed out that Article 371 F, whether it is treated as having been inserted in the Constitution by way of an amendment under Article 368 or by way of terms and conditions on which Sikkim was admitted into the Indian Union under Article 2, does not permit alteration of any of the basic features of the Constitution.
Although the expression 'Secular ' did not find a place in the Constitution prior to its insertion in the Preamble by Constitution (Forty Second Amendment) Act, 1976, but the commitment of the leaders of our freedom struggle during the course of freedom movement which find,,, expression in the various provisions of the Constitution leaves no room for doubt that 1120 secularism is one of the basic features of the Constitution.
It was so held in the Kesavananda Bharati case, [1973] Supp.
SCR 1 [Sikri, CJ.
at pp.
165 6; Shelat and Grover, JJ. at p.280; Hegde and Mukharjea, JJ.
at p.314 and Khanna J. at p.685] and in Smt.
Indira Gandhi vs Raj Narain [Mathew, J. at p.503 and Chandrachud, J. at p. 6591.
The matter has now been placed beyond controversy by incorporating the expression secular" in the Preamble by the Constitution (Forty second Amendment) Act, 1976.
In so far as clause (1) of Article 15 is concerned express provision has been made in clauses (3) and (4) empowering the State to make special provisions for certain classes of persons.
Sanghas, as such, do not fan within the ambit of clauses (3) and (4) of Article 15 and therefore, a special provision in their favour, in derogation of clause (1) of Article 15 is not permissible.
Article 325 also does not postulate any departure from the prohibition with regard to special electoral roll contained therein.
This is borne out by the background in which Article 325 came to be adopted in the Constitution.
Under the British Rule, separate electorates, for Muslims were provided by the Indian Councils Act, 1909.
The Communal Award announced in 1932 provided for separate electorates for Muslims, Europeans, Sikhs, Indian Christian and anglo Indians.
By it, separate electorates were sought to be extended to the depressed classes also.
This was opposed by Mahatma Gandhi who undertook fast unto death and thereupon the said proposal was given up.
The Congress Working Committee in its resolution adopted in Calcutta in October 1937 declared the communal award as being 'anti national, anti democratic and a barrier to Indian freedom and development of Indian unity '.
The Congress felt that separate electorates was a factor which led to the partition of the country.
When the Constitution was being framed, the question whether there should be joint or separate electorates was first considered by the Advisory Committee constituted by the Constituent Assembly to determine the fundamental rights of citizen, minorities etc.
The advisory Committee in its report dated August 8, 1947 has stated : "The first question we tackled was that of separate electorates; we considered this as being of crucial importance 1121 both to the minorities them selves and to the political life of the country as a whole.
By an overwhelming majority, we came to the conclusion that the system of separate electorates must be abolished in the new Constitution.
In our judgment, this system has in the past sharpened communal differences to a dangerous extent and has proved one of the main stumbling blocks to the development of a healthy national life.
It seems specially necessary to avoid these dangers in the new political conditions that have developed in the country and from this point of view the arguments against separate electorates seem to us absolutely decisive.
We recommend accordingly that all elections to the Central and Provincial Legislatures should be held on the basis of joint electorates." [Shiva Rao, Framing of India 's Constitution, Select Documents, Vol.
II, p.412] When the report of the Advisory Committee came up for consideration before the Constituent Assembly, Shri Muniswami Pillai, expressing his satisfaction with the report, said : "One great point, Sir, which I would like to tell this house is that we got rid of the harmful mode of election by separate electorates.
It has been buried seven fathom deep, never more to rise in our country." [Constituent Assembly Debates, Vol.
V p. 2021 An amendment was moved by Shri B. Pocker Sahib Bahadur belonging to Muslim League to the effect that all the elections to the Central and Provincial Legislatures should, as far as Muslims are concerned, be held on the basis of separate electorates.
The said amendment was opposed by most of the members.
Pandit Govind Ballabh Pant, speaking on the said occasion, stated ".
So, separate electorates are not only dangerous to the State and to society as a whole, but they are particularly 1022 harmful to the minorities.
We all have had enough of this experience, and it is somewhat tragic to find that all that experience should be lost and still people should hug the exploded shibboleths and slogans.
" [Constituent Assembly Debates; Vol.
V, p.224] Sardar Patel in his reply to the debate was more emphatic.
He said: "I had not the occasion to hear the speeches which were made in the initial stages when this question of communal electorates was introduced in the Congress; but there are many eminent Muslims who have recorded their views that the greatest evil in this country which has been brought to pass is the communal electorate.
The introduction of the system of communal electorates is a poison which has entered into the body politic of our country.
Many Englishmen who were responsible for this also admitted that.
But today, after agreeing to the separation of the country as a result of this communal electorate, I never thought that proposition was going to be moved seriously, and even if it was moved seriously, that it would be taken seriously." [Constituent Assembly Debates; Vol.
V, p. 255] The Constituent Assembly rejected the move and approved the recommendation of the Advisory Committee.
But in the original Draft Constitution there was no express provision to the effect that elections to the Parliament and to the State Legislatures shall be on the basis of the joint electorates for the reason that electoral details had been left to auxiliary legislation under Articles 290 and 291 of the Draft Constitution.
Subsequently it was felt that provision regarding joint electorates is of such fundamental importance that it ought to be mentioned expressly in the Constitution itself.
Article 289 A was, therefore, inserted to provide that all elections to either House of Parliament or the Legislature of any State shall be on the basis of the joint electorates.
[Shiva Rao : Framing of India 's Constitution, Select Documents, Vol.
IV p. 141].
Article 289 A, as proposed by the Drafting Committee, was substituted during the course of debate in the Constituent Assembly and the said provision, as finally 1023 adopted by the Constituent Assembly was numbered as Article 325.
This would show that.
Article 325 is of crucial significance for maintaining the secular character of the Constitution.
Any contravention of the said provision cannot but have an adverse impact on the secular character of the Republic which is one of the basic features of the Constitution.
The same is true with regard to the provisions of clause (1) of Article 15 which prohibits reservation of seats in the legislatures on the ground only of religion.
It is no doubt true that the impugned provisions, relate to only one seat out of 32 seats in the Legislative Assembly of Sikkim.
But the potentialities of mischief resulting from such provisions cannot be minimised.
The existence of such provisions is bound to give rise to similar demands by followers of other religions and revival of the demand for reservation of seats on religious grounds and for separate electorates which was emphatically rejected by the Constituent Assembly.
It is a poison which, if not eradicated from the system at the earliest, is bound to eat into the vitals of the nation.
It is, therefore, imperative that such provision should not find place in the statute book so that further mischief is prevented and the secular character of the Republic is protected and preserved.
While dealing with fundamental liberties, Bose J., in Kedar Nath Bajoria vs The State of West Bengal, , has struck a note of caution : "If we wish of retain the fundamental liberties which we have so eloquently proclaimed in our Constitution and remain a free and independment people walking in the democratic way of life, we must be swift to scotch at the outset tendencies which may easily widen, as precedent is added to precedent, into that which in the end will be the negation of freedom and equality".
(p.52) Similar caution is called for to preserve the secular character of the Republic.
Having found that the impugned provision providing for a separate electoral roll for Sangha Constituency contraveness Article 325 and reservation of one seat for Sanghas contravenes Article 15(1) and Articles 325 and 15(1) are of crucial importance to the concept of Secularism envisaged 1024 in the Constitution it becomes necessary to examine whether Article 371 F permits a departure from the principle contained in Articles 325 and 15(1) while applying the Constitution to the newly admitted State of Sikkim.
I am unable to construe the provisions of Cl (f) of Article 371 F as conferring such a power clause (f) of Article 371 F which empowers Parliament to make provision for reservation of seats in the Legislative Assembly of Sikkim for protecting the rights and interest of the different sections of the population of Sikkim, must be considered in the context of clause (5) of the tripartite agreement of May 8, 1973.
The 'different sections ' contemplated in clause (f) of Article 371 F are Sikkimese of Bhutia Lepcha origin on the one hand and Sikkimese of Nepali origin on the other and the said provision is intended to protect and safeguard the. rights and interests of these sections.
Clause (f) of Article 371 F, in my view, cannot be construed to permit reservation of a seat for Sanghas and election to that seat on the basis of a separate electoral roll composed of Sanghas only.
It must, therefore, be held that clause (c) of sub s.(1 A) of s.7 and Section 25 A of the 1950 Act and the words "other than constituency reserved for Sanghas" in clause (a) of sub s.(2) of s.5 A and clause (c) of sub s.(2) of s.5 A of the 1951 Act are violative of the provisions of Articles 15(1) and 325 of the Constitution and are not saved by Article 371 F of the Constitution.
The said provisions, in my view, are however, severable from the other provisions which have been inserted in the 1950 Act and the 1951 Act by the 1976 Act and the 1980 Act and the striking down of the impugned provisions does not stand in the way of giving effect to the other provisions.
I would, therefore, strike down s.25 A inserted in the 1950 Act by the Act 10 of 1976 and the provisions contained in clause (c) of sub s.(1 A) which has been inserted in Section 7 of the 1950 Act by Act 8 of 1.980, the words "other than the constituency reserved for the Sanghas" in clause (a) of sub s.(2) as well as clause (c) of sub s.(2) inserted in Section 5 A of the 1951 Act by Act 8 of 1980 as being unconstitutional.
In Transferred Cases Nos. 93 and 94 of 1991, Shri K.N. Bhatt and Shri K.M.K. Nair, the learned counsel appearing for the petitioners therein have not assailed the validity of the provisions with regard to reservation of seats for Sikkimese of Bhutia and Lepcha origin.
They have.
however, 1025 urged that Clause (f) of Article 371 F imposes an obligation on Parliament to make provision for protection of the rights and interests of Sikkimese of Nepali origin also and that while making reservation for protection of rights and interest of Sikkimese of Bhutia Lepcha origin, Parliament was also required to provide for similar reservation of seats for Sikkimese of Nepali origin to protect the rights and interests of Sikkimese of Napalis origin.
In this regard, it has been submitted that reservation for seats in the Sikkim Council and subsequently in Sikkim Assembly for Sikkimese of Nepali origin had been there since the elective element was introduced in 1952.
It was also urged that after Sikkim was admitted in the Indian Union, there has been large influx of outsiders in Sikkim as a result of which the original residents of Sikkim including Sikkimese of Nepali origin have been vastly out numbered by settlers coming to Sikkim from other parts of the country.
In my view, there is no substance in these contentions.
According to the figures of 1971 census Sikkimese of Nepali origin were 1,40,000 whereas Sikkimese of Bhutia Lepcha origin were 51,600 and as per per the figures of 1981 census the corresponding figures were 2,24,481 and 73,623 respectively.
This shows that the ratio of Sikkimese of Nepali origin and Sikkimese of Bhutia Lepcha origin is about 3:1.
In view of the vast difference in their numbers the Sikkimese of Nepali origin can have no apprehension about their rights and interests being jeopardised on account of reservation of twelve seats for Sikkimese of Bhutia Lepcha origin in the Legislative Assembly composed of thirty two seats.
As regards the apprehension that the Sikkimese of Nepali origin would be out numbered by the settlors from other parts of the country I find that no material has been placed by the petitioners to show that the number of settlors from other parts of the country into Sikkim is so large that Sikkimese of Nepali origin are being out numbered.
The figures of the 1971 and 1981 census, on the other hand, indicate to the contrary.
According to the 1.971 census in the total population of 2,09,843 the Sikkimese of Nepali origin were about 1,40,000, i.e., about 67%, and according to the 1981.
census in the total population of 3.16,385 Sikkimese of Nepali origin were 2,24,481, i.e., about 70%.
In these circumstances, it cannot be said that reservation of seat for Sikkimese of Nepali origin was required in order to protect their rights and interests and in not making any provision for reservation of seats for Sikkimese of Nepali origin Parliament has failed to give effect to the provisions of clause Article 371 F of the Constitution.
1026 For the reasons above mentioned, these cases have to be partly allowed and it is declared that Section 25 A introduced in the 1950 Act by Act No. 10 of 1976, Clause (c) of sub s.(1A) introduced in Section 7 of the 1950 Act by Act No. 8 of 1980, the words "other than constituency reserved for the Sanghas"in clause (a) of sub s.(2) introduced in Section 5 A of the 1951 Act by Act no.8 of 1980 and clause (c) of sub s.(2) introduced in s.5 A of the 1951 Act by Act no.8 of 1980 are unconstitutional nd avoid.
T.N.A. Petitions dismissed.
| IN-Abs | On May 8, 1973, a tripartite agreement was executed amongst the Chogyal (Ruler) of Sikkim, the Foreign Secretary to the Government of India and the leaders of the political parties representing the people of Sikkim which envisaged right of people of Sikkim to elections on the basis of adult suffrage, contemplated setting up of a Legislative Assembly in Sikkim to be reconstituted by election every four years and declared a commitment to free and fair elections to be overseen by a representative of the Election Commission of India.
Para (5) of the said agreement provided that the system of elections shall be so organised as to make the Assembly adequately representative of the various sections of the population The size and composition of the Assembly and of the Executive Council shall be such as may be prescribed from time to time, care being taken to ensure that no single section of the population acquires a dominating position due mainly to its ethnic origin, and that the rights and interests of the Sikkimese Bhutia Lepcha origin and of the Sikkimese Nepali, which includes Tsong and Scheduled Caste origin.
are fully protected.
This agreement was effectuated by a Royal Proclamation called the Representation of Sikkim Subjects Act, 1974, issued by the Ruler of ' Sikkim.
It directed the formation of Sikkim Assembly consisting of 32 elected members 31 to be elected from territorial constituencies and One Sangha constituency to elect one member through on electoral college of 893 Sanghas.
Consequently, elections for the Sikkim Assembly were held in April 1974.
The Sikkim Assembly so elected and constituted passed the Government of Sikkim Act, 1974.
Section 7 of the said Act gave recognition to paragraph 5 of the tripartite agreement dated May 8, 1973.
In pursuance of this development the Constitution of India was amended by the Constitution (Thirty Fifth Amendment) Act, 1974 inserting Article 2A which made Sikkim an "Associate State" with the Union of India.
On 10th April, 1975, the Sikkim Assembly passed a resolution abolishing the institution of Chogyal and declared that Sikkim would henceforth be a constituent unit of India enjoying a democratic and fully responsible Government.
A request was made in the resolution to the Government of India to take the necessary measures.
By an opinion poll the said resolution was affirmed by the people of Sikkim.
Accordingly, the Constitution was further amended by the Constitution (Thirty Sixth Amendment) Act, 1975 whereby Sikkim became a full fledged State in the Union of India and Article 371 F was inserted in the Constitution which envisaged certain special conditions for the admission of Sikkim as a new State in the Union of India.
Clause (f) of the said Article empowered Parliament to make provision for reservation of seats in the Sikkim Assembly for the purpose of protecting the rights and interests of the different sections of the population of Sikkim.
Thereafter Parliament enacted the which sought to extend, with certain special provisions, the Representation of the People Act, 1950 and the Representation of the People Act, 1951 to Sikkim.
Further, the Bhutia Lepchas were declared as Scheduled Tribes in relation to the State of Sikkim by a Presidential Order issued under Article 342 of the Constitution of India, and they thus became entitled to the benefits of reservation of seats in the State Legislature in accordance with Article 332.
The consequential reservation in the State Legislature were made in the Representation of People Act, 1950 and Representation of People Act, 1951 by the 1976 Act and the Representation of People (Amendment) Act, 1980.
Twelve seats out of thirty two seats in the Sikkim Assembly were reserved for Sikkimese of Bhutia Lepcha origin; and one seat was reserved for Sanghas, election to which was required to be conducted on the basis of a separate electoral roll in which only the Sanghas belonging to monasteries recognised for the purpose of elections held in Sikkim in April, 1974 were entitled to be registered.
894 The petitioners, Sikkimese of Nepali origin, filed petitions challenging the reservation of 12 seats for Sikkimese of "Bhutia Lepcha" origin and one seat for "sangha".
Objections as to the maintainability of the writ petitions were taken on behalf of the State of Sikkim and the Union of India on the grounds : (a) that a law made under Article 2 containing the terms and conditions on which a new State is admitted in the Indian Union is, by its very nature, political involving matters of policy and, therefore, the terms and conditions contained in such a law are not justiciable on the political question doctrine; (b) in view of the non obstante clause in Article 371 F, Parliament can enact such a law in derogation of the other provisions of the Constitution and the said law would not be open to challenge on the ground that it is violative of any other provisions of the Constitution.
On behalf of the petitioners it was contended (1) that the reservation of one seat in favour of the 'Sanghal (Bhuddhist Lamaic Religious Monasteries) is purely based on religious considerations and is violative of Articles 15(1) and 325 of the Constitution and offends the secular principles; the said reservation based on religion with a separate elec torate at the religious monasteries is violative of basic structure of the Constitution; (2) that the provisions in clause (f) of Article 371 F enabling reservation of seats for sections of the people and law made in exercise of that power providing reservation of seats for Bhutias Lepchas violate fundamental principles of democracy and republicanism under the Indian Constitution; (3) the reservation of seats for Sikkimese of Bhutia Lepcha origin without making a corresponding reservation for Sikkimese of Nepali origin is violative of the right to equality guaranteed under Article 14 of the Constitution; (4) in view of the Constitution (Sikkim) Scheduled Tribes Order, 1978 declaring Bhutias Lepchas as Scheduled Tribes, the extent of reservation of seats is disproportionate and violative of Article 332 (3) of the Constitution.
and (5) that this departure from the provisions of Article 332(3) derogates from the principle of one man, one vote enshrined in Article 170(2) of the Constitution.
On behalf of the respondents it was contended (1) that although basically the monasteries are religious in nature, yet they form a separate section of the society on account of the social services they have been rendering mainly to the Bhutia Lepcha section of the population.
Viewed in 895 this background they should not be treated as merely religious institutions for the purposes of reservation; (2) since the Constitution permits nomination to be made in the legislatures, the creation of a separate electorates for the Sangha seat cannot be objected to; (3) that the constitutional amendment bringing in Article 371F(f), as also the relevant amended provisions of the Representation of the People Acts are legal and valid because a perfect arithmetical equality of value of votes is not a constitutionally mandated imperative of democracy and secondly, that even if the impugned provisions made a departure from the tolerance limits and the constitutionally permissible latitudes, the discriminations arising are justifiable on the basis of the historical considerations peculiar to and characteristic of the evaluation of Sikkim 's political institutions.
Dismissing the petitions, this Court, HELD : By the Court (i) The questions raised in the petitions pertaining to the terms and conditions of accession of new State are justiciable.
[975B] (ii) Clause (f) of Article 371 F of the Constitution of India, is not violative of the basic features of democracy.
[986C] (iii) That impugned provisions providing for reservation of 12 seats, out of 32 seats in the Sikkim Legislative Assembly in favour of Bhutias Lepchas, are neither unconstitutional as violative of the basic features of democracy and republicanism under the Indian Constitution nor are they violative of Articles 14, 170(2) and 332 of the Constitution.
The impugned provisions are also not ultra vires of Clause (f) of Article 371 F. [986E H, 987A H, 988A] (iv) The extent of reservation of seats is not violative of Article 332(3) of the Constitution.
[987A B, 988A] (v) The reservation of one seat for Sangha to be elected by an Electoral College of Lamaic monasteries is not based purely on religious distinctions and is, therefore, not unconstitutional as violative of Articles 15(1) and 325 of the Constitution.
[989A H] Quaere (i) Whether the terms and conditions of admission of a new State are justiciable? 896 1.
The power to admit new States into the Union under Article 2 is, no doubt, in the very nature of the power, very wide and its exercise necessarily guided by political issues of considerable complexity many of which may not be judicially manageable.
But for that reason, it cannot be predicated that Article 2 confers on the Parliament an unreviewable and unfettered power immune from judicial scrutiny.
The power is limited by the fundamentals of the Indian constitutionalism and those terms and conditions which the Parliament may deem fit to impose, cannot be inconsistent and irreconcilable with the foundational principles of the Constitution and cannot violate or subvert the Constitutional scheme.
Therefore, if the terms and conditions stipulated in a law made under Article 2 read with clause (f) of Article 371 F go beyond the constitution ally permissible latitudes, that law can be questioned as to its validity.
Consequently it cannot be said that the issues are non justiciable.
[974D F, 975B E] A.K. Roy, vs Union of India, ; ; Madhav Rao vs Union of India, ; and State of Rajasthan vs Union of India, , referred to.
Vinod Kumar Shantilal Gosalia vs Gangadhar Narsingdas Agarwal & Ors., ; , Held inapplicable.
Marbury, vs Madison U.S. 137, 170 (1803); Martin vs Mott, US 19 (1827); Ware vs Hylton, 3 Dail.
(1796); Luther vs Borden, U.S. 1 (1849); Baker vs Carr ; ; Powell vs McCormack, 395 U.S. 486 and Japan Whaling Ass 'n vs American Cetacean Society ; , referred to.
A.K. Pavithran, Substance of Public International Law Western and Eastern, First Edition, 1965 pp.
281 2; The Constitution of the United States of American Analysis and Interpretation and Congressional Research Service Liberty of Congress 1982 Edn. p.703, referred to.
Article 2 gives a wide latitude in the matter of prescription of terms and conditions subject to which a new territory is admitted.
There is no constitutional imperative that those terms and conditions should ensure that the new State should, in all respects, be the same as the other 897 States in the Indian Union.
However, the terms and conditions should not seek to establish a form or system of Government or political and governmental institutions alien to and fundamentally different from those the Constitution envisages.
[984C D] Constitutional Law of India, Edited by Hidayatullah, J., referred to.
In judicial review of the vires of the exercise of a constitutional power such as the one under Article 2, the significance and importance of the political components of the decision deemed fit by Parliament cannot be put out of consideration as long as the conditions do not violate the constitutional fundamentals.
In the interpretation of a constitutional document, 'words are but the framework of concepts and concepts may change more than words themselves '.
The significance of the change of the concepts themselves is vital and the constitutional issues are not solved by a mere appeal to the meaning of the words without an acceptance of the line of their growth.
It is aptly said that "the intention of a Constitution is rather to outline principles than to engrave details".
[985A C] 43 Aust.
Law Journal, p.256, referred to.
Article 371 F cannot transgress the basic features of the Constitution.
The non obstante clause cannot be construed as taking clause (f) of Article 371 F outside the limitations on the amending power itself.
The provision of clause (f) of Article 371 F and Article 2 have to be construed harmoniously consistent with the foundational principles and basic features of the Constitution.
[974H, 975A] Mangal Singh & Anr.
vs Union of India, ; , relied on.
Per section C Agrawal, J. (Concurring) 1.
While admitting a new State in the Union, Parliament, while making a law under Article 2, cannot provide for terms and conditions which are inconsistent with the scheme of the Constitution and it is open to the Court to examine whether the terms and conditions as provided in the law enacted by Parliament under Article 2 are consistent with the constitutional scheme or not.
Power conferred on Parliament under Article 2 is not wider in ambit than the amending power under Article 368 and it would be of little practical significance to treat Article 371 F as a law made under Article 2 of the Constitution or introduced by way of 898 amendment under Article 368.
In either event, it will be subject to the limitation that it cannot alter any of the basic features of the Constitution.
The scope of the power conferred by Article 371 F, is therefore, subject to judicial review.
So, also is the law that is enacted to give effect to the provisions contained in Article 371 F. [1005E H] Baker vs Carr, ; and Powell vs McCormack, , referred to.
A.K Roy vs Union of India, ; ; Madhav Rao vs Union of India, ; ; State of Rajasthan vs Union of India, ; ; S.P. Gupta vs Union of India, [1982] 2 S.C.R. 365 and Mrs. Sarojini Ramaswami vs Union of India & Ors., Writ Petition (Civil) No. 514 of 1992 decided on August 27, 1992, referred to.
It is not doubt true that is the matter of admission of a new State in the Indian Union, Article 2 gives considerable freedom to Parliament to prescribe the terms and conditions on which the new State is being admitted in the Indian Union.
But at the same time, it cannot be said that the said freedom is without any constitutional limitation.
The power conferred on Parliament under Article 2 is circumscribed by the overall constitutional scheme and Parliament, while prescribing the terms and conditions on which a new State is admitted in the Indian Union, has to act within the said scheme.
Parliament cannot admit a new State into the Indian Union on terms and conditions which derogate from the basic features of the Constitution.
To hold otherwise would mean that it would be permissible for Parliament to admit to the Union new States on terms and conditions enabling those State to be governed under systems which are inconsistent with the scheme of the Constitution and thereby alter the basic features of the Constitution.
It would lead to the anomalous result that by an ordinary law enacted by Parliament under Article 2 it would be possible to bring about a change which cannot be made even by exercise of the constituent power to amend to the Constitution, viz., to after any of the basic features of the Constitution.
The words 'as it thinks fit ' in Article 2 of the Constitution cannot, therefore, be construed as empowering Parliament to provide terms and conditions for admission of a new State which are inconsistent with the basic features of the Constitution.
The said words can only mean that within the framework of the Constitution, it is permissible for Parliament to prescribe terms and conditions on 899 new State is admitted in the Union.
[1003G H, 1004A, C E] Mangal Singh vs Union of India, ; , referred to.
R.D. Lumb, The Constitution of Commonwealth of Australia, (1986) 4th Edn.
p. 736, referred to.
There is no doubt that the non obstante clause in a statute gives overriding effect to the provisions covered by the non obstante clause over the other provisions in the statute to which it applies and in that sense, the non obstante clause used in Article 371 F would give overriding effect to clauses (a) to (p) of Article 371 F over other provisions of the Constitution.
But at the same time, it cannot be ignored that the scope of the non obstante clauses in 371 F cannot extend beyond the scope of the legislative power of Parliament under Article 2 or the amending power under Article 368.
Therefore, the non obstalite clause has to be so construed as to conform to the aforesaid limitation or otherwise Article 371 F would be rendered unconstitutional.
A construction which leads to such a consequence has to be eschewed.
Thus as a result of the non obstante clause in Article 371 F, clauses (a) to (p) of the said Article have to be construed to permit a departure from other provisions of the constitution in respect of the matters covered by clauses (a) to (p) provided the said departure is not of such a magnitude as to have the effect of altering any of the basic features of the Constitution.
[1006B G] 4.
It cannot be said that Article 371 F contains a political element in the sense that it seeks to give effect to a political agreement relating to admission of Sikkim into the Indian Union.
[1003D] Per L.M. Sharma, CJ.
(Concurring) 1.
The courts are not only vested with the jurisdiction to consider and decide the points raised in these writ petitions, but are under a duty to do so.
If steps are taken to grant legitimacy to a state of affairs repulsive to the basic features of our Constitution, the Courts are under a duty to judicially examine the matter.
[925C, H] 2.
There is a vital difference between the initial acquisition of additional territory and the admission of the same as a full fledged State of the Union of India similar to the other States.
[921G] 900 3.
Special provisions for any State can certainly be made by an amendment of the Constitution, as is evident by Article 371A 371 B, 371C at cetera, but it is not permissible to do so in derogation of the basic features of the Constitution.
So far the power of sovereignty to acquire new territories is concerned, there cannot be any dispute.
The power is inherent, it was, therefore, not considered necessary to mention it in express terms in the Constitution.
It is also true that if an acquisition of new territories is made by a treaty or under an agreement the terms of the same will be beyond the scrutiny of the courts.
The position, however, is entirely different when new territory is made part of India, by giving it the same status as is enjoyed by an existing State under the Constitution of India.
The process of such a merger has to be under the Constitution.
No other different process adopted can achieve this result.
And when this exercise is undertaken, there is no option, but to adopt the procedure as prescribed in conformity with the Constitution.
At this stage the Court 's jurisdiction to examine the validity of the adopted methodology cannot be excluded.
[921H, 922A C] 4.
So far the present case is concerned the decision does not admit of any doubt that when the Thirty Sixth Amendment of the Constitution was made under which Sikkim joined India as a full fledged State like other States, power of amendment of the Constitution was invoked, and this had to be done only consistent with the basic features of the Constitution.
Sikkim became as much a State as any other.
Considered in this background, the objection to the maintainability of the writ petitions cannot be upheld.
[922D, H, 923A] Mangal Singh & Anr.
vs Union of India, [1967] 2 S.C.R.109, referred to.
It is true that in case of acquisition Article 2 comes into play but that is only at the initial stage when the new territory joins and becomes the territory of India under Article 1(3) (c).
In the present case the power under Article 2 was not exercised at any point of time.
Initially, Sikkim joined India as an Associate State by Article 2A introduced in the Constitution by an amendment.
When further steps of its complete merger with India were taken, the methodology under Article 3 was not available in view of the observations in Berubari case.
Correctly assessing the situation, fresh steps for amendment of the Constitution once more were taken and Sikkim was granted the status of a full Statehood at par with the other States by the Thirty Sixth Amendment of the Constitution.
Once this 901 was done it had to be consistent with the basic features of the Constitution.
[924E G] The Berubari Union and Exchange of Enclaves, [1960] 3 S.C.R. 250, relied on.
Quaere (ii) Whether the impugned provisions providing for reservation of Sangha seat with provision for separate electoral roll and Sangha constituency are unconstitutional? Per M.N. Venkatachaliah (For himself, J.S. Verma and KJ.
Reddy, JJ.).
A separate electorate for a religious denomination would be obnoxious to the fundamental principles of our secular Constitution.
If a provision is made purely on the basis.
of religious considerations for election of a member of that religious group on the basis of a separate electorate, that would, indeed, be wholly unconstitutional.
But in the case of the Sangha, it is not merely a religious institution.
The literature on the history of development of the political institutions of Sikkim tend to show that the Sangha had played an important role in the political and social life of the Sikkimese people.
It had made its own contribution to the Sikkimese culture and political development.
Thus, there is material to sustain the conclusion that the 'Saughal had long been associated itself closely with the political developments of Sikkim and was inter woven 10th the social and political life of its people.
In view of this historical association, the provisions in the matter of reservation of a seat for the Sangha recognises the social and political role of the institution more than its purely religious identity.
The provision can be sustained on this construction.
[989C H, 990A] 2.
In the historical setting of Sikkim and its social and political evolution the provision has to be construed really as not invoking the impermissible idea of a separate electorate either.
Indeed, the provision bears comparison to Article 333 providing for representation for the Anglo Indian community.
It is to be looked at as enabling a nomination but the choice of the nominee being left to the 'Sangha ' itself [989E F] Per section C Agrawal, J. (Dissenting) 1.
The impugned provision providing for a separate electoral roll for 902 Sangha Constituency contravenes Article 325 and reservation of one seat for Sanghas contravenes Article 15(1).
Article 371 F does not permit a departure from the principle contained in Articles 325 and 15(1) while applying the Constitution to the newly admitted State of Sikkim.
Clause (f) of Article 371 F, cannot be construed to permit reservation of a seat for Sanghas and election to that seat on the basis of a separate electoral roll composed of Sanghas only.
Consequently, clause (c) of sub section (1 A) of Section 7 and Section 25 A of the 1950 Act and the words 'other than constituency reserved for Sanghas ' in clause (a) of sub section (2) of Section 5 A and clause (c) of sub section (2) of Section 5 A of the 1951 Act are violative of the provisions of Articles 15(1) and 325 of the Constitution and are not saved by Article 371 F of the Constitution.
The said provisions, are however, severable from the other provisions which have been inserted in the 1950 Act and the 1951 Act by the 1976 Act and the 1980 Act and the striking down of the impugned provisions does not stand in the way of giving to the other provisions.
[1023H, 1024A B, D E] 2.
Since only a Buddhist can be a Sangha, the effect of the reservation of a seat for Sanghas and the provision for special electoral roll for the Sangha Constituency %,herein only Sanghas are entitled to be registered as electors, is that a person who is not a Buddhist cannot contest the said reserved seat and he is being discriminated on the ground only of religion.
Similarly, a person who is not a Buddhist is rendered ineligible to be included in the electoral roll for Sangha Constituency on the ground only of religion.
The historical considerations do not justify this discrimination.
[1018E G] 2.1.
The reservation of one seat for Sanghas in Sikkim Council and subsequently in the Sikkim Assembly was in the context of the administrative set up in Sikkim at that time wherein Sanghas were playing a major part in the taking of decisions in the Council.
The said reason does not survive after the admission of Sikkim as a new State in the Indian Union.
The continuation of a practice which prevailed in Sikkim with regard to reservation of one seat for Sanghas and the election to the said seat on the basis of a special electoral college composed of Sanghas alone cannot, therefore, be justified on the basis of historical considerations and the impugned provisions are violative of the Constitutional mandate contained in Article 15(1) and Article 325 of the Constitution.
[1019D E] 903 Nain Sukh Das and Anr.
vs The State of Uttar Pardesh and Ors., ; ; Punjab Province vs Daulat Singh and Ors., ; State of Bombay vs Bombay Education Society and Ors., ; and The State of Madras vs Srimathi Champakam Dorairajan, ; , relied on.
In so far as clause (1) of Article 15 is concerned express provision has been made in clauses (3) and (4) empowering the State to make special provisions for certain classes of persons.
Sanghas, as such, do not fall within the ambit of clauses (3) and (4) of Article 15 and therefore, a special provision in their favour, in derogation of clause (1) of Article 15 is not permissible.
[1020C] 4.
Article 325 is of crucial significance for maintaining the secular character of the Constitution.
Any contravention of the said provision cannot but have an adverse impact on the secular character of the Republic which is one of the basic features of the Constitution.
The same is true with regard to the provisions of clause (1) of Article 15 which prohibits reservation of seats in the legislatures on the ground only of religion.
[1023A B] Smt.
Indira Gandhi vs Raj Narain, and Kesa vanalida Bharati vs State of Kerala, [1973] Supp.
S.C.R. 1, referred to.
It is no doubt true that the impugned provisions, relate to only one seat out of 32 seats in the Legislative Assembly of Sikkim.
But the potentialities of mischief resulting from such provisions cannot be minimised.
The existence of such provisions is bound to give rise to similar demands by followers of other religions and revival of the demand for reservation of seats on religious grounds and for separate electorates which was emphatically rejected by the Constituent Assembly.
It is poison which, if not eradicated from the system at the earliest, is bound to eat into the vitals of the nation.
It is, therefore, imperative that such provision should not find place in the statute book so that further mischief is prevented and the secular character of the Republic is protected and preserved.
[1023C E] Kedar Nath Bajoria vs The State of West Bengal, , referred to.
904 Shiva Rao, Framing of India 's Constitution, Select Documents, Vol.
II, p.412 and Constituent Assembly Debates, Vol.
V. p. 202, 224, 225, referred to.
Per L.M. Sharma, C.j (Dissenting) 1.
The provisions of Section 25A of the Representation of the People Act, 1950 are ultra vires the Constitution.
The provisions of.
Section 7(1A)(c) and the other connected amendments are also ultra vires the Constitution.
[941B, 935G] The Buddhist Monasteries, which are the beneficiaries of the reservation, are admittedly religious institutions.
If the entire Constitution is considered harmoniously along with all the other materials, relevant in law for this purpose including the 'Enacting History ', there is no escape from the conclusion that any weightage at the poll in favour of a group on the ground of religion is strictly prohibited and further, that this is a basic feature, which is not amenable to amendment.
[931D, 935G] B.K. Mukherjee, Hindu Law of Religious and Charitable Trust; George Kotturan, The Himalayan Gatewa); J.C. White, Sikkim and Bhutan Twenty One Years on the North East Frontier 887 1908; J.S. Lall, The Himalaya Aspects of change, 1981; Geoffrey Georer, Himalayan Village and A.C. Sinha, Politics of Sikkim A Sociological Study referred to.
If the Constitution is so interpreted as.
to permit, by an amendment a seat to be reserved in the legislature for a group of religious institutions like the Buddhist Monasteries, it will follow that such a reservation would be permissible for institutions belonging to other religions also.
And all this may ultimately change the very complexion of the legislatures.
The effect that only one seat has been reserved today for the Monasteries in Sikkim is the thin edge of the wedge which has the potentiality, to tear apart, in the course of time, the very foundation, which the democratic republic is built upon.
All this is prohibited as being abhorrent to the basic features of the Constitution.
[932H, 933A D] 3.1.
Today a single seat in the legislature of one State is not conspicuously noticeable and may not by itself be capable of causing irreparable damage, but this seed of discord has the potentiality of developing into a deadly monster.
It is true that some special rights have been envisaged 905 in the Constitution for handicapped classes but this has been done only to offset the disadvantage the classes suffer from, and not for bringing another kind of imbalance by making virtue out of minority Status.
The Constitution, therefore, has taken precaution to place rigid limitations on the extent to which this weightage can be granted, by including express provisions instead of leaving the matter to be dealt with by subsequent enactments limitations both by putting a ceiling on the reservation of seats in the legislatures and excluding religion as the basis of discrimination.
To ignore these limitations is to encourage small groups and classes which are in good number in our country on one basis or the other to stick to and rely on their special status as members of separate groups and classes and not to join the main stream of the nation and be identified as Indians.
It is, therefore, absolutely essential that religion, disguised by any mask and concealed within any cloak must be kept out of the field exclusively reserved for the exercise of the State powers.
[955D H] 4.
There is also another serious flaw in the reservation for the Sangha rendering the same to be unconstitutional.
By the impugned provisions of the 1950 Act, a special electorate has been created for this seat which is highly abhorrent to the fundamental tenets of the Constitution.
[935H, 936A] 4.1.
From the entire scheme of the Constitution, it is clear that its basic philosophy eloquently rejects the concept of separate electorate in India.
This conclusion is reinforced by the historical background, the celebrations of the Advisory Committee, and the discussion which took place in the Constituent Assembly before giving final shape to the Constitution.
There is no reason for assuming that while inserting Article 371 F(f) in the Constitution there was a complete reversal of faith on this basic and vital matter, which was otherwise also not permissible.
It follows that consistent with the intention of the rest of the Constitution the provision regarding the delimitation of the Assembly constituencies in Article 371 F(f) has to be interpreted in the same sense, as the expression has been used in the other provisions.
Clause (f) of Article 371F neither by its plain language nor intendment permits separate electorates and any attempt to give a different construction would not only be highly artificial and speculative but also would be violative of a basic feature (if the Constitution.
[940G H. 941A] B.
Shiva Rao 's Framing of Indian constitution, Vol.
II, pp.
56 57, 392, 906 412, referred to.
Constituent.
Assembly Debates, Vol.
V, P.225, 224, 202, referred to.
5.There is no parallel between the nominations permitted by the Constitution to be made In the legislatures and the creation of a separate electorates for the Sangha.
After the establishment of a democratic government at every level in the country in one form or the other, nomination under the Constitution amounts to exercise of a power to induct a member in the legislature by an authority, who ultimately represents the people, although the process of the representation may be a little involved.
So far a handful of the Buddhist Monasteries in Sikkim are concerned, they cannot be said to represent the people of Sikkim in any sense of the term.
Allotting a seat in the legislature to represent these religious institutions is bad enough by itself , and then, to compound it by vesting the exclusive right in them to elect their representative to occupy the reserved seat is to aggravate the evil.
This cannot be compared with any of the provisions in the Constitution relating to nominations.
[940D F] Quaere (iii) Whether the impugned provisions providing for reservation of twelve seats in favour of Bhutia Lepchas are unconstitutional? Per M.N. Venkatachaliah (For himself, J.S. Verma and KJ.
Reddy, JJ.).
1.Article 371F(f) cannot be said to violate any basic feature of the Constitution such as the democratic principle.
[986C] 1.1.The provisions of clauses (f) of Article 371 F and the consequent changes in the electoral laws were intended to recognise and accommodate the pace of the growth of the political institutions of Sikkim and to make the transition gradual and peaceful and to prevent dominance of one section of the population over another on the basis of ethnic loyalties and identities.
These adjustments and accommodations reflect a political expediencies for the maintenance of social equilibrium.
Indeed, the impugned provisions, in their very nature, contemplate and provide for a transitional phase in the political evolution of Sikkim and are thereby essentially transitional in character.
The impugned provisions have been found in the wisdom of Parliament necessary in the admission of a new State into the Union.
The departures are not such as to negate fundamental principles.
of democracy.
Thus, the provisions in the particular situa 907 tion and the.
permissible latitudes, cannot be said to be unconstitutional.
[986E H, 987H, 988A, H] 1.2.
It is true that the reservation of seats of the kind and the extent brought about by the impugned provisions may not, if applied to the existing States of the Union, pass the Constitutional muster.
But in relation to a new territory admitted to the Union, the terms and conditions are not such as to fall outside the permissible constitutional limits.
Historical considerations and compulsions do justify inequality and special treatment [987A B] Lachhman Dass etc.
vs State of Punjab & Ors.
, ; and State of Madhya Pradesh vs Bhopal Sugar Industries Ltd., ; , referred to.
An examination of the constitutional scheme would indicate that the concept of 'one person one vote ' is in its very nature considerably tolerant of imbalances and departures from a very strict application and enforcement.
The provision in the Constitution indicating proportionality of representation is necessarily a broad, general and logical principle but not intended to be expressed with arithmetical precision.
The principle of mathematical proportionality of representation is not a declared basic requirement in each and every part of the territory of India.
The systemic deficiencies in the plenitude of the doctrine of full and effective representation has not been understood in the constitutional philosophy as derogating from the democratic principle.
The inequalities in repre sentation in the present case are an inheritance and compulsion from the past.
Historical considerations have justified a differential treatment.
[985G H, 986A B] Reynolds vs Sims, and Attorney General (CTH) exhibit Rei.
Mckinlay vs The Commonwealth, 135 C.LR.
(1975) 1, referred to.
Article 170 incorporates the rule of 'fair and effective representation '.Though the rule 'one person one vote ' is a broad principle of democracy, it is more a declaration of a political ideal than a mandate for enforcement with arithmetical accuracy.
These are the usual problems that arise In the delimitation of constituencies.
In what is called "First past the post ' system of elections, the variations in the size and in the voting populations of different constituencies, detract from a strict 908 achievement of this ideal.
The system has the merit of preponderance of 'decisiveness" over "representativeness".
[976E F] Keith Graham, The Battle of Democracy.
Conflict, Consensus and the Individual, referred to.
The concept of political equality underlying a democratic system is a political value.
Perfect political equality is only ideological.
[977D] Rodney Brazier, Constitutional Reform Reshaping the British Political System, referred to.
Brazier, Constitutional Practice (Clarendon Press (Word), referred to.
Lijphart, Democracy in Plural Societies ' Howard D. Hamilton, Legislative Appointment: Key to Power; Gordon E. Baker, One Person, One Vote: Fair and Effective Representation? (Representation and Misrepresentation Rand McNally & Co. Chicago), referred to.
The contention that clause (f) of Article 371 F would require that whichever provisions for reservation of seats are considered necessary for the purpose of protecting the rights and interests of different sections of the population of Sikkim, such reservations are to be made for all such sections and not, as here, for one of them alone ignores that the provision in clause (f) of Article 371 F is merely enabling.
If reservation is made by Parliament for only one section it must, by implication, be construed to have exercised the power respecting the other sections in a negational sense.
The provision really enables reservation confined only to a particular section.
[988B C] 4.
Clause (f) of Article 371 F is intended to enable, a departure from Article 332(2).
This is the clear operational effect of the non obstante clause with which Article 371 F opens.
[988F] 5.
Mere existence of a Constitution, by itself, does not ensure constitutionalism or a constitutional culture.
It is the political maturity and traditions of a people that import meaning to a Constitution which otherwise merely embodies political hopes and ideals.
[986E] Per S.C. Agrawal, J. (Concurring) 909 1.
Clause (a) of sub section (1 A) of Section 7 of the 1950 Act which provides for reservation of 12 seats in an Assembly having 32 seats for Sikkimese of Bhutia Lepcha origin does not transgress the limits of the power conferred on Parliament under Article 371 F(f) and it cannot be said that it suffers from.
the vice of unconstitutionality.
[1014E] 2.
The reservation of seats for Bhutias and Lepchas is necessary because they constitute a minority and in the absence of reservation they may not have any representation in the Legislative Assembly.
Sikkimese of Nepali origin constitute the majority in Sikkim and on their own electoral strength they can secure representation in the Legislative Assembly against the unreserved seats.
Moreover, Sikkimese of Bhutia and Lepcha origin have a distinct culture and tradition which is different from that of Sikkimese of Nepali origin.
Keeping this distinction in mind Bhutias and Lepchas have been declared as Scheduled Tribes under Article 342 of the Constitution.
The Constitution in Article 332 makes express provision for reservation of seats in the Legislative Assembly, of a State for Scheduled Tribes.
Such a reservation which is expressly permitted by the Constitu tion cannot be challenged on the ground of denial of right to equality guaranteed under Article 14 of the Constitution.
[1008B D] 3.
Clause (3) of Article 332 has to be considered in the light of clause (f) of Article 371 F. The non obstante clause in Article 371 F enables Parliament to make a departure from the ratio contemplated by Article 332(3) within the limitation which is inherent in the power conferred by Article 371 F, i.e., not to alter any of the basic features of the Constitution.
[1008E F, 1009B] 3.1.
By providing for reservation to the extent of 38% of seats in the Legislative Assembly for Sikkimese of Bhutia Lepcha origin Parliament has sought to strike a balance between protection of the extent of 50% that was available to them in the former State of Sikkim and the protection envisaged under Article 332 (3) of the Constitution which would have entitled them to reservation to the extent of 25% seats in accordance with the proportion of their population to the total population of Sikkim.
[1010C D] 4.
The principle of one man, one vote envisages that there should be parity in the value of votes of electors.
Such a parity though ideal for a representative democracy is difficult to achieve.
There is some departure in every system following this democratic path.
In the matter of delimitation of 910 constituencies, it often happens that the population of the one constituency differs from that of the other constituency and as a result although both the constituencies elect one member, the value of the vote of the elector in the constituency having lesser population is more than the value of the vote of the elector of the constituency having a larger population.
[1010G H, 1011A] Reynolds vs Sims, ; ; Mahan vs Howell, ; and Attorney General (CTH) Er.
Mckinlay vs The Commonwealth, 135 C.L.R. [1975] 1, referred to.
H.W.R. Wade: Constitutional Fundamentals, The Hamlyn Lectures, 32nd Series, 1980, p.5, referred to.
Provisions of Delimitation Act, 1962 show that population, though important, is only one of the factors that has to be taken into account while delimiting constituencies which means that there need not be uniformity of population and electoral strength in the matter of delimitation of constituencies.
In other words, there is no insistence on strict adherence to equality of votes or to the principle one vote one value.
[ 1013H, 1014A] 4.2.
The words "as nearly as may be" in clause (3) of Article 332 indicate that even in the matter of reservation of seats for Scheduled Castes and Scheduled Tribes it would be permissible to have deviation to some extent from the requirement that number of seats reserved for Scheduled Castes or the Scheduled Tribes in the Legislative Assembly of any State shall bear the same proportion to the total number of seats as the population of the Scheduled Castes or the Scheduled Tribes in the State in respect of which seats are so reserved, bears to the total population of the state.
The non obstante clause in Article 371 F read with clause (f) of the said Article enlarges the field of deviation in the matter of reservation of seats from the proportion laid down in Article 332 (3).
The only limitation on such deviation is that it must not be to such an extent as to result in tilting the balance in favour of the Scheduled Castes or the Scheduled Tribes for whom the seats are reserved and thereby convert a minority into majority.
This would adversely affect the democratic functioning of the legislature in the State which is the core of representative democracy.
[1014B D] 4.3.
The non obstante clause in Article 371 F when read with clause (f) of Article 371 F envisages that Parliament may, while protecting the rights 911 and interests of the different sections of the population of Sikkim deviate from the provisions of the Constitution, including Article 332.
[101 OF] 5.
In view of the vast differences in their numbers the Sikkimese of Nepali origin can have no apprehension about their rights and interests being jeopardised on account of reservation of 12 seats for Sikkimise (of Bhutia Lepcha origin in the Legislative Assembly composed of 32 seats.
Therefore, it cannot be said that reservation of seats for Sikkimese of Nepali origin was required in order to protect their rights and interests and in not making any provision for reservation of seats for Sikkimese of Nepali origin Parliament has failed to give effect to the provisions of clause (f) Article 371 F of the Constitution.
[1025E H] Per L.M. Sharma, CJ.
(Dissenting) 1.
The impugned provisions are ultra vires the Constitution including Article 371F(f).
[954E] 2.
The problem of Bhutia Lepcha Tribe is identical to that of the other Tribes of several States where they are greatly out numbered by the general population, and which has been effectively dealt with by the provisions for reservation in their favour included in Part XVI of the Constitution.
It cannot be justifiably suggested that by subjecting the provisions of the reservations to the limitations in clause (3) of Article 332, the Tribes in India have been left unprotected at the mercy of the overwhelming majority of the general population.
The reservations in Part XVI were considered adequate protection to them.
Therefore, adequate safeguard in favour of the Bhutia Lepchas was already available under the Constitution and all that 'was required was to treat them as Tribes like the other Tribes which was done by a Presidential Order issued under Article 342.
Therefore.
the object of clause (f) was not to take care of this problem and it did not authorise the Parliament to pass the Amendment (Act 8 of 1980) inserting Section 7(1A) (a) ill the Representation of the People Act, 1950 and Section ;A in the Representation of the People Act, 1951 and other related amendments.
They being violative of the Constitutional provisions including those in Article 371F (f) are ultra [948F H, 949A C] 3.
Clause (f) permits the Parliament to take only such steps which would be consistent with the provisions of the Constitution coming from before, so that Sikkim could completely merge with India and be placed it 912 par with the other States.
This conclusion is irresistible if the facts and circumstances which led to the ultimate marger of Sikkim in India are kept in mind.
If clause (f) of Article 371F is so construed as to authorise the Parliament to enact the impugned provisions it will be violative of the basic features of the Constitution and, therefore, void.
[946E F, 953C] 3.1.
The choice of the candidate and the right to stand as a candidate at the election are inherent in the principle of adult suffrage, that is, one man one vote.
By telling the people that they have a choice to elect any of a select group cannot be treated as a free choice of the candidate.
This will only amount to lip service, too thinly veiled to conceal the reality of an oligarchy underneath.
It will be just an apology for democracy, a subterfuge; and if it is permitted to cross the limit so as to violate the very core of the principle of one man one vote, and is not controlled by the constitutional safeguards as included in clause (3) of Article 332 of the Constitution it will amount to a huge fraud perpetrated against the people.
[950E G] 3.2.
The very purpose of providing reservation in favour of a weaker class is to aid the elemental principle of democracy based on one man.
one vote to succeed.
The disproportionately excessive reservation creates a privileged class, not brought to the same plane with others but put on a higher pedestal, causing unhealthy competition, creating hatred and distrust between classes and fostering divisive forces.
[950H, 951A] 3.3.
The unequal apportionment of the role in the polity of the country assigned to different groups tends to foster unhealthy rivalry impairing the mutual feeling of goodwill and fellowship amongst the people, and encouraging divisive forces.
[955B] 3.4.
As explained by the Preamble the quality of democracy envisaged by the Constitution does not only secure the equality of opportunity but of status as well, to all the citizens.
This equality principle is clearly brought out in several Articles in the different parts of the Constitution, including Part XVI having special provisions relating to certain classes.
The sole objective of providing for reservations in the Constitution is to put the principle of equal status to work So far the case of inadequate representation of a backward class in State services is con cerned, the problem is not susceptible to be solved in one stroke; and consequently the relevant provisions are kept flexible permitting wider discretion so as to attain the goal of adequate proportionate repre 913 sentation.
The situation in respect to representation in the legislature is entirely different.
As soon as an election takes place in accordance with the provisions for proportionate representation, the objective is achieved immediately, because there is no problem of backlog to be tackled.
On the earlier legislature disappearing, paving the way for new election, the people get a clean slate before them.
The excessive reservation in this situation will bring in an Imbalance of course of another kind but defeating the cause of equal status all the same.
The pendulum does not stand straight it swings to the other side.
The casualty In both cases is the equality clause.
Both situations defeat the very object for which the democratic forces waged the war of independence; and they undo what has been achieved by the Constitution.
This is clearly violative of the basic features of the Constitution.
[952B, F H, 953A B] 4.
A perusal of the Agreement dated 8th May, 1973 dearly indicates that the spirit of the Indian Constitution pervaded through out the entire Agreement and the terms thereof were drafted respecting the main principles embodied in our Constitution.
It must, therefore, be held that an interpretation cannot be given to the Agreement which will render it as deviating from the constitutional pattern of the Indian Constitution.
[945A B]
|
Appeal Nos.
691 97 of 1993.
From the Judgment and Order dated 3.9.1991 of the Rajasthan High Court in D.B. Civil Writ Petition Nos.
2221, 2353 and 3222 of 1990.
P.P. Rao, V.M. Tarkunde, Sushil K. Jain, A.P. Dhamija, Sudhanshu Atreya, Aruneshwar Gupta, Ms. Mamita Naroola and Pushpandra Singh Bhatia for the Appellants.
P. Chidambaram, Pallay Shishodia, A.P. Medh and R.M. Tahija for the Respondents.
The Judgment of the Court was delivered by VERMA, J.
Leave granted.
These appeals by special leave are by the State of Rajasthan and certain candidates whose promotions are adversely affected by the impugned judgment of the Rajasthan High Court.
The dispute in the writ petitions filed in the High Court was between members of the Rajasthan Educational Service belonging to Group 'E ' and Group 'F pertaining to their rival claims for promotion to the posts of principal Higher Secondary School, which posts are in Group 'D ', Section II of the Rajasthan Educational Service.
The dispute between these two groups arises from the fact that in the Rajasthan Educational Service Rules, 1970 (hereinafter referred to as 'the Rules '), the aforesaid two groups 'E ' and 'F ' are clubbed together as the feeder cadre for promotion to Group 'D ', Section II, even though in the service hierarchy the lowest is Group 'F ', above which is Group 'E ' and then comes Group 'D '.
In the writ petitions filed in the High Court, the writ petitioners challenged the constitutional validity of this provision in the Rules clubbing together Group 'E ' and Group 'F for the purpose of promotion to Group 'D '.
Section II on the ground that unequals had been equated.
The High Court has allowed these writ petitions and held that item No. 1(a) in column 5 under the head "Group 'D ' Section II" of 1091 Schedule 1 to the Rules as also Item No. 1 in Schedule 11 under the head 'Group 'D ' Section 11" in column 5 are unconstitutional, being violative of Articles 14 and 16 of the Constitution.
Accordingly, the High Court has quashed the orders promoting members of Group 'F to posts in the Group 'D '.
It is this judgment dated 3.9.1991 of the Rajasthan High Court which is challenged in these appeals by special leave by the State of Rajasthan and members belonging to Group 'F of the Service whose promotions are quashed.
Before we refer to the relevant provisions, mention may be made of the rival contentions before us Shri P.P. Rao, learned counsel for the aggrieved Group 'F teachers, advanced several arguments.
He submits that the Rules require preparation of a combined seniority list of an eligible members of Group 'E ' and 'F and prescribed the placing of those in Group 'E ' en bloc above the persons belonging to Group 'F; and it is also prescribed that amongst those selected for promotion to Group 'D ', the pre existing inter se seniority within the Group and also between the two groups is to be maintained, that is, all those from Group 'E ' are to rank above those from Group 'F. He submits that the interpretation and working of the Rules in this manner, which is the case of the State Government, is in consonance with Articles 14 and 16 of the Constitution.
His next submission is that reservation of a percentage of the promotion quota to be filled exclusively on the basis of merit does not violate the guarantee of equality since it promotes the object of greater efficiency as those considered in the merit quota are all qualified and eligible for promotion.
His further submission is that Rule 25(5) applies to promotion to the next higher grade from the lowest grade while Rule 25 (6) applies to promotions to all other higher grades.
In other words, for promotion from Group 'F to Group 'E ', Rule 25(5) applies while for promotion from Group 'F directly to Group 'D ': Rule 25(6) applies.
He also submitted that Rule 23A does not apply where promotion to a higher grade is from more than one grade.
Shri Aruneshwar Gupta, appearing for the State of Rajasthan, adopted the arguments of Shri Rao.
He also submitted that the writ petitioners having appeared for interview before the D.P.C. and taken their chance, they are precluded from making the challenge when they failed to get selected.
Shri V.M. Tarkunde, who appeared for one of the aggrieved appellants, supported Shri Rao and made some more submissions.
Shri Tarkunde submitted that the difference between members of Group 'F and Group 'E ' is not substantial since both of them had been 1092 functioning as Headmasters and discharging similar duties so that they were equally suitable and qualified for promotion as Principal of a Higher Secondary School.
Shri Tankunde submitted that no person belonging ' to Group 'E ' found suitable for promotion to Group 'D ' was left out and, therefore, filling the remaining vacancies from amongst suitable and qualified persons belonging to Group 'F ' cannot be violative of the rights, if any, of those in Group 'E ' who were not promoted because they were not found suitable for promotion.
Learned counsel also submitted that qualitatively those promoted from Group 'F ' were, according to the service record, not inferior to persons lower down in Group 'E 'who had not been selected and the principle of equation adopted was fair to all.
It was also shown with reference to the particulars of those not selected for promotion from Group 'E ' and those found suitable for promotion in Group 'F ' that the principle adopted and applied was fair and reasonable, with no element of arbitrariness.
In reply, Shri Pallay Shishodia, learned counsel for the respondents, who arc persons not selected for promotion from Group 'E ' to Group 'D ', attempted to support the impugned judgment.
In all, there were 14 such persons who filed the three writ petitions in the High Court.
The main argument of Shri Shishodia is that ex facie clubbing of Group 'F ', a lower cadre, with Group 'E ' for promotion to Group 'D '.
Section II, violates the equality clause.
Shri Shishodia contended that the explanation now given by the State Government to justify the promotions made is not based on a policy adopted and followed, but on the fortuitous circumstances which have emerged from the results of the promotions.
Shri Shishodia also submitted that the yardstick was applied equally rigidly to members of Group 'E ' as to those from 'F ' when it should have been more stringent for those in Group 'F ' which was a lower grade.
In order to satisfy ourselves that the policy adopted by the State Government was fair in its application to members of both Group 'E ' and Group 'F, we directed the State Government to produce the relevant material including the particulars of candidates selected for promotion and those not found fit for promotion in Group 'E ', as also the guidelines followed.
On examination.
of those details, we are satisfied that the net result of the working of the Rules in accordance with the principle adopted has been fair and it cannot be held that those not selected for promotion in Group 'E ' have been dealt with unfairly, in any manner, to justify 1093 quashing the promotions made at this selection.
We may, however, observe that it would be advisable for the State Government to lay down more clearly its policy for the future to avoid even the semblance of treating unequals as equals for the purpose of promotion, in consonance with the well known maxim that 'justice should not only be done but should also be seen to be done.
We do hope that the State Government would take advantage of the experience gained from this litigation to dispel the misapprehension from the minds of a section of its employees who think that the State 's action is not fair.
Obviously the High Court was denied the benefit of the material which the State Government placed before us, on our directions, which enabled us to remove the gloss of seeming inequality in the policy adopted under the Rules read with the guidelines for its working.
We may first refer to the relevant parts of the Rajasthan Educational Service Rules, 1970.
"PART II CADRE 4.
Composition and strength of the Service (1) The Service shall consist of the posts as arranged in the various groups specified in the Schedule.
(2) The nature of posts included in each group of the Service shall be as specified in Column 2 of the Schedules.
(3) The strength of posts in each group of the service shall be such as may be determined by the Government from time to time.
(4) There shall be separate cadres in each Group of Service specified in the Schedules I to VI such as Schedule I for Boys Institutions.
Schedule II for Girls Institutions.
Schedule III for Science and General Institutions.
1094 Schedule IV for Institutions of Language Studies.
Schedule V for Institutions of Physical Education, and Schedule VI for Institutions of Arts, Music and others.
The posts mentioned in each Group of service in a particular Schedule shall be interchangeable within the same Group of an), Schedule provided such posts carry identical time scale of pay.
Initial Constitution of the Service The Service shall consist of (a) all persons holding substantively the posts specified in the Schedule; (b) all persons recruited to the Service before the commencement of these rules; and (c) all persons recruited to the Service in accordance with the provisions of these rules.
PART III RECRUITMENT 6.
Methods of Recruitment Recruitment to the Service after the commencement of these rules shall be made by the following methods in the proportion indicated in column 3 of the Schedule, namely (a) by direct recruitment in accordance with provisions of Part IV of the rules; and (b) by promotion in accordance with the provisions of Part V of these rules: xxx xxx xxx 8C Power to remove difficulties : 1095 The State Government may for the purpose of removing any difficulty in regard to other matters regarding recruitment, probation, confirmation, promotion etc.
and in im plementation of provisions of rules 6A and 6B, make any general of specific order as it may consider necessary or expedient in the interest of fair dealing or in the public interest in consultation with the Commission where necessary. " PART V PROCEDURE FOR RECRUITMENT BY PROMOTION 23.
Eligibility and Criteria for Selection: (1) The persons holding the posts enumerated in Column 5 of the Schedules, shall be eligible, on the basis of merit and seniority cum merit, for promotion to posts specified in column 2 thereof subject to their possessing the qualifications and experience on the first day of the month of April of the year of selection as specified in column 6 thereof Provided that a member of the Service shall not be debarred from promotion for want to training qualifications.
XXX 23A: No officer shall be considered for promotion unless he is substantively appointed and confirmed on the next lower post.
If no officer substantive in the next lower post is eligible for promotion, officers who have been appointed on such post on officiating basis after selection in accordance with one of the methods of recruitment or under any Service Rules promulgated under proviso to Article 309 of the Constitution of India may be considered for promotion on officiating basis only in the order of seniority in which they would have been.
had they been 1096 substantive on the said lower post.
Procedure for selection on the basis of seniority cum merit: (1) As soon as it is decided that a certain number of posts shall be filled by promotion, the Director shall prepare a correct and complete list containing names not exceeding five times the number of vacancies, out of the senior most persons as mentioned in column 5 of the Schedule, who are qualified under the rules for pro notion to the posts concerned.
He shall forward this list alongwith their confidential rolls and personal files to th e Secretary to the Government in the Education Department.
xxx xxx xxx (2)(a) For the posts, appointments whereto are to be made by Government, a Committee consisting of the Chairman of the Commission or his nominee being a member thereof nominated by him, the Secretary to Government in the Education Department or the Special Secretary concerned nominated by him and the Special Secretary to Government in the Department of Personnel or his representative not below the rank of Deputy Secretary as member and the Director as Member Secretary, and for the posts, appoint ments whereto are to be made by the Director, a Committee consisting of a Member of the Commission nominated by the Chairman of the Commission, Deputy Secretary to Government in the Education Department and Deputy Secretary to Government in the Department of Personnel as members and the Director as Member Secretary shall consider the cases of all persons included in the list interviewing such of them as it may deem necessary and shall prepare a list containing names of suitable candidates upto twice the number of such posts as are indicated in sub rule (1).
Provided that in case any Member Secretary, as the case may be, constituting the Committee has not been appointed 1097 to the post concerned, the officer holding charge of the post for the time being shall be the Member or MemberSecretary, as the case may be, of the Committee.
(b) The Chairman or the Member of the Commission shall preside at all meetings of the Committee at which he is present.
(3) The Committee shall prepare a separate list containing names of persons who may be considered suitable to fill temporary or permanent vacancies already existing or are likely to occur till the next meeting of the Committee on a temporary or officiating basis and the list so prepared shall be reviewed and revised every year and shall remain in.
force until it is so reviewed or revised.
(4) The Committee may coopt an expert from outside to assist the Committee for selection of candidates for such posts as are to be filled by promotion.
(5) The names of the candidates selected as suitable shall be arranged in the order of seniority.
(6) The list prepared by the Committee shall be sent to the appointing authority together with the confidential rolls and personal files of the candidates included in them as also of those superseded, if any.
(7) Where consultation with the Commission is necessary the lists prepared in accordance with the sub rules (2) and (3) shall be forwarded to the Commission by the Appointing Authority alongwith xxx xxx xxx (8) The Commission shall consider the lists prepared by the Committee alongwith the other documents received from the Appointing Authority and unless it considers any change to be necessary to be made shall approve the lists but if the Commission considers such change as aforesaid to be necessary it shall inform the appointing authority of 1098 the new changes proposed by it and after taking into account the comments, if any, of the Commission the Appointing Authority may approve the list finally with such modifications, as may in its opinion, be just and proper. 25.
Revised Criteria, Eligibility and Procedure for promotion to Junior, Senior and other posts encadred in the Service: (1) As soon as the Appointing Authority determines the number of vacancies under rule regarding determination of vacancies of these rules and decides that a certain number of posts are required to be filled in by promotion, it shall, subject to provisions of sub rule (9), prepare a correct and complete list of the senior most persons who are eligible and qualified under these rules for promotion on the basis of seniority cum merit or on the basis of merit to the class of posts concerned.
(2) The persons enumerated in column 5 or the relevant column regarding "posts from which promotion is to be made", as the case may be, of the relevant Schedule shall be eligible for promotion to posts specified against them in Column 2 thereof to the extent indicated in Column 3 subject to their possessing minimum qualifications and experience on the first day of the month of April of the year of selection as specified in Column 6 or in the relevant column regarding "minimum qualification and experience for promotion", as the case may be.
(3) No person shall be considered for first promotion in the Service unless he is substantively appointed and confirmed on the lowest post in the Service.
After first promotion in the Service, for subsequent promotions to higher posts in the Service, a person shall be eligible if he has been appointed to such post from which promotion is to be made after selection in accordance with one of the methods of recruitment under any Service Rules promulagated under proviso to Article 309 of the Constitution of India.
1099 Explanation In case direct recruitment to a post has been made earlier than regular selection by promotion in a particular year, such of the persons who are or were eligible for appointment to that post by both the methods of recruitment and have been appointed by direct recruitment first, shall also be considered for promotion.
(4). (5)Subject to the provisions of sub rule (7), selection for promotion from the lowest post or category of post in the State Service to the next higher post or category of post in the State Service and for all posts in the Subordinate Services and in the Ministerial Services shall be made strictly on the basis of seniority cum merit from amongst the persons who have passed the qualifying examination, if any prescribed under these rules, and have put in at least five years ' service, unless a different period is prescribed elsewhere in these rules, on the first day of the month of April of the year of selection on the post of category of post from which selection is to be made: Provided that in the event of non availability of the persons with the requisite period of service of five years, the Committee may consider the persons having less than the prescribed period of service, if they fulfil the qualifications and other conditions for promotion prescribed eleswhere in these rules, and are found otherwise suitable for promotion on the basis of seniority cum merit.
(6)Selection for promoting to all other higher posts or higher categories of posts in the State Service shall be made on the basis of merit and on the basis of seniority cum merit in the proportion of 50:50 Provided that if the Committee is satisfied that suitable persons are not available for selection by promotion strictly on the basis of merit in a particular year, selection by promotion on the basis of seniority cum merit may be made in the same manner as specified in these rules.
1100 Explanation If in a Service, in any category of post, number of post available for promotion is an odd number then for purposes of determining the vacancies for selection by promotion on the basis of seniority cum merit and merit in the proportion of 50:50 the following cyclic order shall be followed The first vacancy by seniority cum merit, The subsequent vacancy by merit, The cycle to the repeated.
xxx xxx (10) Except as otherwise expressly provided in this rule, the conditions of eligibility for promotion, constitution of the Committee and procedure for selection shall be the same as prescribed elsewhere in these rules.
(11) (a) The Committee shall consider the cases of all the senior most persons who are eligible and qualified for promotion to the class of posts concerned under these rules, and shall prepare a list containing names of the persons found suitable on the basis of seniority cum merit and/or on the basis of merit, as the case may be, as per the criteria for promotion laid down in these rules, equal to the number of vacancies determined under rule relating to "Determination of vacancies" of these rules.
The list so prepared on the basis of seniority cum merit and/or on the basis of merit as the case may be, shall be arranged in the order of ' seniority on the category of posts from which .,election is made.
(b) The Committee shall also prepare a separate list on the basis of seniority cum merit and/or on the basis of merit, as the case may be, as per the criteria for promotion laid (town in the rules containing names of persons equal to the number of persons selected in the list prepared under (a) above to fill temporary or permanent vacancies, 1101 which may occur subsequently.
The list so prepared on the basis of seniority cum merit and/or on the basis of merit shall be arranged in the order of the seniority in the category of posts from which selection shall be made.
Such a list shall be reviewed and revised by the Departmental Promotion Committee that meets in the subsequent year and that such list shall remain in force till the end of the last day of the next year or till the Departmental Promotion Committee meets, whichever is earlier.
(c) Such lists shall be sent to the Appointing Authority together with annual Confidential Reports/Annual Performance Appraisal Report and other Service Record of all the candidates included in the lists as also of those not selected, if any.
Explanation For the purpose of selection for promotion on the basis of merit, officers with "outstanding ' or consistently "Very Good" record shall only be selected and their names arranged in the order of seniority." PART VI APPOINTMENT, PROBATION AND CONFIRMATION xxx xxx xxx 28.
Seniority : Seniority of persons appointed to the lowest post of the Service or lowest categories of posts in each of the Group/Section of the Service, as the case may be, shall be determined from the date of confirmation of such persons to the said post but in respect of persons appointed by promotion to other higher posts in the Service or other higher categories of posts in each of the Group/Section in the Service, as the case may be, shall be determined from the date of the if regular selection to such posts.
1102 Provided xxx xxx xxx (7) that the common seniority of persons appointed to posts mentioned in Group 'E ' and 'F ' for promotion to the posts in the Group 'D ' shall be determined with reference to the date of their substantive appointment.
The inter se seniority of person selected by the Commission or Committee shall be as indicated by the Commission or Committee.
litter se seniority of person , selected against departmental promotion quota shall be deter mined under rules 24 and 25; (8). . (9) that the persons selected and appointed as a result of a selection, which is not subject to review and revision, shall rank senior it) the persons who are selected and appointed as a result of subsequent selection.
Seniority inter se of persons selected on the basis of seniority cum merit and on the basis of merit in the same selection shall be the same as in the next below grade.
xxx xxx XXX "SCHEDULE 1" XXK XXX XXX Group 'D ' Section II S.No.
(Col. 1) 1 (a) Name of post Principal, Higher Sec.
(Col. 2) Sclioo1/BSTC/RTC (Boys) Method of recruitment 100% by promotion with percentage (Col. 3) Post or posts from which Group 'E ' & promotion is to be made 'E ' posts (Col. 5)" 1103 "SCHEDULE 11" xxx xxx xxx Group 'D ' Section II S.No.
(Col. 1) I (a) Name of post: Principal, Higher Sec.
(Col. 2) School/BSTC/RTC (Girls) Method of recruitment 100% by promotion with percentage (Col. 3) Post or posts from which Group 'E ' & promotion is to be made 'F ' posts (Col. 5)" Reference may be made also to the Circular dated 11.9.
1978 (Department of Personnel and Administrative Reforms Department of Personnel A Group II No. F.7(10)DOP/A 107 1 dated 11th September, 1978) relating to sub rule (6) of Rule 25; and the Circular dated 28.4.1979 (Department of Personnel (A II) No. F.7(10) DOP/A II/77 dated 28th April, 1979) and the Notification dated 30.11.1991 (Department of Personnel & Administrative Reforms Department of Personnel A II No. F.7(10)DOP/A II/77 dated 30th November, 1991), providing guidelines for selection on the basis of merit, relating to Explanation to sub rule (11) of Rule 25, issued by the State Government, wherein it was stated as under: Circular dated 11.9.1978 "Subject Promotion to certain categories of posts to be filled in on the basis of "Merit" and "Seniority cum Merit".
The existing sub rule (6) of the relevant rules regarding revised procedure for promotion, provides for promotion to certain categories of posts on the basis of "seniority cummerit" and "merit" in the ratio of 50:50.
These rules do not clearly indicate whether selections for such categories of post shall be made first on the basis or "seniority cummerit" or on the basis of "merit '.
The matter has been considered by the Government and 1104 the following procedure should be followed "The number of posts to be filled separately on the basis of seniority cum merit and merit should be determined in accordance with the Explanation below sub rule (6) of the rule laying down the revised criteria of eligibility, promotion etc.
Selection should first be made for filling up vacancies to be filled on the basis of seniority cum merit.
Thereafter persons should be selected on the basis of merit for filling up merit quota vacancies." xxx xxx xxx Circular dated 28.4.1979 " xxx xxx xxx It will be observed that henceforth officers with consistently "Very Good" or "Outstanding" record shall be considered for promotion on the basis of merit.
There will be only one category for the purpose of selection on the basis of merit." Notification dated 30.11.1991 "AMENDMENT" ' For the existing "Explanation below sub rule. . or sub rule (11),. . . shall be substituted by the following, namely: "Explanation: For the purpose of selection for promotion on the basis of merit no person shall be selected if he does not not have "Outstanding" or "Very Good" record in at least five out of the 7 years preceding the year for which D.P.C. is held.
" xxx xxx xxx" The High Court examined the scheme of these Rules and pointed out that even though the writ petitions before it concerned Schedule I to the Rules relating to the boys ' institutions, yet the principle was enqually 1105 applicable for Schedule II relating to the girls ' institutions, since the hierarchy of the grades in both the Schedules is the same.
The lowest grade in Schedule I is Group 'F '.
Item 1(a) of Group 'F is the post of Headmaster.
Secondary School for boys.
It is to be filled 50 per cent by direct recruitment and 50 per cent by promotion from the lower grade.
The minimum qualifications are prescribed in column 4 and the post or posts from which promotion is to be made is shown in column 5 which is teachers in grade 1, 11 and teachers grade I in Sections C, D, E, F of the Schedule appended to the Rajasthan Education Subordinate Service Rules, 1971.
The next higher grade is Group 'E ' which are posts of Headmaster, Higher Secondary School for boys under item 1(a) to be filled 100 per cent by promotion from Group 'F ' posts.
The minimum qualification and experience required for this grade is Master 's degree in addition to those prescribed for Headmasters Secondary School.
Accord ingly, only such of the Headmasters of Secondary School for boys belonging to Group 'F ' who possess Master 's degree in addition to the qualifications prescribed for that post are eligible for promotion as Headmaster, Higher Secondary School for boys under Groups 'E '.
The next higher grade is Group 'D ', Section II of Schedule I and in item 1(a) there under are the posts of Principal, Higher Secondary School/BSTC/RTC (Boys).
These posts are to be filled 100 per cent by promotion from Groups 'E ' and 'F ' posts; and the qualifications prescribed are the same as those for Headmaster of Higher Secondary School.
Above this grade is Group 'D ', Section I, in item 1 of which is the post of Inspector of Schools, which is to be filled 100 per cent by promotion from Group 'D ', Section II posts.
Then comes Group 'C ', above which is Group 'B ' which is the highest post of Joint Director of Education Range in Schedule I to be filled 100 per cent by promotion from Group 'C '.
From the hierarchy of posts in Schedule I indicated above, it is clear that the lowest grade of Group 'F ' in Schedule I is filled 50 per cent by direct recruitment and 50 per cent by promotion, while all the higher grades are filled entirely by promotion from the next lower grade, except for Group 'D '.
Section II, which is filled by promotion for Groups 'E 'and 'F taken together.
In other words, the posts of Principal.
Higher Secondary School in Group 'D ', Section II are filled 100 per cent by promotion from Groups 'E 'and 'F 'together, that is, Headmaster, Higher Secondary School 1106 and Headmaster, Secondary School; and those from Group 'F are considered only if they have the minimum qualifications prescribed for appointment to Group 'D ', Section II.
It is this clubbing of Groups 'E ' and 'F ' for promotion to Group 'D ', Section II which was successfully challenged in the writ petitions filed before the High Court.
The High Court has taken the view that clubbing of Groups 'F and 'E ' together for promotion to the next higher post in Group 'D ' section II, amounts to clubbing of unequals and the Rule to this extent is invalid.
The contention of the State has been rejected wherein it was indicated that a common seniority list was prepared of persons in Groups 'E ' and 'F with those in Group 'E ' being placed en bloc above those in Group 'F '; that persons in Group 'F ' were considered for promotion only after every one in Group 'E ' had been considered and vacancies remained to be filled on account of suitable persons not being found in Group 'E ' to fill those vacancies; persons form Group 'F were considered only then, subject to the prescribed qualifications for appointment to Group 'D '.
Section II; and the nature of functions of both the categories of Headmasters being similar, their equation for this purpose was considered to be reasonable.
The High Court did not accept this as sufficient justification to consider persons in Group 'F ' for filling the remaining vacancies in Group 'D ' Section II even when the remaining persons of Group 'E ' were not found suitable for promotion.
The High Court also appears to have overlooked the fact that all posts in Group 'D ', Section II being required to be filled by promotion, there was no other avenue to fill the remaining vacancies in Group Section II except the next lower cadre of Group 'F for want of adequate number of suitable person in Group 'E ' for appointment to Group 'D '.
The question really is : Whether the policy adopted by the State Government of first considering all the persons in Groups 'E ' for promotion to Group 'D ', Section II and promoting all found suitable, and then only considering the qualified persons in Group 'F 'for appointment to the remaining vacancies for want of suitable persons in Group "E ' for promotion, when the posts in Group 'D ' Section II are required to be filled 100 per cent by promotion, is invalid for any reason? It is in this perspective that the dispute between members of Group 'E ' and Group 'F ' of the Service raised in the present case has to be decided.
Obviously, the grievance of members of Group 'E ' can arise only if those in Group 'F ' are 1107 treated on par with Group 'E ' which is a higher grade or members of Group 'F ' get appointments by promotion in Group 'D ' which would otherwise have gone to those in Group 'E ' but for the rule making Group 'F also eligible for promotion to Group 'D ' by clubbing Groups 'E ' and 'F ' together for this purpose.
There can be no legitimate grievance to members of Group 'E ' in case vacancies remain to be filled in Group 'D ' which can be filled only by promotion, after every one in Group 'E ' has been considered and only those not found fit for promotion therein are left unpromoted.
The appointment to the remaining vacancies by promotion of members of Group 'P, the next lower cadre, possessing the prescribed qualifications and found suitable for promotion cannot result in inequality or injustice to those remaining in Group 'E ' on account of their unsuitability.
There is no other available avenue to fill the remaining posts in Group 'D ' by promotion.
There can be no legitimate claim of an unsuitable person for promotion to provide foundation for the challenge so made.
It is for this reason that we required the State Government to place before us the material indicating the procedure followed for making the selection for promotion to the posts in Group 'D ' Section II from Groups 'E ' and 'F ' of the Service.
It has been shown with reference to full particulars that it is only the vacancies in Group 'D ' remaining unfilled for want of suitable persons in Group 'E ' which are filled by appointment of persons found suitable in Group 'F ' who possess the prescribed qualifications and are also found outstanding.
It does appear to be the only feasible manner in which the remaining vacancies in Group 'D ' can be fined since promotion from the services is the only prescribed mode of filling of the posts in Group "D '.
Moreover, the nature of duties and functions of the post of Principal, Higher Secondary School in Group 'D ', Section II is similar to that of Headmaster of a Higher Secondary School or Secondary School, which are the posts held by persons in Groups 'E ' and 'F respectively.
That apart, an unsuitable person in Group 'E ' cannot claim placement above a qualified and suitable person in Group 'F ', when the nature of duties of both are alike and so is that of the higher post in Group D ' In order to assure ourselves that the principle adopted was fair and reasonable and so was its application in making the promotions to Group D ', Section II from Groups 'E ' and 'F, we also directed the filing of an affidavit by a senior officer giving all the relevant particulars in addition to 1108 production of a chart which would enable comparison of persons in Group 'E ' who were not found suitable for promotion to Group 'D ', Section II with those in Group 'F ' who were found fit for promotion on the basis of merit.
On a scrutiny of these particulars along with the facts stated in the affidavit of M.R. Advani, Deputy Legal Remembrancer, Education Department, Government of Rajasthan.
We are satisfied that the principle adopted and followed was fair and reasonable and does not result in any injustice to the persons not found fit in Group 'E ' for promotion.
The affidavit of M.R. Advani shows that the duties of the office of Principal as well as Headmaster are of a similar nature and there is no qualitative difference in the duties performed by persons belonging to Groups 'E ' and 'F '.
It has also been stated that the Reporting Officer for the purpose of annual performance appraisal of persons in Group 'E ' is the Principal and their Reviewing Officer is the District Education Officer, while in the case of persons belonging to Group 'F ', the Reporting Officer is the District Education Officer and the Reviewing Officer is the Deputy Director/Joint Director.
Prior to introduction of 10 + 2 Scheme, the Reporting Officer for Group 'E ' persons also was the District Education Officer and the Reviewing Officer was the Deputy Director/Joint Director.
This shows that the standard of their annual performance appraisal is also on par, being made in this manner.
Paras 10 and 11 of this affidavit dated 15.10.1992 read as under: "10.It is respectfully submitted that pursuant to the subrule (11) of Rule 25 of the 1970 Rules while considering the merits of candidates the Departmental Promotion Committee first considered all the candidates of category 'E. ' who were in the zone of consideration and every candidate who had 5 or more 'very good ' or 'outstanding ' report and not having any adverse report was selected on merit.
11.After considering all the candidates of category 'E ' the posts which were left unfilled were filled by considering the merits of candidates of category 'F '.
While considering the merits of category 'F ' candidates, first of all candidates having 5 or more :outstanding ' and 'very good ' ACR were selected.
If the number of vacancies are less, the merit list 1109 is prepared on the basis of those having 6 or an 7 ACRs to be 'outstanding ' or 'very good '.
For the year 1989 90 as sufficient vacancies were available in D 11 category all E and F category candidates were promoted who had required minimum merit." Along with the particulars relating to all the candidates from Groups 'E ' and 'F considered for promotion to Group 'D '.
Section II, an additional affidavit dated 21.10.1992 was filed on behalf of the State Government by B.C. Bairathi wherein para 4 is as under: "4.
It is respectfully submitted that it is evident from the statement that all candidates of category 'E ' who were in the zone of consideration and had 5 or more 'outstanding ' and 'very good ' reports and did not have any adverse reports have been selected on merits.
The leftout candidates in group 'E ' are only those who had less than 5 'outstanding 'or 'verygood 'reports and they could not have been selected on merits pursuant to the express provisions of Rule 25(11) of the 1970 Rules.
It is also evident from the said statements that all candidates of category 'F who have been appointed had 5 or more outstanding 'and 'very good 'ACRs and none of them had less than 5 'outstanding ' or 'very good ' ACRs.
" The Explanation to Rule 25(11) as amended vide Notification dated 30.11.1991 prescribes that for such promotion no one having less than 5 outstanding/very good annual confidential reports in the immediate preceding 7 years is to be considered fit for promotion.
The facts clearly show that every one in Group 'E ' satisfying this criterion has been selected and those not found suitable in Group 'E ' are persons who do not satisfy this criterion.
Vacancies remained in Group 'D '.
Section II which could not, therefore, be filled from persons in Group 'E ' since suitable persons amongst them were not available.
The only manner in which the remaining vacancies in Group 'D ', Section II could be filled, since all vacancies were to be filled by promotion according to the Rules, was by promoting the outstanding persons from Group 'F. The duties and functions of persons in Groups 'E ' and 'F being of a similar nature, consideration of persons 1110 from Group F ' for filling the remaining vacancies in this situation was neither unreasonable nor arbitrary but the only available mode left for filling the remaining vacancies.
It also appears that the outstanding persons selected from Group 'F ' were qualitatively found superior to those remaining unselected in Group 'E ', particularly in view of the express requirement of the Explanation to Rule 25(11) which the unsuitable persons in Group 'E ' did not satisfy.
In Chiranjit Lal Chowdhuri vs The Union of India and Others, ; , while dealing with the right to equality, Fazil Ali.
J. indicated that a doctrinaire approach is not warranted and a passage from Constitutional Law by Prof. Willis was cited as a correct proposition of the principle underlying this guarantee where in it was stated as under: ". .
Mathematical nicety and perfect equality are not required.
Similarity, not identity of treatment, is enough.
If any state of facts can reasonably be conceived to sustain a classification, the existence of that state of facts must be assumed.
One who assails a classification must carry the burden of showing that it does not rest upon any reasonable basis." (p.877) In Mohd. Hanif Quareshi & Others vs The State of Bihar, ; , while dealing with the meaning, scope and effect of Article 14, it was reiterated that 'in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assumed every state of facts which can be conceived existing at the time of legislation '.
The validity of the impugned Rules has to be adjudged in this background.
The challenge to the validity, upheld by the High Court, was on the only ground that clubbing of Groups 'E ' and 'F ' for promotion to Group 'D ', Section II was invalid, since unequals had been equated for the purpose of promotion.
From the undisputed facts, it is clear that the total number of posts in Group 'D ', Section II is nearly the same as the total number of posts in Group 'E ', while the total number of posts in Group 'F ' is about five times thereof.
Since appointment to Group 'D ', Section II is 100 per cent by promotion.
It is a distinct possibility, as in the present case, that the requisite number of suitable candidates from Group 'E ' may 1111 not be available to fill all the existing vacancies in Group 'D ', Section II.
In such a situation, all appointments to Group 'D ', Section II posts being by promotion, the only available option is to fill the remaining vacancies by selection of outstanding persons from Group 'F.
This is more so because the nature of duties and functions of the posts in Groups 'E ' and 'F ' is similar and so is that of the posts in Group 'D ' Section II.
In such a situation, the provision made.
in the Rules for promotion to Group 'D '.
Section II from Group 'E ' as well as Group 'F ' does not in any manner offend the guarantee of equality in the Constitution.
The manner in which the Rule is worked, that is, consideration first of all persons in Group 'E ' for promotion to Group 'D ', Section II and moving to Group 'F ', if necessary, for filling only the remaining vacancies by selecting outstanding amongst them who satisfy the requirement of Explanation to Rule ensures fairness lo all while also maintaining efficiency in the administration.
If the need arises to look to Group 'F ' for filling the remaining vacancies on account of want of suitable persons in Group 'E ', those found unsuitable in Group 'E ' cannot complain of discrimination if persons duly qualified and more suitable performing similar functions are selected, since the unsuitable left out in Group 'E ' are excluded from the competition on the ground of unsuitability, and cease to remain contenders for the remaining posts.
These provisions in the Rules are, therefore, not in any manner violative of Articles 14 or 16 of the Constitution.
Reference may also be made to Md. Usman & Ors.
vs State of Andhra Pradesh & Ors.
, [1971] Supp.
S.C.R. 549, wherein clubbing of UDCs and LDCs for recruitment to posts of Grade II Sub Registrars was upheld as valid.
The contention there was that the rule permitting the clubbing violated Article 14 of the Constitution by treating unequals as equals.
The High Court struck down the rule as violative of Article 14, but this Court reversed that decision and upheld validity of the rule.
It was held by this Court that the promotion based on the principles of seniority cum merit, even though the position of UDC is superior to that of LDC, satisfies the guarantee of equality.
In the present case, this decision applies with greater force since the selection from Group 'F ' is based purely on merit and it is only the outstanding from the Group who are promoted.
1112 For the aforesaid reasons, we allow the appeals and set aside the impugned judgment of the High Court with the result that the writ petitions filed in the High Court stand dismissed.
No costs.
R.P. Appeals allowed.
| IN-Abs | Rajasthan Educational Service Rules, 1970 provides for appointment to Group 'DI, Section 11 of the Rajasthan Education Service, consistIng of the posts of Principal of Higher Secondary School/BSTC/RTC (Boys), 100 per cent by promotion from qualified members of Group 'El comprising the posts of Headmaster of Higher Secondary School for boys and from those of Group IF ' representing the posts of Headmasters of Secondary School of boys.
Appointment to Group 'El posts is made 100 per cent by promotion of the members of Group IF '.
The persons belonging to Group 'El, who were not selected for promotion to Group 'DI, Section II, filed writ petitions before the High Court challenging the constitutional validity of the provisions In the Rules clubbing together Groups El and IF ' for the purpose of promotion to Group 'DI, Section 11.
The High Court held the provisions as violative of Articles 14 and 1088 16 of the Constitution, allowed the writ petitions and quashed the orders promoting members of Groups IF ' to the posts in Group ID ', Section II.
The State and the affected members of Group 'F ' of the Rajasthan Education Service filed the appeals by special leave.
It was contended on behalf of members of Group IF ' and the State that the provision clubbing groups IF ' and 'E ' as feeder cadre for promotion to Group 'D ' Section 11, is in consonance with Articles 14 and 16 of the Constitution inasmuch as the Rules require preparation of a combined seniority list of all eligible members of Groups 'E ' and IF ' placing the former en bloc above the latter, and among those selected for promotion to Group 'DI Section 11, all those from Group 'E ' are to rank above those from Group IF '; and as no person belonging to Group 'E ' found suitable for promotion to Group ID ' was left out, filling the remaining vacancies from amongst suitable and qualified persons belonging to Group 'F ' cannot be violative of rights, if any, of the writ petitioners inasmuch as qualitatively those promoted from Group 'F ' were not inferior to the petitioners and the principle of equation adopted was fair to all.
Allowing the appeals, this Court, HELD: I.1.
The manner in which the Rule is worked, that is, consideration first of all persons in Groups 'E ' for promotion to Group 'D ', Section 11, and moving to Group IF ', if necessary, for filling only the remaining vacancies by selecting outstanding amongst them who satisfy the requirement of Explanation to Rule 25(11) (i.e. who have 5 outstanding/ 'very good ' annual Confidential Reports in the immediate preceding 7 years), ensures fairness to all while also maintaining efficiency in the administration.
[pp.1109E F; 1111B C] 1.2.
The total number of posts in Group 'DI, Section II is nearly the same as the total number of posts in Group 'E ', while the total number of posts in Group IF ' is about rive times thereof.
Since appointment to Group 'D ', Section If is 100 per cent by promotion, it is a distinct possibility as.
in the instant case, that the requisite number of suitable candidates from Group 'E ' may not be available to rill all the existing vacancies in Group 'D ' Section 11.
In such a situation, the only available option is to rill the remaining vacancies by selection of outstanding persons from Group 'F '.
This is more so because the nature of duties and functions of the posts in 1089 Group 'E ' and 'F ' is similar and so is that of the posts in Group 'D ' Section 11.
The High Court overlooked this fact.
[pp.1110G H; 1111A B] 13.
If the need arises to look to Group IF ' for filling the remaining vacancies on account of want of suitable.
person in Group 'El, those found unsuitable in Group 'E ' cannot complain of discrimination if persons duly qualified and more suitable performing similar functions are selected, purely on the basis of merit, since the unsuitable left out in Group 'El are excluded from the competition on the ground of unsuitability and cease to remain contenders for the remaining posts.
[pp.1111C E, G H] 1.4.
The provisions made in the Rules for promotion to Group ID ' Section II, from Group 'E ' as well as Group IF ' are therefore, not in any manner violative of Articles 14 or 16 of the Constitution.
[pp.1111B E] Chiranjit Lal Chowdhuri vs The Union of India and Ors.
, ; ; Mohd Hanif Quareshi & Ors.
vs The State of Bihar, ; and Md. Usman & Ors.
vs State of Andhra Pradesh & Ors.
, [1971] Supp.
S.C.R. 549, relied on.
Constitutional Law by Prof. Willis; cited.
From the affidavit of a senior officer giving all the relevant particulars alongwith a chart indicating the comparative position of persons in Group 'E ' not found suitable for promotion to Group ID ' Section [ with those in Group IF ' who were found fit for promotion on the basis of merit, it was established that the principle adopted and followed was fair and reasonable and does not result in any injustice to the persons not found fit in Group 'E ' for promotion; the duties of the office of Principal as well as Headmaster are of a similar nature and there is no qualitative difference in the duties performed by persons belonging to Groups 'E ' and IF '; and that the standard of annual performance appraisal of the members of the two groups is also on par.
[pp.1107G H; 1108A D] 3.
It would be advisable for the State Government to lay down more clearly its policy for the future to avoid even the semblance of treating unequals as equals for the purpose of promotion, in consonance with the well known maxim that 'justice should not only be done but should also be seen to be done '.
[p.1093A B] 4.
The judgment of the High Court* is set aside with the result that 1090 the writ petitions filed in the High Court stand dismissed.
[p.1112A] * Miss Kusum Tandon vs State of Rajasthan, etc., etc., D.B. Civil Writ Petition No. 2221 of 1990 on the file of Rajasthan High Court, decided on 3.9.1991.
|
Appeal No. 265 of 1956.
Appeal from the judgment and order dated August 26, 1954, of the Calcutta High Court in Income tax Reference No. 107 of 1952.
S.Mitra, Dipak Choudhry and B. N. Ghosh, for the appellants.
C.K. Daphtary, Solicitor General of India, K. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondent.
356 1959.
March 16.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
Messrs.
Mcgregor & Balfour, Ltd., Calcutta (hereinafter called the Company) is a Company incorporated in the United Kingdom.
Its head office is also there.
It, however, does business in India also.
In some of the previous years, the Company was required to pay excess profits tax both in England and in India.
When it did so, it obtained deduction of the amounts from its profits and gains for purposes of the Indian lncome tax Act, under s.12(2) of the Indian Excess Profits Tax Act.
In the assessment year 1947 1948 which corresponded to the accounting year of the Company ending on October 31, 1946, 'it obtained a repayment of Rs. 2,31,009 out of the excess profits tax paid in England.
This was under section 28(1) of 4 & 5, Geo.
VI, Ch. 30.
For purposes of the levy of the Indian Income tax, this sum was included in the taxable profits of the Company by the Income tax Officer.
He purported to act under section 11(14) of the Indian Finance Act, 1946 (hereinafter called the Act).
The income of the Company in India was held to be Rs. 6,34,937 (including the sum of Rs. 2,31,009) while the in ' come outside the taxable territory was held to be Rs. 4,29,620.
Applying section 4A(c)(b) of the Indian Income tax Act, the Income tax Officer assessed the Company on its total world income.
The appeals of the Company made successively to the Appellate Assistant Commissioner and the Incometax Appellate Tribunal were dismissed.
The Tribunal, however, referred the following questions of law to the High Court at Calcutta under section 66 of the Indian Income tax Act: "(1) Whether on the above facts and circumstances of this case the Tribunal was right in holding that the sum of Rs. 2,31,009 was income of the assessee during the assessment year under consideration and was liable to be assessed under the Indian Income tax Act ? and (2)If so, whether this amount could not be taken into consideration for determining the residence of the 357 assessee under section 4A(c)(b) of the Indian Income tax Act ? " This reference was heard by Chakravarti, C. J., and Lahiri, J., who by their judgment dated August 26, 1954, answered the first question in the affirmative and the second in the negative.
They, however, granted a certificate under section 66A of the Indian Income tax Act, read with article 135 of the Constitution to appeal to this Court.
No appeal has been filed on behalf of the Department, and the second of the two questions must be taken to be finally settled in this case.
The contentions of the Company in this appeal, thus, concern only the first question, and they are two: It was said firstly that section 11(14) of the Finance Act could not be made applicable to the assessment year 1947 1948, because the provision was not incorporated in the Indian Income tax Act or repeated in the subsequent Finance Acts.
This argument was not seriously pressed before us, and beyond mentioning it, Mr. Mitra for the Company did not choose to elaborate it.
We think that Mr. Mitra has been quite correct in not pursuing the matter.
The section framed as it is, does apply to subsequent assessment years just as it did to the assessment for 1946 1947, and prima facie, it was not necessary to follow one of the two courses detailed above.
Since the point was not pressed before us, we need not give our reasons here.
It was said nextly that the High Court was in error in construing section 11(14) of the Finance Act as a provision which created a liability proprio vigore, as if it was a charging section.
It was contended that the repayment was not within the taxable territory, and in view of the answer to the second question as to the applicability of section 4A(c)(b), there could be no tax upon it.
On behalf of the Department it was argued that the sub section created a charge by itself and the fiction therein created being sufficient and clear, it was not necessary to consider where the income arose.
Section 11(14) of the Finance Act reads as follows: " Where under the provisions of sub section (2) of 358 section 12 of the Excess Profits Tax Act, 1940 (XV of 1940), excess profits tax payable under the law in force in the United Kingdom has been deducted in computing for the purposes of income tax and supertax the profits and gains of any business, the amount of any repayment under sub section (1) of Section 28 of the Finance Act, 1941, (4 & 5, Geo.
6, c. 30), as amended by Section 37 of the Finance Act, 1942 (5 & 6, Geo 6, c. 21), in respect of those profits, shall be deemed to be income for the purposes of the Indian Income tax Act, 1922, and shall, for the purpose of assessment to income tax and super tax, be treated as income of the previous year during which the repayment is made.
" This section may be compared with R. 4(1) of the Rules which are applicable to cases 1 and 11 of sch.
D of the Income tax Act, 1918 (8 & 9, Geo.
V, c. 40): " Where any person has paid excess profits duty, the amount so paid shall be allowed as a deduction in computing the profits or gains of the year which included the end of the accounting period in respect of which the excess profits duty has been paid; but where any person has received repayment of any amount previously paid by him by way of excess profits duty, the amount repaid shall be treated as profit for the _year in which the repayment is received.
" The English rule above quoted deals first with the deduction of the amount paid as excess profits duty from the profits or gains of the year which includes the end of the accounting period in respect of which the excess profits duty has been paid a matter dealt with in section 12(2) of, the Indian Excess Profits Tax Act, and next with the assessability to tax of the amount repaid from the excess profits duty previously charged a matter dealt with in sub sections (11) and (14) of section 11 of the Finance Act.
The object and purpose of the legislation in each case is the same, and though the two provisions are not ipsissima verbal they are substantially in the same words and also in pari materia.
The concluding words of the English rule " the amount repaid shall be treated as profits of the year in which the repayment is received ", and which have been interpreted by 359 English Courts may specially be compared with the concluding words of sub section
(14) of section 11 of the Finance Act, which run: " any repayment. shall, for the purposes of assessment to income tax and super tax, be treated as the income of the previous year during which the repayment is made.
" There can be no doubt that the intention underlying the two provisions is the same, and the language is substantially similar.
Now, the English rule was interpreted by the English Courts to create a liability irrespective of considerations arising from the general provisions of the income tax law.
In Eglinton Silica Brick Co., Ltd. vs Marrian (1), the assessee company which had gone into voluntary liquidation in 1904 was carried on by the liquidator till 1921 when the business was sold to another company which took it over on October 5, 1921, and the business of the appellant company then ceased.
The income tax assessment for the year 192122 was apportioned between the two companies and inasmuch as the assessee company had suffered a loss, it was reduced to nil in its case.
The assessee company then received pound, 7,224 and pound, 1,150 in 1952 after it had ceased to carry on business as repayments of excess profits duty, and this income was assessed under R. 4(1) above mentioned.
The question was whether this was right.
The case was considered by the Lords of the First Division, and they are their opinion against the assessee firm.
The Lord President (Clyde) with whom Lords Skerrington, Cullen and Sands agreed (Lord Sands dubitans) explained the two parts of the rule as follows: " The principle is obvious.
It is that if a taxpayer has made profits assessable (directly, or indirectly through the operation of the three years ' average) to income tax, and the Revenue takes a share of those profits in the name of Excess Profits Duty, it is only fair that the profits actually assessed to Income Tax should suffer some corresponding deduction. . ." (1)(1924) , 98.
360 The problem which arose in the case of repayment of Excess Profits Duty was different.
Nobody knew or could know how soon, or how late, repayment might fall to be made; nor whether the business whose profits were assessed to Excess Profits Duty would be in the same hands when repayment (if any) came to be made.
By that time the business might have ceased to be in existence.
Repayment might therefore have to be made to a person who was not carrying on the original business.
The original trader might have given up business, died, and an executor might have come in his place.
The solution provided for all these cases is that contained in the second part of the paragraph, according to which the amount repaid to any person is to be I treated as profit for the year in which the repayment is received. ' It is obvious that the amount of the former trading profits so repaid could not actually be trading profits for such year.
None the less, the amount repaid is to be treated as if it were that which in fact it is not, and cannot be.
The amount repaid consists of trading profits which reach the taxpayer out of their proper time.
However belated his fruition of them, they have not lost their original character as trading profits.
In my opinion, this is what explains the position of paragraph (1) of Rule 4 as part of the Rules under Cases I and 11 of Schedule D, which are concerned with the profits of trades and vocations.
That some artificial rule should be formulated was in the circumstances inevitable, and the highly artificial character of the rule adopted is shown by the words in which it is expressed , the amount repaid shall be treated as profit for the year in which the repayment is received.
In short, the amount repaid is deemed to be something that it is not, and could not in the actual circumstances possibly be.
Nor is this in any way unreasonable or contrary to what might be expected, if regard be had to the subject matter.
For, as has been seen, the Excess Profits Duty was itself a part of the trading profits computed by methods familiar under the Income Tax Act.
It was not merely a part of something which entered into the computation of profit; it was actual 361 computed profit.
And, but for the disparity between the ' accounting period ' and the three years ' average, it would have been directly assessable to Income Tax.
" A similar view was taken in the Court of Appeal by Lord Hanworth, M. R., Scrutton, L. J., and Romer, J. (Scrutton, L. J., dubitans) in A. & W. Nesbitt Ltd. vs Mitchell (1).
There too, the assessee company after suffering losses in the accounting period May 1 to November 25, 1920, went into liquidation and ceased to trade.
On April 22, 1924, the repayment of Excess Profits Duty took place, and this was assessed to income tax.
The Master of the Rolls described the amount received as repayment in these words: " But in respect of what is that payment made ? It is not a legacy, it is not a sum which has fallen from the skies ; it, is a sum which is repaid because there was too large a sum paid by the Company to the Revenue Authorities over the whole period during which Excess Profits Duty was paid, and that sum means and is intended to represent a repayment of a sum which was paid by them in respect of the duty charged upon the excess profits of their trading.
It comes back, therefore, not having lost its character but being still the repayment of a sum too much, it is true, but a sum taken out of the profits which were made by the Company in the course of its trading, profits which at the time they were made were subject to Income Tax and subject to Excess Profits Duty, and that is the character of the repayment that has been made.
" Dealing with the rule, the Master of the Rolls observed : "I have pointed out, this is a case where the Company has received payment of an amount previously paid by way of Excess Profits Duty and having that characteristic attaching to it; and we are told by the Statute that when such a sum is repaid it is to be treated as a profit for the year in which the repayment is received.
It is said it may be treated as a (1) 217, 218.
46 362 profit; but it ought not to be treated as an assessable profit.
The answer, to my mind, is that it is paid back not by way of a sum which has no origin or ancestry ; it is a sum which represents a repayment of the amount previously paid by that company in the form of Excess profits duty upon their trading.
If it is to have that character and is to be treated as such a profit, although it be a repayment of sums paid in respect of profits, it is to be treated as a profit for the year in which the repayment is received.
The word ' treated ' indicates that it is to be deemed to be something which in fact it is not, or whether it is so or not it is to be treated as a profit, and therefore it is, to my mind, impossible to discuss the question of whether or not difficulties may arise or whether it may be criticised as financially not quite sound that it should be treated in this method in that particular year; but we are told by the Statute that it is to be treated as a profit for the year in which the repayment is received.
" In a case similar on facts as the ones cited above (Kirke 's Trustees vs The Commissioners of Inland Revenue (1)), the House of Lords Viscount Cave, L. C., Lord Atkinson, Lord Shaw of Dunfermline, Lord Sumner and Lord Carson) placed the same construction upon the latter part of R. 4(1).
The following passage in the speech of Lord Sumner, explaining the extent of the fiction in the latter part of the Rule, is extremely instructive : " The express mandatory terms of the sentence show, in carefully chosen language, that he is to submit to something by reason of his having previously enjoyed this advantage in the shape of repayment of an amount previously paid by way of Excess Profits Duty.
Something which is not a profit, but is only a money repayment, something which may not result in a profit, because although trading goes on there is so great a loss on the year that this repayment does not make up the deficit, something which may not be a trading profit, because trading has ceased altogether, nevertheless is to be treated as profit and as profit for the year.
Treated ' is a, fresh word free from legal technicality.
(1) , 332.
363 It is the widest word that could be chosen.
The Legislature avoided saying 'shall be assessed as ' or I shall be brought into the computation of profit and loss , and simply says that something which is not profit but mere payment shall be treated as profit, which it c may or may not be, and as profit for the year.
I think, therefore, that the word treated is an apt word to impose a charge ".
See also in this connection Olive and Partington Ltd. vs Rose (1).
These cases were relied on by Chakravarti, C. J., and Lahiri, J., in the judgment under appeal, and the learned Judges pointed out that the addition of the words " for the purposes of assessment to income tax and super tax " rather strengthen the reasoning in its application to the words of the Indian Statute.
We agree with this statement.
It is to be noticed that the sub section creates two fictions.
By the first fiction it makes the amount of any repayment ' income ' for the purposes of the Indian Income tax Act, and goes on to say that that ' income ' shall be ' treated ' for purposes of assessment to income tax and super tax, as the income of the previous year.
Mr. Mitra, for the Company contends that no doubt the amount may be treated as 'income ' for the purposes of the Indian Income tax Act, but the Department is still under a duty to prove that the Company is liable to tax at all.
According to him, this will have to be treated as income received outside the taxable territory, because if the fiction contemplated its being treated as 'within the taxable territory ', it would have said so specifically.
In our opinion, this submission cannot be accepted.
That this would have been taxable income but for the provisions of section 12(2) of the Excess Profits Tax Act, goes without saying.
The income character of the receipt is restored by the fiction, and it is to be brought under assessment without any further proof than this that it has been received as repayment of the United Kingdom tax, in respect of which a deduction was made in the earlier years.
The distinction between (1) 364 incomes within and without taxable territories is made unnecessary by demanding that this amount by way of repayment shall be brought to tax and ' treated ' as income within the previous year.
The effect thus is that the sub section charges the said amount with a liability to tax by its own force or to borrow the words of Lord Sumner, is apt to ' impose a charge '.
In our opinion, the amount received as repayment of excess profits tax must be deemed to be 'income ' for the purposes of the Indian Income tax Act and for assessment it must be treated as income of the previous year.
The answer to question No. 1 given by the Calcutta High Court was thus correct.
The appeal fails, and is dismissed with costs.
Appeal dismissed.
| IN-Abs | The appellant carried on business in England and in India.
For the previous years it paid excess profits tax in both countries and it obtained deduction of the amounts so paid from its profits and gains for the purposes of the Indian Income tax Act.
In the assessment year 1947 48 it obtained a repayment of RS.
2,31,009 out of the excess profits tax paid in England.
The Income tax authorities acting under section 11(14), Indian Finance Act 1946, included this amount received in England in the taxable profits of the appellant.
The appellant contended that the repayment not being within the taxable territory it could not be taxed.
Held, that the amount received as repayment of the excess profits tax was rightly taxed.
Under section 11(14) the amount of repayment was deemed to be 'income ' for purposes of the Indian Income tax Act and that ' income ' was to be treated as the income for the previous year during which the repayment was made.
Section 11(14) created a liability irrespective of the considerations arising from the general provisions of the income tax law.
The distinction between incomes within and without taxable territories was made unnecessary by section 11(14).
Eglinton Silica Brick Co. Ltd. vs Maryian, (1924) 9 Tax Cas. 92; A. & W. Nesbitt Ltd. vs Mitchell, (1926) " Tax Cas. 217 and Kirke 's Trustees vs The Commissioners of lnland Revenue, , applied.
|
Appeal Nos.
797 803 of 1993.
From the Judgment and Order dated 16.7.91 of the Karnataka Administrative Tribunal in Application No. 1443/91 & dated 9.3.81, & 25.11.82 of the Karnataka High Court in W.P. Nos.
20147, 20148/79, 11343/78 & 1016 1018 of 1981.
S.S.Javali, Gopal Singh and E.C. Vidyasagar for the Appellant.
R.N.N. Narasimha Murthy, M.T. George, S.K. Kulkarni, M. Veerappa and P. Mahale for the Respondents.
The following Order of the Court was delivered: 56 Delay condoned in S.L.P (C) 3464 3469/93 (CC 19593)/93.
Both disposed of by this common order.
Leave granted.
The appellant who was working as Assistant Engineer in Public Works Department was transferred on deputation to Bangalore City Corporation under City Bangalore (Cadre and Recruitment Regulation) 1971, which permitted 75% of vacancies in the cadre to be filled in by deputation from P.W.D.
In 1977 Karnataka Municipal Corporation Rules were framed under which the appellant was absorbed as Assistant Executive Engineer in the Corporation.
Validity of these rules and absorption of the appellant was assailed in the High Court by way of a Writ Petition which was allowed.
The rules were struck down and the absorption of the appellant in the Corporation was set aside.
In 1981 the Govt.
issued an Ordinance removing the infirmity in the rules.
It was replaced by the Karnataka Municipal Corporation Amendment Act, 1981 (Act 40 of 1981), for short 'the Act '.
Section 8 of the Act reads thus: "8.
Validation : (1) The Karnataka Municipal Corporations Rules, 1977 made in notification No. HMA 270 MUN 77 dated 19th Dec., 1977 and published as GSR 390 in the Karnataka Gazette (Extraordinary) dated 22nd Dec., 1977 (hereinafter referred to as the said rules) shall, notwithstanding anything contained in any judgment, decree or offer of any court or other authority or in the principal Act, be deemed to be as valid and effective for all purposes as if the said rules had been made under the Principal Act as amended by this Act and accordingly (a) all actions or things taken or done (including appointments and promotions made) under the said rules shall, for all purposes be deemed to be and to have always been taken or done in accordance with law; (b) (i) suit or other proceedings shall be maintained or continued in any court or tribunal or before any authority questioning the validity of any action or thing taken or done under the said rules; and 57 (ii)court shall recognise or enforce any decree or order declaring that the said rules or any action or thing taken or done thereunder as invalid, on the ground that the rules were made without giving reasonable opportunity to persons likely to be affected by it to file their objections and suggestions.
(2) Notwithstanding anything contained in any judgment, decree or order of any court or other authority or in the principal Act all appointments of Administrators made or continued before the commencement of this act shall be deemed to have been validly made for all purposes as if the said appointment had been made under the Principal Act as amended by this act and accordingly all actions and things taken or done by or under the authority of the Administrators shall be and shall be deemed to have always been validly taken or done and no suit or other proceedings shall lie or be continued in any court of law or any other authority on the ground that at the time when such action or thing was taken or done the appointment or continuance of the Administrator was not authorised by law." Since the law had been amended and all actions taken including appointments and promotions were validated the appellant after coming into force of the Act, was promoted as Executive Engineer and Superintending Engineer in 1981 and 1990 and Addl.
Chief Engineer respectively.
In 1991 those persons who had challenged validity of appellant 's appointment approached the High Court once again in contempt jurisdiction for non implementation of the order passed in 1979.
Faced with this situation the Govt.
repatriated the appellant to his parent department, just few months before his retirement.
According to the appellant this affected him, prejudicially both in status and pensionary benefits.
He, therefore, approached the Administrative Tribunal which being of opinion that since it could not examine the ' validity of orders in favour of appellant challenging his continuance which was pending in the High Court and the appellant was not going to suffer as he is bound to be paid pension either by the Corporation or the State 58 Govt.
, the petition had spent out its utility and, therefore, dismissed it as infructuous.
In Shri Prithvi Cotton Mills Ltd & Anr.
vs Broach Borough Municipality & Ors.
, , this court held thus: "When a legislature sets out to validate a tax declared by a court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively.
The most important condition, of course, is that the legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal.
Granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise.
A court 's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. .
If the legislature has the power over the subject matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively so as to bind even past transactions.
The validity of a validating law, therefore, depends upon whether the legislature possesses the competence which it claims over the subject matter and whether in making the validation it removes the defect which the courts had found in the existing law and makes adequate provisions in the Validating law for a valid imposition of the tax.
" In the above case the Validation Act was upheld.
The same view was reiterated in Janapada Sabha, Chihindwara, etc.
vs Central Provinces Syndicate Ltd. & Anr., etc.
; , and Yadlapati Venkateswarlu vs State of Andhra Pradesh & Anr., 119901 Suppl.
1 SCR 381.
It is seen that under the Act the basis on which the 1977 Rules were declared void was removed and a appointments made or continued before 59 the commencement of the Amendment Act were declared to be valid and shall always to be deemed to have been validly made for all purpose as if the said appointments had been made in the Principal Act as amended by the Act.
It is not in dispute that the State legislature is competent to make the Act.
When the Act was made and validated past acts done or proceedings taken, it was a valid Act and removed the defects declared by the Court.
It must be deemed and shall always been deemed that the appointment of the appellant as Addl.
Chief Engineer is legal and valid.
Unfortunately, the Act was not brought to the notice of the High Court when the direction to repatriate the appellant was made by the High Court.
But the failure to bring to the notice of the court does not have the effect of nullifying the valid action legislatively taken.
In these circumstances, the order of the High Court and consequent order of the Govt.
repatriating the appellant from the Corporation service to the State service are declared illegal.
Consequently the appellant must be deemed to have been retired from service as Addl.
Chief Engineer of the Corporation.
The appeals are accordingly allowed.
The appellant is entitled to all the consequential benefits, all pensionary benefits etc.
from the Corporation.
No costs.
G.N. Appeals allowed.
| IN-Abs | The appellant who was an Assistant Engineer in Public Works Department was transferred on deputation to the Bangalore City Corporation under the City Bangalore (Cadre and Recruitment) Regulation, 1971 which permitted 75% of vacancies in the cadre to be filed in by deputation from P.W.D.
In 1977, the Karnataka Municipal Corporation Rules were framed and the appellant was absorbed in the Corporation.
On being challenged in a Writ Petition the High Court struck down the Rules and set aside the absorption of the appellant in the Corporation.
The Government issued an ordinance removing the infirmity in the Rules.
It was replaced by the Karnataka Municipal Corporation Amendment Act, 1981.
In course of time the appellant was promoted as Executive Engineer, Superintending Engineer and Addl.
Chief Engineer.
Ile earlier Writ Petitioners approached the High Court by way of a Contempt Petition against the non implementation of its order.
Faced with this situation, the Government repatriated the appellant to his parent department,just a few months before his retirement.
The appellant approached the Administrative Tribunal, which dismissed his application as infructuous in view of the fact that the matter was pending before the High Court and in any case the appellant would get his pension either from the State Government or the Corporation.
Hence these appeals.
55 Allowing the appeals, this Court, HELD: Under the Karnataka Municipal Corporation Amendment Act, 1981 the basis on which the Karnataka Municipal Rules, 1977 were declared void was removed and appointments made or continued before the commencement of the Amendment Act were declared to be valid and were always be deemed to have been validly made for all purposes as if the said appointments had been made under the Principal Act as amended by the Act.
It is not in dispute that the State Legislature is competent to make the Act.
When the Act was made and it validated past acts done or proceedings taken, it was valid Act and removed the defects declared by the Court.
It must be deemed and shall always be deemed that the appointment of the appellant as Addl.
Chief Engineer is legal and valid.
Unfortunately, the Act was not brought to the notice of the High Court when the direction to repatriate the appellant was made by the High Court.
But the failure to bring to the notice of the court does not have the effect of nullifying the valid action legislatively taken.
Consequently the appellant must be deemed to have been retired from service as Addl.
Chief Engineer of the Corporation.
The appellant is entitled to all the consequential benefits, all pensionary benefits etc.
from the Corporation.
[58H; 59 A D] Shri Prithvi Cotton Mills Ltd. & Anr.
vs Broach Borough Municipality & Ors.
, ; Janapada Sabha, Chhindwara, etc.
vs Central Provinces Syndicate Ltd. & Anr., etc.
; , and Yadlapati Venkateswarlu vs State of Anadhra Pradesh & Anr., [19901 Suppl.
1 SCR 381, relied on.
|
Appeal Nos.
3115 16 of 1980.
From the Judgment and Order dated 15.6.1978 of the Bombay High Court in I.T. Ref.
No. 458 of 1976.
V.U. Eradi and Suman J. Khaitan for Khaitan & Co. for the Appellant.
section Rajappa for Ms. A. Subhashini for the Respondent.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
Assessee is the appellant.
He is aggrieved by the decision of the Bombay High Court in Income Tax Reference No. 458 of 1976 answering the following question, which was referred to it at his instance, against him: "whether on the facts and in the circumstances of the case the amount of tax paid by Ballarpur on behalf of the assessee in assessment years 1974 75 and 1975 76 is income tax ore under the heading 'other sources" '.
The Ballarpur Paper and Straw Board Mills Limited (Ballarpur) is a public limited company engaged in the manufacture of paper and straw board.
It undertook to set up a caustic soda/chlorine manufacturing plant at Ballarpur.
For this purpose, it entered into an agreement with Krebs, a French concern, for purchase of certain machinery and equipment.
There was a second agreement between Ballarpur and Krebs whereunder Krebs undertook to provide services of certain personnel including engineers for setting up the plant at Ballarpur.
Krebs, in turn, entered into an arrangement with a Swiss concern, Escher Wyas Eurich, for supply of certain machinery and also to make available services of certain personnel.
The 30 assessee, Emil Webler, was one such person provided by the Swiss concern The assessee came to India and worked here in connection with the setting up of the plant.
According to the agreement between Ballarpur and Krebs the former undertook to pay salaries and other emoluments to personnel provided by Krebs in accordance with the formula contained in the agreement.
Inter alia, it was provided that 'salaries are understood free of any Indian tax or duty '.
For the assessment year 1974 75, the assessee appellant was paid a sum of Rs. 3,82,481 and for the assessment year 1975 76, a sum of Rs. 67,200 in addition to daily allowances and other facilities.
The assessee contended before the Income Tax Officer that he was not liable to pay tax He also filed returns affirming the said stand.
The stand taken by him was negatived, whereupon Ballarpur paid the tax of Rs. 3,23,400 and Rs. 35,546 for the said two assessment years respectively.
In his assessment orders, the I.T.O. treated the said tax amount as a perquisite and added the same to the salary amount received by the assessee.
The said addition was questioned by the assessee in appeal, before the A.A.C. but without success.
The matter was then carried to the Tribunal.
The Tribunal too did not agree with the assessee 's contention and dismissed his appeal whereupon he obtained the aforesaid reference which, as stated above, has been answered against him by the Bombay High Court.
For a proper appreciation of the question arising herein, it is necessary to notice certain factual statements contained in the Statement of the Case.
It is stated therein: "according to this agreement, Ballarpur were under an obligation to pay by the device of delegation invoices opened with a bank in France certain amount of salaries at agreed rates to Krebs and Cis.
Paris for setting up the plant at the town of Ballapur. . .
The Tribunal clarified that there was no dispute between the parties that the amounts of Rs. 3,82,481 and Rs. 67,200 paid by Ballarpur through Krebs to the assessee for services rendered by it in the two respective years were taxable under the heading 'Salary '.
It further clarified that there was no dispute between the parties, that the relationship of the employer and employee did not exist between Ballarpur and the assessee.
The Tribunal held as below: (1) Ballarpur was under a legal obligation to pay the tax if any, levied on the assessee; (2) Ballarpur paid the tax by virtue of such a legal obligation . . . 31 The facts found by the Tribunal thus show that the assessee appellant was paid certain salary free of tax but that the tax payable in that behalf was to be and was in fact paid by Ballarpur.
The assessment was made upon the assessee directly.
The question is whether the said tax component paid by Ballarptir can be included within the income of the assessee.
The first contention of ' the learned counsel for the assessee is that the amount paid by Ballarpur by way of tax cannot be treated as 'income ' of assessee at all.
His second contention is that the assessee did not receive the said amount and, therefore, it cannot constitute his income.
Indeed, the learned counsel sought to argue that Ballarpur was under no obligation to pay the said tax amount relating to the salary amount received by the assessee.
We find it difficult to agree with the learned counsel.
The definition of 'income ' in clause (24) of Section 2 of the Act is an inclusive definition.
It adds several artificial categories to the concept of income but on that account the expression 'income ' does not lose its natural connotation.
Indeed, it is repeatedly said that it is difficult to define the expression 'income ' in precise terms.
Anything which can properly be described as income is taxable under the Act unless, of course, it is exempted under one or the other provision of the Act.
It is from the said angle that we have to examine whether the amount paid by Ballarpur by way of tax on the salary amount received by the assessee can be treated as the income of the assessee.
It cannot be overlooked that the said amount is nothing but a tax upon the salary received by the assessee.
By virtue of the obligation undertaken by Ballarpur to pay tax on the salary received by the assessee among others, it paid the said tax.
The said payment is, therefore, for and on behalf of the assessee.
It is not a gratuitous payment.
But for the said agreement and but for the said payment, the said tax amount would have been liable to be paid by the assessee himself He could not have received the salary which he did but for the said payment of tax.
The obligation placed upon Ballarpur by virtue of Section 195 of the Income Tax Act cannot also be ignored in this context.
It would be unrealistic to say that the said payment had no integral connection with the salary received by the assessee.
We are, therefore, of the opinion that the High Court and the authorities under the Act were right in holding that the said tax amount is liable to be included in the income of the assessee during the said two assessment years.
The question then arises under which head of income should the said 32 income be placed.
Inasmuch as the assessee is not an employee of Ballarpur, which made the payment, it cannot be brought within the purview of Section 17 of the Act.
It must necessarily be placed under sub section (1) of Section 56, 'income from other sources '.
According to the said sub section, income of every kind which is not to be included from the total income under the Act shall be chargeable to income tax under the head 'income from other sources ', if it is not chargeable to income tax under any of the other heads specified in Section 14, Items A to E.
It is not the case of the assessee that any provision of the Act exempts the said income from the liability to tax The learned counsel for the assessee appellant relied upon certain decisions in support of his contention.
The first is the decision of this court in N.A. Modi vs S.A.L. Narayana Rao, SC.
An advocate was appointed as a Judge.
He received certain income after his appointment as a Judge in lieu of the professional service rendered by him before his appointment.
The question was whether the said amount is taxable.
It was held that it was not (in view of the provisions of the Act as it then stood).
The basis for the said decision is that the assessee therein cannot be said to be carrying on the profession of an advocate at the time he received the said income.
We are unable to see how the said decision helps the assessee herein.
Indeed, in the said decision this court emphasised that the question whether an income falls under one head or the other has to be decided according to the common notion of practical men, inasmuch as the Act does not provide any guidance in the matter.
It was observed that the heads of income must be decided on the nature of income by applying practical common notions and not by reference to the assessee 's treatment of income.
The application of said test does not certainly help the assessee herein.
The second decision cited is of the Bombay High Court in CLT.
Bombay vs Smt.
T.P. Sidhwa, The question was whether the income from property received by an assessee of which he is not the owner can be taxed as 'income ' from other 'sources '.
It was held that it cannot be so taxed.
We do not see any anology between the facts and principle of that case and those of this case.
Here the integral connection between the salary received by the assessee and the tax payable thereon, paid by Ballarpur in pursuance of a legal obligation, cannot be overlooked.
The third case cited is in Mrs. Sheela Kaushish vs C.I.T, Delhi, 131 I.T.R. 435 33 S.C.
In this case, it was held that determination of annual value under Section 23 of the Income Tax Act, 1961 should be done by taking the standard rent as the basis even where the assessee is receiving rent higher than the standard rent.
Again we must say, we see no relevance of the said principle of this case to the facts of this case.
For the above reasons, the appeals fail and are dismissed.
No costs.
V.P.R. Appeals dismissed.
| IN-Abs | Ballarpur, a public limited company undertook to set up a caustic soda/chlorine manufacturing plant.
It entered into an agreement with a French concern for purchase of certain machinery and equipment.
In another agreement with Ballarpur, the French concern agreed to provide services of certain personnel and Ballarpur agreed to pay salaries and other emoluments free of any Indian tax or duty to the personnel.
The French concern entered into an arrangement with a Swiss concern for supply of certain machinery and to make available services of certain personnel.
The assessee appellant was one such person.
He came to India and started working in connection with the setting up of the plant.
In addition to daily allowances and other facilities, the assessee appellant was paid Rs. 3,82, 481 and Rs. 67,200 for the assessment years, 1974 75 and 1975 76, respectively.
Before the Income Tax Officer, the assessee contended that he was not liable to pay tax.
The I.T.O. did not agree.
Ballarpur paid the tax amount of Rs. 3,23,400 and Rs. 35,546 for the assessment years respectively.
The Income Tax Officer treated the tax amount paid by Ballarpur as a perquisite and added the same to the salary amount of the assessee.
The assessee questioned the action of the I.T.O. in appeal before the A.A.C., which was dismissed.
28 The appeal flied before the Tribunal was also dismissed, whereupon the assessee obtained a reference to be answered by the High Court.
The High Court answered the reference, "whether on the facts and in the circumstances of the case the amount of tax paid by Ballarpur on behalf of the assessee in assessment years 1974 75 and 1975 76 is income taxable under the heading 'other sources '," against the assessee.
Hence these appeals by the assessee contending that the amount paid by way of tax could not be treated as 'Income ' of assessee; that as the assessee did not receive the said amount from Ballarpur, it could not constitute his income.
Dismissing the appeals, this Court, HELD: 1.01.
The definition of 'Income ' in clause (24) of Section 2 of the Act is an inclusive definition.
It adds several artificial categories to the concept of income but on that account the expression 'income ' does not lose its natural connotation.
It is repeatedly said that it is difficult to define the expression 'income ' in precise terms.
Anything which can properly be described as income is taxable under the Act unless, of course, it is exempted under one or the other provision of the Act.
[31D] 1.02.
The amount paid by Ballarpur by way of tax on the salary amount received by the assessee can be treated as the income of the assessee.
The said amount is nothing but a tax upon the salary received by the assessee.
By virtue of the obligation undertaken by Ballarpur to pay tax on the salary received by the assessee among others, it paid the said tax.
The said payment is, therefore, for and on behalf of the assessee.
It is not a gratuitous payment But for the said agreement and but for the said payment, the said tax amount would have been liable to be paid by the assessee himself.
He could not have received the salary which he did but for the said payment of tax.
The obligation placed upon Ballarpur by virtue of Section 195 of the Income Tax Act cannot also be ignored in this context.
It would be unrealistic to say that the said payment had no integral connection with the salary received by the assessee.
[31E G] 1.03.
Inasmuch as the assessee is not an employee of Ballarpur, which made the payment, it cannot be brought within the purview of Section 17 of the Act.
It must necessarily be placed under sub section (1) 29 of Section 56, 'income from other sources '.
According to the said sub section, income of every kind which is not to be excluded from the total income under the Act shall be chargeable to income tax under the head 'income from other sources ', if it is not chargeable to income tax under any of the other heads specified in Section 14, Items A to E. [32A B] N 4.
Modi vs S.A.L., Narayana Rao, SC; C.L T., Bombay vs Smt.
T.P. Sidhwa, and Mrs. Sheela Kaushish vs C.I. T. Delhi 131 [TR 435 SC, distinguished.
|
Appeal Nos.
714 16 of 1993.
From the Judgment and Order dated 14.9.92 of the Allahabad High Court in Civil Misc.
W.P. Nos. 20731, 23861 & 24353 of 1991.
AND Civil Appeal No. 717 of 1993.
39 From the Judgment and Order dated 9.12.91 of the Allahabad High Court in Civil Misc.
W.P.No.
11114 of 1990.
D.V. Sehgal, Ravi Kiran Jain, Sunil Gupta, Jamshed Bey, H.K. Puri, Mrs. Rani Chhabra and R.B. Misra for the Appellants.
Sabir Hussain Saif, Shakeel Ahmed Syed, Bahar U. Barqi, Anis Suhrawardy and Vijay Hansaria for the Respondents.
The Judgment of the Court was delivered by KASLIWAL, J.
Special leave granted.
As common questions of fact and law are involved in all the above cases, as such they are disposed of by one single order.
First proviso to Section 9 of the United Provinces Municipalities Act, 1916 (hereinafter referred to as 'the Act ') provided for nomination of only one woman as a member of the Municipal Board by the State Government.
Further, there was no provision permitting the State Government to cancel the nomination of such member at its pleasure.
One Smt.
Sarla Devi was nominated by the State Government as the sole Woman member for the Shahjahanpur Municipal Board (hereinafter referred to as 'the Board) in January, 1989.
By U.P. Ordinance No. 2 of 1990 later on succeeded by Ordinance No. 8 of 1990 and eventually replaced by U.P. Act No. 19 of 1990, the aforesaid first proviso to Section 9 of the Act was substituted by another proviso which made provision for the nomination of two women members by the State Government.
Further, a fourth proviso was also added to Section 9 of the Act which provided that the nomination of the aforesaid two members was at the pleasure of the State Government.
The aforesaid Ordinance No. 2 of 1990 was promulgated on 15.2.1990.
Soon thereafter on 19.2.1990, a general notification was issued by the State Government cancelling of nominations of Women members in several Municipal Boards in Uttar Pradesh.
The nomination of Smt.
Sarla Devi also stood cancelled.
On 19.4.1990, the State Government nominated Smt.
Abida and Hazra Khatoon as members of the Board under the newly introduced fourth proviso to Section 9 of the Act.
The total strength of the Board was 37 including two nominated women members.
On 22.7.1991 Mohd. Iqbal was the President of the Board and Shri Om Narain Agarwal was the Vice President of the Board.
Some members of the Board on 40 22.7.1991initiated no confidence motion against Mohd. Iqbal before the District Magistrate in accordance with the procedure prescribed under Section 87 A of the Act.
The District Magistrate fixed 12.8.1991 for consideration of the no confidence motion.
In the meantime, the State Government on 2.8.1991 in exercise of its powers under the fourth proviso to Section 9 of the Act issued notification cancelling the nominations of Smt.
Abida and Hazra Khatoon and in their place nominated Smt.
Shyama Devi and Smt.
Baijanti Devi as the two women members of the Board.
On 9.8.1991 Mohd. Iqbal filed a Writ Petition No. 20731 of 1991 in the High Court challenging the constitutional validity of the fourth proviso to Section 9 of the Act as well as the notification dated 2.8.1991 whereby the nomina tions of Smt.
Abida and Hazra Khatoon were cancelled and in their place Smt.
Shyama Devi and Smt.
Baijanti Devi were nominated.
Mohd. lqbal also challenged the proceedings of no confidence motion initiated against him.
The High Court in the aforesaid Writ Petition passed an interim order stating that outcome of the no confidence proceedings shall be subject to the result of the Writ Petition but did not grant any stay of no confidence proceedings.
Shyama Devi and Smt.
Baijanti Devi participated in the meeting held on 12.8.1991 and so far as Smt.
Abida and Hazra Khatoon are concerned, they neither attended the said meeting nor claimed any right to attend the same.
In the aforesaid meeting held on 12.8.1991, 20 members of the Board voted in favour of the no confidence motion out of the total strength of 37 members of the Board.
After the no confidence motion dated 12.8.1991 having been passed against Mohd. lqbal, a casual vacancy arose in the Office of the President of the Board by virtue of Section 47 A of the Act and Shri Om Narain the then Vice President was elected as President of the Board.
Om Narain took charge of the said Office and continued to function as President thereafter.
Mohd. Iqbal then filed another Writ Petition No. 23861 of 1991 on 20th August, 1991 challenging the no confidence motion dated 12.8.1991 passed against him.
The High Court refused to pass any stay order in favour of Mohd. Iqbal.
Abida and Smt.
Hazra Khatoon also filed a Writ Petition No. 24353 of 1991 on 12.9.1991 challenging the cancellation of their nominations and nominating Smt.
Shyama Devi and Smt.
Baijanti Devi in their place.
A Division Bench of the Lucknow Bench of the Allahabad High Court in Writ Petition No. 1067 of 1991 Prem Kumar Balmiki vs State of U.P. by order dated 13.11.1991 held that the fourth proviso to Section 9 of the Act was constitutional and valid and any notification issued by the State 41 Government under the said provision was also valid.
Another Division Bench of the Allahabad High Court sitting at Allahabad in Writ Petition No. 11114 of 1990 Dr. Smt.
Rama Mishra vs State of U.P. by 'order dated 9.12.1991 held that the fourth proviso to Section 9 of the Act was arbitrary, unreasonable, unconstitutional and invalid and any notification issued thereunder cancelling the nomination of any woman member of the Board and nominating a new member was invalid.
A Division Bench of the Allahabad High Court considered all the three Writ Petitions, two filed by Mohd. Iqbal and one by Smt.
Abida and Smt.
Hazra Khatoon and by a common order dated 14.9.1991 recorded its agreement with the decision in Rama Mishra 's case and quashed the notification dated 2.8.1991 whereby Smt.
Abida and Smt.
Hazra Khatoon were ousted and in their place Smt.
Shyama Devi and Smt.
Baijanti Devi were nominated and also declared Mohd. Iqbal to be the President of the Board.
In this judgment the High Court though followed Rama Mishra 's case but failed to take notice of the decision of the Lucknow Bench of the High Court dated 13.11.1991 given in Prem Kumar Balmiki 's case.
A review application filed by Om Narain and others was also dismissed by the High Court by order dated 21.9.1992.
Aggrieved against the aforesaid decision of the High Court, Om Narain Agarwal former Vice President, Smt.
Shyama Devi and Smt.
Bailjanti Devi have come in appeal by Special Leave Petition Nos.
13621 23 of 1992.
Bashiran who was a nominated woman member in the Municipality of Varanasi and whose nomination was subsequently cancelled has filed Special Leave Petition No. 13004 of 1992 against the judgment of the Allahabad High Court dated 9.12.1991 passed in Dr. Rama Mishra 's case.
The Division Bench of the High Court in the impugned order dated 14.9.1992 has agreed with the view taken in Dr. Rama Mishra 's case.
After taking the aforesaid view the High Court held that the State Government had no power to cancel the nominations of Smt.
Abida and Smt.
Hazra Khatoon and to nominate Smt.
Shyama Devi and Smt.
Baijanti Devi in their place.
The High Court as a result of the above finding held that the notification dated 2.8.1991 was a nullity and that being so, the earlier notification dated 19.4.1990 nominating Smt.
Abida and Smt.
Hazra Khatoon remained operative.
The High Court then considered the next question as to what was the effect of the notification dated 2.8.1991 and the motion of no confidence passed on 12.8.1991.
The High Court in this 42 regard took the view that the total strength of the members was 37 and the motion of no confidence was carried out by 20 members including the two nominated members Smt.
Shyama Devi and Smt.
Baijanti Devi.
As nomination of these two women members was declared to be invalid, their par ticipation and voting right shall have to be ignored and in that view of the matter, proceedings dated 12.8.1991 shall be considered as having been attended only by 18 eligible members and the motion cannot be deemed to have been carried by a majority of the members consisting of at least 19 members.
The High Court thus held that the provision of Section 87 A (12) of the Act being mandatory and the resolution of no confidence having not been passed by a requisite majority the entire proceedings held on 12.8.1991 relating to the motion of no confidence was non est and as such the resolution of no confidence passed therein was void.
The High Court also repelled the contention that till the nomination of Smt.
Shyama Devi and Smt.
Baijanti Devi was declared void, all acts done by them will be protected by de facto doctrine.
The High Court also repelled the contention that the nomination of Smt.
Abida and Smt.
Hazra Khatoon vide notification dated 19.4.1990 should also be declared invalid on the analogy on which the notification dated 2.8.1991 nominating Smt.
Shyama Devi and Smt.
Baijanti Devi has been declared invalid.
The High Court in this regard held that the notification dated 19.4.1990 shall remain operative unless the same is challenged and declared to be void.
It was also held by the High Court that in view of the interim order passed on 9.8.1991 in Writ Petition No. 20731 of 1991 to the effect that the result of no confidence motion shall be subject to the decision of the Writ Petition, Section 47 A(1)(b) of the Act cannot be invoked against the writ petitioner.
The High Court after recording the above findings passed the following operative order: "In the result the Writ Petition No. 20731 of 1991 is partly allowed and the notification dated 2.8.1991 (Annexure No. 3 to the Petition) is quashed.
The Writ Petition No. 23861 of 1991 succeeds and is allowed and the entire proceedings taken up in the meeting dated 12.8.1991 including the resolution of no confidence passed against the petitioner are quashed.
Annexures No. 1 and 1 A to this petition are quashed.
The respondents are directed not to interfere with the petitioner 's working as President of the Municipal Board, Shahjahanpur.
The Writ Petition No. 24353 of 1991 succeeds and is allowed.
Notification dated 2.8.1991 (An 43 nexure No. 1 to this petition having been quashed, the respondents are directed to treat the petitioners as members of the Municipal Board, Shahjahanpur and permit them to act as such.
No order as to costs.
" Before considering the arguments advanced on behalf of the appellants, it would be necessary to state the relevant provisions of the Act namely, Sections 9, 47 A and 87 A of the Act.
Section 9 of the Act including the amendment added from 15.2.1990 is reproduced as under: "[Section 9.
Normal composition of the board.
Except as otherwise provided by Section 10, a Board shall consist of (a) The President; (b) The elected members who shall not be less than 10 and not more than 40, as the State Government may by notification in the Official Gazette specify; (c) The ex officio members comprising all members of the House of People and the State Legislative Assembly whose constituencies include the whole or part of the limits of the Municipality;] [(d) Ex officio members comprising all members of the Council of States and the State Legislative Council who have their residence within the limits of the Municipality.
Explanation.
For the purposes of this clause, the place of residence of a member of the Council of States or the State Legislative Council shall be deemed to be the place of his residence mentioned in the notification of his election or nomination, as the case may be] : [Provided that if none of the members elected under clause (b), is a woman, the State Government may by a like notification nominate one woman as a member of the Board and thereupon, the normal composition of the 44 Board shall stand varied to that extent] [Provided that if none or only one of the members elected under clause (b), is a woman, the State Government may, by notification, nominate two women members or one more woman member, as the case may be, so that the number of women members in the Board is not less than two and thereupon the normal composition of the Board shall stand varied to that extent] [Provided further that if any member of the State Legislative Council representing the Local Authorities Constituency does not have his residence within the limits of any Municipality, he will be deemed to be ex officio member of the board of such one of the municipalities situated within his constituency as he may choose : Provided also that if none of the members elected under clause (b) belongs to safai mazdoor class, the State Government may, by notification, nominate a person belonging to the said class a member of the Board, and thereupon the normal composition of the Board shall stand varied to that extent.
Explanation : A person shall be deemed to belong to the Safai Mazdoor class if he belongs to such a class of scavengers by occupation or to such of the Scheduled Castes traditionally fol lowing such occupation as may be notified by the State Government] : [Provided also that a member nominated under this section, whether before or after February 15, 1990 shall hold office during the pleasure of the State Government, but not beyond the term of the Board.]" "[47 A. Resignation of President of vote of non confidence. (1) If a motion of non confidence in the President has 45 been passed by the board and communicated to the President in accordance with the provisions of Section 87 A, the President shall (a) With three days or the (receipt) of such communication, either resign his office or represent to the State Government to (supersede) the board stating his reasons therefore, and [(b) unless he resigns under clause (a), cease to hold office of President on the expiry of three days after the date of receipt of such communication, and thereupon a casual vacancy shall be deemed to have occurred in the office of the President within the meaning of Section 44 A: Provided that.if a representation has been made in accordance with clause (a) the board shall not elect a President until an order has been made by the State Government under sub section (3)].
[(2) ****] (3) If a representation has been made in accordance with sub section (1), the State Government may after considering the same [either supersede the board for such period, not exceeding the remainder of the term of the board, as may be specified, or reject the representation.] [(4)*****] [(5)*********] [(6) If the State Government supersedes the board under sub section (3) the consequences mentioned in Section 31 shall follow as if there had been a supersession under Section 30. '] "[87 A. Motion of non confidence against President.
(1) Subject to the Provisions of this section, a motion expressing non confidence in the President shall be made 46 only in accordance with the procedure laid down below.
[(2) Written notice of intention to make a motion of no confidence in its President signed by such number of members of the Board as constitute no less than [one half] of the total number of members of the Board together with a copy of the motion which it is proposed to make shall be delivered in person together by any two of the members signing the notice to the District Magistrate.] (3) The District Magistrate shall then convene a meeting for the consideration of the motion to be held at the office of the board, on the date and at the time appointed by him which shall not be earlier than thirty and not later than thirty five days from the date on which the notice under sub section (2) was delivered to him.
He shall send by registered post not less than seven clear days before the date of the meeting, a notice of such meeting and of the date and time appointed therefor, to every member of the board at his place of residence and shall at the same time cause such notice to be published in such manner as he may deem fit.
Thereupon every member shall be deemed to have received the notice.
(4) The District Magistrate shall arrange with the District Judge for a stipendiary civil judicial officer to preside at the meeting convened under this section, and no other person shall preside thereat.
If within half an hour from the time appointed for the meeting, the judicial officer is not present to preside at the meeting, the meeting shall stand adjourned to the date and the time to be appointed and notified to the members by that officer under sub section (5).
(5) If the judicial officer is unable to preside at the meeting, he may, after recording his reasons adjourn the meeting to such other date and time as he may appoint, but not later than fifteen days from the date appointed for the meeting under sub section (3).
He shall without delay communicate in writing to the District Magistrate the 47 adjournment of the meeting.
It shall not be necessary to send notice of the date and the time of the adjourned meeting to the members individually, but the District Magistrate shall give notice of the date and the time of the adjourned meeting by publication in the manner provided in sub section (3).
(6) Save as provided in sub sections (4) and (5) a meeting convened for the purpose of considering a motion under this section shall not for any reason be adjourned.
(7) As soon as the meeting convened under this section has commenced, the judicial officer shall read to the board the motion for the consideration of which it has been convened and declare it to be open for discussion.
(8) No discussion on any motion under this section shall be adjourned.
(9) Such discussion shall automatically terminate on the expiry of three hours from the time appointed for the commencement of the meeting, unless it is concluded earlier.
Upon the conclusion of the debate or upon the expiry of the said period of three hours, as the case may be, the motion shall be put to the vote of the board.
(10) The judicial officer shall not speak on the merits of the motion, nor shall he be entitled to vote thereon.
(11) A copy of the minutes of the meeting together with a copy of the motion and the result of the voting thereon shall on the termination of the meeting, be forwarded forthwith by the judicial officer to the [President and the] District Magistrate [Provided that if the President refuses or avoids to take delivery of the copies so forwarded, the same shall be affixed at the outer door of his last Known residence and .he shall be deemed to have received the same at the time such affixation is made.] 48 [(11 A.] As soon as may be after three days of the receipt of the copies mentioned in sub section (11), the District Magistrate shall forward the same to the State Government, together, in the event of the motion of non confidence having been carried, with a report whether or not the President has forwarded his resignation in accordance with the provisions of Sections 47 and 47 A;] [(12) The motion shall be deemed to have, been carried only when it has been passed by a majority of [more than one half] of the total number of members of the Board.] [(13) If the motion is not carried by a majority as aforesaid, or if the meeting cannot be held for want of quorum which shall not be less than two thirds of the total number of members of the Board, for the time being, No. notice of any subsequent motion of no confidence in tic same President shall be received until after the expiry of a period of two years from the date of the meeting.] [(14) No Notice of a motion of no confidence under this section shall be received within two years of the assumption of office by a President.] [(15) Nothing done by any member of the board, the District Magistrate, the judicial officer or the [State Government] in pursuance of the provisions of this section shall be questioned in any Court.]" It was contended on behalf of the appellants that the view taken in Dr. Rama Mishra 's case was not correct and the view taken by the Lucknow Bench of the Allahabad High Court in Prem Kumar Balmiki 's case was correct.
It was submitted that the State Legislature was fully competent to insert fourth proviso and to lay down that the nominated members shall hold office during the pleasure of the State Government.
It was submitted that the pleasure doctrine also finds place in several other enactments including the Constitution of India.
It was submitted that under Article 75 (2) of the Constitution, Ministers of the Central Government hold office during the pleasure of the President.
Similarly, under Article 164 (1), the Ministers in the States of the Indian Union hold office during the pleasure 49 of the Governor.
Similarly, under Article 76 (1), the President appoints Attorney General for India and in view of clause 4 of the said Article this office is held during the pleasure of the President.
It was also submitted that Governors for the States are appointed by the President under Article 155 and under Article 156 (1),.
the Governor holds office during the pleasure of the President.
It was also contended that the Office of member of Municipal Board is a political office.
It was further argued that if the initial appointment by nomination is made on political considerations, there appears no reason why political consideration should not be allowed to operate in terminating such appointments made by nomination.
In these circumstances if the Legislature has itself added the fourth proviso to Section 9 of the Act authorising the State Government to allow the nominated member to hold the Office during the pleasure of the State Government, there is no violation of any principle of natural justice nor such provision is arbitrary so as to be violative of Article 14 of the Constitution.
It was contended that the only requirement under the second proviso to Section 9 of the Act was that if none or only one of the members elected under clause (b) is a woman, the State Government may by notification, nominate two women members or one more woman member as the case may be, so that the number of women members in the Board is not less than two.
It was submitted that the State Government has not violated the aforesaid provision inasmuch as Smt.
Shyama Devi and Smt.
Baijanti Devi were nominated in place of Smt.
Abida and Smt.
hazra Khatoon and the number of two women members in the Board was kept intact.
Learned counsel for the private respondents submitted that once the power of nominating the women members is exercised by the State Government, such nominated members cannot be removed prior to the completion of the term of the Board unless they are removed on the grounds contained under Section 40 of the Act.
It was also contended that the State Government cannot be allowed to remove a nominated member at its pleasure without assigning any reason and without affording any opportunity to show cause.
Once a woman member is nominated she gets a vested right to hold the office of a member of the Board and the State Government cannot be given an uncanalised, uncontrolled and arbitrary power to remove such member.
It is contended that such arbitrary and naked power without any guidelines would be contrary to the well established principles of democracy and public policy.
It would hamper the local bodies to act 50 independently without any hindrance from the side of the Government.
Section 10 A of the Act prescribes the term of the Board which is five years.
Section 38 prescribes the term of office of members elected or nominated to fill casual vacancies and reads as under: "The term of office of a member elected to fill a casual vacancy or a vacancy remaining unfilled at the general election shall begin upon the declaration of his election under the Act and shall be the remainder of the term of the Board.
" Section 39 deals with resignation by a member of the Board.
Section 40 provides the grounds for removal of a member of the Board.
Sub section (5) of Section 40 deals with suspension of a member.
From a perusal of the above provisions it is clear that the term of an elected or nominated member is con terminous with the term of the Board.
The normal term of the Board is five years, but it may be curtailed as well as extended.
If the term of the Board is curtailed by dissolution or supersession, the term of the member also gets curtailed.
Similarly, if the term of the Board is extended, the term of the member is also extended.
Apart from the curtailment of the term of a member of the Board by dissolution of supersession of the Board itself, the term of a member also gets curtailed by his resignation or by his removal from office.
Section 40 specifically provides the grounds under which the State Government in the case of a city, or the prescribed authority in any other case, may remove a member of the Board.
The removal under Saction 40 applies to elected as well as nominated members.
In respect of a nominated member, power of curtailment of term has now been given to the State Government under the fourth proviso to Section 9 added after the third proviso through the amending Act of 1990.
In the cases before us, we are concerned with the removal of nominated members under the fourth proviso to Section 9 of the Act and we are not concerned with the removal as contained in Section 40 of the Act.
The right to seek an election or to be elected or nominated to a statutory body, depends and arises under a statute, The initial nomination of the two women members itself depended on the pleasure and subjective satisfaction of the State Government.
If such appointments made initially by nomination are based on political considerations, there can be no violation of any provision of the Constitution in case the Legislature 51 authorised the State Government to terminate such appointment at its pleasure and to nominate new members in their place.
The nominated members do not have the will or authority of any residents of the Municipal Board behind them as may be present in the case of an elected member.
In case of an elected member, the legislature has provided the grounds in Section 40 of the Act under which the members could be removed.
But so far as the nominated members are concerned, the Legislature in its wisdom has provided that they shall hold office during the pleasure of the Govern ment.
It has not been argued from the side of the respondents that the Legislature had no such power to legislate the fourth proviso.
The attack is based on Articles 14 and 15 of the Constitution.
In our view, such provision neither offends any Article of the Constitution nor the same is against any public policy or democratic norms enshrined in the Constitution.
There is also no question of any violation of principles of natural justice in not affording any opportunity to the nominated members before their removal nor the removal under the pleasure doctrine contained in the fourth proviso to Section 9 of the Act puts any stigma on the performance or character of the nominated members.
It is done purely on political considerations.
In Dr. Rama Mishra 's case, the High Court wrongly held that the pleasure doctrine incorporated under the fourth proviso to Section 9 of the Act was violative of the fundamental right of equality as enshrined in Article 14 and Article 15 (3) of the Constitution.
We are unable to agree with the aforesaid reasoning of the High Court.
Clause (3) of Article 15 is itself an exception to Article 14 and clauses (1) and (2) of Article 15 of the Constitution.
Under Article 14, a duty is enjoined on the State not to deny any person equality before the law or the equal protection of the laws within the territory of India.
Article 15 (1) provides that the State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them.
Article 15 (2) provides that no citizen shall, on grounds only of religion, race, caste, sex, place of birth or any of them .be subject to any disability, liability, restriction or condition with regard to (a) access to shops, public restaurants, hotels and places of public entertainments; or (b) the use of wells, tanks, bathing ghats, roads and places of public resort maintained wholly or partly out of State funds or dedicated to the 52 use of the general public.
Thereafter Article 15 (3) provides that nothing in this Article shall prevent the State from making any special provision for women and children.
This means that in case any special provision is made for women, the same would not be violative on the ground of sex which is prohibited under clauses (1) and (2) of Article 15 of the Constitution.
Thus, the special provision contained for nominating one or two women members as the case may be provided in Section 9 of the Act would be protected from challenge under clause (3) of Article 15 of the Constitution.
It may also be worthwhile to note that the provision of pleasure doctrine incorporated by adding proviso four does not, in any manner, take away the right of representation of women members in the Board, but it only permits the State Government to keep the nominated women members of its own choice.
The High Court in Dr. Rama Mishra 's case took a wrong view in holding that the fourth proviso to Section 9 of the Act was violative of Article 15 (3) of the Constitution under an erroneous impression that this provision in any manner curtailed the representation of women members in the Board.
We are not impressed with the reasoning given by the High Court that the fourth proviso to Section 9 of the Act in any manner deprived the fundamental right of equality as enshrined in Article 14 of the Constitution.
It is well established that the right of equality enshrined under Article 14 of the Constitution applies to equals and not to enequals.
The nominated members of the Board fall in a different class and cannot claim equality with the elected members.
We are also not impressed with the argument that there would be a constant fear of removal at the will of the State Government and is bound to demoralise the nominated members in the discharge of their duties as a member in the Board.
We do not find any justification for drawing such an inference, inasmuch as, such contingency usually arises only with the change of ruling party in the Government.
Even in the case of highest functionaries in the Government like the Governors, the Ministers, the Attorney General and the Advocate General discharge their duties efficiently, though removable at the pleasure of the competent authority under the law, and it cannot be said that they are bound to demoralise or remain under a constant fear of removal and as such do not discharge their functions in a proper manner during the period they remain in the office.
Thus, in the circumstances mentioned above, we are clearly of the 53 view that the decision in Dr. Rama Mishra 's case does not lay down.
the .correct law and is overruled and the view taken by the High Court in Prem Kumar Balmiki 's case (supra) is held to be correct.
We do not consider it necessary to dwell upon other arguments made before us or made and dealt with by the High Court, as the above appeals can be disposed of on the point already dealt and decided by us.
Thus, as a result of the view taken by us, we hold that Smt.
Shyama Devi and Smt.
Baijanti Devi, the two women.
members had been rightly nominated in place of Smt.
Abida and Smt.
Hazra Khatoon and were entitled to take part in the meeting held on 12.8.1991 for considering the motion of no confidence against Mohd. Iqbal, the President of Nagar Palika Shahjahanpur.
Further, the motion of no confidence being supported by 20 members which admittedly constituted a majority of the total strength of the members of the Board being 37, the no confidence motion has been rightly carried out and as a result of which Mohd. Iqbal was not entitled to continue as President of the Board.
Similarly, Smt.
Abida and Smt.
Hazra Khatoon having been rightly removed as nominated members, they are no longer entitled to continue as nominated members of the Municipal Board, Shahjahanpur and in their place Smt.
Shyama Devi and Smt.
Baijanti Devi shall be entitled to continue as nominated members of the Board.
In the result, all the above appeals are allowed, the judgment of the High Court dated 14.9.1992 in Writ Petition Nos.
20731 of 1991, 23861 of 1991 and 24353 of 1991 and dated 9.12.1991 in Writ Petition No. 11114 of 1990 are set aside and all the aforesaid Writ Petitions stand dismissed.
No order as to costs.
V.P.R. Appeals allowed.
| IN-Abs | In January, 1989, in accordance with First Proviso to Section 9 of the United Provinces Act, 1916 one Smt.
Sarla Devi was nominated by the State Government as the sole Woman member for the Municipal Board.
On 15.2.1990 U.P. Ordinance No. 2 of 1990 later on replaced by U.P. Act No. 19 of 1990 amended the proviso of Section 9 of the Act substituting a new proviso, providing for the nomination of two Women members by the State Government.
The Amendment Act also added a fourth proviso to the Section which provided that the nomination of the two women members was at the pleasure of the State Government.
On 19.2.1990 the Government issuing a general notification and cancelled nominations of Women members in several Municipal Boards.
Cancelling the nomination of Smt.
Sarla Devi, Smt.
Abida and Smt.
Hazra Khatoon were nominated by the Government on 19.4.1990.
On 22.7.1991 under Section 87 A of the Act a no confidence motion against one Mohd. Iqbal, the President of the Board was initiated by some members before the District Magistrate.
The District Magistrate fixed 12.8.1991 for consideration of the confidence motion.
On 2.8.1991, the Government nominated Smt Shyama Devi and Smt.
Baijanti Devi as the two women members of the Board, cancelling the nominations of Smt.
Abida and Smt Hazra Khatoon.
35 On 9.8.1991 Mohd. Iqbal, President of the Municipal Board, against whom the non confidence motion was pending, filed a writ petition in the High Court challenging the constitutional validity of the fourth proviso to Section 9 of the Act and also challenged the notification dated 2.8.1991.
Further he challenged the proceedings of no confidence motion initiated against him.
The High Court did not grant any stay of no confidence proceedings, but ordered that the outcome of the no confidence proceedings shall be subject to the result of the writ petition.
In the meeting fixed on 12.8.1991 by the District Magistrate to consider the no confidence motion 20 members of the Board voted in favour of the no confidence motion, out of the total strength of 37 members of the Board.
The newly nominated Women members by notification dated 2.8.1991 participated in the meeting, whereas Smt Abida and Hazra Khatoon neither attended the meeting nor claimed any right to attend the same.
The no confidence motion dated 12.8.1991 was passed against Mohd. Iqbal.
One Om Narain, The appellant No. 1 in C.A. Nos.
714 16 of 1993) who was the Vice President of the Board was elected as the President in the vacancy.
The appellant Om Narain took charge of the office of the President of the Board and continued to function as the president.
Mohd. Iqbal, the former President filed another writ petition challenging the no confidence motion dated 12.8.1991 passed against him.
Abida and Smt Hazra Khatoon also filed a writ petition, challenging the notification dated 2.8.1991, which cancelled their nominations and nominated Smt.
Shyama Devi and Smt.
Baijanti Devi in their places.
A Division Bench of the High Court considered all the three writ petitions two by the former President and one by the former women members.
Agreeing with the decision in Dr. Smt.
Rama Mishra vs State of U.P. (Writ Petition No. 11114 of 1990 disposed on 9.12.1991) allowed the writ petitions, quashing the notification dated 2.8.1991 and declaring Mohd. Iqbal to be the president of the Board.
The review application flied by the appellants was dismissed by the High Court.
36 Being aggrieved against the High Court 's decision, the former Vice President and the Women members nominated by notification dated 2.8.1991 approached this Court in these appeals (C.A.Nos.
714 716 of 1993) by special leave.
The C.& No. 717 of 1993 was by another Woman member of another Municipal Board, having aggrieved against the judgment of the High Court dated 9.12.1991 passed in Dr. Rama Mishra 's case.
The appellants contended that the view taken in Dr. Rama Mishra 's case was not correct and the view taken in Prem Kumar Balmiki vs State of U.P. (W.P. No. 1067 of 1991, disposed of on 13.11.1991) was correct; that the State Legislature was competent to insert fourth proviso and to lay down that the nominated members shall hold office during the pleasure of the State Government; that if the initial appointment by nomination was made on political considerations, political considerations should be allowed to operate in terminating such appointments made by nomination; that there was no violation of any principle of natural justice nor such provision was arbitrary so as to be violative of Article 14 of the Constitution; and that the only requirement under the second proviso to Section 9 of the Act was that if none or only one of the members elected under clause (b) was a woman, the State Government was to nominate by notification two Women members or one more Woman member, as the case may be, so that the number of Women members in the Board was not less than two, and that the State Government did not violate the provision.
The private respondents submitted that once the power of nominating the Women members was exercised by the State Government, such nominated members could not be removed prior to the completion of the term of the Board, unless they were removed on the grounds contained under section 40 of the Act; that the State Government could not be allowed to remove a nominated member at its pleasure without assigning any reason and without affording any opportunity to show cause; that once a Woman member was nominated, she got a vested right to hold the office of a member of the Board and the State Government could not be given an uncanalised, uncontrolled and arbitrary power to remove such member; that such arbitrary power without any guidelines would be contrary to the well established principles of democracy and public policy and that it would hamper the local bodies to act independently without any hindrance from the side of the Government.
37 Allowing the appeals, this Courts, HELD: 1.01.
The right to seek an election or to be elected or nominated to a statutory body, depends and arises under a statute.
The initial nomination of the two Women members itself depended on the pleasure and subjective satisfaction of the State Government.
If such appointments made initially by nomination are based on political con siderations, there can be no violation of any provision of the Constitution in case the Legislature authorised the State Government to terminate such appointment at its pleasure and to nominate new members in their place.
[50G H] 1.02.
The nominated members do not have the will or authority of any residents of the Municipal Board behind them as may be present in the case of an elected member.
In case of an elected member, the Legislature has provided the grounds in Section 40 of the Act under which the members could be removed, But so far as the nominated members are concerned, the Legislature in its wisdom has proved that they shall hold office during the pleasure of the Government.
[51B] 1.03.
Such provision neither offends any Article of the Constitution nor the same is against any public policy or democratic norms enshrined in the Constitution.
There is also no question of any violation of principles of natural justice in not affording any opportunity to the nominated members before their removal nor the removal under the pleasure doctrine contained in the fourth proviso to Section 9 of the Act puts any stigma on the performance or character of the nominated members.
It is done purely on political considerations.
[51D] 1.04.
In Dr. Rama Mishra 's case, the High Court wrongly held that the pleasure doctrine incorporated under the fourth proviso to Section 9 of the Act was violative of the fundamental right of equality as enshrined in Article 14 and Article 15(3) of the Constitution.
[51E] Dr. Smt.
Rama Mishra vs State of U.P. Writ Petition No. 11 114 of 1990 decided on 9.12.1991 by the Allahabad High Court, over ruled.
Prem Kumar Balmiki vs State of U.P. Writ Petition No. 1067 of 1991 decided on 13.11.1991 by the Allahabad High Court, approved.
The special provision contained for nominating one or two 38 women members as the case may be provided in Section 9 of the Act would be protected from challenge under clause (3) of Article 15 of the Constitution.
[52B] 1.06.
The provision of pleasure doctrine incorporated by adding proviso four does not, in any manner, take away the right to representation of women members in the Board, but it only permits the State Government to keep the nominated women members of its own choice.
[52C] 1.07.
The right of equality enshrined under Article 14 of the Constitution applies to equals and not to unequals.
The nominated members of the Board fall in a different class and cannot claim equality with the elected members.
[52E] 1.08.
Even in the case of highest functionaries in the Government like the Governors, the Ministers, the Attorney General and the Advocate General discharge their duties efficiently, though removable at the pleasure of the competent authority under the law, and it cannot be said that they are bound to demoralise or remain under a constant fear of removal and as such do not discharge their functions in a proper manner during the period they remain in the office.
[52G] 1.09.
The motion of no confidence being supported by 20 members which admittedly constituted a majority of the total strength of the members of the Board being 37, the no confidence motion has been rightly carried out and as a result of which Mohd. Iqbal was not entitled to continue as President of the Board.
Similarly, Smt.
Abida and Smt.
Hazra Khatoon having been rightly removed as nominated members, they are no longer entitled to continue as nominated members of the Municipal Board, Shahjahanpur and in their place Smt.
Shyama Devi and Smt.
Baijanti Devi shall be entitled to continue as nominated members of the Board.
[53C D]
|
minal Appeal No. 827 of 1981.
From the Judgment and Order dated 22.7.81 of the Allahabad High Court in Government Appeal No. 1861 of 1975.
P.K. Dey, Rakesh Goswami and Ms.
Rani Jethmalani (N.P.) for the Appellant.
R.C. Verma for the Respondent.
The Judgment of the Court was delivered by N.P. SINGH, J.
The appellant was acquitted of the charges under sections 302 and 307 read with section 34 of the Penal Code by the Trial Court.
On appeal being filed on behalf of the State of Uttar Pradesh he has been convicted under section 302 of the Penal Code by the High Court and sentenced to undergo rigorous imprisonment for life.
It is the case of the prosecution that on 25.2.1974 at about 6.00 P.M. Chandrapal (PW 2) along with Jagdish (hereinafter referred to as "the deceased") were returning after answering the call of nature.
It is said that at that time this appellant along with co accussed Ramesh came from the side of the village; seeing Chandrapal (PW 2) and the deceased, the appellant and Ramesh rushed towards them with knives.
After some chase the appellant gave a knife blow on the chest of the victim.
The co accused Ramesh gave a knife blow to Chandrapal (PW 2).
Thereafter the appellant and Ramesh fled away.
The victim while being taken to Debai, died on the way, Chandrapal (PW 2) lodged the first information report at the Police Station Debai at about 11.30 P.M. the same night.
75 The motive of the occurrence, according to the prosecution, is that about 10 or 12 days before the date of the aforesaid occurrence, there was some altercation between Chandrapal (PW 2) and the deceased on the one side and this appellant on the other, in which the appellant is said to have abused them.
Chandrapal (P.W 2) and the deceased had given two/three slaps to the appellant.
The defence of the appellant was that the prosecution has suppressed the real manner of occurrence.
According to the appellant,.
for last two days prior to the date of occurrence the crop of his grand father Sohan Lal was being damaged.
Because of that he was keeping a watch on the said field.
During night Chandrapal (PW 2) and the deceased came to the field.
The appellant raised an alarm chor chor.
Thereafter Chandrapal (PW 2) and the deceased started running.
The appellant chased them to catch them.
But soon they turned back and started assaulting the appellant with lathies.
To save his life the appellant attacked with a 'ballam ' (spear).
The injuries on the person of the appellant were examined the next morning.
He also filed an application before the Superintendent of Police, giving his version of the occurrence in which he admitted that when he was being assaulted by Chandrapal (PW 2) and the deceased, he bad used a ballam.
A case was registered by the Police at about 10.25 A.M. on 26.2.1974, on the basis of the petition filed on behalf of the appellant.
The injuries on the person of the appellant were examined by Dr. R.P. Rastogi at the District Hospital, Bullandshahar, on 26.2.1974.
He found the following injuries on his person: "(1) Faint contusion 2 cm x 1/2 cm back of left shoulder upper part.
(2) Faint contusion 10 cm x 2 cm on outer side left back at the lower angle of scapula.
(3) Faint contusion 4 1/2 cm x 1 cm on back of upper part 1/3rd left forearm.
(4) Faint contusion 12 cm x 1 cm on the back and inner aspect left forearm upper 1/3rd.
" During the post mortem examination of the deceased which was also held on 26.2.1974, the following injury was found on his person: 76 "Stab wound 1" x 1/2" x 1.3/4".
On probing, on left side front of chest, 2.1/2" inner to left nipple at 10 O ' clock position pointing the onwards and downwards.
" The Doctor (PW 1), who held the post mortem examination, ad mitted that the aforesaid injury could be caused by ballam.
So far Chandrapal (PW 2) is concerned, the Doctor noted the following injury on 26.2.1974: "Abrasion 1 1/2 x 1/3" on the left side front of chest, horizontally with shallow edge, medically, 7" below ancillary pit.
The wound was not bleeding afresh, but had got clotted blood over it.
" The Doctor in Court stated that possibility of self infliction of that injury could not be ruled out.
According to the State, even if the version disclosed by the appellant is accepted, it will amount to a case of free fight between the prosecution party and the accused, both being armed and when there is a free fight there is no question of right of private defence accruing to any side.
A free fight is that when both sides mean to fight a pitched battle.
The question of who attacks and who defends in such a fight is wholly immaterial and depends on the tactics adopted by the rival party.
In such cases of mutual fights, both sides can be convicted for their individual acts.
This position has been settled by this Court in the cases of Gajanand vs State of Uttar Pradesh, AIR 1954 SC 695; Kanbi Nanji Virji vs State of Gujarat AIR 1970 SC 219; Puran vs State of Rajasthan, AIR 1976 SC 912 and Vishvas Aba Kurane vs State of Maharashtra, AIR 1978 SC 414.
As such once it is established by the prosecution that the occurrence in question is result of a free fight then normally no right of private defence is available to either party and they will be guilty of their respective acts.
But so far the facts of the present case are concerned, if the version disclosed by the accused can be held to be a probable version of the occurrence then it cannot be held to be a case of free fight.
According to the appellant, the crops of the field of his grand father were being damaged for last two days prior to the date of the occurrence; because of that appellant claims that he was watching the said field.
During the night the 77 deceased and Chandrapal (PW 2) came to the same field and the appellant chased them.
But soon they turned back and started assaulting the appellant with lathies.
At this stage the appellant wielded his ballam (spear) which caused an injury to the deceased which ultimately proved fatal.
It is an admitted position that the appellant filed a petition before the Superintendent of Police giving his version of the occurrence in the morning of 'basis of that a case was registered at about 10.25 A.M. on 26.2.1974, the occurrence having taken place during the night of 25.2.1974.
This fact has been admitted by Shri Manohar Singh (PW 6) who has proved the first information report lodged on behalf of the prosecution.
On the examination, Dr. R.P. Rastogi (PW 3) of the District Hospital, Bullandshahar, did find four injuries including one on the scapula of the appellant.
It is true that injuries were simple in nature.
But even on the deceased only one injury 1" x 1/2 1.3/4" was found on the left side front of the chest, which according to the Doctor who held the post mortem examination, could have been caused by a weapon like ballam (spear).
In the statement under section 313 of the Code of Criminal Procedure (hereinafter referred to as "the Code") given by the appellant, it was stated by the appellant in detail as to how the standing crops on the land of his grand father were being damaged and on the night of the occurrence he was guarding the field when he saw the deceased and Chandrapal (PW 2) destroying the crops in the field.
He also stated that he shouted chor chor and then chased them to catch them.
But soon they turned round and started giving lathies blows and in self defence the appellant used a ballam.
It appears that all this happened in the aforesaid field which the apppellant was guarding.
From time to time this Court has pointed out that merely because some injuries are found on the accused, which have not been explained by the prosecution, by itself shall not be a ground for rejecting the whole prosecution case.
It will depend on facts of each case what inference should be drawn by the Court.
In the case of The State of Gujarat vs Bai Fatima; , , it was said that when the prosecution fails to explain the injuries on the person of an accused, depending on the facts of each case, any of the three results may follow : "(1) That the accused had inflicted the injuries on the members of the prosecution party in exercise of the right of self defence.
78 (2) It makes the prosecution version of the occurrence doubtful and the charge against the accused cannot be held to have been proved beyond reasonable doubt.
(3) It does not affect the prosecution case at all.
" The aforesaid three inferences drawn on basis of the nature of injuries were reiterated in the case of Lakshmi Singh vs State of Bihar, AIR 1976 SC 2263, and it was further observed: "It seems to us that in a murder case, the non explanation of the injuries sustained by the accused at about the time of the occurrence or in the course of altercation is a very important circumstance from which the Court can draw the following inferences: (1) that the prosecution has suppressed the genesis and the origin of the occurrence and has thus not presented the true version: (2) that the witnesses who have denied the presence of the injuries on the person of the accused are lying on a most material point and therefore their evidence is unreliable; (3) that in case there is a defence version which explains the injuries on the person of the accused it is rendered probable so as to throw doubt on the prosecution case.
The omission on the part of the prosecution to explain the injuries on the person of the accused assumes much greater importance where the evidence consists of interested or inimical witnesses or where the defence gives a version which competes in probability with that of the prosecution one.
" A three Judge Bench in yet another case of Bliaba Nanda Sarma vs The State of Assam, ; , said: "The prosecution is not obliged to explain the injuries on the person of an accused in all cases and in all circumstances.
This is not the law.
It all depends upon the facts and 79 circumstances of each case whether the prosecution case becomes reasonably doubtful for its failure to explain the injuries on the accused.
" In the case of Hare Krishna Singh vs State of Bihar, ; , it was said: "If the witnesses examined on behalf of the prosecution are believed by the Court in proof of the guilt of the accused beyond any reasonable doubt, the question of the obligation of the prosecution to explain the injuries sustained by the accused will not arise.
When the prosecution comes with a definite case that the offence has been committed by the accused and proves its case beyond any reasonable doubt, it becomes hardly necessary for the prosecution to again explain how and in what circumstances injuries have been inflicted on the person of the accused.
" But in the case of State of Rajasthan vs Madho, AIR 1991 SC 1065, it was held: "If the prosecution witnesses shy away from the reality and do not explain the injuries caused to the respondents herein it casts a doubt on the genesis of the prosecution case since the evidence shows that these injuries were sustained in the course of the same incident.
It gives the impression that the witnesses are suppressing some part of the incident.
The High Court was, therefore, of the opinion that having regard to the fact that they have failed to explain the injuries sustained by the two respondents in the course of the same transaction, the respondents were entitled to the benefit of the doubt." As first impression there appears to be some conflict in the views expressed in the different judgments of this Court referred to above.
But on proper reading with reference to the facts of each case, there is no basic difference and according to us this Court rightly in the case of The State of Gujarat vs Bai Fatima (supra) put in three categories the result which may follow from the facts of each case.
It is well known that guilt of the 80 accused is to be judged on the basis of the facts and circumstances of the particular case.
In any particular case the injuries found on the person of the accused being serious in nature may assume importance in respect of the genesis and manner of occurrence alleged by the prosecution.
In other case the injuries being superficial, by themselves may not affect the prosecution case; the version disclosed by the prosecution having been proved by witnesses who are independent, reliable and trustworthy, supported by the circumstances of that particular case, including the prompt ness with which the first information report was lodged on behalf of the prosecution.
But if the first information report has not been lodged promptly and there is no reasonable explanation for the delay; the witnesses who support the version of the prosecution are not only inimical but even their evidence is not consistent with the circumstances found during the course of investigation, then in that situation, injuries on the person of the accused which are not very serious in nature assume importance for the purpose of consideration as to whether the defence of the right of private defence pleaded by the accused should be accepted.
It is well known that accused pleading the right of private defence need not prove it beyond reasonable doubt.
It is enough if on the basis of the circumstances of a particular case, applying the test of preponderance or probabilities the version becomes acceptable.
There are not two parallel versions before the Court, one on behalf of the prosecution and other on behalf of the accused and the Court is required to choose as to which of the two versions is the correct version of the occurrence.
The burden placed on the accused is discharged no sooner he creates a doubt in the mind of the Court and satisfies the Court that the version disclosed by him in the facts and circumstances of that particular case is more probable.
The onus of the accused under section 105 of the Evidence Act has been examined by this Court in the cases of Partap vs The State of U.P., ; ; Mohan Singh vs State of Punjab, AIR 1975 SC 2161; Seriyal Udayar vs State of Tamil Nadu, AIR 1987 SC 1289; Vijayee Singh vs State of U.P., ; and Buta Singh vs State of Punjab, So far the present case is concerned the injuries found on the person of the appellant are not serious in nature and merely on the ground that prosecution has suppressed those injuries, the appellant is not entitled to the acquittal.
But those injuries can certainly be taken into consideration 81 while judging whether the defence version of the accused is probable.
The motive disclosed on behalf of the prosecution for the occurrence is not acceptable.
Even if it is assumed that because of some altercation 10/12 days before the date of occurrence, the appellant had decided to cause the murder of Jagdish then more injuries would have been caused on the person of the victim by the appellant instead of an injury 1" x 1/2 x 1 3/4".
The prosecution case regarding assault by Ramesh with a knife on Chandrapal (PW 2) has been disbelieved by the Trial Court as well as the High Court.
The delay in lodging the first information report by Chandrapal (PW 2) has not at all been explained.
The occurrence according to prosecution took place at 6.00 P.M. in the evening.
The victim while being taken to Debai which is at a distance of five kilometers expired on the way.
Then why first information report was lodged at 11.30 P.M., there is no explanation.
On the other hand the appellant 's case is that the occurrence did not take place at 6.00 P.M. in the evening but at later part in the night.
That appears to be more probable.
The appellant appeared before the Superintendent of Police, the next morning and disclosed his version of the occurrence on basis of which a case was registered.
His injuries were also examined only the next morning.
He also took a firm stand during his statement under section 313 that he give a ballam blow when the deceased and Chandrapal (PW 2) started assaulting him with lathies.
Out of the four injuries one was on the scapula,.
The doctor has not opined that they were manufactured or self inflicted.
Those injuries, according to the doctor, had been caused by a blunt weapon which is consistent with the defence version of the occurrence.
The injury found on the chest of the deceased is inconsistent with the prosecution case that appellant chased the deceased and then gave a blow by knife.
But it is consistent with the defence version that soon the deceased and Chandrapal (PW 2) returned and started assaulting the appellant when the appellant gave a ballam blow in the chest of the deceased.
If the appellant had given the ballam blow while chasing the deceased, in that event it would have caused injury on the back of the deceased.
The High Court has not disbelieved 'the version disclosed by the appellant.
The High Court on consideration of the evidence and the circumstances of the case has observed: "It is true that this respondent gave a different time of the occurrence and his version of the occurrence was also 82 different and it has been disbelieved by the learned Sessions Judge, obviously on cogent grounds.
But this cannot wash out the effect of his clear stand all through that there was a marpit between him and the informant and the deceased in which he had wielded a spear on them.
This part of this respondent 's version was clearly severable from the rest of his version and it was not at all necessary that if the learned Sessions Judge disbelieved his version regarding the manner of the occurrence, he was bound to rule out of consideration this admission of the respondent which was clearly separate and severable from the rest of his story.
" The High Court has used a part of the statement of the appellant as an admission.
According to us, that part of the statement made by the accused under section 313 of the Code cannot be used as an admission, supporting the prosecution case.
It is well known that an admission has to be taken as a whole.
It was not open to the High Court to reject one part so far the aggression and assault by the prosecution party which according to the appellant preceded giving of the ballam blow, and to accept only the later part of the statement that appellant gave a ballam blow, for the purpose of convicting the appellant.
In the case of Hanumant Govind Nargunadkar vs State of Madhya Pradesh, AIR 1952 SC 343.
it was said: "It is settled law that an admission made by a person whether amounting to a confession or not cannot be split up and part of it used against him.
An admission must be used either as a whole or not at all.
" The High Court should have taken the whole statement made by the appellant as an admission and then should have examined what shall be the effect thereof on the prosecution case.
According to us, taking all facts and circumstances into consideration the version of the accused of the occurrence appears to be probable and acceptable.
The next question is as to whether in the circumstances of the case appellant could have caused the death of Jagdish.
While accepting the plea of right of private defence it has been said that if the right is available, while judging the question whether the accused has exceeded such right, should not be weighed in a golden scale.
But the right of private defence 83 does not extend to infliction of more harm than is necessary for the purpose of defence.
When the appellant caused the injury with a ballam (spear) in the chest of the victim which resulted in his death, certainly he exceeded his right of private defence.
Accordingly, the conviction of the appellant under section 302 of the Penal Code is set aside.
But the appellant is convicted under section 304, Part 1, and sentenced to rigorous imprisonment for seven years which according to us shall meet the ends of justice.
The appeal is allowed in part to the extent indicated above.
V.P.R. Appeal allowed partly.
| IN-Abs | The prosecution 's case was that on the date of occurrence, the pw.2 and the deceased were returning after answering the call of nature at about 6 P.M.
At that time the appellant along with co accused came there.
Seeing the p.w.2 and the deceased the accused came rushed towards them with knives.
Appellant chased the deceased and gave a knife blow on his chest.
The P.W.2 received a knife blow from the co accused.
Thereafter the accused fled away.
The victim died on the way while he was being taken to Debai.
The P.W. 2. lodged the first information report on the same night at about 11.30 P.M.
The motive for the occurrence was that about 10 or 12 days before the date of occurrence, the appellant abused the P.W.2 and the deceased.
They gave two/three slaps to the appellant The appellant accused 's case was that for last two days prior to the date of occurrence the crop of his grand father was being damaged.
Therefore, he was keeping a watch on the field.
During night the P.W.2 and the deceased came to the field.
Seeing them, the appellant raised an alarm Chor Chor.
They started running.
The appellant chased them to catch 71 them.
But they turned back and started assaulting the appellant with lathies.
The appellant attacked them with a 'ballam ' to save his life.
The injuries on the person of the appellant were examined, in the next morning.
He filed an application before the Superintendent of Police and a case was registered at about 10.25 A.M. on the next day of the date of occurrence on the basis of appellant 's petition.
The trial Court acquitted the appellant of the charges under sections 302 and 307 read with section 34 of the penal Code.
The State 's appeal was allowed by the High Court and the present appellant was convicted under section 302 of the Penal Code and was sentenced to undergo rigorous imprisonment for life.
Present appeal was filed by the accused against the High Court 's judgment.
The State contended that if the version of appellant was accepted, it would amount to a case of free fight between the prosecution party and the accused, both being armed and that in a case of free right no party could claim right of private defence.
Partly allowing the appeal, this court, HELD: 1.01.
A free right is that when both sides mean to right a pitched battle.
The question of who attacks and who defends in such a fight is wholly immaterial and depends on the tactics adopted by the rival party.
In such cases of mutual rights, both sides can be convicted for their individual acts, [76E] 1.02.
So far the facts of the present case are concerned, if the version disclosed by the accused can be held to be a probable version of the occurrence then it cannot be held to be a case of free fight.
[76G] 1.03.
In any particular case the injuries found on the person of the accused being serious in nature may assume importance in respect of the genesis and manner of occurrence alleged by the prosecution.
In other case the injuries being superficial, by themselves may not affect the prosecution case; the version disclosed by the prosecution having been proved by witnesses who are independent, reliable and trustworthy, supported by the circumstances of that particular case, including the promptness with 72 which the first information report was lodged on behalf of the prosecution.
But if the first information report has not been lodged promptly and there is no reasonable explanation for the delay , the witnesses who support the version of the prosecution are not only inimical but even their evidence is not consistent with the circumstances found during the course of investigation, then in that situation, injuries on the person of the accused which are not very serious in nature assume importance for the purpose of consideration as to whether the defence of the right of private defence pleaded by the accused should be accepted.
[80B D] 1.04.
So far the present case is concerned the injuries found on the person of the appellant are not serious in nature and merely on the ground that prosecution has suppressed those injuries, the appellant is not entitled to the acquittal.
But those injuries can certainly be taken into consideration while judging whether the defence version of the accused is probable.
[80H] 1.05.
The motive disclosed on behalf of the prosecution for the occurrence is not acceptable.
Even if it is assumed that because of some altercation 10/12 days before the date of occurrence, the appellant had decided to cause the murder of the deceased, then more injuries would have been caused on the person of the victim by the appellant.
[81B] 1.06.
The delay in lodging the first information report by PW 2 has not at all been explained.
The occurrence according to prosecution took place at 6.00 P.M. in the evening.
The victim while being taken to Debai which is at a distance of five kilometers expired on the way.
Then why first information report was lodged at 11.30 P.M., there is no explanation.
On the other hand the appellant 's case is that the occurrence did not take place at 6.00 P.M. in the evening but at later part in the night.
That appears to be more probable.
[81C] 1.07.
The injury found on the chest of the deceased is inconsistent with the prosecution case that appellant chased the deceased and then gave a blow by knife.
But it is consistent with the defence version that soon the deceased and PW.2 returned and started assaulting the appellant when the appellant gave a ballam blow in the chest of the deceased.
If the appellant had given the ballam blow while chasing the deceased, in that event it would have caused injury on the back of the deceased.
[81F] 73 1.08.
Taking all facts and circumstances into consideration the version of the accused of the occurrence appears to be probable and acceptable.
[82G] Gajanandv.
State of Uttar Pradesh, AIR1954SC 695;Kanbi Nanji Virji vs State of Gujarat AIR 1970 SC 219; Puran vs State of Rajasthan, AIR 1976 SC 912; Vishvas Aba Kurane vs State of Maharashtra, AIR 1978 SC 414; The State of Gujarat vs Bai Fatima, ; ; Lakshman Singh vs State of Bihar, AIR 1976 SC 2263; Bhaba Nanda Sarma vs The State of Assam, ; ; Hare Krishna Singh vs State of Bihar, ; and State of Rajasthan vs Madho, AIR 1991 SC 1065, referred to.
[76F] 2.01.
Once it is established by the prosecution that the occurrence in question is result of a free fight then normally no right of private defence is available to either party and they will be guilty of their respective acts.
[76G] 2.02.
Accused pleading the right of private defence need not prove it beyond reasonable doubt.
It is enough if on the basis of the circumstances of a particular case, applying the test of preponderance or probabilities the version becomes acceptable.
[80E] 2.03.
There are no two parallel versions before the Court, one on behalf of the prosecution and other on behalf of the accused and the Court is required to choose as to which of the two versions is the correct version of the occurrence.
The burden placed on the accused is discharged no sooner he creates a doubt in the mind of the Court and satisfies the Court that the version disclosed by him in the facts and circumstances of that particular case is more probable.
[80E F] 2.04.
If the right of private defence is available.
While judging the question whether the accused has exceeded such right, should not be weighed in a golden scale.
But the right of private defence does not extend to the infliction of more harm than is necessary for the purpose of defence.
When the appellant caused the injury with a ballani (spear) in the chest of the victim which resulted in his death, certainly he exceeded his right of private defence.
[82H, 83A] Partap vs )le State of U.P., ; Mohan Singh vs State of Punjab, AIR 1975 SC 2161; Seniyal Udayar vs State of Tamil Nadu, AIR 1987 SC 1289; Vijayee Singh vs State of U.P.; , and Buta 74 Singh vs State of Punjab, , referred to.
[80G] 3.
An admission has to be taken as a whole.
It was not open to the High Court to reject one part so far the aggression and assault by the prosecution party which according to the appellant preceded giving of the ballam blow, and to accept only the later part of the statement that appellant gave a ballam blow, for the purpose of convicting the appellant [82D].
Hanumant Govind Nargundkar vs State of Madhya Pradesh, AIR 1952 SC 343, referred to.
|
Appeal Nos.
724 725 of 1992.
From the Judgment and Order dated 13.11.90 & 10.8.90 of the Central Administrative Tribunal, New Bombay in M.P. No. 855/90, & O.A. No. 799 of 1989.
N.M. Ghatate, Anand Prasad and S.V. Deshpande for the Appellant.
T.C. Sharma and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Special leave granted in both the matters.
B.G. Kajrekar joined service as Chief of Police on August 1, 1954 in Dadra and Nagar Haveli.
He worked in that capacity upto April 19, 1966.
Thereafter he was sent on deputation to the Central Reserve Police, 62 Neemuch (Madhya Pradesh).
He came back to his original post in Dadra and Nagar Haveli on November 17, 1967 and worked as Chief of Police upto April 6, 1971.
He was transferred to Delhi Armed Police on April 7, 1971 where he worked as Deputy Superintendent of Police till his retirement on July 31, 1977.
He has thus, put in about twenty three years of service.
Kajrekar was not given pension on the ground that throughout his service he worked on officiating basis and was never appointed substantively to any of the posts held by him.
Kajrekar challenged the action of the respondents, denying pension to him, before the Central Administrative Tribunal, Bombay.
The Tribunal rejected his application on the ground that he retired from service without holding lien on any substantive post and as such was not entitled to pension under Rule 13 of the Central Civil Services (Pension) Rules, 1972 (the Rules).
The application of Kajrekar was disposed of ex parte by the Tribunal and his prayer for restoration and hearing was also rejected.
These appeals by way of special leave petitions are against the orders of the Central Administrative Tribunal.
It is not disputed that the post of Chief of Police under Dadra and Nagar Haveli Administration was declared permanent with effect from June 14, 1967.
On that date the appellant had already put in about thirteen years of service but his case for confirmation was not considered on the ground that there were no Recruitment Rules for the post in existence.
The Recruitment Rules for the post of Chief of Police under the Administration of Dadra and Nagar Haveli came into force on January 19, 1980.
The said Rules provided "by transfer on deputation" as the method of recruitment to the post of Chief of Police.
The Recruitment Rules have no relevance to the question of confirmation of the appellant as he had retired from service on January 31, 1977 much before the coming into force of the Recruitment Rules.
It was incum bent on the respondents to have considered the question of confirmation of the appellant before his retirement, specially when he was being retired after serving the respondents for twenty three years.
It was wholly arbitrary on the part of the respondents to have kept the appellant as an unconfirmed employee for a period of twenty three years on the ground that there were no Recruitment Rules for the post he was holding.
The Union Territory of Dadra and Nagar Haveli in its counter filed in this Court has stated that after the publication of the Recruitment Rules 63 a Departmental Promotion Committee was convened on July 4, 1981 for considering the question of confirmation of the appellant as Chief of Policy.
The Departmental Promotion Committee did not recommend the appellant for confirmation on the ground that during the course of his service, two departmental enquiries were instituted against the appellant.
The enquiries could not be completed before the appellant 's retirement and the findings were made available thereafter.
The proceedings of the Departmental Promotion Committee further show that as a result of the enquiries Rs. 4,000 was to be deducted from the gratuity amount of the appellant as a measure of punishment.
The Departmental Promotion Committee found that the confidential reports of the appellant for the last three years were good but the Committee declined to recommend confirmation because of the two enquiries.
It is not disputed that the findings in the two enquiries were never communicated to the appellant during the period of his service.
Those were served on him only after retirement.
The question of his confirmation which was due in the year 1967 could not have been linked with the enquiries which were initiated at a much later stage.
The Departmental Promotion Committee should have considered the appellant for confirmation on the basis of the record of the appellant as existed in the year 1967/1968.
There is no material before us to show that the service record of the appellant prior to 1970 was adverse in any manner rather the averments made by the appellant in the rejoinder to the effect that there was nothing adverse against him on the record prior to 1971, have not been controverted.
Even the Departmental Promotion Committee found the confidential reports of the appellant for the last three years as good.
We are of the view that on the availability of a permanent post of Chief of Police on June 14, 1967 the appellant was entitled to be confirmed against the said post.
It was wholly arbitrary for the respondents to have deferred the question of confirmation of the appellant on the ground that there were no Recruitment Rules.
We, therefore, hold that the appellant having served the respondents for about thirteen years on June 14, 1967 when the post of Chief of Police was made permanent and there being nothing adverse against him at that point of time, he was entitled to be confirmed in the said post.
In that view of the matter the appellant was a confirmed employee when he retired from service on July 31, 1977.
We, therefore, direct the respondents to treat the appellant as having 64 been retired as a confirmed employee and fix his pension and other post retiral benefits on that basis.
We further direct the respondents to complete the pension case of the appellant within three months from today and pay him all the arrears of the pension within two months thereafter alongwith 12% interest on the said arrears.
We allow the appeals with costs which we quantify as Rs. 10,000.
G.N. Appeals allowed.
| IN-Abs | The appellant retired in 1977 after putting in 23 years of service.
But he was not given pension on the ground that throughout his service he was working on officiating basis and was never appointed substantively to any of the posts held by him.
The appellant challenged the denial of pension to him before the Central Administrative Tribunal.
The Tribunal held that since the appellant retired from service without holding lien on any substantive post, he was not entitled to pension under Rule 13 of the Central Services (Pension) Rules, 1972.
The application of the appellant was disposed of ex parte by the Tribunal and his application for restoration and hearing was also rejected.
Against these orders of the Tribunal appellant preferred the present appeals.
The Respondents contested the appeals on the ground that the Departmental Promotion Committee did not recommend the appellant 's confirmation since two departmental enquiries were initiated against him, resulting in deduction of Rs. 4,000 from his gratuity, by way of punishment.
Allowing the appeals, this Court, HELD: 1.
Admittedly the findings in the two enquiries were never communicated to the appellant during the period of his service.
Those were served on him only after retirement The question of his confirmation which was due in the year 1967 could not have been linked with the enquiries which were initiated at a much later stage.
The Departmental Promotion Commit60 61 tee should have considered the appellant for confirmation on the basis of the record of the appellant as existed in the year 1967/1968.
There is no material on record to show that the service record of the appellant prior to 1970 was adverse in any manner.
Even the Departmental Promotion Com mittee found the confidential reports of the appellant for the last three years as good.
On the availability of a permanent post of Chief of Police on June 14, 1967 the appellant was entitled to be confirmed against the said post.
It was wholly arbitrary on the part of the respondents to have deferred the question of confirmation of the appellant on the ground that there were no Recruitment Rules.
The appellant having served the respondents for about thirteen years, on June 14, 1967 when the post of Chief of Police was made permanent and there being nothing adverse against him at that point of time, he was entitled to be confirmed in the said post.
In that view of the matter the appellant was a confirmed employee when he retired from service on July 31,1977.
[63D G] 2.
The respondents are directed to treat the appellant as having been retired as a confirmed employee and fix his pension and other post retiral benefits on that basis.
The respondents are further directed to complete the pension case of the appellant within three months and pay him all the arrears of the pension within two months thereafter alongwith 12% interest on the said arrears.
[63H; 64A]
|
minal Appeal No. 645 of 1989.
From the Judgment and Order dated 17.3.89 of the Delhi High Court in Criminal Appeal No. 270/85.
AND Criminal Appeal No. 534 of 1989.
A.P. Mohanty and S.K. Sabharwal for the Appellants.
K. Lahri, V.C. Mahajan, Mrs. Indra Sawhney and B.K. Prasad for the Respondent.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Sardar Singh, his wife Saraswati and his brother 's wife Savitri were charged under Sections 302/34 and 201/34, Indian Penal Code (IPC) for the murder of one Charanjit.
The trial Court convicted Sardar Singh and his wife Saraswati on both the counts and sentenced them to imprisonment for life on the first count and for five years on the second count.
Accused Savitri was, however, acquitted by the trial Court.
The High Court dismissed the appeal filed by Sardar Singh.
Saraswati was acquitted of the charge under Sections 302/34, IPC but her conviction and sentence Under Section 201/34 IPC was maintained by the High Court.
These two appeals are by Sardar Singh and Saraswati against the judgment of the High Court.
67 Sardar Singh, appellant and one Tara Chand are real brothers.
Both the them were residing in village Jhatikara.
They were living in adjoining houses.
Deceased Charanjit was living in a house adjacent to their houses.
Charanjit 's wife had died about ten years ago and he was living in the house by himself.
Deceased Charanjit had developed illicit relation with Savitri wife of Tara Chand and also with appellant Saraswati.
The prosecution case in a nut shell is that deceased Charanjit was having illicit relations with both Saraswati and Savitri and used to visit them during night for the last so many years.
On March 31, 1983 the deceased had gone to sleep in his house in the evening and did not appear thereafter.
On April 4, 1983 Lakhmi Chand, brother of the deceased, lodged report with the police expressing suspicion against the appellants and Savitri.
It is alleged that during the course of interrogation Sardar Singh appellant made a disclosure statement and consequently led the policy party to his sitting room where he pointed out a spot covered by a cot.
Sardar Singh, thereafter, dug the floor and the dead body of the deceased was recovered from a five feet deep grave.
Thereafter, at the pointing out of the appellant Sardar Singh, the police also seized doe (wood cutter) and knife contained in a canvas bag hanging in the adjacent room.
The dead body was tied with a rope and was wrapped in three gunny bags.
The recovered knife had no blood stained while the doe was found stained with blood.
On examination by the Serologist the blood stains on the doe were found to be human and of the same group as that of the deceased.
The entire case of the prosecution is based on circumstantial evidence.
The circumstances relied upon by the prosecution are as under: (1) The deceased had illicit relations with Saraswati and Savitri, wife and brother 's wife of appellant Sardar Singh.
(2) The deceased was last seen on the night of March 31, 1983 when he went to sleep in his house and thereafter his dead body was found buried in the appellants ' house.
(3) Sardar Singh appellant, on interrogation made a disclosure statement leading to the recovery of the dead body from a five feet deep pit in the sitting room of the appellants.
(4) Recovery of doe from the possession of the appellant which was 68 found to bear the same human blood group as that of the deceased.
Relying upon the above mentioned circumstances the trial Court and the High Court have convicted the appellants.
So far as appellant Sardar Singh is concerned, the chain of circumstances relied upon by the prosecution and accepted by the courts below leaves no manner of doubt that it was he who committed the murder of Charanjit.
We have been taken through the judgments of the trial Court and that of the High Court.
We agree with the reasoning and the conclusions reached therein.
We, therefore, uphold the conviction and sentenced of appellant Sardar Singh and dismiss his appeal.
So far as appellant Saraswati is concerned the High Court dealt with her case in the following manner: "Before we part with this order, there is one more fact which needs our consideration.
In this case, the disclosure that led to the recovery of the dead body has been made by Sardar Singh appellant.
There is no evidence direct or indirect to connect the appellant Saraswati with the commission of murder, though it can safely be said that she being the inmate of the house was in know of the fact that the dead body was buried in the house with a view to cause the disappearance of evidence.
In our view, the process of digging a grave of 5 feet deep and of the size of the deceased in length, the filling of the grave and then erasing the traces of the same is a long process and she must have been necessarily involved in the same.
since, in our view, there is no evidence to connect her with the commission of murder we acquit the appellant Saraswati of the charge under Section 302/34 IPC but maintain her conviction and sentence under Section 201/34 IPC.
" We are of the view that the reasoning adopted by the High Court in acquitting Saraswati of the charge under Section 302/34 IPC is equally applicable to the charge against her under Section 201/34 IPC.
It may be correct that the process of digging a grave of five feet deep, the filling of the grave and then erasing the traces etc.
may not have been done by Sardar Singh alone but there is not an iota of evidence on the record not even a whisper to the effect that it was Saraswati who helped him in 69 concealing or causing the evidence of the commission of the offence to disappear.
Simply because she is the wife of appellant Sardar Singh and as such is supposed to be living in the same house, it cannot be assumed that she was guilty of the offence under Section 201/34 of the Indian Penal Code.
According to the Prosecution Saraswati was having illicit relation with the deceased for several years.
Sardar Singh may or may not have taken her help in concealing the dead body.
Her being wife of Sardar Singh by itself is not sufficient to prove the charge under Section 201/34 IPC against her.
We, therefore, give benefit of doubt to Saraswati, allow her appeal and acquit her of the charge under Section 201/34, Indian Penal Code.
She is already on bail.
Her bail bonds are cancelled.
T.N.A. Crl.
A. No.645/89 dismissed.
Criminal Appeal No. 534/89 allowed.
| IN-Abs | The appellant, A 1, his wife, A 2, and his brother 's wife, A 3, were prosecuted under Sections 302/34 and 201/34 of the Indian Penal Code.
Ile entire case was based on the circumstantial evidence : (a) the deceased had illicit relations with A 2 and A 3; (b) the deceased was last seen on the night when he went to sleep in his house and thereafter his dead body was found buried in the house of A 1; (3) during interrogation A 1 made a disclosure statement and consequently lead the police party to his sitting room where he pointed out a spot covered by a cot and thereafter he dug the floor and, the dead body of the deceased was recovered from a five feet deep pit; and (4) recovery of doe (woodcutter) from his possession bearing the same human blood group as that of the deceased.
Relying upon these circumstances the trial court convicted A 1 and A 2 on both the counts and sentenced them to imprisonment for life on the first count and for five years on the second count but acquitted A 3. 'Me High Court dismissed the appeal of A 1.
However, it acquitted A 2 on the ground that there was no evidence to connect her with the commission of the murder but maintained her conviction and sentence under sections 201/34 on the ground that she being the inmate of the house was in the know of the fact that the dead body was burried in the house with a view to causing the disappearance of evidence and she must have been necessarily involved in the process of digging a grave of five feet deep, the filling of the grave and erasing the traces etc.
Both the accused filed appeals in this Courts.
Dismissing the appeal of A 1 and allowing the appeal of A 2, this Court, 66 HELD: 1.
The chain of circumstances relied upon by the prosecution and accepted by the Courts below leaves no manner of doubt that A 1 committed the murder.
Accordingly his conviction and sentence is upheld.
[68B] 2.
There is not an iota of evidence on the record not even a whisper to the effect that it was A 2 who helped in concealing or causing the evidence of the commission of the offence to disappear.
Simply because she is the wife of A 1 and as such is supposed to be living in the same house, It cannot be assumed that she was guilty of the offence under section 201/34.
A 1 may or may not have taken help of his wife in concealing the dead body.
Her being wife of A 1 by itself is not sufficient to prove the charge under section 201/34.
She is accordingly acquitted of that charge.
[68H, 69A B]
|
Appeal Nos. 182 and 183 of 1993.
From the Judgment and Order dated 6.6.86 of the Central Ad ministrative Tribunal, Chandigarh in O.A./T.A. Nos.49 & 102 of 1986.
Raj Birbal for the Appellant.
Rajinder Sachher, Mahabir Singh and A.K Mahajan for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Kamlesh Baboo and V.K. Bhardwaj were promoted as Executive Engineer (Civil) with effect from January 21, 1986 in the Engineering Department of the Chandigarh Administration.
The promotion was made on the basis of merit and suitability as determined under the provisions of the Punjab Service of Engineers, Class I (Buildings and Road Branch) Rules, 1960 (Rules) as applicable to the Chandigarh Administration.
Both of them approached the Central Administrative 123 Tribunal, Chandigarh Bench seeking a direction to the effect that their 'seniority in the cadre of Executive Engineers be determined from the date when they became eligible to be considered for promotion under the Rules.
In other words, they claimed January 1, 1985 the eligibility date as the date of their promotion to the post of Executive Engineer instead of January 21, 1986 when they were actually promoted.
The Tribunal by its order dated June 6, 1986 granted the relief asked for by Kamlesh Baboo and V.K. Bhardwaj in the following terms: "In view of the above discussion, we direct that the applicant, who was promoted as Executive Engineer from 21.1.1986 (vide Office Order dated 20.1.1986 and 2.5.1986) shall be continued as Executive Engineer even if the approval of the U.P.S.C. is not received within six months from the date of his promotion.
For the purposes of seniority, the applicant shall be considered from the date when he became eligible.
The promotion of the applicant as Executive Engineer, shall however, be subject to the approval by the U.P.S.C. and without prejudice to the decision of the competent court in the matter of seniority, which is in dispute.
" These two appeals by the Chandigarh Administration are against the order of the Tribunal.
Kamlesh Baboo joined service as Section Officer under the Chandigarh Administration on March 8, 1971.
He was promoted to the post of Sub Divisional Engineer on December 29, 1976 and was confirmed as such on August 13, 1985.
The service particulars of V.K. Bhardwaj are identical.
The conditions of service of the respondents are governed by the Rules.
Rules 6(b) and 8 (1)(3)(4)(8)(9)(10)(11) which are relevant are reproduced hereunder: "6 (b) in the case of an appointment by promotion from Class 11 Service has 8 years completed service, in that class and has passed the departmental examination, as provided in rule 15; 8(1) A committee consisting of the Chairman of the Public 124 Service Commission or where the Chairman is unable to attend, any other member of the Commission representing it, the Secretary, P.W.D. (Buildings and Roads Branch), and the Chief Engineers, Punjab, P.W.D. Buildings and Roads Branch, shall be constituted.
(3)The Committee shall meet at intervals, ordinarily not exceeding one year, and consider the cases of all eligible officers for promotion to the senior scale of the Service, as on the first day of January of that year.
(4)The Committee shall prepare a list of officers suitable for promotion to the senior scale of the Service.
The selection for inclusion in such list shall be based on merit and suitability in all respects with due regard to seniority.
(8)The fist prepared or revised in accordance with subrules (4), (5) and (6) shall then be forwarded to the Commission by Government along with (i) the records of all officers included in the list; (ii) records of all officers proposed to be superseded as a result of the recommendations made by the Committee; (iii)the reasons, if any, recorded by the Committee for the proposed supersession of any officer; (iv) the observations, if any of the State Government on the recommendation of the Committee.
(9) The Commission shall consider the list prepared by the Committee along with other documents received from the State Government and,unless it considers any change necessary, approve the list.
(10) If the Commission considers it necessary to make any, changes in the list received from Government, the 'Commission shall make the changes it proposes and forward the list it considers suitable to the State Government.
125 (11) Appointments to the Service shall be made by Government from this list in the order in which names have been placed by the Commission.
" It is not disputed that the respondents in these two appeals completed eight years of service in Class 11 cadre, by the end of December 1984 and as such they were eligible to be considered for promotion to the post of Executive Engineer on January 1, 1985.
The selection to the post of Executive Engineer was to be done by following the procedure laid down under Rule 8 of the Rules, reproduced above.
Rule 8 of the Rules envisages a Selection Committee presided over by Chairman/Member of the Public Service Commission.
The Committee considers the cases of eligible officers on the basis of merit and suitability, the list of the selected officers is sent to the Commission for final approval and thereafter the appointments are made out of the approved list in accordance with the merit assigned therein.
It is thus obvious that eligibility under Rule 6(b) of the Rules by, itself does not give a right to a member of Class II service to be promoted to the post of Executive Engineer in Class I service.
The promotion has to be made in accordance with the procedure laid down under Rule 8 of the Rules.
No member of Class 11 service can claim promotion to the post of Executive Engineer on the ground of eligibility alone.
Unless a Class 11 officer has been selected in accordance with Rule 8 of the Rules he cannot be promoted to the post of Executive Engineer.
The question of Assigning seniority in Class I service only arises after a Class 11 officer has been selected and appointed to the said service.
The seniority in class I is determined under Rule 12 of the Rules, keeping in view the date of appointment as a result of selection under Rule 8 of the Rules.
Both the respondents in these appeals were appointed to the post of Executive Engineer, as a result of selection held under Rule 8 of the Rules, with effect from January 21, 1986.
Their seniority has to be determined in class I service keeping in view the date of their appointments as January 21, 1986.
The Tribunal grossly erred in directing the Chandigarh Administration to give seniority to the respondents from the date of their eligibility.
The respondents can neither be given the date of appointment as January 1, 1985 nor their seniority fixed from that date.
The directions of the Tribunal in this respect are patently violative of the Rules and cannot be sustained.
Even otherwise both Kamlesh Baboo and V.K. Bhardwaj were working as 126 Sub Divisional Engineer on January 1, 1985 and as such treating them to have been appointed to Class I service from that date and giving them benefit towards seniority on that basis would be wholly erroneous.
The question as to whether the deputationists from Punjab and Haryana should be permitted to continue to serve the Chandigarh Administration has no relevance to the controversy involved in these appeals.
That is a matter of policy between the States of Punjab, Haryana and Union Territory of Chandigarh.
The Tribunal was wholly unjustified in seeking support from the non existent fact that because of the presence of many deputationists the respondents in these appeals were not being considered for promotion.
As a matter of fact the respondents got their promotion at the earliest possible opportunity.
They became eligible on January 1, 1985 and thereafter within a period of one year the procedure under Rule 8 was completed and they were promoted with effect from January 21, 1986.
We allow the appeals, set aside the order of the Tribunal dated June 6, 1986 and dismiss the applications filed by respondents Kamlesh Baboo and V.K. Bhardwaj before the Tribunal.
No costs.
V.P.R. Appeals allowed.
| IN-Abs | The respondent in C.A. No.182 of 1993 joined service as Section Officer under the appellant on 83.1971.
On 29.12.1976 he was promoted to the post of Sub Divisional Engineer and was confirmed on 13.8.1985.
With effect from 21.1.1986, the.
respondent was promoted as Executive Engineer (Civil).
The service particulars of the respondent in C.A. No.183 of 1993 were identical.
The respondents approached the Central Administrative Tribunal to determine their seniority in the cadre of Executive Engineers from the date of eligibility, ie.
1.1.1985 and not from 21.1.1986.
The Tribunal allowed the applications of the respondents, against which the present appeals were riled by the Administration.
Allowing the appeals, this Court, HELD:1.01.
The selection to the post of Executive Engineer was to be done by following the procedure laid down under Rule 8 of the Punjab Service of Engineers, Class I (Buildings and Roads Branch) Rules 1960.
Eligibility under Rule 6(b) of the Rules by itself does not give a right to a member of Class 11 service to be promoted to the post of Executive Engineer in Class I service.
The promotion has to be made in accordance with the procedure laid down under Rule 8 of the Rules.
No member of Class 11 service can claim 122 promotion to the post of Executive Engineer on the ground of eligibility alone.
Unless a Class II officer has been selected in accordance with Rule 8 of the Rules he cannot be promoted to the post of Executive Engineer.
[125C E] 1.02.
The question of assigning seniority in Class I service only arises after a Class 11 officer has been selected and appointed to the said service.
The seniority in class I is determined under Rule 12 of the Rules, keeping in view the date of appointment as a result of selection under Rule 8 of the Rules.
[125F] 1.03.
The respondents in these appeals were appointed to the post of Executive Engineer, as a result of selection held under Rule 8 of the Rules, with effect from January 21, 1986.
Their seniority has to be determined in Class I service keeping in view the date of their appointments as January 21, 1986.
[125F G] 1.04 The Tribunal grossly erred in directing the Chandigarh Administration to give seniority to the Respondents from the date of their eligibility.
The respondents can neither be given the date of appointment as January 1, 1985 nor their seniority fixed from that date.
The directions of the Tribunal in this respect are patently violative of the Rules.
[125G H]
|
minal Appeal No. 237 of 1993.
From the Judgment and Order dated 4.9.91 of the Kerala High Court in Crl.
A. No. 537 of 1988.
M.M. Kashyap, Sudhir Gopi, A.G. Prasad and Roy Abraham for the Appellants.
M.T. George for the Respondent.
ANAND, J. On 9.3.1992, when this special leave petition, directed against the judgment and order dated 4th September, 1991, of the High Court of Kerala in Criminal Appeal No. 537 of 1988, came up for preliminary hearing, the following order was made: "Issue notice limited to the question as to the nature of offence and the quantum of sentence.
89 No orders on bail." Heard learned counsel for the parties.
Leave is granted confined to the limited question on which notice was issued as referred to above.
For an occurrence which took place on 24th, December 1986, in which one Suku succumbed to the injuries as a result of the assault during the occurrence, six accused persons were arrayed by the investigating agency for offences punishable under Sections 302, 324, 323, 341, 148 read with Section 149 IPC.
They were put on trial and the prosecution sought to establish its case by examining as many as six eye witnesses besides other evidence, documentary and oral.
At the trial however, four eye witnesses, PW3 Devassykutty, PWs 6 and 7 salesman and his assistant in the arrack shop and PW8 Unni @ Velayudhan turned hostile and did not support the prosecution case.
The prosecution case was sought to be proved by the ocular testimony of PW4 Biju and PW5 Anil, both aged about 13 years at the time of occurrence and the other evidence.
Both the eye witnesses supported their statements recorded under Section 161 Cr.
P.C. during their testimony in court.
The trial court on the basis of prosecution evidence found accused No. 1, Subran, guilty of an offence punishable under Section 302 IPC and sentenced him to suffer rigorous imprisonment for life.
Accused Nos. 2 to 6, namely, Rajan, Preman, Viswan, Sura and Shajan were found guilty of an offence under Section 326/149 IPC and each one of them was sentenced to undergo rigorous imprisonment for three years.
Besides, accused 1 to 4 were convicted for an offence under Section 148 and sentenced to suffer rigorous imprisonment for one year.
All the accused were also convicted and sentenced to suffer rigorous imprisonment for six months each under Section 147 IPC.
All the accused were also convicted for offences under Sections 143, 341, 323, 324 read with Section 149 IPC but no separate sentences were awarded on any of those counts.
On an appeal before the High Court, the conviction and sentenced awarded to accused 1 to 3 and 5 were confirmed while accused 4 and 6 were acquitted and the conviction and sentence recorded against them by the learned Sessions Judge was set aside.
In view of the limited notice issued by this Court, we are relieved of the necessity to reappreciate the prosecution evidence in extenso and shall therefore confine ourselves to the determination of the nature of the offence and the award of appropriate sentence to the four appellants accepting, as established the prosecution case against the four appellants beyond a reasonable doubt.
90 According to the prosecution case, all the six accused persons were armed with weapons like chopper, iron rod, knife, cycle chain and torches.
It is the prosecution case that the accused had held PW2 George and while the first accused kicked him, the third accused inflicted injuries on him with a cycle chain.
So far as Suku deceased is concerned, according to the prosecution, all the accused except the first accused caused him injuries with a torch, a cycle chain and a knife.
The first accused is alleged to have caught hold of Suku by the collar and inflicted injuries on his hands arms and legs with a chopper.
The assault took place in front of an arrack shop.
According to the prosecution case there was enmity between the two groups on account of illicit distillation and suspicion of information being passed on to the Excise officials.
However, no evidence was led in support of this allegation by the prosecution and no motive for commission of the crime was established at the trial.
The postmortem on the deceased was conducted by Dr. Sivasankara Pillai PW12.
He had found as many as 38 injuries on the deceased.
Most of the injuries found by him, however, were abrasions or contusions on different parts of the body though the deceased had also suffered stab wounds on the right upper arm and left forearm and sharp weapon injuries on his hands and legs.
The bones of the legs and arm had been fractured.
According to the medical witness, death of Suku deceased was caused due to multiple injuries.
According to the medical evidence, there was no stab or incised wound inflicted on any of the vital parts of the body i.e. neck, chest or abdomen.
The Doctor has opined that the deceased had died due to multiple injuries and that the injuries could have been caused by beating him with torches, knife, iron rod, cycle chain and the chopper.
According to him, the cumulative effect of all the injuries, taken together, had resulted in the death of the deceased.
The doctor further stated that as a result of the chemical analysis of the viscera, blood and urine, there was indication that the deceased had consumed alcohol before he had been assaulted, though he was unable to give the quality or quantity of liquor consumed by the deceased.
From an analysis of the record of injuries as detailed in the post mortem report, it transpires that there were 18 contusions of different dimensions but minor in their gravity on the body of the deceased.
Eight of the injuries recorded, out of the 38 in the post mortem report.
, were abrasions on different parts of the body.
According to the medical witness, nine out 91 of those injuries could have been caused by a fall or the deceased coming into contact with any rough surface or area.
Out of the remaining injuries, seven were chop wounds while two were stab wounds, besides three were incised injuries.
it was the cumulative effect of the injuries which resulted in the death of the deceased and according to the doctor, the injuries when taken together were sufficient to cause death in the ordinary course of nature.
None of the injuries by itself was found to be sufficient in the ordinary course of nature to cause death of the deceased.
According to the medical opinion about the cause of death, "deceased died due to multiple injuries".
From the above analysis of injuries, it cannot be said that any one of the four appellants, who alone stand convicted by the High Court had inflicted injuries intending to cause death or such bodily injury as is sufficient in the ordinary course of nature to cause death.
As already noticed, six accused persons had been charged by the investigating agency for offences punishable under Sections 143, 147, 148, 341, 323, 324, 326 and 302 read with Section 149 IPC and put on trial.
The trial court convicted accused 2 to 6 under Section 326 IPC with the aid of Section 149 IPC.
It convicted accused No. 1 for an offence under Section 302 IPC.
While convicting accused 2 to 6 for the offence under Section 326/149 IPC, the trial court came to the conclusion that 'the accused did not share the common object to murder Suku and that the common object was only to cause grievous hurt ' to the deceased.
Being of the opinion, that accused No. 1 had caused injuries with a chopper and those injuries "could" have resulted in the death of the deceased, he was convicted for an offence under Section 302 IPC.
The High Court acquitted two of the accused and convicted the remaining four only.
The High Court found that clear evidence of the eye witnesses was only against accused Nos. 2, 3 and 5 besides appellant No. 1.
The participation of the 6th accused and the role assigned to him by the prosecution was doubted by the learned Judges of the High Court and he was given the benefit of doubt and acquitted.
Similarly, the High Court disbelieved the role assigned to accused No. 4 and doubted his participation in the commission of the crime.
He was also ' given the benefit of doubt and acquitted.
While setting aside the conviction and sentence of the said two accused, the High Court did not hold that beside the four accused convicted by it, there were some other known or unknown accused who had also been a party to the commission of the crime.
It is in this above background that we have to consider the nature 92 of the offence committed by the four appellants.
Admittedly, none of the accused persons individually had been charged for the substantive offence of murder under Section 302 IPC.
In the trial court all the six accused were charge sheeted for an offence under Section 302 read with Section 149 IPC.
Other charges were also framed against the accused but only with the aid of Section 149 IPC.
After the acquittal of the two accused, could the High Court convict appellant No. 1 for the substantive offence under Section 302 IPC (with which he had not been charged) and the appellants 2 to 4 for an offence under Section 326/149 IPC ? Section 141 IPC defines an unlawful assembly to be an assembly of five or more persons, where the common object of the persons comprising that assembly is to commit any of the acts enumerated in the five clauses of that Section.
Section 149 IPC reads as under: "Sec. 149.
Every member of unlawful assembly guilty of offence committed in prosecution of common object If an offence is committed by any member of an unlawful assembly in prosecution of the common object of that assembly, or such as the members of that assembly knew to be likely to be committed in prosecution of that object, every person who, at the time of the committing of that offence, is a member of the same assembly, is guilty of that offence.
" A combined reading of Section 141 and Section 149 IPC (supra) show that an assembly of less than five members is not an unlawful assembly within the meaning of Section 141 and cannot, therefore, form the basis for conviction for an offence with the aid of Section 149 IPC.
The effect of the acquittal of the two accused persons by the High Court and without the High Court finding that some other known or unknown persons were also involved in the assault, would be that for all intent and purposes the two acquitted accused persons were not members of the unlawful assembly.
Thus, only four accused could be said to have been the members of the assembly but such an assembly which comprises of less than five members is not an unlawful assembly within the meaning of Section 141 IPC.
The existence of an unlawful assembly is a necessary postulate for invoking Section 149 IPC.
Where the existence of such an unlawful assembly is not 93 proved, the conviction with the aid of Section 149 IPC cannot be recorded or sustained.
The failure of the prosecution to show that the assembly was unlawful must necessarily result in the failure of the charge under Section 149 IPC.
Consequently, the conviction of appellants 2 to 4 for an offence under Section 326/149 IPC cannot be sustained and the same would be the position with regard to the conviction of all the appellants for other offences with the aid of Section 149 IPC also.
Since, appellant No. 1 Subran had not been charged for the substantive offence of murder under Section 302 IPC, even the trial court, which tried the six accused persons, was not justified in recording a conviction against him for the substantive offence of murder punishable under Section 302 IPC after framing a charge against him for the offence under Section 302 read with Section 149 IPC only.
A person charged for an offence under Section 302, IPC read with Section 149 cannot be convicted of the substantive offence under Section 302, IPC without a specific charge having been framed against him as envisaged by law.
Conviction for the substantive: offence in such a case is unjustified because an accused might be misled in his defence by the absence of the charge for the substantive offence under Section 302 IPC.
Appellant No. 1, Subran, was never called upon to meet a charge under Section 302 IPC simplicitor and, therefore, in defending himself, he can not be said to have been called upon to meet that charge and he could very well have considered it unnecessary to concentrate on that part of the prosecution case during the cross examination of the prosecution witnesses.
Therefore, the conviction of the first appellant for an offence under Section 302 was not permissible.
That apart, according to the medical evidence, none of the injuries allegedly caused by this appellant was either individually or taken collectively with the other injuries caused by him, sufficient in the ordinary course of nature to cause death of Suku.
Medical evidence is clear on this aspect of the case and it is not possible to say that the injuries inflicted by the first appellant with the chopper were inflicted with the intention to cause the death of Suku.
The High Court failed to draw the distinction between an offence under clause (b) and (c) of Section 299 IPC and the one falling under clause (3) of ' Section 300 IPC.
The intention to cause murder of Suku deceased, could not be attributed to him and the medical evidence also shows that the injuries attributed to him were not sufficient in the ordinary course of nature to cause death of the deceased.
The conviction of appellant No. 1, Subran, for the substantive offence under Section 302 IPC is therefore, 94 unwarranted and cannot be sustained.
That Suku deceased died as a result of injuries inflicted on him by all the four appellants is not a matter which is in doubt.
From the ocular evidence read with the medical evidence, it stands established that the injuries on the deceased had been caused by all the four appellants and that the death of Suku had occurred due to receipt of multiple injuries.
What offence can then be said to have been committed by the four appellants ? According to the medical evidence, the injuries caused were cumulatively sufficient to cause death and the death had occurred due to multiple injuries which were found sufficient in the ordinary course of nature to cause death.
According to the ocular testimony of witnesses namely, Biju (PW4) and Anil (PW5), who have been believed by both the courts below and with which finding we have no reason to differ, all the four appellants had caused those injuries.
It is, therefore, necessary in a case like this to determine as to which of the accused is guilty of a particular offence.
On a consideration of the circumstances of the case, the type of weapons with which they were armed and nature and seat of the injuries, it is not possible to hold that all the four appellants had shared the common intention of causing such bodily injuries on the deceased as were likely to cause the death of Suku or were sufficient in the ordinary course of nature to cause his death.
The appellants would, therefore be liable for the offence com mitted individually by each one of them.
As already noticed, though it may not be possible to attribute to appellant No. 1, Subran, the necessary intention to cause death of Suku so as to hold him guilty of an offence of murder under Section 302 IPC since the injuries inflicted by him were not found to be sufficient in the ordinary course of nature to cause death of Suku, but looking to the weapon with which he was armed and the nature number and seat of injuries inflicted by him though not on any vital part, he can certainly be attributed with the knowledge that with those injuries it was likely that death of Suku may be caused and, therefore, he can be cloathed with the liability of causing culpable homicide not amounting to murder.
The case of the first appellant, therefore, falls within Section 299 IPC punishable under Section 304 Part 1 IPC.
We, accordingly, convict him for the said offence and sentence him to suffer rigorous imprisonment for a period of seven years and to pay a fine of Rs. 2000 (two thousand) and in default of payment of fine suffer further rigorous imprisonment for one year.
Fine if realised shall be paid 95 to the heirs of the deceased.
Coming now to the case of the other three appellants.
Since, their conviction for an offence under Section 326 with the aid of Section 149 is not sustainable in law, we set aside their conviction under Section 326/149 IPC.
They would be responsible for their individual acts.
The injuries caused by Rajan and Preman appellants 2 and 3, were with a torch, iron rod and a cycle chain.
None of the injuries caused by them according to the postmortem report were on any vital part of the body, though some of the injuries caused by blunt weapons were grievous in nature.
We, therefore, convict each of the two appellants Rajan and Preman, for an offence under Section 325 IPC and sentence them to suffer rigorous imprisonment for two years each.
So far as the fourth appellant Sura Surendran is concerned, he caused grievous injuries to the deceased with a knife.
His offence would, therefore, fall under Section 326 IPC and convicting him for the said offence, we sentence trim to suffer rigorous imprisonment for a period of three years and to pay a fine of Rs. 500 (five hundred).
In default of payment of fine he shall further suffer rigorous imprisonment for a period of three months.
Fine, if realised shall be paid to the heirs of the deceased.
The conviction of all the appellants for the offence under Section 324 as recorded by the learned Judges of the High Court as also for the other offences are maintained but without the aid of Section 149 IPC.
In view of the sentences recorded for offence under Section 304 Part I against the first appellant Subran, Section 325 IPC against appellants 2 and 3, Rajan and Preman, and Section 326 IPC against Sura Ca, Surendran, appellant 4, no separate sentence are recorded for the other offences.
The appeal is accordingly partially allowed and disposed of in the above terms.
N.V.K. Appeal allowed partially.
| IN-Abs | Six accused persons were arrayed by the investigating agency for offences punishable under Sections 302, 324, 323, 341, 148 read with Section 149 IPC, for an occurrence that took place on 24th December, 1986 in which one Suku succumbed to injuries as a result of the assault during the occurrence.
They were put on trial, and the prosecution sought to establish its case by examining as many as six eye witnesses besides other evidence, documentary and oral.
According to the prosecution case, all the six accused persons were armed with weapons like chopper, iron rod, knife, cycle chain and torches and that the accused had held PW.2 George and while the first accused kicked him, the third accused inflicted injuries on him with a cycle chain.
So far as Suku deceased was concerned, all the accused except the first accused caused him injuries with a torch, a cycle chain and a knife.
The first accused was alleged to have caught hold of Suku by the collar and inflicted injuries on his hands, arms and legs with a chopper.
The assault took place in front of an arrack shop.
It was alleged that enmity between the two groups on account of suspicion of information being passed on to the Excise Officials, regarding illicit distillation was the cause of the occurrence, but no evidence was led in support of this allegation and no motive for commission of the crime was established at the trial.
85 At the trial, four eye witnesses PW3, P.W. 6, PW.7, the salesman and his assistant in the arrack shop and PW.8 turned hostile and did not support the prosecution case.
The prosecution case was sought to be proved by the ocular testimony of PW.4 and PW.5 both aged about 13 years, at the time of the occurrence and other evidence.
Both these eye witnesses supported their statements recorded under section 161 Cr.
P.C. during their testimony in Court.
The trial court on the basis of prosecution evidence found accused No. 1, Subran, guilty of an offence punishable under Section 302 IPC and sentenced him to suffer rigorous imprisonment for life.
Accused Nos. 2 to 6, namely, Rajan, Preman, Viswan, Sura and Shajan, were found guilty of an offence under Section 326/149 IPC and each one of them was sentenced to undergo rigorous imprisonment for three years Besides, accused 1 to 4 were convicted for an offence under Section 148 and sentenced to suffer rigorous imprisonment for one year.
All the accused were also convicted for offences under Sections 14, 341, 323,324 read with Section 149 IPC but no separate sentences were awarded on any of those counts.
On appeal to the High Court, the conviction and sentence awarded to accused 1 to 3 and 5 were confirmed, while accused 4 and 6 were acquitted and the conviction and sentence recorded against them by the Sessions Judge was set aside.
Ile participation of the 6th accused and the role assigned to him by the prosecution was doubted by the Judges of the High Court and he was given the benefit of doubt and acquitted.
Similarly, the High Court disbelieved the role assigned to accused No. 4 and doubted his participation in the commission of the crime. ]Me accused appealed to this Court by Special Leave.
After preliminary hearing it was ordered that the appeal be heard on the limited question regarding the nature of the offence and the quantum of the sentence only.
On the question : Whether after the acquittal of the two accused, could the High Court Convict appellant No. 1 for the substantive offence under Section 302 IPC an offence with which he had not been charged, and appellants 2 to 4 for an offence under section 326/149 IPC, Partially allowing the appeal, the Court, HELD: 1.
A combined reading of Section 141 and Section 149 IPC 86 show that an assembly of less than five members is not an unlawful assembly within the meaning of Section 141 and cannot, therefore, form the basis for conviction for an offence with the aid of Section 149 IPC.
[92F] 2.
The existence of an unlawful assembly is a necessary postulate for invoking Section 149 IPC.
Where the existence of such an unlawful assembly is not proved, the conviction with the aid of Sections 149 IPC cannot be recorded or sustained.
The failure of the prosecution to show that the assembly was unlawful must necessarily result in the failure of the charge under section 149 )PC.
[92H,93A] 3.
A person charged for an offence under Section 302 IPC read with Section 149 cannot be convicted of the substantive offence under Section 302 IPC without a specific charge having been framed against him as envisaged by law.
Conviction for the substantive offence in such a case is unjustified because an accused might be misled in his defence by the absence of the charge for the substantive offence under Section 302 IPC.
[93D] 4.
The conviction of appellants 2 to 4 for an offence under Section 326/149 IPC cannot be sustained and the same would be the position with regard to the conviction of all the appellants for other offences with the aid of Section 149 IPC also.
[93B] 5.
The High Court failed to draw the distinction between an offence under clause (b) and (c) of Section 299 IPC and the one failing under clause (3) of Section 300 IPC.
[93G] 6, The effect of the acquittal of the two accused persons by the High Court and without the High Court finding that some other known or unknown persons were also involved in the assault, would be that for all intent and purposes the two acquitted accused persons were not members of the unlawful assembly.
Thus, only four accused could be said to have been the members of the assembly but such an assembly which comprises of less than five members is not an unlawful assembly within the meaning of Section 141 IPC.
[92G] 7.
Appellant No. 1 Subran not having been charged for the substantive offence of murder under Section 302 IPC, even the trial court, which tried the six accused persons, was not justified in recording a conviction against him for the substantive offence of murder punishable under Sec 87 tion 302 IPC after framing a charge against him for the offence under Section 302 read with Section 149 IPC only.
[93C] 8.
Appellant No. 1, Subran, was never called upon to meet a charge under Section 302 IPC simplicitor and, therefore, in defending himself, he can not be said to have been called upon to meet that charge and he could very well have considered it unnecessary to concentrate on that part of the prosecution case during the cross examination of the prosecution witnesses.
Therefore, the conviction of the appellant No. 1 for an offence under Section 302 was not permissible.
[93E] 9.
The intention to cause murder of Suku deceased, could not be attributed to appellant No. 1 and the medical evidence also shows that the injuries attributed to him were not sufficient in the ordinary course of nature to cause the death of the deceased.
The conviction of appellant No. 1 for the substantive offence under Section 302 IPC is therefore unwarranted and cannot be sustained.
That Suku deceased died as a result of injuries inflicted on him by all the four appellants is not a matter which is in doubt.
From the ocular evidence read with the medical evidence, it stands established that the injuries on the deceased had been caused by all the four appellants and that the death of Suku had occurred due to the receipt of multiple injuries.
[93H, 94A B] 10.
On a consideration of the circumstances of the case, the type of weapons with which the accused were armed and the nature and seat of the injuries, it is not possible to hold that all the four appellants had shared the common intention of causing such bodily injuries on the deceased as were likely to cause the death of Suku or were sufficient in the ordinary course of nature to cause his death.
The appellants would, therefore be liable for the offence committed individually by each one of them.
[94D E] 11.
The case of appellant No. 1 therefore, falls within Section 299 I PC punishable under Section 304 Part 1 [PC.
He is accordingly, convicted for the said offence and sentenced to suffer rigorous imprisonment for a period of seven years and to pay a fine of Rs. 2,000 and in default of payment suffer further rigorous imprisonment for one year.
Fine if realised to be paid to the heirs of the deceased.
[94G H] 12 (a) With regard to the three other appellants their conviction for 88 an offence under Section 326 with the aid of Section 149 is not sustainable in law, it is accordingly set aside and they are convicted under Section 326/149 IPC.
They would be responsible for their individual acts.
The injuries caused by appellants 2 and 3 were with a torch, iron rod and a cycle chain.
None of the injuries caused by them according to the post mortem report were on any vital part of the body, though some of the injuries caused by blunt weapons were grievous in nature.
Each of them are convicted for an offence under Section 325 IPC and sentenced to suffer rigorous imprisonment for two years each.
[95B C] 12 (b) Appellant No. 4 caused grievous injuries to the deceased with a knife, the offence would therefore, fall under Section 326 IPC.
He is therefore convicted for the said offence and sentenced to suffer rigorous imprisonment for a period of three years and to pay a fine of Rs. 500/ and in default of payment to suffer rigorous imprisonment for a period of three months.
The fine, if realised shall be paid to the heirs of the deceased.
[95D] 12 (c) The conviction of all the appellants for the offence under Section 324 as recorded by the High Court as also for the other offences are maintained but without the aid of Section 149 IPC.
|
Appeal No. 2230 (NT) of 1977.
From the Judgment and Order dated 13.12.76 of the Gujarat High Court in Income Tax Reference No. 36 of 1972.
Mrs. A.K. Verma, for JBD & Co. for the Appellant.
G.C. Sharma, E.U.Eradi and T.R. Talwar for the Respondent.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
This appeal is preferred by the assessee against the judgment of the Gujarat High Court answering the question, referred at the instance of Revenue, against the assessee.
The following question was referred under Section 256(1) of the Income Tax Act for the opinion of the High Court: 111 "Whether on the facts and in the circumstances of the case, the following amounts are to be included in the computation of capital of the assessee Company under Rule 1.
of the Second Schedule of the : (i) Amount set apart for contingent Rs. 4,50,000 liability (taxation) (ii) Amount set apart for proposed divi Rs. 19,90,000 dend (iii) Reserve for Depreciation fund in ex Rs. 6,77,122 cess of the amount allowed as depreciated in income tax (iv) Excess provision in Revenue Acco Rs. 3,61,876 unts disallowed in income tax assess ment for the assessment years.
" Though the question refers to four items, we are concerned in this appeal only with the first item.
We shall, therefore, state the facts only in so far as they are relevant to the said item.
The assessee is a Private Limited Company.
The assessment year concerned is 1963 64.
Sometime in 1955 56, a notice was issued to the assessee under Section 23A of the Income Tax Act, 1922.
Apprehending that it may become liable to pay additional tax under the said provision, the assessee set apart a sum of Rs. 6,52,000 in its Books for the year ending March 31, 1956.
Out of this amount an amount of Rs. 2,02,000 was transferred to the profit and loss account during the year 1958 59, with the result that a sum of Rs. 4,50,000 continued to remain and was shown as a provision set apart to meet the taxation liability which the assessee called a contingent liability.
At the same time the assessee had been contesting the proceedings taken against it under Section 23A.
Though it failed at the earlier stages, it succeeded ultimately in the Letters Patent Appeal filed by it in the East Punjab High Court.
In the said appeal decided on May 24, 1965, it was held that no action can be taken against the assessee under Section 23A.
With this order, all the orders passed and notices issued under the said provision prior to the date of the said judgment stood vacated.
In its assessment relating to the assessment year 1963 64 under the 112 , the assessee contended that the said sum of Rs. 4,50,000 is a reserve and should be included in its capital for the purposes of the Act.
The Income Tax Officer did not agree and the matter was ultimately taken to the Income Tax Appellate Tribunal.
By the date this appeal was taken up for hearing, another appeal preferred by the assessee relating to the subsequent assessment year (1964 65) was also before the Tribunal.
That appeal arose under the provisions of the Companies Sur tax Profits Act, 1964 which replaced the .
The Tribunal first disposed of the appeal relating to the assessment year 1964 65.
In so far as the item in question is concerned it held that it was a reserve.
Following the said judgment, the appeal pertaining to the assessment year 1963 64 was also allowed.
(It may be stated that the order of the Tribunal relating to assessment year 1964 65 was subsequently rectified by an order dated February 15, 1972 and the said item was held to be a provision.
But no such order was passed with respect to the assessment year 1963 64).
Aggrieved by the judgment of the Tribunal the Revenue obtained the aforesaid reference.
The High Court answered the same.
in favour of Revenue and against the assessee following the decision of this Court in Metal Box Company of India Limited vs Their Workmen, It held that the said amount being a provision made towards a liability which had attached on account of the issuance of a notice was a provision and not a reserve.
In this appeal the correctness of the said view is questioned.
The learned counsel for the appellant assessee submitted that inasmuch as no order levying additional tax under Section 23A was made on or before the date relevant to the assessment year 1963 64 the said amount cannot be treated as a provision.
We find it difficult to agree.
In Metal Box, which has been followed in Vazir Sultan Tobacco Co. Ltd etc.
vs Commissioner of Income Tax, Andhra Pradesh etc.
, , the distinction between provision and reserve is stated in the following words: "The distinction between a provision and a reserve is in commercial accountancy fairly well known.
Provisions made against anticipated losses and contingencies are charges against profits and, therefore, to be taken into account against gross receipts in the P. & L. accounts and the balance sheet.
On the other hand, reserves are appropriations of profits, the assets by which they are rep resented being retained to form part of the capital 113 employed in the business.
Provisions are usually shown in the balance sheet by way of deductions from the assets in respect of which they are made whereas general reserves and reserve funds are shown as part of the proprietor 's interest.
(See Spicer and Pegler 's Book keeping and Accounts, 15th Edn.
p. 42).
" While approving the said statement it was stated in Vazir Sultan: "In other words the broad distinction between the two is that whereas a provision is a charge against the profits to be taken into account against gross receipts in the P.& L. account, a reserve is in appropriation of profits, the asset or assets by which it is represented being retained to form part of the capital employed in the business.
Bearing in mind the aforesaid broad distinction we will briefly indicate how the two concepts are defined and dealt with by the .
" Applying the said test it must be held that the provision made by the assessee in its Books for meeting the anticipated liability of tax (under Section 23A) was indeed a provision and not a reserve.
The assessee itself called it a provision.
It did not call it a reserve nor was it set apart or appropriated as a reserve.
We are not suggesting that the description given or the Book entries made by the assessee are conclusive.
We are only emphasizing how the assessee understood the said item itself.
In the circumstances of the case we must hold that the High Court was right in holding it to be a provision and not a reserve.
The appeal accordingly fails and is dismissed.
No costs.
G.N. Appeals dismissed.
| IN-Abs | The appellant assessee was issued a notice under Section 23A of the Income tax Act, 1922.
The assessee contested the same.
At the same time, it set apart a sum of Rs. 6,52,000 in its books for the year ending 31st March 1956, to meet the contingency that may arise if his plea failed.
During the year 1958 59 an amount of Rs. 2,02,000 out of the said amount was transferred to the profit & loss account. 'Me balance amount of Rs. 4,50,000 continued to remain and was shown as a provision set apart to meet the aforesaid contingent liability.
The assessee has been contesting the said proceedings.
Ultimately it succeeded before the High Court which held that no action could be taken against the assessee under Section 23A.
For the assessment year 1963 64 in proceedings under the , the assessee claimed that the said sum of Rs. 4,50,000 was a reserve and should be included in its capital.
The Income tax Officer did not agree.
Ultimately the matter reached the Tribunal which agreed with the assessee.
At the instance of Revenue the question as to whether the sum of Rs. 4,50,000 set apart for contingent liability (taxation) was to be included in the computation of capital of the assessee company under Rule 1 of the Second Schedule of the was referred to the High Court.
The High Court having answered the question against the assessee, the, assessee has preferred the present appeal contending that inasmuch as no order levying additional tax under Sec.
23A was made the amount could not be treated as a provision.
109 110 Dismissing the appeals, this Court, HELD : 1.1.
Provisions made against anticipated losses and contingencies are charges against profits and, therefore, to be taken into account against gross receipts in the P.&L. accounts and the balance sheet.
On the other hand, reserves are appropriations of profits, the assets by which they are represented being retained to form part of the capital employed in the business.
[112G] 1.2.
In the instant case, the provision made by the assessee in its Books for meeting the anticipated liability of tax (under Section 23A of the Income Tax Act, 1922) was indeed a provision and not a reserve.
The assessee Itself called it a provision.
It did not call it a reserve nor was the amount set apart or appropriated as a reserve.
It is not to suggest that the description given or the Book entries made by the assessee are conclusive, but to emphazise how the assessee understood the said item itself In the circumstances of the case the High Court was right in holding it to be a provision and not a reserve, and so the amount of Rs. 4,50,000 was not to be included in the computation of Capital of the assessee Company.
[113E] Metal Box Company of India Limited vs Their Workmen, and Vazir Sultan Tobacco Co.Ltd.
vs Commissioner of Income Tax, Andhra Pradesh etc.
, , relied on.
|
Appeal No. 5899 of 1983.
From the Judgment and Order dated 13.4.83 of the Bombay High Court in S.A. No. 46 of 1983.
V.A. Bobde and A.K. Sanghi for the Respondent.
The Judgment of the Court was delivered by N.P. SINGH, J.
The defendant in a suit for eviction is the appellant before this court.
The suit plot was let out to the appellant as a monthly tenant for an automobile garage.
The plaintiff respondent (hereinafter referred to as "the respondent") issued a notice on 10.7.1975 determining 170 the lease in favour of the appellant with effect from 31.7.1975.
Later the suit in question was filed.
As the suit premises had not been let out for residential purposes, it was an admitted position that the Central Provinces and Berar Letting of Houses and Rent Control Order, 1949 was not applicable.
The Trial Court dismissed the said suit on a finding that as the appellant was using the suit premises for manufacturing purposes, a six months ' notice was required before the lease could be determined and as the notice issued to the appellant under section 106 of the Transfer of Property Act (hereinafter referred as "the Act") had purported to deter mine the tenancy with 15 days ' notice, the suit in question could not have been filed.
On appeal being filed on behalf of the respondent, the Assistant Judge came to the conclusion that the premises in question had not been let out for any manufacturing purpose but for a motor workshop and as such the notice under section 106 of the Act was valid and the respondent was entitled to the possession of the plot in dispute.
The second appeal filed on behalf of the appellant was dismissed in limine by the High Court saying that no substantial question of law was involved.
Before this Court the finding recorded by the court of appeal below and affirmed by the High Court that the respondent was entitled to a decree for possession and the appellant was liable to be evicted was not questioned.
A new stand was taken on behalf of the appellant, that in view of the subsequent events the aforesaid decree of eviction passed against the appellant cannot be given effect to.
It was pointed out that by C.P. and Berar Letting of Houses and Rent Control (Second Amendment) Order, 1989 a new clause 13A has been introduced in the said Order.
The new clause 13A is as follows: "13 A. No decree for eviction shall be passed in a suit or proceeding filed and pending against the tenant in any court or before any Authority unless the landlord produces a written permission of the Controller as re quired by sub clause (1) of clause 13.
" Leave to appeal was granted by this Court on 1st August, 1983 and clause 13A has been introduced in the year 1989 during the pendency of the present appeal.
By that very amending Order the definition of "premises" given in the original Order has also been amended and the said 171 definition after amendment includes not only building but even "land not being used for agricultural purposes".
if the definition of the "Premises", which has been amended, had been in force on the date of the filing of the suit, then the respondent had to pursue the procedure prescribed for eviction in accordance with the provisions of the Order aforesaid instead of filing a suit after service of notice under section 106 of the Act.
There is no dispute that the amendment has not been introduced with retrospective effect and it is only prospective in nature.
As the suit premises is only land and not a building when the suit was filed steps for eviction of the appellant could not have been taken in accordance with the provisions of the Order aforesaid because then those provisions were not applicable.
But the stand of the appellant is that although clause 13A has been introduced not with retrospective effect still it shall be applicable to proceedings pending before any Court including this Court and in view of the bar imposed by said clause 13A, no decree for eviction can be passed by this Court in the present appeal against the appellant unless the respondent landlord produces a written permission of the Controller as required by sub clause (1) of clause 13 of the Order.
Reliance was placed on the case of H. Shiva Rao vs Cecilia Pereira, , wherein it was pointed out by this court : "It is well settled legal principle that Rent Control legislations being beneficial to the tenant have to be given a liberal interpretation.
While ordinarily substantive rights should not be held to be taken away except by express provision or clear implication, in the case of Rent Control Act, it being a beneficial legislation the provision which confers immunity to the tenant against eviction by the landlord though prospective in form operates to take away the right vested in the landlord by a decree of a court which has become final, unless there is express provision or clear implication to the contrary.
" It appears that in the aforesaid case the judgment was passed for possession of the premises in question on August 27, 1970.
Thereafter execution proceedings were initiated.
During the pendency of the execution proceedings, the village in which the suit premises was situated was included within the Mangalore Municipality by amendment of the Karnataka Rent Control After issuance of the notification the provisions of the aforesaid Rent Control Act became applicable even to the suit premises during the pendency of the execution.
An objection was taken on behalf of the tenant that in view of sub section (1) of section 21 of the Act aforesaid, the decree passed in the connected suit was not executable.
Sub section (1) of section 21 provided: "Notwithstanding anything to the contrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or other authority in favour of the landlord against the tenant.
" So far the aforesaid case is concerned, once the provisions of the Karnataka Rent Control Act became applicable during the pendency of the execution proceedings, the bar imposed on the Court from passing an order for recovery of possession of any premises in favour of the landlord became applicable.
But clause 13A, with which we are concerned, is only in respect of passing a decree for eviction and "not an, order for recovery of the possession of any premises".
If even in clause 13A a bar had been placed in respect of recovery of possession of any premises, then there was no difficulty in accepting the contention raised on behalf of the appellant and holding that although there is a decree for eviction in favour of the respondent, but as in the meantime a bar has been placed on recovery of the possession of the premises the decree became unexecutable.
Reference was also made to the case of M/s. East India Corporation Ltd vs Shree Meenakshi Mills Ltd., JT It will appear that when the suit in question had been filed or even when the leave had been granted by this Court, the building in question did not come within the purview of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, in view of an exclusionary provision contained in clause (ii) of section 30.
During the pendency of appeal before this Court clause (ii) of section 30 was struck down by this Court in another appeal pending as being violative of Article 14 of the Constitution.
The result whereof was that provisions of the aforesaid Act became applicable.
In view of the subsequent events, it was urged in the aforesaid case that section 10 of that Act became applicable as well.
Section 10 provided : "S.10.
Eviction of tenants. (1) A tenant shall not be evicted whether in execution of a decree or otherwise except in accordance with the provisions of this section or sections 14 to 16: In view of the bar placed by section 10 aforesaid on the eviction of a tenant whether in execution of a decree or otherwise except in accordance with the provisions of section 10 or sections 14 to 16 which had become applicable in view of striking down of clause (ii) of section 30, the decrees for eviction passed by courts below were set aside.
This case is clearly distinguishable because the bar had been placed in respect of eviction of the tenant whether in execution of a decree or otherwise and this Court while exercising jurisdiction under Article 136 of the Constitu tion could have taken note of that bar for purpose of setting aside the decree because in view of the subsequent events the decree passed in the suit became unexecutable in absence of compliance of section 10 or sections 14 to 16 of the Act.
Here as the bar is on the part of the Court from passing a decree for eviction, it has to be examined as to whether while affirming the decree for eviction passed by the High Court, it shall be deemed that a fresh decree for eviction shall be deemed to have been passed by this Court.
It was submitted that even if it is held that bar under clause 13A is only on respect of passing of the decree as appeal before this Court on basis of the leave granted under Article 136 of the Constitution is a continuation of the suit/proceeding, while dismissing the said appeal, it shall be deemed that this Court has passed a decree for eviction which in view of clause 13A is barred and the said bar is applicable even on this Court.
In this connection reference was made to the judgments of this Court in the cases of Amarjit Kaur vs Pritam Singh, ; , and Sadhu Singh vs Sharan Dev, AIR 1980 SC 1654.
In the case of Amarjit Kaur vs Pritam Singh (supra) the suit for pre emption in question had been decreed by the Trial Court.
The appeal preferred by the vendee was dismissed.
While the second appeal was pending before the High Court, the Punjab Pre emption (Repeal) Act, 174 1973 came into force.
In view of section 3 of the said Act, the High Court allowed the appeal and dismissed the suit.
Section 3 of that Act provided: "Bar to pass decree in suit for pre emption.
On and from the date of commencement of the Punjab Pre emption (Repeal) Act, 1973, no court shall pass a decree in any suit for pre emption.
" In view of the fact that aforesaid section 3 said in clear and unambiguous term that no court shall pass a decree in any suit for pre emption after coming into force of the Act, the High Court was of the view that said bar applied even.
to the High Court, while confirming the decree for pre emp tion as passed by the Trial Court because it amounted to passing a decree in a suit for pre emption.
This Court said : "As an appeal is a re hearing, it would follow that if the High Court were to dismiss the appeal, it would be passing a decree in a suit for pre emption.
Therefore, the only course open to the High Court was to allow the appeal and that is what the High Court has done.
In other words, if the High Court were to confirm the decree allowing the suit for pre emption, it would be passing a decree in a suit for pre emption, for, when the appellate court confirms a decree, it passes a decree of its own, and therefore, the High Court was right in allowing the appeal.
" Again in the case of Sandhu Singh vs Dharam Dev, (supra) the same section 3 of the Punjab Pre emption (Repeal) Act, 1973, came up for consideration and this Court held: "The section is plain and its meaning unambiguous that there is a statutory mandate against passing a decree for enforcement of a right of pre emption in the State of Punjab.
The only point here is as to whether a decree already passed by the trial court, challenged in appeal after the Act was passed and affirmed on appeal would fall within the mischief of section 3 while the case pends in the High Court.
We think that S.3 interdicts the passing of a decree even in appeal.
For one thing a decree challenged in appeal is reopended and the appellants ' hearing is a 175 rehearing of the whole subject matter and when a decree is passed in appeal the first decree merges in the appellate decree and it comes within the scope of section 3.
" From the facts of the aforesaid case it shall appear that even in this case section 3 of the Punjab Pre emption (Repeal) Act had come into force while appeal was pending in the High Court and the High Court had affirmed the decree of the Trial Court without taking note of the bar imposed by section 3 aforesaid.
This Court said that section 3 interdicted the passing of a decree even in appeal because the decree which had been challenged in appeal had reopened the hearing of the whole subject matter and even while affirming the said decree it shall be deemed that appellate court had passed a decree for pre emption which was not permissible in view of the bar placed by section 3 of the Act in question.
In the aforesaid cases section 3 of the Punjab Pre emption (Repeal) Act had come into force while the appeals were pending in the High Court and effect of section 3 of that Act was considered in connection with the pendency of the appeals before the High Court and not before this Court.
Can it be said that when a special leave is granted under Article 136 of the Constitution by this court, against the judgment of the High Court it is to be treated at par with an appeal entertained by the High Court against the judgment of a court subordinate to the High Court ? Whether by granting leave to appeal, the decree of the High Court is reopened "for rehearing" of the whole subject matter ? Whether on the same analogy when an appeal is dismissed by this Court, the decree of the High Court merges in the decree of this Court and amounts to passing a decree in the connected suit for eviction by this Court ? Article 136(1) of the Constitution confers on this court overriding and extensive powers of granting special leave to appeal.
Article 136 does not confer a right to appeal, it confers a right to apply for special leave to appeal which is in the discretion of this Court.
The discretionary power under Article 136 cannot be construed as to confer a right of appeal where none exist.
According to us, although the power under Article 136(1) is unfettered but it cannot be held that after having entertained a special leave petition against any final or interlocutory order, this Court converts itself into a court of appeal for the hearing of the dispute involved and as 76 such when the appeal is dismissed the decree passed by the High Court merges into the decree of this Court and in that situation amounts to passing a decree for eviction.
This aspect has been considered by this Court in the case of Gyan Chand vs Kunjbeharilal, ; , in connection with Rajasthan Premises (Control of Rent and Eviction) Act, 1950.
Section 13A as amended by Rajasthan Ordinance 26 of 1975 extended the opportunity of paying arrears of rent by the tenant facing eviction.
Benefit was made available in pending suits, appeals therefrom and applications for revision pending on the date of commencement of the Ordinance.
This Court examined whether that benefit of section 13A can be availed by the tenant while the appeal was pending before this Court.
The Ordinance aforesaid had come into force after the special leave petition had been filed before this Court.
The appellant submitted that on basis of the leave granted a proceeding was pending before this Court within the meaning of clauses (a) and (b) of section 13A aforesaid and as such he was entitled to the benefit of section 13A which had come into force during the pendency of the proceeding/appeal before this Court.
Chandrachud, J. (as he then was) speaking on behalf of the Court said : "With regard to the first submission it may be pointed out that an application for special leave under Article 136 of the Constitution against a judgment or an order cannot be equated with the ordinary remedy of appeal, as of right, under any provisions of law.
It is an extraordinary right conferred under the Constitution, within the discretion of this Court, and such an application for special leave does not come within the contemplation of appeal pending before the Court under Section 13A(a).
It is true that the word "proceeding" which appears in Section 13A(a) and (b) means suit, appeal or application for revision according to the Explanation appended to Section 13A.
Therefore, in order to attract Section 13A(a), a suit, appeal or application for revision must be pending on the date of commencement of the Ordinance 26 of 1975.
In view of the connotation of the word "proceeding" as given under the Explanation to Section 13A it is imper 177 missible to extend the meaning of the word "proceeding" to include an application for special leave under Article 136 of the Constitution.
The collocation of the words, "suit, appeal or application for revision" in the Explanation to denote "proceeding" would go to show that suits, regular appeals therefrom, as provided under the ordinary law and applications for revision alone are intended.
It is inconceivable that if the legislature had intended to include within the ambit of "proceeding" an application for special leave under Article 136 of the Constitution it would have omitted to mention it in express terms.
" The bar placed by clause 13A of the Order in question shall be applicable only to suit or proceeding which was pending in any court under provisions of any special Act or under the provision of Code of Civil Procedure.
as the case may be.
It shall not become applicable to a special leave petition pending or an appeal registered before this Court on basis of leave granted under Article 136 of the Constitution.
This Court while exercising its discretionary power under Article 136 of the Constitution even while dismissing the appeal shall not be deemed to have passed any decree for eviction.
The matter would have been different if clause 13A instead of only imposing a bar on passing a decree for eviction had also prescribed a bar on passing any order for recovery of possession of any premises or on initiation of execution proceedings on basis of any decree passed earlier.
In that event, this Court could have taken not of subsequent change in the law and in exercise of its discretionary power could have passed an order directing the respondent not to recover possession of the premises on basis of the decree for eviction passed in his favour or to pursue the execution proceedings without complying with the requirement of clause 13A.
We accordingly dismiss the appeal.
But, in the circumstances of the case, there shall be no orders as to costs.
Before we part with this appeal, we any mention that during the pendency of the present appeal it was brought to our notice that amended definition of "premises" and clause 13A which had been inserted by C.P. and Berar Letting of Houses and Rent Control (Second Amendment) Order, 1989, have been struck down by a Division Bench of Bombay High Court on 23.6.1992.
But the counsel neither produced a copy of the said 178 judgment nor could inform this Court whether any special leave to appeal against the said judgment is pending before this Court.
As such, we have considered the effect of clause 13A of the Order, so far the present appeal is concerned.
N.V.K. Appeal dismissed.
| IN-Abs | The suit plot was let out to the appellant as a monthly tenant for an automobile garage.
The respondent plaintiff issued a notice on 10th July, 1975 determining the lease in favour of the appellant with effect from 31st July, 1975, and filed a suit for eviction.
The trial Court dismissed the said suit on the finding that as the appellant was using the suit premises for manufacturing purposes, a six months ' notice was required before the lease could be determined, and as the notice issued to the defendant appellant under section 106 of the Transfer of Property Act had purported to determine the tenancy with 15 days ' notice, the suit in question could not have been riled.
On appeal by the respondent, the Assistant Judge came to the conclusion that the premises in question had not been let out for any manufacturing purpose but for a motor workshop and as such the notice under section 106 of the Act was valid, and the respondent was entitled to the possession of the plot in dispute, and passed an order for possession.
The second appeal filed on behalf of the appellant was dismissed in limine by the High Court saying that no substantial question of law was involved.
In the appeal to this Court, the finding recorded by the Court of Appeal below and affirmed by the High Court that the respondent was entitled to a decree for possession, and that the appellant was liable to be 168 evicted was not questioned.
However, a new stand was taken on behalf of the appellant that in view of the subsequent events the decree of eviction passed against the appellant could not be given effect to.
It was submitted that by C.P. and Berar Letting of Houses and Rent Control (Second Amendment) Order, 1989 a new clause 13A has been introduced and that was during the pendency of the present appeal, and that though clause 13 A had been introduced not with retrospective effect still it shall be applicable to proceedings pending before any Court including this court and in view of the bar imposed by the said clause 13 A no decree for eviction could be passed by this court in the present appeal against the appellant unless the respondent landlord produces a written permission of the Controller as required by sub clause (1) of Clause 13 of the Order.
Dismissing the appeal, this Court, HELD: 1. Article 136(1) of the Constitution confers on this Court overriding and extensive powers of granting special leave to appeal.
Article 136 does not confer a right to appeal which is in the discretion of this Court.
The discretionary power under Article 136 cannot be construed as to confer a right of appeal where none exist.
Although the power under Article 136(1) is unfettered, it cannot be held that after having entertained a special leave petition against any final or interlocutory order, this court converts itself into a court of appeal for the hearing of the dispute involved and as such when the appeal is dismissed the decree passed by the High Court merges into the decree of this court, and in that situation amounts to passing a decree for eviction.
[175G H,176A] Gyan Chand vs Kunjbeharilal, ; , referred to.
[176B] 2.
The bar placed by clause 13 A of the Order shall be applicable only to a suit or proceeding which was pending in any court under provisions of any special Act or under the provision of the Code of Civil Procedure, as the case may be.
It shall not become applicable to a special leave petition pending or an appeal registered before this court on the basis of leave granted under Article 136 of the Constitution.
This Court while exercising its discretionary power under Article 136 of the Constitution even while dismissing the appeal shall not be deemed to have passed any decree for eviction.
[177C D] 3.
The matter would have been different if clause 13 A instead of only 169 imposing a bar on passing a decree for eviction had also prescribed a bar on passing any order for recovery of possession of any premises or on initiation of execution proceedings on basis of any decree passed earlier.
In that event, this Court could have taken note of subsequent change in the law and in exercise of its discretionary power could have passed an order directing the respondent not to recover possession of the premises on the basis of the decree for eviction passed in his favour or to pursue the execution proceedings without complying with the requirement of clause 13 A. [177E F] H. Shiva Rao vs Cecilia Pereira, ; M/s East India Corporation Ltd. vs Shree Meenakshi Mills Ltd., JT ; Amarjit Kaur vs Pritam Singh, ; and Sadhu Singhi vs Dharam Dev.
AIR 1980 SC 1654, referred to.
[172F, 173G] (During the hearing it was brought to the notice of the Court, that the amended definition of 'Premises ' and clause 13 A which had been inserted by C.P. and Berar Letting of Houses and Rent Control (Second Amendment) Order, 1989, have been struck down by a Division Bench of the Bombay High Court on 23.6.1992.
But the Counsel neither produced a copy of the said judgment, nor could inform whether any special leave to appeal against the said judgment was pending before this Court.
As such, the effect of clause 13 A of the Order, has been considered, so far as the present appeal was concerned.) [177H, 178A]
|
Appeal No. 204 of 1958.
Appeal from the judgment and decree dated January 6, 1956, of the Calcutta High Court in Income tax Reference No. 74 of 1953.
K. N. Rajagopal Sastri, R. H. Dhebar and D. Gupta, for the appellant.
Radha Binod Pal, Panchanan Pal and D. N. Mukherjee, for the respondents.
March 26.
The Judgment of the Court was delivered by SINHA, J.
The question for determination in this appeal on a certificate of fitness granted by the High Court of Calcutta, is whether the respondent 's admitted income tinder certain heads, is chargeable to income tax under the provisions of section 10(6) of the Indian Income tax Act, 1922 (XI of 1922) (hereinafter referred to as the Act).
The Calcutta High Court, by its judgment dated January 6, 1956, answered the question in the negative, disagreeing with the determination of the Income tax Appellate Tribunal by its order dated April 23, 1949.
The facts of this case, upon which the decision of the appeal depends, may shortly be stated as follows: The respondent is a limited liability company incorporated on June 7, 1933, with a view to taking over the assets and liabilities of an unincorporated association called " The Calcutta Stock Exchange Association 461 and to carrying on the affairs of the Stock Exchange which had been founded by that Association.
The principal object of the Respondent Company is to facilitate the transaction of business on the Calcutta Stock Exchange.
In view of that objective, the Company had to make rules and by laws, regulating the mode and the conditions in, and subject to, which the business of the Stock Exchange had to be transacted.
The Company is composed of " members " who may be either individuals or firms, who, except in the case of parties who had been members of the unincorporated Association have to be elected as such, and upon such elections, have to acquire a share of the Company and pay an entrance fee.
The members have to pay a monthly subscription according to the by laws of the Company.
Under the by laws of the Respondent Company, members with a certain standing, are allowed to have "Authorized Assistants ", upto a maximum of six in number.
Such Authorized Assistants are permitted the use of the premises of the Association and to transact business therein in the names and on behalf of the members employing them.
The members have to pay an admission fee for such Authorized Assistants according to the following scale : (a) for the first two Assistants Rs.1,000 (b) for the third Assistant Rs.2,000 (c) for the fourth Assistant Rs.3,000 (d) for the fifth Assistant Rs.4,000 (e) for the sixth Assistant Rs.5,000 (f) for replacement Rs.1,000 The last item of replacement fee of Rs. 1,000/ is meant to cover the fee for substituting one Assistant by another.
Before these by laws were amended with effect from July 10, 1944, a member could have more than six such Assistants, but the number was limited to six by the new amendment which also provided that " Members who have more than six Assistants, at present, shall not be allowed any replacement unless the number of Assistants in their firms has come down to six (maximum fixed).
" Rule (5), as amended, is in these terms: 462 "Every candidate applying for admission as Assistant to a member must serve at least for one year as a probationer in the firm of that member.
A probationer must apply to the Committee (through the member in whose office he will serve as probationer) in such form as may be prescribed by the Committee by paying Rs. 100/ as probationer fee which will not be refunded in any circumstances ".
It would, thus, appear that the rules relating to the admission of members ' Assistants, confer the benefit upon those members only either individuals or firms who are qualified according to the by laws to have such Assistants, and who have paid admission fees and pay a monthly subscription in respect of each of them, besides their own dues, to the Company.
The number of such Assistants has been sought by the by laws to be limited upto a maximum of six, by imposing a progressively enhanced admission fee, apparently, with a view to discouraging the employment of a large crowd of such " Authorized Assistants".
The by laws also provide that "an authorized assistant shall not enter into any contracts on his own behalf and all contracts made by him shall be made in the name of the member employing him and such member shall be absolutely responsible for the due fulfilment of all such contracts and for all transactions entered into by the authorized assistant on his behalf" It is also contemplated by the by laws that tickets have to be issued to the Authorized Assistants, besides the members ' tickets.
The bylaws also contemplate that a member shall give to the prescribed Authority of the Company an immediate notice in writing, of the termination of the employment by him of any Authorized Assistant, and on such termination, the right of the Assistant to use the rooms of the Association, shall cease, and he shall not be at liberty to transact business in the name and on behalf of his employer.
The by laws also make provision for the supervision of the work of the Authorized Assistants to see that they function within the limits of their powers, and do not transact 463 business on behalf of persons or firms other than those employing them.
During the accounting year 1944 45 assessment year 1945 46), the Respondent Company received from its members the sum of Rs. 60,750/ as entrance fees, and the sum of Rs. 15,687/ as subscription in ' respect of the Authorized Assistants.
The Company also received during the aforesaid year, a sum of Rs. 16,000/ as fees for putting the names of companies on the Quotations List.
Unless a particular company 's name is placed on the Quotations List, no dealings in respect of the shares of that company are permitted on the Stock Exchange.
An application has to be made by a member to place on the Quotations List any company not already included in that List, and on approval by the prescribed Authority of the Company, the name of the company thus proposed, is included in the List upon payment of a certain fee.
The companies themselves cannot apply to the Association for such enlistment.
The application has to be made by a member, and has to be accompanied by a fee of Rs. 1,000/ , and it is only after the necessary scrutiny and investigation into the affairs of the proposed company have been made, that the enlistment applied for is granted.
That is another source of income to the Respondent Company.
It is no more necessary to refer to another item of income, which was admitted, during the course of the assessment proceedings in their appellate stage, to be liable to the payment of tax.
We are, thus, concerned in the present controversy with the aforesaid sums of Rs. 60,750/ , Rs. 15,687/ and Rs. 16,000/ which were held by the Income tax Officer, by his order dated March 27, 1946, to be liable to income tax.
The Income tax Officer rejected the contention raised on behalf of the assessee Company that the Authorized Assistants aforesaid were themselves members of the Company, and that therefore, the moneys received from them were exempt from taxation.
He also held that though the Respondent Company was a mutual Association, each one of the three items of income, referred to above, was remuneration definitely related 464 to specific services performed, and was thus, chargeable to tax within the meaning of section 10(6) of the Act.
On appeal, the Appellate Assistant Commissioner, by his order dated June 30, 1947, considered the points at great length, and came to the conclusion that the authorized Assistants were not members or substitute members.
He held that the Authorized Assistants were no more than representatives of the members who employ them, and they transact business on their behalf, and that the Association had framed rules and by laws, regulating the admission, supervision and discontinuance of such Authorized Assistants.
For coming to this conclusion, he relied upon the decision of the Bombay High Court in the case of Native Share and Stock Brokers ' Association vs The Commissioner of Income tax(1).
The case was then taken up in appeal to the Income tax Appellate Tribunal, which dismissed the appeal.
The Tribunal agreed with the finding of the taxing authorities that the Authorized Assistants were not members of the Company within the meaning of the Articles of Association of the Company, and that their position was analogous to that of the " authorised clerks in Native Share and Stock Brokers ' Association at Bombay ".
In the course of its order, the Tribunal observed as follows: " The provision made in the regulations of the company, by which a member can take advantage of sending his authorised assistants to the company for transacting the business in the member name is nothing but giving extra facilities to the members.
By controlling the institution of authorised assistants the company renders specific services to the members and in particular to the member whose assistants work for him.
The amounts received by the company from these sources are clearly covered by the provisions of section 10(6) ".
At the instance of the assessee, the Tribunal stated a case and referred the following questions of law to the High Court for its decision under section 66(1) of the Act: " (1) Whether on the facts of this case the Incometax Appellate Tribunal was right in holding that, (1) 465 Authorised Assistants were not members of the company and as such the amounts of Rs. 15,687/ and 60,750/ received from them as subscriptions and entrance fees respectively should be included in the assessable income.
(2) Were these amounts received for specific services performed by the Association or its members within the meaning of sub section (6) of section 10 of the Indian Income tax Act ? (3)Whether the sums of Rs. 16,000/ and Rs. 600/ were remuneration definitely related to specific services performed by the Association for its members within the meaning of subsection (6) of section 10 ".
The reference was heard by a Division Bench consisting of Sir Trevor Harries, C. J., and Banerjee, J., of the Calcutta High Court.
Before that Bench, certain concessions were made.
It was conceded by Dr. Pal, who also appeared before that Bench, that the Authorised Assistants were not members of the Company.
It was also agreed at the bar, on behalf of both the parties, that the two sums of Rs. 60,750 and 15,687 were not received from the Authorized Assistants, as suggested in the question formulated, and that it was common ground that they were received from members of the Association in respect of their Authorized Assistants.
Therefore, the High Court took the view that the questions framed by the Tribunal did not arise, and that the Tribunal bad proceeded on a wrong basis of facts.
The High Court, therefore, re cast the questions in these terms: " Whether in the facts and circumstances of this case the Income tax Appellate Tribunal was right in holding that (a)the amounts of Rs. 15,687/ and Rs. 60,750/ received from the members of the Association as subscriptions and entrance fees in respect of Authorized Assistants, and (b) the amounts of Rs. 16,000/ and Rs. 600/ received as fees for enlisting names of newly floated companies and for recognition of changes in the styles of firms respectively should be included in the assess.
able income of the assessees 59 466 The Tribunal was asked to re state a case upon the questions as re cast, extracted above.
Accordingly, the Tribunal drew up a fresh statement of the case and re submitted it to the High Court.
On this re statement of the case, the matter was heard by a Bench consisting of Chakravarti, C. J., and Sarkar, J.
The High Court considered the terms of section 10(6) of the Act, and came to the conclusion that the case had not been brought within those terms.
The High Court, in the course of its opinion, observed that though the assessee is undoubtedly a trade association, it did not perform any specific services for its members for remuneration.
It then examined in detail the decision of the Bombay High Court in the case of Native Share and Stock Brokers ' Association vs The Commissioner of Income tax (1), relied upon by the Department, and observed that the differences pointed out between the case in hand and the case decided by the Bombay High Court, were " not vital, though they are not immaterial ", but it was not prepared to take the same view of the facts of this case as had been taken by the Bombay High Court in the case referred to above, or by the Travancore Cochin High Court in the case of Commissioner of Income tax vs Chamber of Commerce, Alleppey (2).
The High Court, accepted the argument of Dr. Pal, which is also addressed to us, that the words " performing specific services for " were far stronger and more definite than the words " render service to ", and that those words meant the actual doing of definite acts in the nature of services.
The Court further observed that those words meant " execute certain definite tasks in the interests and for the benefit of the latter (that is to say, the members) under an arrangement of a direct character ".
It further observed that the words " for remuneration" and " definitely related to those services " meant that " certain specific tasks must be performed or functions of a specific character must be discharged for payment and such payment is to be made to the association as wages for its labour in respect of those tasks or functions ".
In this connection, (1) (2) 467 it may be added that the High Court also made the following observations bearing on the construction of the crucial words of section 10(6): " When section 10(6) speaks of a trade, professional or other similar association performing specific services for its members for remuneration, it contemplates, I think, services in regard to matters outside the mutual dealings for which the Association was formed and for the transaction of which it exists as a mutual association.
If performance of functions even in regard to matters within the objects of the association as a mutual association be performance of specific service within the meaning of the sub section, dis charge of no function can be outside it and everything done would be specific service performed.
That, I do not think, is what the sub section means and intends ".
It is manifest that unless the assessee is brought within the terms of sub section (6) of section 10, the three items of income coming into the hands of the Association, would not be chargeable to income tax.
That subsection is in these terms: " (6) A trade, professional or similar association performing specific services for its members for remu neration definitely related to those services shall be deemed for the purpose of this section to carry on business in respect of those services ' and the profits and gains therefrom shall be liable to tax accordingly ".
It has to be observed at the outset that the performing of the services of the description mentioned in that sub section, may not, but for the words of that section, have amounted to carrying on business in respect of those services.
The use of the word " deemed " shows that the legislature was deliberately using the fiction of treating something as business which otherwise it may not have been.
It is also noteworthy that the sub section is couched in rather emphatic terms.
We have, therefore, to examine the terms of the sub section to see whether the three sums of money in question, or any of them, are or is within the ambit of those terms.
The words " performing specific services ", in our opinion, mean, in the context, " conferring particular benefits " on the members.
The word 468 " services " is a term of a very wide import, but in the context of section 10 of the Act, its use excludes its theolo gical or artistic usage.
With reference to a trade, pro fessional or similar association, the performing of specific services must mean conferring on its members some tangible benefit which otherwise would Dot be available to them as such, except for payment received by the association in respect of those services.
The word " remuneration ", though it includes " wages ", may mean payment, which, strictly speaking, may not be called wages ".
It is a term of much wider import including recompense ", " reward ", " payment ", etc.
It, therefore, appears to us that the learned Chief Justice was not entirely correct in equating " remuneration " with " wages ".
The sub section further requires that the remuneration should be " definitely related " to the specific services.
In other words, it should be shown that those services would not be available to the members or such of them as wish to avail themselves of those services, but for specific payments charged by the association as a fee for performing those services.
After these observations bearing on the interpretation of the crucial words, we shall now examine each of the three items of income, separately, to determine the question whether they answer, or any of them answers, the description of " services " contemplated by the sub section.
Firstly, the sum of Rs. 60,750 has been realised from such members as applied for and obtained permission of the Association to have the use of Authorized Assistants within the precincts of the Stock Exchange.
There cannot be the least doubt that unless those members paid the prescribed entrance fees for one or more Authorized Assistants upto a maximum of six, they could not have the benefit thus conferred upon such members.
Ordinarily, a member has to transact business in the precincts of the Association by himself or by his business partner if there is a firm ; but if that member is a very busy person, and wishes to avail of the services of Authorized Assistants, he has to pay the the prescribed fee.
A member of the Association, with the advantage of mutuality, so long as he transacts 469 business within the precincts of the Association, by himself or by his partner in the case of a firm, is not required to pay any such entrance fee but only the fee payable by every member as such.
The entrance fee, thus, is clearly chargeable only from such of the members as avail themselves of the benefit conferred by the rules of the Association in that behalf.
The entrance fee is, thus, a price paid for the services of the Association in making suitable arrangements for an absentee member to transact business on his behalf and in his name by his representative or agent.
The entrance fee in question, therefore, cannot but be ascribed to the specific services rendered by the Association in respect of Authorized Assistants who thus become competent to transact business on behalf of their principal.
Coming next to the sum of Rs. 15,687 which was realised from the members by way of subscription in respect of their Authorized Assistants, it is clear that this sum consists of the contributions severally made by the members periodically, so as to continue to have the benefit conferred by the Association of having the use of their representative or agent even during their absence.
There cannot be the least doubt that this is a very substantial benefit to those members who found it worth their while to engage the services of Authorized Assistants.
A member is not obliged, as indicated above, to have such an Assistant, but the fact that he chooses to have such an Assistant on payment of the prescribed fee or subscription, itself, is proof positive that a businessman, who ordinarily thinks in terms of money, has found it worth while to have the services of an Assistant by making an additional payment to the Association by way of recompense for the benefit, thus conferred upon him.
Lastly, the sum of Rs. 16,000 represents fees received from members for allowing their application for enlisting the names of companies not already on the Quotations List, so that the shares and stocks of these companies, may be placed on the Stock Market.
As already indicated, it is not the company concerned which has directly to pay this fee, but the fee has to 470 be paid by the member who initiates the proposal and, apparently, finds it worth his while to pay that prescribed fee to the Association.
He would not make the payment unless he found it worth his while to do so Apparently, such a member is interested in placing the stocks of that company on the market.
It cannot, therefore, be denied that that sum of money is definitely related to the specific services performed by the Association, namely, to permit transactions in respect of the shares of the company concerned, which services would not otherwise be available to the members as a body or to the individual member or members interested in that company.
In our opinion, therefore, each one of the three sources of income to the Association, accrues to it on account of its performing those specific services in accordance with its rules and by laws.
Each one of the three distinct sources of revenue to the Association, is specifically attributable to the distinct services performed by the Association for its members or such of them as avail themselves of those benefits.
And each one of those services is separately charged for, according to the rate or schedule laid down by the rules and by laws of the Association.
In our opinion, therefore, the requirements of sub section
(6) of section 10, have been fulfilled in the present case.
But we have yet to deal with the last argument accepted by the High Court, with reference to the terms of sub section
(6) of section 10, namely, that the services contemplated therein, have reference to " matters outside the mutual dealings for which the Association was formed ".
In the first place, there is no warrant for limiting the application of the words used by the legislature, in the way suggested.
Secondly, the mutuality of the Association extends only to such benefits as accrue to every member on the payment made by him to the Association, but even if additional items of payment have to be made for additional services to be performed by the Association only for such of the members as avail themselves of those benefits, it cannot be said that the mutuality extends to those additional benefits also.
It is, in our opinion, 471 equally wrong to suggest that the services in question should have been outside the objects of the Association.
If the Association renders services to such of its members as avail themselves of such services as are not within the scope of the business activities of the Association, those benefits, if any, would not be ' conferred by the Association as such, because the Association has to function within the scope of its objects of incorporation.
Hence, on a true construction of the provisions of the sub section in question, we have come to the conclusion that the facts and circumstances of the present case, bring the three items of income of the Association within the taxing statute.
In our opinion, the decision of the Bench of the Bombay High Court, consisting of Stone, C. J., and Kania, J., (as he then was), in the case of Native Share and Stock Brokers ' Association vs Commissioner of Income tax is correct, and the facts of that case run very parallel to those of the case in band, though there may be minor differences in the rules and by laws of the Association then before the Bombay High Court.
In that case, as in the present one, the rules of the Stock Brokers ' Association (the Bombay Stock Exchange) contemplated a definite scheme for allowing members to employ authorized clerks and for the admission, conduct, control and supervision of those clerks, for the benefit primarily of the members who employed them.
It was held by the High Court that the income received by the Association by way of fees in respect of those authorized clerks, was within the taxing statute and liable to income tax.
After examining in detail the provisions of the rules and the by laws of the Association, Stone, C. J., made the following observations which are equally applicable to the rules and by laws of the Association in the present case : " In my judgment these rules lay down a definite scheme and provide an organised arrangement, controlled and supervised by the Association for the benefit of its members.
In my opinion the carrying (1) 472 of their scheme into effect is performing services for its members by the Association.
No doubt the benefit of the scheme would redound to the benefit of all members since all would have the advantage of disciplined supervision exercised over the authorised clerks and remisiers of the others.
I do not think that because the payment for the carrying of the scheme is provided for only by members who avail themselves of the use of the authorised clerks it makes any difference.
" Kania, J., (as he then was), in a separate but concurring judgment, made the following very pertinent observations: " A perusal of the rules referred to in the judgment of the learned Chief Justice shows that the institution of authorised clerks exists for the benefits only of those who pay remuneration of Rs. 100 instead of going to the market and carrying on their business themselves.
Individual members are permitted to work through an agent.
For that the charge is made.
The rules provide for the application and grant for such permission, registration of the authoris ed clerks on the individuals being recognised as clerks of particular members, supervision over the work of such clerks and particularly to prevent them from registering contracts either in their own name or in the name of another member; and a general supervision over their good behaviour is contemplated. . ".
A question was raised as to whether these are specific services to be performed for particular members or whether the rules amount to performance of duties towards members in general.
It is true that several of the services to be rendered may be helpful to the other members for their business.
Taken as a whole I consider that as a performance of services by the Association for, the benefit of members who pay the remuneration.
" We have made these copious quotations from the judgment of the Bombay High Court, because, in our 473 opinion, they truly apply the provisions of sub section
(6) of section 10 to associations like the one before us.
The other case to which our attention was drawn, is Commissioner of Income tax vs Chamber of Commerce, Alleppey (1).
The facts of that case are not similar to those of the case before us, but the ratio decidendi of that case are relevant.
That case referred to the Alleppey Chamber of Commerce.
The Chamber inaugurated a produce section with the object of promoting the interests of merchants in general, and of those engaged in the produce trade, in particular, of acting as arbitrators and collecting and publishing information relating to the produce trade.
Members were admitted to the produce section on payment of admission fees, monthly fees and contributions at certain prescribed rates.
The question which was referred to the High Court, was whether the receipts by way of fees and contributions, could be chargeable under section 10(6) of the Act, and it was answered in the affirmative.
Though cases in England, by way of precedent for the decision of the case in hand, have not been cited at the Bar, apparently because the scheme of the Income tax law in England is different and the words of the statute are not in parti material yet there are some cases which throw some light on the controversy before us.
For example, the case of The Carlisle and Silloth Golf Club vs Smith (Surveyor of Taxes) (2 ) related to a golf club which was not incorporated.
It was admittedly a bonafide members ' club, but under one of the terms of its lease, it had to admit non members to play on its course on payment of " green fees " at certain prescribed rates.
Those fees were paid by non members.
Receipts from those fees were entered in the general accounts of the Club, thus, showing an annual excess of receipts over expenditure of the Club as a whole.
It was held by Hamilton, J., (as he then was), that the Club carried on a concern or business in respect of which it received remuneration which was assessable to 'income tax.
He pointed out that the (1) (2) 60 474 receipts from non members went to augment the funds of the Club, and the revenue thus received was applied for the purposes of the Club towards its general expenditure.
The case was taken up to the Court of Appeal, and the decision of that Court is reported in the same Volume at p. 198.
The Court of appeal affirmed the decision and dismissed the appeal.
The Judgment of the King 's Bench Division in The Liverpool Corn Trade Association, Limited vs Monks (H. M. Inspector of Taxes) (1) was based on facts which are similar to the facts of the present case.
In that case, the Liverpool Corn Trade Association, Limited, was an incorporated body under the Companies Act, with the object, inter alia, of protecting the interests of the corn trade, and of providing a clearing house, a market, an exchange, and arbitration and other facilities to the trade.
Membership of the Association was confined to persons engaged in the corn trade.
Each member was required to have one share in the company, and had to pay an entrance fee and an annual subscription.
Non members could also become subscribers.
Payments were made to the Association by members and others for services rendered through the clearing house, etc.
The assessee was taxed on the excess of its receipts over expenditure.
On appeal to the Special Commissioners, they upheld the assessment.
One of the points raised before the Special Commissioners, was that transactions with its members were mutual ones, and that any surplus arising from such transactions, was not a profit assessable to income tax.
On appeal, the High Court agreed with the determination of the Special Commissioners, and held that any profit arising from the Association 's transactions with members, was assessable to income tax as part of the profits of its business, and that the entrance fees and subscriptions received from members must be included in the computation of such profits.
It was suggested that the service in this case, if any, was extremely trivial and the remuneration which was large was for that reason not definitely related to the (1) 475 service.
It was held by Upjohn, J., in Bradbury (H. M. Inspector of Taxes) vs Arnold (1) that the extent of the services was of no materiality.
There, the question was being dealt with under Case VI of Schedule D of the Income tax Act, 1918.
The learned Judge observed : " There is no doubt that a contract for services may, and clearly does, form a matter for assessment under Case VI of Schedule D, and not the less so that the services to be rendered are trivial or that they are to be rendered once and for all so that the remuneration may be regarded as a casual profit arising, out of a single and isolated transaction".
The same view was expressed by Harman, J., in Housden (Inspector of Taxes) vs Marshall (2).
In that case, a well known jockey 'contracted with a newspaper company to make available to its nominee " reminiscences of his life and experiences on the turf for the purpose of writing a series of four articles ", and to provide photographs, press cuttings, etc.
He was paid pound 750.
The question was whether this amounted to sale of property, or was a payment for services rendered.
It was held that it was the latter, and that it did not matter if the service rendered was trivial.
In view of what we have said above as to the nature of the service which the Association performed in respect of the Assistants, the payment of the fee was definitely related to that service.
It is, therefore, plain that the case fell within section 10(6) of the Act.
It must, therefore, be held that the question referred to the High Court should have been answered in the affirmative, and that the High Court was in error in giving its opinion to the contrary.
The appeal must, accordingly, be allowed with costs here and below.
(1) , 669.
Appeal allowed.
| IN-Abs | By sub section
6 of section 10 of the Indian Income tax Act, 1922: "A trade, professional or similar association performing specific services for its members for remuneration definitely related to those services shall be deemed for the purpose of this section to carry on business in respect of those services, and the profits and gains therefrom shall be liable to tax accordingly.
" The members of the respondent company, whose principal object was to facilitate the transaction of business on the Stock Exchange, were enabled under the by laws to have a certain number of Authorised Assistants so that the latter could use the premises of the company and transact business therein in the names and on behalf of the members who, for that purpose, were required to pay admission fees and monthly subscriptions in respect of each of them.
The by laws of the company also provided that no dealings in respect of the shares of any particular company should be permitted on the Stock Exchange, unless an application made by a member of the respondent company and accompanied by a fee of Rs. 1000, for putting the name of that company on the Quotations List was approved by the prescribed Authority of the respondent company.
During the accounting year in question the company received from its members admission fees and subscriptions in respect of the Authorized Assistants and fees for putting the names of companies on the Quotations List.
The question was whether the aforesaid amount was liable to be taxed under section 10(6) of the Indian Income tax Act, 1922.
Held, that with reference to a trade, professional or similar association, the performing of specific services under section 10(6) of the Indian Income tax Act, 1922, mean conferring on its members some tangible benefit which otherwise would not be available to them as such, except for payment received by the association in respect of those services.
460 Accordingly, the income received by the respondent company towards the admission fees and the subscriptions in respect of the Authorized Assistants, being the price paid for the services of the respondent company in making suitable arrangements for an absentee member to transact business on his behalf and in his name by his representative or agent within the Stock Exchange, as well as the fees received from members for enlisting the names of companies not already on the Quotations List so as to permit transactions in respect of the shares of the companies concerned, was remuneration definitely related to specific services performed by the respondent for its members within the meaning of s.10(6) of the Indian Income tax Act, 1922, and was assessable to income tax.
Native Share and Stock Brokers ' Association vs The Commissioner of Income tax, Bombay , approved.
|
Appeal Nos.
1022 24 & 423 of 1982.
100 From the Judgment and Order dated 14.3.78 & 2.7.79 of the Madras High Court in Tax Case Nos.
228/74 & 215 of 1975.
Uttam Reddy, Atul Sharma, A.V. Palli and Ms. Reena Agarwal for E.C. Agrawala for the Appellant.
G. Vishwanatha, P. Parmeshwaran and Ms. A. Subhashini (NP) for the Respondent.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
These appeals are preferred by the assesagainst the judgment of the Madras High Court answering the Income Tax reference made at the instance of the Revenue, against the assessee.
The assessment years concerned are 1967 68, 1968 69, 1969 70 and 1.970 71.
The question of law which was referred for the opinion of the High Court under Section 256(2) of the Income Tax Act is: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the royalty amounts should be assessed on cash basis for 1967 68. 1968 69 and 1969 70 assessment if the books and balance sheet of such receipts were found to be maintained on cash basis and directing fresh assessment on such basis?" In the paper book supplied by the assessee appellant the Statement of the Case is not available nor are the orders of any of the authorities supplied.
We are, therefore, obliged to draw the facts from the judgment of the High Court which we presume are drawn from the Statement of the Case.
As a matter of fact, the facts require to be appreciated clearly for a proper decision of the question arising herein.
The assessee, Standard Triumph Motor Co. Ltd. is a non resident company, having its place of business at Coventry in the United Kingdom.
It entered into a collaboration agreement with the Standard Motor Products of India Ltd. (Indian Company) in November, 1939 whereunder the assessee was entitled to royalty of five per cent on all sales effected by the Indian Company.
This amount of five per cent less the Indian tax had to be remitted to the assessee in the Sterling currency.
The assessee 's accounting year was the year ending 30th of September.
With respect to 101 its Indian income, it was filing its returns through the Indian Company.
The collaboration agreement between the assessee and the Indian Company expired in the year 1965.
It was renewed.
The renewed agreement too expired in November, 1970.
For the assessment years 1967 68 (year ending 30.9.1966) and 196869 (year ending 30.9.1967) the assessee filed returns in which it stated that it was maintaining its accounts on mercantile basis.
It did not dispute its liability to assessment.
In these returns, it disclosed a royalty income of Rs. 1,600 and Rs. 4,57,311 respectively.
When it came to filing of the return for the assessment year 1969 70 (year ending 30.9.1968), the assessee admitted a royalty of Rs. 9,25,257 but filed a nil return saving that it was maintaining its accounts on cash basis and not on mercantile basis, that no part of the royalty amount has been received by it and, therefore, nothing is taxable.
For the next assessment year 1970 71 (year ending 30.9.1.969) as well, it took the same stand.
The I.T.O. completed the assessment for the first two assessment years on the basis of the returns.
For the assessment years 1969 70 and 1970 71, however, he refused to accept the assessee 's plea that it was maintaining its accounts on cash basis.
He held that it was maintaining its accounts on mercantile basis alone and accordingly brought to tax the royalty amount disclosed.
The assessee filed appeals against the assessments relating to all the four years.
In these appeals, it took the stand that even with respect to the accounting years relevant to the assessment years 1967 68 and 1968 69, it has been maintaining accounts on cash basis and since it did rot actually receive any income in all these four years, no tax is payable by it.
Its case was that there was 'no actual payment ' of the royalty by the Indian Company.
It stated that though the Indian Company had credited to the assessee in its account books for the relevant years (accounting year for the Indian Company is stated to be the calendar year), the assessee did not actually receive the amount nor did it take credit for the said amounts in its Books at Coventry.
The Appellate Assistant Commissioner dismissed the appeals holding that the assessment orders for the past years relating to the assessee reveal that the method of accounting was mercantile, that for the A.Y. 1967 68, the assessee did never contest its liability to be taxed on the amounts disclosed and further that it was not open to it to change the method of accounting to suit its convenience, without the approval of 102 the Income Tax Officer.
The assessee carried the matter in further appeals to the Tribunal.
It was contended by the assessee before the Tribunal that it was not following any particular method of accounting regularly in the past years, that it was the Indian Company which was finally filing the returns of income on behalf of the assessee by incorporating the figures as per its profit and loss account, that the Indian Company was not aware of the assessee 's system of accounting in regard to royalty and that, therefore, it had committed a mistake in filing the returns for the assessment years 1967 68 and 1968 69.
The assessee submitted that as soon as it noticed that said mistake it corrected the same and filed the return for the assessment year 1969 70 on correct basis, showing that the method of accounting was cash receipt basis.
The appeals were allowed by the Tribunal.
The Tribunal held that the assessee had not been following any particular method of accounting regularly over the past years.
For example, it said, for the assessment year 1963 64 it did not say anything regarding the method of accounting.
For the assessment year 1.964 65, it said it was on cash basis.
For the assessment years 1967 68 and 1968 69 it stated it was maintaining accounts on mercantile basis and again for the two subsequent years it stated as cash basis.
The Tribunal was, therefore, of the opinion that the question of method of accounting adopted by the assessee must be examined afresh and for that purpose allowed the appeals and remanded the matters to the Income Tax Officer.
The Tribunal gave liberty to the parties to adduce additional evidence in that behalf.
It directed further that if it is found that the assessee was maintaining its accounts and balance sheets on cash basis in respect of the royalty it should be assessed on cash basis.
On a Reference made at the instance of Revenue, the High Court answered the question in the negative, i.e., in favour of the revenue and against the assessee.
It would be appropriate at this stage to notice the contentions urged by the assessee and how they were met by the High Court.
Though the High Court has not set out the arguments of the assessee as such, the arguments advanced can easily be gleaned from the judgment.
The assessee reiterated his contention that though the Indian Company made a credit entry in the account of the assessee in its Books, it did not actually receive the amount.
The argument appears to be that the assessee can be said to have received the royalty amount only when it receives the same in U.K. in the shape of pounds and makes an entry to that effect in its own Books at Coventry.
Since it is maintaining its accounts, with respect to the said royalty on cash basis, it argued, receipt means receipt in U.K. Section 145 was relied upon by the 103 assessee to say that the method of accounting regularly adopted by an assessee is binding upon the department; on that basis it was argued that if the assessee is proved to have maintained its accounts with respect to royalty amount on cash basis, then there is no receipt until it is received by it in U.K.
It is this argument which led the High Court to say that acceptance of the said argument would mean escapement of income from taxation in India altogether.
This is what the High Court said : "If the contention of the assessee that the royalty should be assessed to income tax only on its actual receipt under Section 5(2)(a) of the Act on the ground that it maintains its accounts on cash basis is accepted, the income could not be taxed at all as it would be received in England and not in India.
The assessee company, a non resident, receiving its income outside India could be assessed to tax only under Section 5(2) (b) of the Act on accrual basis.
Section 5(2) (a) cannot be made applicable to such an assessee.
In the case of a non resident, to whom income accrues in India, Section 5(2)(a) will have no application.
unless the non resident receives income in India.
On the facts of this case it is clear that eventuality will never arise in regard to the income with which were are concerned, because that income will have to be remitted to the nonresident by obtaining an irre vocable letter of credit and will thus be received only outside India.
" Pursuing the said reasoning the High Court held further: "So it is clear that there can be cases of non residents to whom section 5(2)(a) will never apply in regard to a particular income.
The question then is, whether in such circumstances the assessee concerned (non resident to whom income had accrued in India) can insist it, since )has kept his accounts in regard to that income on the cash basis, he is not liable to be taxed on the accrual basis.
In other words, the question is Sec 145(1) can be applied in such circumstances.
The effect of applying the section would be to take the income outside the purview of taxation though the charge to tax on that income had taken effect on the accrual basis.
Further, no occasion for imposing tax on receipt outside India would arise in the case of a non resident, because Section 5(2)(a) will apply only to receipt in India.
In such circumstances, to apply Section 145(1) would be to defeat the charge under Section 4 and to obliterate the provisions of section 5(2)(h) and let the income which is taxable escape Such a 104 result is not certainly intended by the statute.
Section 145(1) is only an enabling provision to effectuate the charge.
The section cannot be used for destroying the charge to tax and the provisions of Sec.
5(2)(b), though by merely looking at the wording of Section 145(1) it may appear that in all cases the method of accounting must be followed, unless in any case where the accounts are correct, but the method is such that, in the opinion of the Income Tax Officer, the income cannot properly be deduced therefrom.
But it must be remembered that Sec.
145 is only a machinery provision and cannot qualify the charging section so as to make the latter otioss.
So Section 145(1) should not be permitted to be applied in such circumstances as those while arise from the facts of this case.
it is therefore immaterial whether the assessee is keeping his accounts in regard to a particular income regularly on the cash basis.
Even if the assessee is keeping his accounts on the cash basis in regard to his income, the assessee is liable to tax under Sec.
5(2)(b).
To hold otherwise would be to take the income outside the purview of taxation under the Act, though such income had accrued in India to a nonresident and under Sec.
5(2)(b) the charge to tax had taken effect and there is no possibility of Sec.
5(2)(b) ever coming into operation.
We cannot give to Sec.
145(1) such an overriding effect as to defeat the charge and the provisions of Section 5(2)(b).
" In this court, the learned counsel for the assessee contended that so far as the royalty income is concerned, the assessee was maintaining its accounts at Coventry in the United Kingdom on receipt basis.
Its accounting years was the year ending on 30th of September of each year whereas the accounting year of the Indian Company was the calendar year.
Notwithstanding the stipulation in the collaboration agreement for half yearly remittances, the practice was that the Indian Company was determining the amount of royalty at the end of its accounting year.
This amount was credited to the account of the assessee in the account books of the Indian Company, but mere crediting to the account of the assessee in the Books of the Indian Company does not 105 amount to receipt of income by the assessee.
Receipt is only when the amount is remitted to United Kingdom in accordance with the agreement.
Counsel submitted that the assessee was not maintaining any particular method of accounting regularly in respect of the said royalty amount and that the alleged statement in the returns relating to the assessment years 1967 68 and 1968 69 to the effect that it was maintaining its accounts on mercantile basis, was an incorrect statement made by the Indian Company which was not aware of the true state of affairs relating to the assessee 's accounts.
The learned counsel submitted that all that the Tribunal has done is to direct an inquiry to find out the true state of affairs viz., whether the assessee was maintaining its accounts on mercantile basis or on cash receipt basis in so far as the royalty amount is concerned.
He submitted further that since the Appellate Assistant Commissioner exercises all the powers of the assessing authority, it was perfectly open to the assessee to raise the contention relating to the method of accounting even with respect to the assessment years 1967 68 and 1968 69, in the appeals.
When the assessee has not actually received any royalty income from the Indian Company, it is not expected to bring money from the United Kingdom for paying its taxes in India, the learned counsel contended.
The collaboration agreement between the assessee and the Indian Company is as old as 1939.
According to its own case, the assessee has been filing its income tax returns in India through the Indian Company.
It is true that the agreement contemplated royalty amount being remitted in Sterling currency to U.K., but it cannot be said that until it is so remitted to and received in the U.K., the assessee has not received the income.
The practice evidently was that the Indian Company was maintaining an account pertaining to the assessee in its Books.
After it made up its accounts at the end of the calendar year and determined the royalty amount payable to the assessee, the the Indian Company was crediting the said amount to the account of the assessee in its Books.
This was treated as income by the assessee over all these years.
The returns filed by the assessee even with respect to assessment years 1967 68 and 1968 69 were based upon the said premise.
In the said returns, the assessee declared a particular amount of income and offered the same for taxation.
It did not take the stand that the said credit entry in the Books of the Indian Company does not give rise to income in India nor did it ever say that the receipt in U.K. in the shape of Sterling pounds alone constitutes income or for that matter receipt of income.
It may also be noticed that in its returns relating to the assessment years 1967 68 and 1968 69, the assessee stated that it was maintaining its 106 accounts on mercantile basis.
Only in the returns relating to the assessment year 1968 69, did it raise the plea that it was maintaining its books, with respect to the said royalty amount, on cash receipt basis.
(The Tribunal appears to have stated that for the year 1964 65 too, the assessee had stated ,cash basis ' but it is not clear for what purpose the said plea was raised.
One thing is clear: the assessee did not say at any time earlier to A.Y. 1968 69 that receipt of money in U.K. alone is receipt by it).
It also took the rather strange plea that the Indian Company was not aware of the method of accounting adopted by the assessee and, therefore, it made the aforesaid incorrect statement in the returns relating to the years 1966 67 and 1967 68.
This plea, the Appellant Assistant Commissioner refused to countenance.
It is significant to notice that the assessee did not say that the method of accounting adopted by it for all its income was on cash basis.
It confined the said plea to its Indian income alone.
The said plea, it should be noticed, had no significance by itself.
Its significance lies when we examine the said plea in the fight of the further contention of the assessee that it did not actually receive the amount from the Indian Company.
We put a pointed question to the learned counsel for the assessee whether it was the assessee 's case at any stage that the credit entry made in the account books of the Indian Company in favour of the assessee was a bogus or a mere make believe entry.
The counsel replied that it was not its case at any point of time.
His contention was that the mere entry in the account books of the Indian Company does not amount to receipt of income by the assessee.
The assessee had been very careful not to say that the Indian Company did not place the said amount at the disposal of the assessee.
Indeed, he replied to a further question by us that even if the said amount were put by the Indian Company in a Bank to the credit of the assessee, it could not have been said that the assessee has received the amount.
In other words, according to the learned counsel, the said royalty income can be said to have been received by the assessee only when it received the same in U.K.
It is this extreme argument which led the High Court to make the observations quoted hereinbefore.
It would immediately be evident that this was not the basis put forward by the assessee at any point of time till it to the filing of return for the assessment year 1969 70.
We are not suggesting that it is estopped from doing so.
We are only saying that the said plea was not and is not acceptable.
The receipt of the said income in the U.K., in our opinion, is immaterial.
It may happen that a non resident assessee may choose not to repatriate his income/profits to his parent 107 country; he may choose to plough back the said amount in India for such purposes as he may choose.
It cannot be said in such a situation that he has not received the income in India.
In Raghava Reddi vs CL T., Andhra Pradesh, 44 I.T.R. 720 the non resident company instructed the assessee, in view of the difficulties in this country in remitting the monies abroad, to credit the amount due to it on account of commission in the account Books of the assessee awaiting further instructions regarding its remittance.
The assessee was assessed as the statutory agent of the non resident company.
The I.T.O. assessed the amounts credited in the accounts of the assessee as the income of the non resident company.
The contention of the assessee was that mere entry in the Books of the assessee cannot amount to receipt and that the amounts cannot be assessed until they were actually paid over to the non resident company or dealt with according to its directions.
Rejecting the contention, it was held by this court that as soon as the monies were credited to the account of the non resident (Japanese) com pany, it must be held that it "received" the same and are taxable.
Hidayatullah, J. speaking for the Constitution Bench observed: "This leaves over the question which was earnestly argued, namely, whether the amounts in the two account years can be said to be received by the Japanese company in the taxable territories.
The argument is that the money was not actually received, but the assessee firm was a debtor in respect of that amount and unless the entry can be deemed to be a payment or receipt, clause (a) cannot apply.
We need not consider the fiction, for it is not necessary to go to the fiction at all.
The agreement, from which we have quoted the relevant term, provided that the Japanese company desired that the assessee firm should open an account in the name of the Japanese company in their books of account, credit the amounts in that account, and deal with those amounts according to the instructions of the Japanese company.
Till the money was so credited, there might be a relation of debtor and creditor; but after the amounts were credited, the money was held by the assessee firm as a depositee.
The money then belonged to the japanese company and was held for and on behalf of the company and was at its disposal.
The character of the money changed from a debt to a deposit in much the same 108 way as if it was credited in bank to the account of the company.
Thus, the amount must be held, on the terms of the agreement, to have been received by the Japanese company, and this attracts the application of section 4(1)(a).
Indeed, the Japanese company did dispose of a part of amounts by instructing the assessee firm that they be applied in a particular way.
In our opinion, the High Court was right in answering the question against the assessee.
" Applying the above principle, it must be held in this case that the credit entry to the account of the assessee in the Books of the Indian Company does amount to its receipt by assessee and is accordingly taxable and that it is immaterial when did it actually receive it in U.K.
In this view of the matter, it must be held that in the circumstances of the case.
the method of accounting adopted by the assessee for the relevant accounting years is really irrelevant.
As explained hereinbefore, the very concept of "receipt" as espoused by the assessee is untenable and unacceptable.
The order of remand made by the Tribunal was thus unnecessary.
In the circumstances, we do not think it necessary to express any opinion on the question whether there is any conflict or inconsistency between Section 5(2) and Section 145 of the Act nor is it necessary to express ourselves on the view expressed by the High Court that in the case of a non resident assessee like the petitioner clause (a) of sub section (2) of Section 5 has no application whatsoever and that Section 5(2)(b) governs it irrespective of the fact whether it maintains its accounts on cash basis or mercantile basis.
The question referred did not really arise in the facts and circumstances of the case and need not have been answered.
The Tribunal shall complete the assessments in question in the light of this judgment.
In view of the above, it is unnecessary for us to deal with the decisions cited by the learned counsel for the assessee.
The first decision cited by him is in C.I.T vs Macnzillan & Co., ; regarding the powers of the Appellate Authority.
The second decision is in Keshav Mills Ltd. vs CL T., Bombay The principle of this decision does in no way support the principle contended for by the appellant.
The appeals accordingly fail and are dismissed.
No costs.
N.V.K. Appeals dismissed.
| IN-Abs | The assessee appellant in the appeal is a non resident company having its place of business at Coven" in the United Kingdom.
It entered into a collaboration agreement with an Indian company in November, 1939 the assessee being entitled to royalty of 5% on all sales effected by the Indian Company, and this amount less the Indian tax had to be remitted by the assessee in Sterling currency.
The assessee 's accounting year was the year ending 30th September and with respect to its Indian income, it was filing its returns through the Indian Company.
The aforesaid collaboration agreement expired in the year 1965, but it was renewed and the renewed agreement also expired in November, 1970.
For the assessment years 1967 68 and 1968 69 the assessee riled returns in which it stated that it was maintaining its accounts on mercantile basis, and did not dispute its liability to assessment.
In these returns, it disclosed a royalty income of Rs. 7,21,600 and Rs. 4,57,311 respectively.
When it came to the filing of the return for the assessment year 1969 70 the assessee admitted a royalty of Rs. 9,25,357 but filed a nil return saying that it was maintaining its accounts on cash basis and not on mercantile basis, that no part of the royalty amount had been received by it and, therefore, nothing was taxable.
For the next assessment year 1970 71 as well, the same stand was taken by the assessee.
The Income Tax Officer completed the assessment for the first two 97 assessment years on the basis of the returnes, but for the assessment years 1969 70 and 1970 71, he refused to accept the plea of the assessee; and held that the assessee maintaining its accounts on mercantile basis alone and that the royalty amount disclosed be brought to tax.
The assessee filed appeals against the assessments relating to all the four years, taking the stand that even with respect to the accounting year relevant to the assessment years 1967 68 and 1968 69, it had been maintaining accounts on cash basis and since it did not actually receive any income in all these 4 years no tax was payable.
The Appellate Assistant Commissioner dismissed the appeals holding that the assessment orders for the past years reveal that the method of accounting was mercantile, that for the assessment year 1967 68, the assessee never contested its liability to be taxed on the amounts disclosed and further it was not open to the assessee to change the method of accounting to suit its convenience, without the approval of the Income Tax Officer.
The assessee carried the matter In further appeals to the Tribunal and contended that it was not following any particular method of accounting regularly in the past years that it was the Indian Company which was finally filing the returns of income on behalf of the assessee by incorporating the figures as per its profit and loss account, that the Indian Company was not aware of the assessee 's system of accounting in regard to royalty and that, therefore, it had committed a mistake in filing the returns for the assessment years 1967 68 and 1968 69, that as soon as the mistake had been noticed, it was corrected and returns for the assessment year 1969 70 on correct basis showing that the method of account cash receipt basis was filed. 'Me appeals were allowed the Tribunal which held that as the assessee had not been following any particular method of accounting regularly over the past years, the question of the method of accounting adopted by the assessee must be examined afresh and for that purpose remanded the matters to the Income Tax Officer.
On a reference made at the instance.
of the Revenue, the High Court answered the reference in favour of revenue and against assessee.
The High Court held that it was 'immaterial whether the assessee was keeping his accounts in regard to a particular income regularly on the cash basis; that even if the assessee was keeping his accounts on the cash basis in regard to his income the assessee was liable to tax under Section 5 (2) (a); to hold 98 otherwise would be to take the income outside the purview of taxation under the Act, though such income had accrued in India to a non resident, and under Section 5(2)(b) the charge to tax had taken effect; and, therefore, there is no possibility of Section 5(2)(b) ever coming into operation and that Section 145(1) cannot be given such an overriding effect so as to defeat the charge and the provisions of Section 5(2)(b).
The assessee appealed to this Court contending that so far as the royalty income was concerned, the assessee was maintaining its accounts at Coventry in the United Kingdom on receipt basis, that the accounting year was the year ending 30th September of each year, whereas the accounting year for the Indian Company was the Calendar year and that notwithstanding the stipulation in the collaboration agreement for half yearly remittances, the practice was that the Indian Company was determining the amount of royalty at the end of its accounting year and that this amount was credited to the account of the assessee in the account books of the Indian Company and that receipt is only when the amount is remitted to the United Kingdom in accordance with the Company.
Dismissing the appeals, this Court, HELD: The collaboration agreement between the assessee and the Indian Company was as old as 1939.
The assessee had been riling its income tax return in India through the Indian Company.
Though the collaboration agreement contemplated the royalty amount being remitted in Sterling Currency to U.K., it cannot be said that until it was so remitted to and received in the U.K., the assessee had not received the income.
The practice evidently was that the Indian Company was maintaining an account pertaining to the assessee in its Books.
After it made up its accounts at the end of the calender year and determined the royalty amount payable to the assessee, the Indian Company was crediting the said amount to the account of the assessee in its Books, and this was recorded as income by the assessee over all these years.
The returns riled by the assessee even with respect to the assessment years 1967 68 and 1968 69 were based upon this premise.
In the said returns, the assessee declared a particular amount of income and offered the same for taxation.
It did not take the stand that the said credit entry in the Books of the Indian Company did not give rise to income in India nor did it ever say that the receipt in U.K. in the shape of sterling pounds alone constitutes 99 income or for that matter receipt of income.
It can also be noticed that in its returns relating to the assessment years 1967 68 and 1968 69, the assessee stated that it was maintaining its accounts on mercantile basis, and that only in the returns relating to the assessment year 1968 69, did it raise the plea that it was maintaining its books, with respect to the said royalty amount, on cash receipt basis.
[105E H] The receipt of the said income in the U.K., is immaterial.
It may happen that a non resident assessee may choose not to repatriate his income/profits to his parent country; he may choose to plough back the said amount in India for such purposes as he may choose.
It, therefore, cannot be said in such a situation that he has not received the income in India.
[106H] Raghava Red& vs C.I.T, Andhra Pradesh, ; relied on.
[107A] The credit entry to the account of the assessee in the Books of the Indian Company does amount to receipt by assessee and is accordingly taxable.
It is immaterial when it was actually received in U.K. [108C] The method of accounting adopted by the assessee for the relevant accounting years Is really irrelevant.
Thi very concept of 'receipt" as espoused by the assessee is untenable and unacceptable.
The order of remand made by the Tribunal was unnecessary.
It is not necessary to express any opinion either on the question whether there is any conflict or inconsistency between Section 5(2) and Section 145 of the Act or on the view expressed by the High Court that in the case of a non resident assessee like the appellant clause (a) of sub section (2) of Section 5 has no application whatsoever and that Section 5(2)(b) governs it irrespective of the fact whether it maintains its accounts on cash basis or mercantile basis.
The question referred did not really arise in the facts and circumstances of the case and need not have been answered.
The Tribunal shall complete the assessments in question.
[108D F] C.I. T. vs Machillan & Co., ; and Keshav Mills Ltd. vs C.I T., Bombay, , distinguished.
[108G]
|
Appeal No. 830 of 1993.
From the Judgment and Order dated 6.4.87 of the Allahabad High Court in Civil Misc.
W.P. No. 20544 of 1986.
section Markandeya for the Appellant 152 Pankaj Kalra for the Respondents.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
The appeal is directed against the judgment and order of a Division Bench of the Allahabad High Court allowing Writ Petition 20544 of 1986 with certain directions.
The first respondent Gem Cap (India) Pvt. Ltd. is a private limited company.
Second respondment is its Managing Director.
At the request of the respondents, the appellant, U.P. Financial Corporation, sanctioned a loan of Rs. 29.70 lakhs.
The terms and conditions of loan and the manner of repayment of the loan are contained in the agreement and hypothecation deeds executed in 1981.
Suffice it to note that loan was repayable in certain specified instalments alongwith interest.
A sum of Rs. 26, 29, 578 was released to the respondents.
The first respondent went into production in December 1982.
Within a few months i.e., in March 1983 its operations ceased.
By an order dated February 21, 1984 the first respondent unit was declared a sick unit.
The respondents did not make any repayment as stipulated in the agreement and hypothecation deeds whereupon the Corporation took steps to take over the unit under Section 29 of the for recovering an amount of Rs. 38.57 lakhs due to it by that date vide notice dated July 10, 1984.
Then started a series of Writ Petitions by the respondents, all designed to stall the appellant from taking over and/or recovering the amount due to it.
It is not necessary to trace the course of the several writ petitions except the one from which the present appeal arises.
Writ Petition 20544 of 1986 was filed questioning the taking over of the first respondent unit by the appellant Corporation under Section 29 of the Act and for a direction to the appellant to reschedule the repayment of debt in accordance with the earlier orders of the High Court.
The writ petition has been allowed with the following directions : "(1) Having regard to the discussion made above we direct the U.P. Financial Corporation : (1) to consider expeditiously the resolution dated 29.1.1986aimed at the rehabilitation of the industrial concern in question in the light of the feasibility report of the U.P. Industrial Consultants Ltd. the Financial aid 153 forthcoming from the Bank of Baroda and other financial institutions and the reports of the managing director of the corporation dated 18.12.85 and 29.1.1986; (2) to restore back possession of the unit to the petition No. 1 forthwith.
The notice dated 11.6.1986 issued by the Corporation under Section 29 of the State Financial Corporation Act, 1951 shall, however, remain alive it being open to the Corporation to proceed further in pursuance thereof in case the rehabilitation deal is given a fair trial but does not bear fruit.
The petition is allowed accordingly with no order, however, as to costs." With great respect to the Learned Judges who allowed the writ petition we feel constrained to say this : a reading of the judgment shows that they have not kept in mind the well recognised limitations of their jurisdiction under Article 226 of the Constitution.
The judgment reads as If they were setting as an Appellate Authority over the appellate Corporation.
Not a single provision of law is said to have been violated.
The exclusive concern of the court appears to be to revive and resurrect the respondent Company, with the aid of public funds, without giving any thought to the interest of public financial institutions.
The approach is : "the Corporafion is supposed to act in the best interest of the industrial concern with the object primarily to promote and advance the industrial activity without, of course, undue involvement or risk of its financial commitment 'section .
It needs no emphasis to say that the Corporation is conceived '.Regional Development Bank with the principal object to accelerate the industrial growth in the State by providing financial assistance mainly to small and smaller of the medium scale industries.
The approach has to be business like in conformity with the declared policy of the State Govt.
If the unit is potentially viable or such as maY be capable of being rehabilitated, it would deserve being administered proper treatment and not lead to its liquidation.
" Here was a company which drew substantial public funds and became sick within three months of its going into production.
One of the main reasons for its sickness appears to be the inter necine fight between the two groups controlling the Company.
The 154 unit was closed.
It was not paying a single pie in repayment of the loan neither the principal nor the interest.
Already a huge amount was due to the appellant.
There was no prospect of its recovery.
And yet other financial corporations were being asked by the court, four years after its closure, to sink more money into the sick unit.
Though a passing reference is made to the financial risk of appellant.
this concern was not translated into appropriate directions.
The Corporation was not allowed to sell the unit when it wanted to in 1984 85.
Now, it is difficult to sell it, because it has been lying closed for about 8 years and more.
The machinery must have become junk.
While the Company could not be revived, the appellant corporation now stands to lose more than a crore of rupees all public money in this one instance.
To continue the factual narration against the judgment of the Allahabad High Court aforesaid (dated April 6, 1987) the appellant filed this appeal and on May 8, 1987 this Court while issuing notice on the SLP directed stay of operation of the judgment of the High court.
After the respondents filed a counter affidavit this Court made the following order on September 18, 1987 : "Stay made absolute with the direction that there shall be no sale of the industrial unit.
Hearing expedited.
To be heard alongwith Civil Appeal No. 568 of 1987.
" The S.L.P. could not be heard finally though it was posted for hearing on certain dates.
On November 13, 1991, the counsel for the respondents made an offer which is recorded in the order of that date.
It reads "This matter is adjourned for 11.12.91.
Mr. Shanti Bhushan, Sr.
Adv., suggests that in view of the lapse of time of more than 5 years the position has changed and the Corporation should now consider the feasibility of taking over the assets in liquidation of the dues by making an assessment and consider relieving the directors from their personal responsibilities to the corporation and the other creditors.
" The subsequent order dated December 12, 1991, however, shows that the appellant corporation refused to bite the bait.
The amount due to it had risen to over a crore of rupees by now.
Whereupon, this Court passed 155 the following order : "The appellant in consultation with the other creditors is permitted to put up the industrial undertaking of the firstrespondent for sale.
It may do so either by public auction or by inviting tenders or by an combination of both.
It may proceed to do so within a period of two months from today.
While permitting the appellant to take steps for the sale, we make it clear that before accepting the offers, the appellant should obtain prior permission of this Court.
List this matter after 10 weeks, i.e., in the first week of March, 92.
" It is clear as to why the unit could not be sold .
On March 13, 1992, this Court passed the following further order: "We have heard learned counsel on both sides.
Apart from the merits of the issues raised, it appears to us that the present impasse is to nobody 's advantage.
The dispute has to be resolved in some meaningful way.
We accordingly direct the respondent Company and Sri K.P. Chaturvedi, who claims to be in charge of the affairs of the Company, to confirm in writing to the petitioner Cor poration within three weeks from today that they unconditionally agree to settle the claims of the.
Financial Corporation at a figure which would represent the principal amount said to be Rs. 26.30 lacs and interest thereon from the inception at 13.5% per year with half yearly rests calculated upto 25.7.1986.
If such an offer is made, the Financial Corporation will assess the merit and acceptability of that offer and take within six weeks thereafter, an appropriate decision including the manner in which and the period over which the payment should be completed, and if the Financial Corporation agrees to grant time for payment, the rate of interest for the deferred period.
The decision taken by the Corporation will be placed before this Court.
156 If, however, any offer, as indicated above, is not communicated by the company or Sri Chaturvedi within a period of three weeks from today, then the Financial Corporation shall be at liberty to initiate, with notice to the respondents, steps for the sale by public auction of the subjectmatter of the security in its favour and to treat and hold the proceeds of sale as substituted security in the place of the subject matter of the security, subject to the final result of this S.L.P. Call this matter in the 3rd week of May, 1992.
" Pursuant to the said order the second respondent, Managing Director of the first respondent Company merely wrote a letter addressed to the appellant Corporation, to the following effect : "We, herewith, attach a photo copy of the captioned order which is self explicit.
We, however, unconditionally agree to abide with the directions given to us by the Hon 'ble Supreme Court.
Further, as the Corporation is aware that the Unit (Company) as well as The Registered Office of the Company, both are in possession of the Corporation, we shall feel obliged if you kindly communicate your views to us at the below given address.
" It is evident that the letter written by the second respondent is not in terms of the order to this Court dated March 13, 1992.
No figure is mentioned nor is it mentioned as to how and in what manner the said huge debt is sought to be repaid by the respondents.
Evidently, the appellant corporation could not pay any heed to such a letter.
When the matter came before this Court the second respondent appeared in person stating that he has discharged his advocate and that he will argue the matter himself.
The matter again came up before us on 19.2.1993 when we heard the appellant 's counsel and the second respondent in person.
We allowed the appeal stating that the reasons would follow.
There are the reasons for the order.
It is true that the appellant Corporation is an instrumentality of the 157 State created under the State Finance Corporation Act, 1951.
The said Act was made by the Parliament with a view to promote industrialisation of the States by encouraging small and medium industries by giving financial assistance in the shape of loans and advances, repayable within a period not exceeding 20 years from the date of loan.
We agree that the Corporation is not like an ordinary money lender or a Bank which lends money.
It is a lender with a purpose the purpose being promoting the small and medium industries.
At the same time, it is necessary to keep certain basic facts in view.
The relationship between the Corporation and the borrower is that of creditor and debtor.
The corporation is not supposed to give loans once and go out of business.
It has also to recover them so that it can give fresh loans to others.
The Corporation no doubt has to act within the four corners of the Act and in furtherance of the object underlying the Act.
But this factor cannot be carried to the extent of obligating the Corporation to revive and resurrect every sick industry irrespective of the cost involved.
Promoting industrialisation at the cost of public funds does not serve the public interest; it merely amounts to transferring public money to private account.
The fairness required of the Corporation cannot be carried to the extent of disabling it from recovering what is due to it.
While not insisting upon the borrower to honour the commitments undertaken by him, the Corporation alone cannot be shackled hand and foot in the name of fairness.
Fairness is not a one way street, mote particularly it? matters like the present one.
The above narration of facts shows that the respondents have no intention of repaying any part of the debt.
They are merely putting forward one or other ploy to keep the Corporation at bay.
Approaching the Courts through successive writ petitions is but a part of this game.
Another circumstance.
These Corporation are not sitting on King Solomon 's mines.
They too borrow monies from Government or other 'financial corporation.
They too have to pay interest thereon.
The fairness required of it must be tempered nay, determined, in the light of all these circumstances.
Indeed, in a matter between the Corporation and its debtor, a writ court has no say except in two situation : (1) there is a statutory violation on the part of the Corporation or (21) Where the Corporation acts unfairly i.e., unreasonably.
While the former does not present any difficulty, the latter needs a little reiteration of its precise meaning.
What does acting unfairly or unreasonably mean? Does it mean that the High Court exercising its jurisdiction under Article 226 of the Constitution can sit as an Appellate Authority over the acts and deeds of the corporation and seek 158 to correct them ? Surely, it cannot be.
That is not the function of the High Court under Article 226.
Doctrine of fairness, evolved in administrative law was not supposed to convert the writ courts into appellate authorities over administrative authorities.
The constraints self imposed undoubtedly of writ jurisdiction still remain.
Ignoring them would lead to confusion and uncertainty.
The jurisdiction may become rudderless.
The obligation to act fairly on the part of the administrative authorities was evolved to ensure the Rule of Law and to prevent failure of justice.
This doctrine is complementary to the principles of natural justice which the Quasi Judicial Authorities are bound to observe.
It is true that the distinction between a quasi judicial and the administrative action has become thin, as pointed out by this Court as far back as 1970 in A.K. Kraipak & Ors.
vs Union of India & Ors., AIR 1970 S.C. 150.
Even so the extent of judicial scrutiny/judicial review in the case of administrative action cannot be larger than in the case of quasi judicial action.
If the High Court cannot sit as an appellate authority over the decisions and orders of quasi judicial authorities it follows equally that it cannot do so in the case of administrative authorities.
In the matter of administrative action, it is well known, more than one choice is available to the administrative authorities; they have a certain amount of discretion available to them.
They have "a right to choose between more than one possible course of action upon which there is room for reasonable people to hold differing opinions as to which is to be preferred ' (Lord Diplock in Secretary of State for Education vs Tameside Metropolitan Borough Counsel, ; at 1064).
The Court cannot substitute its judgment for the judgment of administrative authorities in such cases.
Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervene.
To quote the classic passage from the judgment of Lord Greene MR in Associated Provincial Picture Houses Ltd. vs Wednesbury Corporation, (1948) 1 KB at 229.
"It is true the discretion must be exercised reasonably.
Now what does than mean ? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word "unreasonable" in a rather comprehensive sense.
It has frequently been used and is frequently used as a general description of the 159 things that must not be done.
For instance, a person entrusted with the discretion must, so to speak, direct himself properly in law.
He must call his own attention to the matters which he is bound to consider.
He must exclude from his consideration matters which are irrelevant to what he has to consider.
If he does not obey those rules, he may truly be said, and often is said, to be acting 'unreasonably '.
Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority. ' While this is not the occasion to examine the content and contours of the doctrine of fairness, it is enough to reiterate for the purpose of this case that the power of the High Court while reviewing the administrative action is not that of an appellate court.
The judgment under appeal precisely does that and for that reason is liable to be and is herewith set aside.
On behalf of the appellant reliance has been placed upon the decision of this court in Mahesh Chandra vs Regional Manager, U.P. Financial Corporation & Ors., (1992) 2 J.T. 326.
We have perused the decision.
That was a case where the debtor was anxious to pay off the debt and had been taking several steps to discharge his obligation.
On the facts of that particular 'case it was found that the corporation was acting reasonably.
In that context certain observations were made.
The decision also deals with the procedure to be adopted by the Corporation while selling the units taken over under Section 29.
That aspect is not relevant in this case.
We are, therefore, of the opinion that the said decision is of no help to the appellant herein.
The appeal is accordingly allowed.
The respondents shall pay the .costs of the appellant assessed at Rs. 10,000 consolidated.
T.N.A. Appeal allowed.
| IN-Abs | The respondent Company obtained loan from the appellant Financial Corporation.
Soon after obtaining the loan it ceased to, operate and was declared a sick unit.
Consequently, it did not make any repayment of loan as stipulated in the agreement and the hypothecation deeds.
Thereafter, the appellant Corporation issued notice under section 29 of the for taking over the respondent 's unit for recovery of the amount due Rs.38.57 lakhs.
Ile respondent Company filed a writ petition in the Allahabad High Court questioning the appellant 's action.
Ile High Court allowed the petition and directed (1) expeditious rehabilitation of the concern and (2) to restore back the 150 possession of the unit to the respondent Company.
Against the judgment of the High Court the Financial Corporation riled an appeal in this Court.
Allowing the appeal and setting aside the order of the High Court, this Court, HELD : 1.
It is true that the appellant Corporation which Is an instrumentality of the State created under the is not like an ordinary money lender or a Bank which lends money.
It is a lender with a purpose the purpose being promoting the small and medium industries.
At the same time, It is necessary to keep certain basic facts In view.
The relationship between the Corporation and the borrower is that of creditor and debtor.
the Corporation is not supposed to give loans once and go out of business.
It has also to recover them so that it can give fresh loans to others.
Corporations too borrow monies from Government or other financial corporations and they too have to pay interest thereon.
No doubt it has to act within the four corners of the Act and in furtherance of the object underlying the Act.
But this factor cannot be carried to the extent of obligating the Corporation to revive and resurrect every sick industry irrespective of the cost involved.
[156H, 157A C,F,] Promoting industrilisation at the cost of public funds does not serve the public interest; it merely amounts to transferring public money to private account.
The fairness required of the Corporation cannot be carried to the extent of disabling it from recovering what Is due to it.
While not insisting upon the borrower to honour the commitments undertaken by him, the Corporation alone cannot be shackled band and foot in the name of fairness.
Fairness is not a one way street more particularly in matters like the present one.
The fairness required of it must be tempered nay, determined in the light of all these circumstances.
In the instant case the respondents have no intention of repaying any part of the debt.
They were merely putting forward one or other ploy to keep the Corporation at bay.
[157D F] Mahesh Chandra vs Regional Manager, U.P. Financial Corporation Ors., (1992) 2 J.T. 326, held Inapplicable.
In a matter between the corporation and Its debtor, a writ court has no say except in two situations : (1) there is a statutory violation on the part of the Corporation or (2) where the Corporation acts unfairly i.e. 151 unreasonably.
The High Court exercising its jurisdiction under Article 226 of the Constitution cannot sit as an Appellate Authority over the acts and deeds of the Corporation and seek to correct them.
Doctrine of fairness.
evolved in administrative law was not supposed to convert the writ courts into appellate authorities over administrative authorities.
The constraints self imposed undoubtedly of writ jurisdiction still remain.
Ignoring them would lead to confusion and uncertainty.
The jurisdiction way become rudderless.
[157G H, 158A] 2.1.
The obligation to act fairly on the part of the administrative authorities was evolved to ensure the Rule of law and to prevent failure of justice.
This doctrine is complementary to the principle of natural justice which the Quasi judicial Authorities are bound to observe.
It is true that the distinction between a quasi judicial and the administrative action has become thin.
But even so the extent of judicial scrutiny/judicial review in the case of administrative action cannot be larger than in the case of quasi judicial action.
If the High Court cannot sit as an appellate authority over the decisions and orders of quasi judicial authorities it follows equally that it cannot do so in the case of administrative authorities.
The Court cannot substitute its judgment for the judgment of administrative authorities in such cases.
Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervenes.
[158C F] A.K Kraipak & Ors.
vs Union of India & Ors.
, A.I.R. 1970 S.C. 150; Secretary of State for Education vs Talimeside Metropolitan Borough Council, ; and Associated Provincial Picture Houses Ltd., vs Wednesbury Corporation, ; , relied on.
While passing the impugned order the High Court has not kept in mind the well recognised limitations of its jurisdiction under Article 226 of the Constitution.
While reviewing the administrative action it was not justified in acting as an appellate court.
[153D,159C]
|
minal Appeal No. 462 of 1985.
From the Judgment and Order dated 21.12.84 of the Patna High Court in Crl.
A. No. 146 of 1978 (R).
R.C. Kohli Advocate for the Appellant.
Pramod Swarup Advocate for the Respondent.
The Judgment of the Court was delivered by N.P. SINGH, J.
This appeal is on behalf of the sole appellant who has been convicted under section 304 Part 1 of the Indian Penal Code (hereinafter referred to as "the Penal Code") and has been sentenced to undergo rigorous imprisonment for two years by the High Court.
The appellant along with Sitaram Mandal and Tribhanga Mandal 140 were charged for offence under section 307 read with section 34 for attempting to commit the murder of Gopal Chandra Ravidas, They had also been charged under section 379 of the Penal Code for committing the theft of the paddy crops from plot No. 2760 of village Amjhore, P.S. Baliapur, District Dhanbad.
According to the prosecution case, on 26.10.75 at about 12.00 noon the informant Bishnu Ravidas (PW 9) and his brother Gopal Chandra Ravidas having learnt that the accused persons were harvesting their paddy from the plot aforesaid went there.
When they protested as to why their crops were being harvested, accused Sitaram Mandal caught hold of the hands of Gopal Chandra Ravidas and Harendra Nath Mandal, the appellant, assaulted Gopal Chandra Ravidas on his head with the back portion of a Tangi.
At that very time, accused Tribhanga Mandal assaulted informant with a lathi on his right hand.
On a consideration of the evidence on record, the learned Sessions Judge convicted appellant Harendra Nath Mandal and Sitaram Mandal for offence under section 307 read with section 34 of the Penal Code and sentenced the appellant, Harendra Nath Mandal to undergo rigorous imprisonment for seven years and accused Sitaram Mandal to undergo rigorous imprisonment for five years.
Accused Tribhanga Mandal was convicted under section 323 and sentenced to undergo rigorous imprisonment for six months.
All of them were also convicted under section 379 of the Penal Code and sentenced to one year rigorous imprisonment each.
The sentences were directed to run concurrently.
During the pendency of the appeal before the High Court, Sitaram Mandal died and his appeal abated.
The learned Judge, however, set aside the conviction and sentence under section 307 read with section 34 passed against the appellant Harendra Nath Mandal but convicted him under section 304 Part 1 of the Penal Code and sentenced him to two years ' rigorous imprisonment.
The conviction and sentence under section 379 were also set aside.
The conviction and sentence under section 323 of the Penal Code against Tribhanga Mandal were also set aside and he was acquitted of the charges levelled against him.
It was rightly urged on behalf of the appellant that when Gopal Chandra Ravidas to whom this appellant is alleged to have given a blow by the back portion of a Tangi, has survived 141 the injury aforesaid, there was no question of covicting the appellant under section 304 Part 1 of the Penal Code.
Section 304 does not create an offence but provides the punishment for culpable homicide not amounting to murder.
In view of section 299 of the Penal Code, whoever causes death by doing an act with the intention of causing death, or with the intention of causing such bodily injury as is likely to cause death, or with the knowledge that he is likely by such act to cause death, commits the offence of culpable homicide.
In view of section 300 of the Penal Code, except in cases covered by the five exceptions mentioned therein, culpable homicide is murder.
It is well known that if a death is caused and the case is covered by any one of the five exceptions of section 300 then such culpable homicide shall not amount to murder.
Section 304 provides punishment for culpable homicide not amounting to murder and draws a distinction in the penalty to be inflicted in cases covered by one of the five exceptions, where an intention to kill is present and where there is only knowledge that death will be a likely result, but intention to cause death or such bodily injury which is likely to cause death is absent.
To put it otherwise if the act of the accused falls within any of the clauses 1, 2 and 3 of section 300 but is covered by any of the five exceptions it will be punishable under the first part of section 304.
If, however, the act comes under clause 4 of section 300 i.e. the person committing the act knows that it is so imminently dangerous that it must, in all probability cause death but without any intention to cause death and is covered by any of the exceptions, it will be punishable under the second part.
The first part of section 304 applies where there is guilty intention whereas the second part applies where there is guilty knowledge.
But before an accused is held guilty and punished under first part or second part of section 304, a death must have been caused by him under any of the circumstances mentioned in the five exceptions to section 300, which include death caused while deprived of power of self control under grave and sudden provocation, while exercising in good faith the right of private defence of person or property, and in a sudden fight in the heat of passion without premeditation.
So far the present case is concerned, when death itself had not been caused, there was no occasion for convicting the appellant under section 304 of the Penal Code.
Now the next question is as to whether the appellant should be convicted for causing injury on the head of aforesaid Gopal Chandra 142 Ravidas with the back portion of a Tangi.
It was pointed out that the appellant has sustained injuries during the same occurrence including one at the scalp.
The aforesaid injuries on the person of the appellant were examined by the Civil Assistant Surgeon, Sadar Hospital, Dhanbad, who has been examined as a witness at the trial.
The appellant in his examination under section 313 of the Code of Criminal Procedure stated that he had sustained injuries aforesaid while warding off the Bhala blow aimed at his chest by the aforesaid Gopal Chandra Ravidas.
The other accused Sitaram Mandal who died during the pendency of the appeal had also been examined by the jail Doctor in the Dhanbad jail and said Doctor was examined as a witness at the trial, who proved the injuries on the person of accused Sitaram Mandal.
The learned Judge himself on consideration of the materials on recored has come to the following conclusion : "From the aforesaid discussion of the evidence, in the facts and circumstances of the case, it appears that since long before the occurrence both the parties were claiming title and possession over the disputed land and the occurrence took place regarding the harvesting of the paddy crop.
In the same occurrence the informant (PW 9) and his brother Gopal Ravidas sustained injuries and the first and second appellants were also injured.
According to the appellants Gopal Ravidas aimed a 'Bhala ' blow on the chest of the first appellant but he warded it off and sustained injuries at his hand.
The first and the second appellants were also assaulted by lathis.
The injuries were examined and proved by the doctor (DW 8).
Likewise, the injuries of the second appellant were examined by the jaid doctor, (DW 7), who proved the injury report.
May be, that their injuries were not severe but it was a matter of luck that the first appellant could avoid and ward off the 'Bhala ' blow aimed at his chest.
The manner of occurrence as alleged by the appellants in which they sustained injuries has been suppressed and the true version of the occurrence has not been given by the prosecution.
In the circumstances, the right of private defence of person and property cannot be completely ruled out.
" 143 Once the finding aforesaid was recorded that the prosecution has not disclosed the true version of the occurrence and the right of private defence of person and property was available to the appellant then the appellant was entitled to be acquitted.
Accordingly, the appeal is allowed.
The conviction and sentence passed against the appellant are set aside.
N.P.V. Appeal allowed.
| IN-Abs | The prosecution alleged that when PW 9 and his brother, having learnt that the appellant and two other persons were harvesting paddy from their plot, went there and protested as to why their crops were being harvested, one person caught hold of the hands of PW 9 's brother, and the appellant, assaulted him on his head with the back portion of a Tangi, and at that very time, another person assaulted PW 9, the informant, with a lathi on his right hand.
The three persons were charged with attempt to commit murder of PW 9 's brother, and also theft of the paddy crops from the plot of PW 9 and his brother.
On consideration of the evidence on record, the Sessions Judge convicted the appellant and another accused for offence under section 307 read with section 34 of the Penal Code.
They were sentenced to undergo seven years ' and five years ' rigorous imprisonment respectively.
The third accused was convicted under section 323 and sentenced to undergo rigorous imprisonment for six months.
All of them were also convicted under section 379 of the Penal Code and sentenced to one year 's rigorous imprisonment each.
138 During the pendency of the appeal before the High Court, preferred by the three accused, one of them died and his appeal abated.
The High Court set aside the conviction and sentence under section 323 of the Penal Code against the other accused and he was acquitted of the charges levelled against him.
The High Court also set aside the conviction and sentence under section 307 read with section 34 passed against the appellant, but convicted him under section 304 Part 1 of the Penal Code and sentenced him to two years ' rigorous imprisonment.
In the appeal before this Court on behalf of the appellant, it was urged that when PW 9 to whom the appellant was alleged to have given a blow by the back portion of a Tangi, survived the injury, there was no question of convicting the appellant under section 304 Part 1 of the Penal Code.
It was also contended that the appellant had sustained injuries during the same occurrence including one at the scalp.
Allowing the appeal, this Court, HELD : 1.1.
Section 304 does not create an offence but provides the punishment for culpable homicide not amounting to murder.
In view of section 300 of the Penal Code, except in cases covered by the five exceptions mentioned therein, culpable homicide is murder.
If a death is caused and the case is covered by any one of the five exceptions of section 300, then such culpable homicide shall not amount to murder.
Section 304 provides punishment for culpable homicide not amounting to murder and draws a distinction in the penalty to be inflicted in cases covered by one of the five exceptions where an intention to kill is present and where there is only knowledge that death will be a likely result, but intention to cause death or such bodily injury which is likely to cause death is absent.
The first part of section 304 applies where there is guilty intention whereas the second part applies where there is guilty knowledge.
But before an accused is held guilty and punished under first part or second part of section 304, a death must have been caused by him under any of the circumstances mentioned in the five exceptions to section 300, which include death caused while deprived of power of self control under grave and sudden provocation, while exercising in good faith the right of private defence of person or property, and in a sudden fight in the heat of passion without permeditation.
[141B D,F] 1.2.
In the instant case, when death itself had not been caused, there 139 was no occasion for convicting the appellant under section 304 of the Penal Code.
[141G] 1.3.
The appellant, in his examination under section 313 of the Code of Criminal Procedure, stated that he had sustained injuries during the same occurrence while warding off the Bhala blow aimed at his chest by PW 9.
The aforesaid injuries on the person of the appellant were examined by the Civil Assistant Surgeon, who had been examined as a witness at the trial.
The other accused, who died during the pendency of the appeal had also been examined by the Jail Doctor and the Doctor was examined as a witness at the trial, who proved the injuries on the person of accused.
The Judge himself on consideration of the materials on record has come to the conclusion that the manner of occurrence, as alleged by the appellants in which they sustained injuries, has been suppressed and the true version of the occurrence has not been given by the prosecution and in the circumstances, the right of private defence of person and property cannot be completely ruled out.
[142B CG H] 1.4.
In view of the finding of the High Court that the prosecution had not disclosed the true version of the occurrence, and the right of private defence of person and property was available to the appellant, the appellant was entitled to be acquitted.
[143A]
|
Appeal No. 901 of 1993.
From the Judgment and Order dated 15.11.91 of the Patna High Court in C.W. C. No. 3430 of 1991.
A. Sharan for the Appellant.
G. Ramaswamy and A.V. Rangam for the Respondents.
The Judgment of the Court was delivered by BHARUCHA, J.
Leave to appeal is granted.
The appeal is directed against the judgment and order of the High Court at Patna dismissing the writ petition filed by the appellant.
The appellant was employed by the respondent.
He was chargesheeted for having granted bank loans to a large number of persons without proper documentation and without verifying their creditworthiness and also with having obtained illegal gratification in that connection.
An en quiry was held.
The Enquiry Officer made a report holding the appellant guilty.
Upon the basis of the enquiry report the appellant was dismissed from service.
The appellant filed a writ petition before the High Court at Patna (being Writ Petition No. C.W.J.C. No. 1979 of 1988) impugning the dis 163 missal.
The High Court allowed the writ petition by judgment and order dated 8th July, 1988.
The enquiry, the court concluded, could not be held to be proper and in accordance with law.
Consequently, the order of dismissal was set aside.
The High Court observed : "This does not mean that the petitioner should be got scot free.
He must face enquiry.
Sufficient time has already lapsed.
The enquiry must be concluded as early as pos sible.
The petitioner will appear before the Enquirying Officer (to be nominated in the meantime) at Patna on 2nd August, 1988 and the prosecution will produce the witnesses examined on his behalf for cross examination.
After the cross examination is over the petitioner will also produce the witnesses when he may like to enquire.
This should be done without any adjournment and the proceed ing should be conducted day to day so that it may be concluded as early as possible.
With this observation this writ application is disposed of.
" The same Enquiry Officer then permitted the appellant to cross examine the witnesses produced in support of the charge and to examine his own witnesses.
He made a report dated 27th March, 1989 in which he held nine charges against the appellant to be proved, one to be partly proved and one not proved.
The disciplinary authority, upon consideration of the enquiry report, passed an order dated 23rd October, 1989, dismissing the appellant from service.
The appellant challenged the order of dismissal dated 23rd October, 1989 on the ground that the enquiry upon the basis of which it had been passed had not been conducted as required by the order of the High Court dated 8th July, 1988.
He also challenged it upon the ground that he had not been furnished with a copy of the Enquiry Report.
The High Court rejected the writ petition.
It held that the judgment of this Court in the case of Union of India and others vs Mohd. Ramzan Khan; , , did not cover an order of dismissal that had been passed before the said judgment was delivered.
Insofar as the enquiry report was concerned, the High Court took the view that the Enquiry Officer had allowed the appellant to participate in the proceedings as also to cross examine witnesses and he had considered all relevant aspects on the record.
164 It will be recalled that the High Court by the judgment and order dated 8th July, 1988 had held that the earlier enquiry was not proper and in accordance with law and had quashed the order of dismissal dated 14th February, 1987 based thereon.
It had directed that the appellant should face an enquiry whereat the prosecution would produce the witnesses it had examined on its behalf for cross examination.
by the appellant.
Thereafter, the appellant could produce such witnesses as he desired.
It is the submission of learned counsel on behalf of the appellant that the Enquiry Officer had in the second enquiry report relied upon the findings of the earlier enquiry, since quashed, and that he had not permitted the appellant to examine three necessary witnesses in support of his case.
There had, therefore, been no real enquiry as contemplated by the High Court 's order dated 8th July, 1988 and that, therefore, the dismissal order passed upon the basis of the second enquiry report should be quashed.
Shri G Ramaswamy, learner senior counsel for the respondent, submitted that the Enquiry Officer had conducted the enquiry as directed by the High Court in its order dated 8th July, 1988, from the point of cross examination of the respondent 's witnesses onward.
The enquiry report made by the Enquiry Officer subsequent to the order of the High Court dated 8th July, 1988 is entitled Additional enquiry report in respect of charges laid against Shri Heera Prasad".
It opens with the sentence, "This enquiry, report is further to the enquiry, report already submitted by me in September 1986".
It says that "the enquiry was reopened".
It says, further, ".As the charges have been dealt with one by one in detail in my previous enquiry report I am confining this report only to the cross examination of prosecution witnesses as also examination/cross examination of defence witnesses.
" The report concludes thus : "After going through the proceedings, hearing the depositions made by the defence witnesses, and hearing the answers given by the prosecution witnesses, I find no reason to change may report as no exonerating fact came out during the enquiry instead it becomes a little darker particularly noting the fact that at least three (03) of the witnesses cited by the charged officer himself refused to come for deposing before the enquiry for reasons best known to the charged officer/witnesses.
As the various 165 exhibits etc. were discussed and analysed by me in my previous report, I am not repeating the analysis once again in this report.
" As aforesaid, the Enquiry Officer held nine of the eleven charges to be proved, one to be partly proved and one to be not proved.
(The Emphasis is supplied).
It is patent that the order dated 8th July, 1988 contemplated a fresh enquiry.
At best, the examination in chief of the witnesses of ' the respondent could be said to have been allowed to be incorporated in the second enquiry proceedings.
The order certainly contemplated that the Enquiry Officer would apply his mind afresh to the evidence on record comprising the examination in chief and cross examination of the respondents witnesses and that of the appellant 's witnesses.
It is patent from the "Additional enquiry report" made by the Enquiry Officer that there has been no fresh application of mind.
It was impermissible for the Enquiry Officer, in these circumstances, to have borne his previous Enquiry Report in mind and to have confined the "Additional enquiry report" only to the cross examination of prosecution witnesses and the examination and cross ex amination of defence witnesses "as the charges have been dealt with one by one in detail in my previous enquiry report".
It was also impermissible for him to have stated that "the findings of the previous enquiry report remain as they are".
Having regard to the High Court 's order dated 8th July, 1988, the Enquiry Officer was bound to consider the material or, record afresh and not to take his earlier report into account and to say that he found "no reason to change that report".
We are, in the circumstances, not satisfied that the appellant has had a fair opportunity of presenting his case to an Enquiry Officer unbiased by pre conceptions.
Having regard to all that has transpired.
we think that it is in the fitness of things that the order of dismissal dated 23rd October, 1989 should be quashed and another Enquiry Officer should be appointed by the respondent who should allow the appellant the opportunity of examining as his witnesses the three persons referred to by the earlier Enquiry Officer in the paragraph of the "Additional enquiry report" subtitled "Conclusion".
He should give to the respondent and the appellant the opportunity of a hearing.
He should then apply his mind to the material on record without in any way being influenced by the earlier enquiry reports, and make his own enquiry report accordingly.
In the result, the appeal is allowed.
The judgment and order under appeal are set aside.
The writ petition is allowed to the extent mentioned in the preceding paragraph.
There shall be no order as to costs.
V.P.R. Appeal allowed.
| IN-Abs | The respondent bank charge sheeted the appellant employee for granting bank loans to a large number of persons without proper documentation and without verifying their credit worthiness and obtaining illegal gratification in that connection.
An enquiry was held.
The Enquiry Officer found the appellant guilty and on the basis of the enquiry report, he was dismissed from service.
The appellant challenged the order of dismissal in a writ petition before the High Court.
On 8.7.1988 the High Court allowed the petition holding that the enquiry held was not proper and in accordance with law and ordered the appellant to face another enquiry in respect of which it gave certain directions.
The same enquiry Officer then permitted the appellant to cross examine the witnesses of the bank and to examine his own witnesses.
The Enquiry Officer held in his report dated 27.3.1989 that nine charges against the appellant were found to be proved, one not proved and one partly proved.
The disciplinary authority, considering the enquiry report, dismissed the appellant from service on 23.10.1989.
161 The appellant challenged the dismissal order in the High Court contending that the enquiry was not conducted as required by the order of the High Court dated 8.7.1998 and that he was not furnished with a copy of the Enquiry Report.
The High Court dismissed the writ petition, against which the present appeal by special leave was filed.
The appellant contended that the Enquiry Officer in the second enquiry report had relied upon the findings of the earlier enquiry, since quashed, and that he did not permit the appellant to examine three necessary witnesses in support of his case; that there was no real enquiry as contemplated by the High Court 's order dated 8.7.1988; and that, therefore, the dismissal order passed on the basis of the second enquiry report be quashed.
The respondent bank submitted that the Enquiry Officer conducted the enquiry as directed by the High Court in its order dated 8.7.1988.
Allowing the appeal, this Court, HELD : 1.01.
The order dated 8th July, 1988 contemplated a fresh enquiry.
At best, the examination in chief of the witnesses of the respondent could be said to have been allowed to be incorporated in the second enquiry proceedings.
The order certainly contemplated that the Enquiry Officer would apply his mind afresh to the evidence on record, comprising the examination in chief and cross examination of the respondent 's witnesses and that of the appellant 's witnesses.
[165C] 1.02.
It was patent from the "Additional enquiry report" made by the Enquiry.
Officer that there had been no fresh application of mind.
It was impermissible for the Enquiry Officer, in these circumstances, to have borne his previous Enquiry Report in mind and to have confined the "Additional enquiry report" only to the cross examination of prosecution witnesses and the examination and cross examination of defence witnesses .as the charges have been dealt with one by one in detail in my previous enquiry report".
It was also impermissible for him to have stated that "the findings of the previous enquiry report remain as they are".
Having regard to the High Court 's order dated 8th July, 1988, the Enquiry Officer was bound to consider the material on record afresh and not to take his earlier 162 report into account and to say that he found "no reason to change that report '. [165C E] 1.03.
In the fitness of things it was directed that another Enquiry Officer should be appointed by the respondent who should allow the appellant the opportunity of examining as his witnesses the three persons referred to by the earlier Enquiry Officer in the paragraph of the 'Addi tional enquiry report" sub titled 'Conclusion".
He should give to the respondent and the appellant the opportunity of a hearing.
He should then apply his mind to the material on record without in any way being influenced by the earlier enquiry reports, and make his own enquiry report accordingly.
[165G H, '166A] Union of India and Others vs Mohd Ramzan Khan, ; , referred to.
|
ial Leave Petition (c) No.17098 of 1992.
From the Judgment and Order dated 23.10.1992 of the Allahabad High Court in Civil Misc.
Writ Petition No.473 of 1992.
R.B. Misra for the Petitioners.
Ms. Shalmi Soni, Mrs. P.S. Shroff (For M/s S.A. Shroff & Co.) for the Respondents.
The following Order of the Court was delivered: Heard counsel for the petitioners as well as the counsel for the respondents.
We see no reason to entertain this special leave petition.
It is established by the decision of this Court in Synthetics and Chemicals Ltd. and Ors.
vs State of U.P. and Ors.
, ; that so far as the industrial alcohol is concerned, the power of licencing vests in the Union of India alone.
At the same time it is held that the power of the State Government to legislate with respect to potable liquor referable to Entry 6 of List II remains unaffected.
It is also held that the State has the power to make regulations and to take appropriate action to ensure that nonpotable alcohol is not diverted and misused as a substitute for potable alcohol.
Another principle enunciated in the said decision is that the State can, not only charge excise duty on potable alcohol and sales tax on sales of such potable alcohol, but also entitled, in cases it renders any service, 293 as distinct from its claim of grant of privilege, to charge fees based on quid pro quo.
The High Court in this case has merely reiterated the said principles.
It has held "that the Central Government has the exclusive power to grant a licence for the the manufacture of Industrial Alcohol.
It is not necessary for the petitioner to obtain a PD 2 licence from the Excise Commissioner, U.P., Allahabad before starting its distillery for the manufacture of Industrial Alcohol.
The provisions in the U.P. Excise Manual relating to taking of PD 2 licence are not applicable to a case where a person wants to manufacture industrial alcohol.
The other provisions of the Act and Rules of the U.P. Excise Act and Manual are applicable in order to ensure that Industrial alcohol is not converted into potable alcohol.
" The final order of the High Court is to the following effect: "In view of the above, we allow the writ petition and direct the respondents not to interfere with the petitioner 's manufacturing industrial alcohol in the distillery for which licence had been granted.
This is, however, subject to the right of the State Government to ensure that industrial alcohol is not converted into potable alcohol." In our opinion the said observations must be understood as reiterating the principles enunciated by this Court in the decision afore cited.
Mr. Salve, learned counsel for the State of Uttar Pradesh submitted that before manufacturing industrial alcohol, the Respondent company has to manufacture rectified spirit and that rectified spirit can be coverted into potable liquor by merely adding water.
May be so.
The observations made by the High Court and the law laid down by this Court recognise and safeguard the power of the State Government to guard against such abuse.
We affirm it.
Shri Salve questioned the direction given by the High Court to the following effect: "We further direct that the respondents shall allot molasses to the petitioner in accordance with the assurance given to the petitioner vide order of the Government dated 23.3.1989.
" The proceeding dated 23.3.1989 of course pertaints to the year 1989.
But Mr. F.S. Nariman, leanred counsel for the Respondent Company says that the said order has been extended from time to time for the subsequent years as well.
Mr. Salve points out that in the body of the Judgment of the High Court no reasons 294 are given in support of the aforesaid direction.
We are, however, of the opinion that the said direction cannot be construed and shall not be understood, as calling upon or directing the Government to do anything, or to make any supplies, contrary to the Provisions of the Molasses control order or any other law governing the supply of molasses.
The supply of molasses to the Respondent shall be made in accordance with law.
Mr. Salve raised certain other contentions but we did not allow him to do, so in view of the fact that those contentions were not urged before the High Court.
We need express no opinion thereon.
Special Leave Petition is accordingly dismissed subject to the above observations.
V.P.R. Petition dismissed.
| IN-Abs | The High Court reiterating the principles enunciation in Synthetics and Chemicals Ltd. and Ors.
vs State of U.P. and Ors.
, ; held that the Central Government had the exclusive power to grant a licence for the manufacture of industrial alcohol and it was not necessary for the Company respondent to obtain a PD 2 licence from the Excise Commissioner before starting its distillery for the manufacture of industrial alcohol.
The High Court directed the State of U.P. and another not to interfere with the respondent Company 's manufacturing Industrial alcohol in the distillery for which licence was granted but subject to the State Government 's right to ensure that industrial alcohol was not converted into potable alcohol.
The State of U.P. filed a special leave petition against the judgment of the High Court, in this Court contending that before manufacturing industrial alcohol, the respondent company was to manufacture into rectified spirit and that rectified spirit Could be converted potable liquor by merely adding water, that the High Court did not give any reason in support of the High Court 's direction.
"We further direct that the respondents shall allot molasses to the, petitioner in accordance with the assurance given to the petitioner vide order of the Government dated 23.3.1989." The respondent Company submitted that the High Court order was extended from time to time for the subsequent years as well.
Dismissing the Special Leave Petition, this Court, HELD: 01.
The law laid down by this court and the observations of 292 the High Court in the impugned judgment recognise and safeguard the right of the State Govt.
to guard against any abuse and to ensure that rectified spirit is not diverted for human consumption.
That power is affirmed.
[293F] 02.
The direction of the High Court cannot be construed and shall not be understood as calling upon or directing the Government to do anything, or to make any supplies, contrary to the provisions of the provisions of the Molasses Contral Order or any other law governing the supplies of molasses.
The supply of molasses to the respondent shall be made in accordance with law.
[294A B] Synthetics and Chemicals Ltd. and Ors.
vs State of U.P. and Ors.
, ; , referred to.
[292F]
|
Appeal Nos.
2640 41 of 1991.
From the Judgment and Order dated 3.6.1991 of the Himachal Pradesh High Court in Election Petition Nos. 1 & 2 of 1990.
A.K. Ganguli, B.T. Kaul, Sarvesh Bisaria and S.K. Bisaria for the Appellant.
B. Dutta and R. Sasiprabhu for the Respondents.
253 The Judgment of the Court was delivered by S.C. AGRAWAL, J.
These appeals have been filed under section 116 A of the Representation of the People Act, 1951.
They relate to election to the Himachal Pradesh Legislative Assembly from 60 Chachiot Assembly constituency held during February, 1990.
The appellant was declared elected to the Legislative Assembly from the said constituency.
His election was challenged by the respondents in these appeals by filing election petitions in the High Court of Himachal Pradesh.
By its judgment dated June 3, 1991, the High Court has allowed the election petitions and has set aside the election of the appellant on the ground that the nomination of one of the candidates, Shri Karam Singh was improperly rejected by the returning officer.
The last date for filing the nomination papers was February 2, 1990 and the scrutiny of the nomination papers was fixed for February 5, 1990.
Fifteen persons, including the appellant and Shri Karam Singh had filed nomination papers.
At the time of scrutiny, an objection was raised on behalf of one of the candidates against the nomination of Shri Karam Singh on the ground that he was holding the office of Chairman, Himachal Pradesh Khadi and Village Industries Board, which is an office of profit within the meaning of Article 191(1)(a) of the Constitution and was, therefore, disqualified for being chosen as a member of the Legislative Assembly.
By order dated February 7, 1990, the Returning Officer upheld the said objection and rejected the nomination of Shri Karam Singh.
The High Court has, however, found that the said rejection of nomination of Shri Karam Singh was improper because on the date of scrutiny Shri Karam Singh was not holding an office of profit and has, for that reason, set aside the election of the appellant.
Before we proceed to deal with the appeals on merits, it may be mentioned that during the pendency of these appeals before this court, the Himachal Pradesh Legislative Assembly has been dissolved.
This raises the question whether the matters in issue in these appeals have ceased to be living issues and have become wholly academic.
The effect of dissolution of the legislature on a pending election appeal has been considered by this court in Loknath Padhan vs Birendra Kumar Sahu; , In that case, the election of the returned candidate was challenged before the High Court on the ground that there was a subsisting contract entered into 254 by the respondent in the course of his trade and business with the State Government for the execution of works undertaken by the Government and he was, therefore, disqualified under section 9A of the Representation of the People Act, 1951.
The election petition was, however, dismissed by the High Court and while the appeal against the said decision was pending in this Court, the Legislative Assembly was dissolved.
A preliminary objection was raised on behalf of the respondent to the appeal that in view of the dissolution of the assembly it was academic to decide whether or not the respondent was disqualified under section 9A. Upholding the said preliminary objection, this court has held that the court should not undertake to decide an issue unless it is a living issue between the parties and if an issue is purely academic, in that its decision one way or the other would have no impact on the position of the parties, it would be waste of public time and indeed not proper exercise of authority for the court to engage itself in deciding it.
In that case, this court drew a distinction between a case where the challenge to the election is on a ground confined to the validity of that election only and having no consequences operating in future and a case involving challenge to the election on a ground which would entail electoral disqualification for the future, such as, charge of corrupt practice.
It was held that if the election is challenged on the ground of commission of a corrupt practice the dissolution of the legislature would not have any effect on the pendency of an election petition or an appeal arising therefrom and the said petition will have to be considered on its merits whereas a challenge to the election on any other ground which does not entail future disqualification would raise academic issue only and in view of the dissolution of the legislature the election petition or the appeal arising therefrom would not survive because it would be futile and meaningless for the court to decide an academic question the answer to which would not affect the position of one party or the other.
Although in the instant case the election is not challenged on the ground of commission of any corrupt practice and a finding would not result in electoral disqualification in future but the present case differs from the case of Loknath Padhan vs Birendra Kumar Sahu (supra) in the sense that in Loknath 's case the election petition was dismissed whereas in the present case the election petitions against the election of the appellant have been allowed and the election has been set aside.
It has been submitted by Shri A.K. Ganguli, the learned Senior counsel appearing on behalf of the appellant, that in view of the fact that the decision of the High 255 Court setting aside his election, the appellant may be required to refund the various allowances that he has received while he was functioning as a member of the Legislative Assembly after his election till the decision of the High Court.
It would thus appear that invalidation of the election of the appellant may give rise to the liability to refund the allowances received by the appellant as a member of the Legislative Assembly.
It cannot, therefore, be said that the question a rising for consideration in this appeal are purely academic in nature.
In these circumstances, it becomes necessary to go into the merits of these appeals.
The relevant facts relating to the rejection of the nomination of Shri Karam Singh are as under.
The Himachal Pradesh Khadi and Village Industries Board (hereinafter referred to as 'the Board ').
has been established by the Government of Himachal Pradesh under Section 3 of H.P. Khadi and Village Industries Board Act, 1966 (hereinafter referred to as 'the Act ').
Section 4 provides for the constitution of the Board and in sub section
(1), it is laid down that the Board shall consist of not less than three and not more than nine members appointed by the Government of Himachal Pradesh after consultation with the Khadi and Village Industries Commission from amongst non officials who in the opinion of Government of Himachal Pradesh have shown active interest in the protection and development of khadi and village industries and officials.
In sub section
(2) of Section 4 it is provided that the Government of Himachal Pradesh shall after consultation with the Khadi and Village Industries Commission, nominate one of the members of the Board to be the Chairman thereof, Section 7 makes provision for resignation of office by members.
Section 11 provides that the term of office and terms and conditions of service of the Chairman, Vice Chairman, Secretary and other members shall be such as may be prescribed.
In exercise of the powers conferred by Section 35 of the Act, the Government of Himachal Pradesh has made the Himachal Pradesh Khadi and Village Industries Board Rules, 1966 (hereinafter referred to as 'the Rules ').
Rule 3 of the Rules prescribes that a member of the Board shall hold office for such period not exceeding three years as may be prescribed in the notification of his appointment which shall be notified in the Official Gazette and shall be eligible for re appointment.
Rule 7 provides for salary or honorarium and allowance payable to members.
Sub rule (1) of Rule 7 provides that the Chairman, the Vice Chairman, the Secretary and other 256 members of the Board shall be paid such salary or honorarium and allowances from the funds of the Board as the Government may from time to time fix.
In sub rule (2) of Rule 7, it is laid down that the Chairman, the Vice Chairman, the secretary and other members of the Board shall also be entitled to draw travelling and daily allowances for journeys performed for attending the meetings of the Board or for the purpose of discharging such duties as may be assigned to them by the Board in accordance with the rules and orders issued by the Government from time to time at the highest rate admissible to Government servants of Grade 1.
By notification dated September 2, 1982, issued in exercise of the powers conferred by Rule 7 of the Rules, the Governor of the Himachal Pradesh, ordered that the Chairman of the Board shall be entitled to pay and other allowances from the Funds of the Board at the following rates: (1) Pay/remuneration/honorarium of Rs. 1500 p.m. (consolidated).
(2) Free electricity and water charges upto Rs. 1500 per year.
(3) Use of a car or in lieu thereof a conveyance allowance of Rs. 300 per month.
(4) Telephone facilities in office and at residence.
(5) TA and medical expenses admissible to the officers of Highest First Grade category.
By notification dated December 27, 1986, the Governor of Himachal Pradesh constituted the Board with immediate effect.
Under the said order, the Board consisted of nine members including Shri Karam Singh Thakur.
By the said order the Governor of Himachal Pradesh also nominated Shri Karam Singh Thakur as Chairman of the said Board.
By notification dated December 20, 1989, the term of the Board was extended upto December 26, 1990.
On October 18, 1989, Shri Karam Singh Thakur wrote a letter to the Financial Commissioner cum Secterary (Industries) to the Government of Himachal Pradesh wherein it was stated that consequent upon amendment to Second Proviso to section (1) of section 6B of the Himachal Pradesh Legislative Assembly (Allowances and Pension of members) Act, 1971, his pension had been revised to Rs. 2400 per month with effect from February 4, 1989 and that on the basis of the said orders, 257 he was authorised by the Senior DAG(A&E), Himachal Pradesh, Shimla, by letter dated 6th July, 1989, to draw from Shimla Treasury the balance pension of Rs. 900 p.m. after adjusting the remuneration of Rs. 1500 which he had been drawing as remuneration from the Board and the pension of Rs. 900 p.m. plus relief due thereon from the Punjab National Bank through Treasury Officer, Shimla.
By aforesaid letter, Shri Karam Singh intimated that he now intended not to draw the monthly remuneration of Rs. 1500 p.m. from the Board and that instead he would be drawing the gross pension of Rs. 2400 p.m. from the Treasury/Bank and he requested that no objection of the State Government to the said proposal may be conveyed to him at an early date.
The said proposal made by Karam Singh was accepted by the Government of Himachal Pradesh and by notification dated January 8, 1990 issued under Rule 7(1) of the Rules, the Governor of Himachal Pradesh ordered that the remuneration of Rs. 1500 p.m. (consolidated) which was payable to the Chairman of the Board shall cease as per the request of the Chairman made vide his letter dated October 18, 1989.
On January 31, 1990, Shri Karam Singh addressed a Letter to the Financial Commissioner cum Secretary (Industries) to the Governor of Himachal Pradesh in the following terms : "I hereby resign from the membership and Chairmanship of the Himachal Pradesh Khadi and Village Industries Board.
The resignation may kindly be accepted with effect from today Le.
31st January, 1990".
On the basis of the letter of January 31, 1990, which was received on the same day, the matter was processed in the office of Financial Commissioner cum Secretary (industries) and it was placed before the Chief Minister for his approval with the recommendation that the resignation of Shri Karam Singh, Chairman, may be accepted.
The Chief Minister gave his approval on February 4, 1990.
On February 12, 1990, a notification was issued in the following terms : "In exercise of the powers vested in him under section 7 of the Himachal Pradesh Khadi and Village Industries Board Act, 1966, the Governor, Himachal Pradesh is pleased to accept the resignation of Shri Karam Singh Thakur, Chairman, H.P. Khadi and Village Industries Board, Shimla with immediate effect".
258 In the meanwhile, Shri Karam Singh filed his nomination papers for election to the Himachal Pradesh Legislative Assembly from the 60 Chachiot Assembly constituency.
The scrutiny of the nomination papers was held on February 5, 1990.
An objection was raised against the nomination of Shri Karam Singh on behalf of one of the candidates, viz., Vir Singh, on the ground that Shri Karam Singh was holding an office of profit and was disqualified for being chosen as a member of the Legislative Assembly.
Shri Karam Singh was not present at the time of scrutiny but his proposer, Shri Mani Ram, Advocate, was present and he was requested to ensure the appearance of Shri Karam Singh before the Returning Officer on February 6, 1990 at 11.00 a.m. for hearing him in connection with the objection.
The Returning Officer also directed Tehsildar (Elections) to enquire from the Secretary of the Board about the remuneration and other allowances being drawn by Shri Karam Singh in his capacity as chairman of the Board.
The report of the Tehsildar was placed before the Returning Officer.
Shri Mani Ram, Advocate, as proposer of Shri Karam Singh also submitted a reply to the Returning Officer on February 6, 1990 wherein it was stated that Karam Singh had resigned from the chairmanship on 29th or 30th of January 1990 and that the acceptance of the resignation was not kwown to Shri Karam Singh.
By order dated February 7, 1990, the Returning Officer rejected the nomination of Shri Karam Singh on the view that were submission of the resignation unless it was accepted, could not be taken as deemed to have been accepted and that Shri Karam Singh was holding an office of profit as his resignation had not been accepted upto February 5, 1990 which was the date for scrutiny, and that he was not eligible to seek election as a candiate for the Himachal Pradesh Legislative Assembly.
Before the High Court, it was submitted on behalf of the petitioners in the election petitions (respondents herein) that Shri Karam Singh had resigned with effect from January 31, 1990 vide his resignation letter of the said date and the said letter takes effect from January 31, 1990 itself.
The High Court accepted the said contention and held that the Act is silent and contains no provision as to how and in what manner the resignation of the Chairman of the Board is to be accepted and therefore the holder thereof could bring his appointment to an end by resigning with effect from a particular date and he would then be deemed to have ceased to be Chairman from the date itself notwithstanding its acceptance on a later date.
The High Court was, therefore, of the view that Shri Karam Singh 259 held no office of profit whatsoever in the Board on the date of scrutiny, i.e., February 5, 1990 since he had tendered his resignation on January 31, 1990.
The High Court, further, found that in view of the letter dated October 18.
1989 sent by Shri Karam Singh conveying his request of giving up the remuneration of Rs. 1500 per month (consolidated) which request was accepted by the State Government as pet notification dated January 8, 1990, pursuant to which Shri Karam Singh ceased to be entitled to draw the abovementioned remuneration with effect from January 8, 1990, Shri Karam Singh was not entitled to remuneration which could be classified as `profit ' for the office of Chairman of the Board held by him and after January 8, 1990, it could not be said that Shri Karam Singh was holding an office of profit and therefore the disqualification for membership of the Legislative Assembly of Himachal Pradesh could not attach to him.
For the reasons aforesaid, the High Court held that the nomination of Shri Karam Singh was wrongly rejected by the Returning Officer.
Shri Ganguli has assailed the findings recorded by the High Court on both the questions whereas Shri B. Datta, the learned senior counsel appearing for the respondents has supported the said findings.
It is not disputed that in view of the amendment introduced in clause (a) of sub section
(2) of Section 36 of the Representation of the People Act, 1951 by Act 40 of 1961, the relevant date for determining whether a candidate was qualified or disqualified for being chosen to fill the seat under the various provisions of Constitution mentioned therein, including Article 191, is the date fixed for scrutiny of nominations.
In the instant case the said date was February 5, 1990.
It is, therefore, necessary to determine whether Shri Karam Singh was holding an office of profit on February 1990.
In view of the findings recorded by the High Court, the following questions arise for consideration.
(1) Did Shri Karam Singh cease to hold the office of Chairman of the Board on January 31.
1990 the date on which he submitted his resignation from the said office or on February 12, 1990 when the notification about acceptance of his resignation with immediate effect was issued by the Government of Himachal Pradesh? (2) Did the office of Chairman of the Board held by Shri Karam 260 .
Singh cease to be an office of profit with effect from January 8, 1990 in view of the notification of the said date whereby the remuneration of Rs. 1500 p.m. (consolidated) payable to the Chairman of the Board had ceased to be payable to Shri Karam Singh? Shri Ganguli has urged that the resignation of Shri Karam Singh from the office of Chairman of the Board could be effective only after it was accepted by the Governor of Himachal Pradesh who had nominated him to the said office and till the acceptance of the said resignation, Shri Karam Singh continued to hold the office of the Chairman of the Board.
The submission of Shri Ganguli is that acceptance of a resignation is necessary before it can be effective and since in the present case the resignation was accepted only by notification dated February 12, 1990, Shri Karam Singh continued as Chairman of the Board till that date and he was holding that office on the date of scrutiny, i.e., February, 5, 1990.
In support of this submission Shri Ganguli has placed reliance on the decisions of this Court in Central Inland Water Transport Corporation Limited and Another vs Brojo Nath Ganguly and Anr., ; and J.K Cotton Spinning and Weaving Mills Company Ltd. vs State of U.P. & Others.
, (19901 3 SCR 523 as well as the decision of the Allahabad High Court in Lala Rain vs Gauri Shanker, 1981 All.
Law 1982.
Having carefully considered the said contention of Shri Ganguli we find it difficult to accede to it.
As pointed out by this court, 'resignation ' means the spontaneous relinquishment of one 's own right and in relation to an office, it connotes the act of giving up or relinquishing the office.
It has been held that in the general juristic sense, in order to constitute a complete and operative resignation there must be the intention to give up or relinquish the office and the concomitant act of its relinquishment.
It has also been observed that the act of relinquishment may take different forms or assume a unilateral or bilateral character, depending on the nature of the office and the conditions governing it.
(See : Union of India vs Shri Gopal Chandra Misra & Ors., ; at p. 21).
If the act of relinquishment is of unilateral character, it comes into effect when such act indicating the intention to relinquish the office is communicated to the competent authority.
The authority to whom the act of relinquishment is communicated is not required to take any action and the relinquishment takes effect from the date of such communication where the resignation is intended to operate in prasenti.
A resignation may also be prospective to be operative 261 from a future date and in that event it would take effect from the date indicated therein and not from the date of communication.
In cases where the act of relinquishment is of a bilateral character, the communication of the intention to relinquish, by itself, would not be sufficient to result in relinquishment of the office and some action is required to be taken on such communication of the intention to relinquish, e.g., acceptance of the said request to relinquish the office, and in such a case the relinquishment does not become effective or operative till such action is taken.
As to whether the act of relinquishment of anoffice is unilateral or ' bilateral in character would depend upon the nature of the office and conditions governing it.
Under the Constitution of India there are various offices which can be relinquished by unilateral act of the holder of the office and acceptance of resignation is not required, e.g., President [Article 56(a)].
Vice President [Article 67(a)], Deputy Chairman of Rajya Sabha [Article 90(b)], Speaker and Deputy Speaker of Lok Sabha [Article 94(b)], Judge of the Supreme Court [Article 124(2)(a)], Judge of a High Court [Article 217 (1)(a)].
As regards member of either House of Parliament or a member of a House of Legislature of a State, originally, the position was that he could resign his office by unilateral act and the acceptance of resignation was not required.
The requirement of acceptance of such resignation was introduced in Articles 101(3)(b) and 190(3)(b) by the Constitution (ThirtyThird Amendment) Act, 1974.
Similarly in company law, a director of a company is entitled to relinquish his office at any time he pleases by proper notice to the company and acceptance of the resignation is not required.
[See: Glossop vs Glossop, , Halsbury 's Law of England, 4th Ed., Vol. 7, p. 316, para 536].
A contract of employment, however, stands on a different footing wherein the act of relinquishment is of bilateral character and resignation of an employee is effective only on acceptance of the same by the employer.
Insofar as Government employees are concerned, there are specific provisions in the Service rules which require acceptance of the resignation before it becomes effective.
In Raj Kumar vs Union of India, , it has been held "But when a public servant has invited by his letter of resignation determination of his employment, his services 262 normally stand terminated from the date on which the letter of resignation is accepted by the appropriate authority, and in the absence of any law or rule governing the conditions of his service to the contrary, it will not be (,pen to the public servant to withdraw his resignation after it is accepted by the appropriate authority.
Till the resignation is accepted by the appropriate authority in consonance with the rules governing the acceptance, the public servant concerned has locus paenitentiae but not thereafter".
(p.860) Similarly, in Central Inland Water Transport Corporation Ltd. and Anr.
vs Brojo Nath Ganguly and Anr.
(supra) which related to an employee of a Government company jointly and wholly owned by the Central Government and two State Governments, it was observed "A resignation by an employee would, however, normally require to be accepted by the employer in order to be effective.
It can be that in certain circumstances an employer would be justified in refusing to accept the employee 's resignation as, for instance, when an employee wants to leave in the middle of a work which is urgent or .important and for the completion of which his presence and participation a necessary.
An employer can also refuse to accept the resignation when there is a disciplinary inquiry pending against the employee.
In such a case, to permit an employee to resign would be to allow him to go away from the service and escape the consequences of an adverse finding against him in such an inquiry.
There be justified in not accepting the resignation of an employee".
(p.386) The same view was reiterated in J.K. Cotton Spinning and Weaving Mills Company Ltd. vs State of U.P. & Ors.
(Supra) which also relates to a contract of employment.
The question whether the resignation of Shri Karam Singh from the office of Chairman of the Board was required to be accepted before it became effective involves the question whether the act of relinquishment 263 of the office of Chairman is unilateral or bilateral in character.
In order to answer this question it is necessary to consider the relevant provisions of the Act.
The Act does not contain any provision for resignation of the office of Chairman of the Board but in Section 7, the following provision has been made with regard to the resignation of office by members "7.
Resignation of office by members Any member may resign, his office by giving notice in writing to the Government of Himachal Pradesh and, on such resignation being notified in the Official Gazette by the Government of Himachal Pradesh, shall be deemed to have vacated his office".
In the aforesaid provision, there is no requirement that the resignation of a member should be accepted by any authority.
What is required is that a member who wishes to resign his office as member should give notice in writing to the Government of Himachal Pradesh and such resignation takes effect when it is notified in the official gazette by the Government of Himachal Pradesh.
This indicates that the act of relinquishment of the office of a member of the Board is bilateral in character in as much as the resignation takes effect only when such resignation is notified in the Official Gazette by the Government of Himachal Pradesh.
There is no such requirement for relinquishing the office of Chairman of the Board.
Section 4(2), however, provides that the Chairman of the Board has to be nominated from amongst the members of the Board.
This means that the Chairman of the Board holds office so long as he is a member of the Board and if he ceases to be a member of the Board he also ceases to be the chairman of the Board.
But the converse is not true.
A Chairman of the Board may resign his office as Chairman but may continue as member of the Board.
If he resigns only from the office of Chairman of the Board, there is no requirement that such resignation should be accepted by any authority or that any other action is required to be taken for the said resignation to be effective.
It would, therefore, appear that the act of relinquishment of the office of Chairman of the Board is unilateral in character and the resignation from the said office takes effect when it is communicated without any further action being required to be taken on the same.
Since the Chairman of the Board is nominated by the Government of Himachal Pradesh under Section 4(2) of the Act, resignation has 264 also to be communicated to the Government of Himachal Pradesh i.e., the Head of the Department dealing with the Board, and once it is so communicated it takes effect from the date of such communication if the resignation is in presenti or from the date indicated therein if it is prospective in nature to be operative from a future date.
This means that the act of relinquishment of the office of Chairman of the Board differs from the act of relinquishment from the office of a Member of the Board in the sense that while the act of relinquishment of office of a Member is bilateral in character requiring certain action, namely, resignation being notified in the Official Gazette by the Government of Himachal Pradesh before it comes into effect, the act of relinquishment of the office of Chairman of the Board is unilateral in character.
The decisions on which reliance has been placed by Shri Ganguli relating to contracts of employment where the act of relinquishment has been held to be bilateral in character requiring acceptance of the resignation, can, therefore, have no application to the present case where the act of relinquishment of the office of Chairman of the Board is unilateral in character.
Three possible situations involving resignation by a person holding the office of Chairman of the Board can be envisaged : (i) He may resign only from the office of the Chairman of the Board.
In such a case if the resignation is in presenti it would take effect from the date of communication of the resignation to the Head of the Department in the Government of Himachal Pradesh it would take effect from the date as indicated in the said resignation if the resignation is prospective to be operative from a future date.
(ii)He may resign only from the office of the member of the Board.
This resignation would take effect from the date the resignation is notified in the Official Gazette by the Government of Himachal Pradesh and with effect from the said date the Chairman would cease to be a member of the Board.
Since a person cannot continue as Chairman of the Board after he has ceased to be a member of the Board, he would also cease to be the Chairman of the Board from the date of his resignation as member of the Board is notified in the Official Gazette by the Government of Himachal Pradesh.
(iii)He may resign both from the office of Chairman of the Board 265 as well as from the office of member of the Board.
In such a case, his resignation from the office of Chairman of the Board would take effect from the date of communication to the Head of the Department in the Government of Himachal pradesh if it is it? praesenti or from the date indicated therein if it is prospective to be operative from a future date.
He would, however, continue to be a member of the Board till his resignation from the office of member is notified in the Official Gazette by the Government of Himachal Pradesh under Section 7 of the Act.
The instant case falls in the third category because Shri Karam Singh, by his letter dated January 31, 1990, resigned from the office of member as well as the office of Chairman of the Board and wanted the resignation to be accepted with effect from the same day, i.e., January 31, 1990.
By notification dated February 12, 1990, it was notified that the resignation of Shri Karam Singh Thakur, as Chairman of the Board has been accepted by the Governor of Himachal Pradesh with immediate effect.
In our opinion, the said notification dated February 12, 1990, proceeds under a misconception of the correct legal position.
The resignation of Shri Karam Singh as Chairman of the Board was not required to be accepted by the Government of Himachal Pradesh.
It became effective on January 31, 1990 when the letter of resignation was received by the Financial Commissioner cum Secretary (Industries) to the Government of Himachal Pradesh who was the Head of the Department dealing with the Board and to whom it was addressed.
Since there is no requirement in the Act that the resignation of the Chairman of the Bord should be notified in the Official Gazette as in the case of a member of the Board, it cannot be said that the resignation of Shri Karam Singh did not take effect till it was notified in the official gazette vide notification dated February 12, 1990.
The High Court was, therefore, right in taking the view that Shri Karam Singh had ceased to hold the office of the Chairman of the Board having resigned from the said office on January 31, 1990, and the said resignation became effective from that date itself and that on the date of scrutiny, i.e., February 5, 1990, he was not holding an office of profit.
For that reason, it has been rightly held that the nomination of Shri Karam Singh was improperly rejected by the Returning Officer.
Since we are in agreement with the view of the High Court that the nomination of Shri Karam Singh had been improperly rejected for the 266 reason that he was not holding the office of the Chairman of the Board on the date of scrutiny, we do not consider it necessary to go into the question whether the office of Chairman of the Board held by Shri Karam Singh had ceased to be an office of profit after January 8, 1990.
The appeals, therefore, fail and are, accordingly, dismissed: But in the circumstances with no orders to costs.
B.V.B.D. Appeals dismissed.
| IN-Abs | For election to the Himachal Pradesh Legislative Assembly from 60 Chachiot Assembly Constituency held during February, 1990, fifteen persons, including the appellant and one Karam Singh, filed nomination papers.
At the time of scrutiny, an objection was raised against the nomination of Karam Singh on the ground that he was holding the office of Chairman, Himachal Pradesh Khadi and village Industries Board, which is an office of porfit within the meaning of Article 191 (1) (a) of the Constitution and was, therefore, disqualified for being chosen as a member of the legislative Assembly.
The Returning Officer upheld the objection and rejected the nomination of Karam Singh.
The appellant was declared elected to the Legislative Assembly from the said Constituency.
His election was challenged by the Respondents by filing election petitions in the High Court of Himachal Pradesh.
The High Court found that the said rejection of nomination of Karam Singh was improper because on the date of scrutiny Karam Singh was not holding an office of profit and for that reason, the election of the appellant was set aside.
The appellant herein filed the present appeals under section 116 A of the Representation of the People Act, challenging the judgment of the High Court of Himachal Pradesh. 251 During the pendency of the appeals the Himachal Pradesh Legislative Assembly was dissolved.
After considering the appeals on merits the Court, which dismissing the appeals, HELD : 1.
Inspite of the dissolution of the Himachal Pradesh Legislative Assembly the question arising for consideration cannot be said to have become academic because the invalidation of the election of the appellant may give rise to the liability to refund the allowances received by the Appellant.
[253G, 255 B] Loknath Padhan vs Birendra Kumar Sahu, ; , distinguished.
[253G] 2.01. 'Resignation ' means the spontaneous relinquishment of one 's own right and in relation to an office, it cannotes the act of giving up or relinquishing the office.
The act of relinquishment may be unilateral or bilateral depending on the return of the office and the conditions governing it.
[260F] 2.02.If the act of relinquishment is of unilateral character, it comes into effect when such act indicating the intention to relinquish the office is communicated to competent authority.
The authority to whom the act of relinquishment is communicated is not required to take any action and the relinquishment takes effect from the date of such communication where the resignation is intended to operate in praesenti.
[260G] 2.03.In cases where the act of relinquishment is of a bilateral character, the communication of the intention to relinquish, by itself, would not be sufficient to result in relinquishment of the office and some action is required to be taken on such communication of the intention to relinquish, e.g., acceptance of the said request to relinquish the office, and in such a case the relinquishment does not become effective or operative till such action is taken.
[260H,,261A B] 301.
From the provision of Section 7 of the H.P. Khadi and Village Industries Board Act, 1966, (the 'Act ') it would appear that the act of relinquishment of the office of Chairman of the H.P. Khadi and Village Industries Board (the Board) is unilateral in character and the resignation from the said office takes effect when it is communicated without any 252 further action being required to be taken on the same.
Since the Chairman of the Board is nominated by the Government of Himachal Pradesh under Section 4(2) of the Act, resignation has also to be communicated to the Government of Himachal Pradesh i.e. the Head of the Department dealing with the Board, and once it is so communicated it takes effect from the date of such communication if the resignation is in praesenti or from the date indicated therein if it is prospective in nature to be operative from a future date.
[263G H, 264A B] 3.02.The resignation of Karam Singh as Chairman of the Board was not required to be accepted by the Government of Himachal Pradesh.
It became effective on January 31, 1990 when the letter of resignation was received by the Financial Commissioner cum Secretary (Industries) to the Government of Himachal Pradesh who was the Head of the Department dealing with the Board and to whom it was addressed.
[265D] 3.03.Since there is no requirement in the Act that the resignation of the Chairman of the Board should be notified in the Official Gazette as in the case of a member of the Board, it cannot be said that the resignation of Karam Singh did not take effect till it was notified in the Official Gazette vide notification dated February 12, 1990.
[265E] Central Inland Water Transport Corporation Limited and Another vs Brojo Nath Ganguly and Anr., ; J.K Cotton Spinning and Weaving Mills Company Ltd. vs State of U.P. & Others, ; ; Lala Ram vs Gauri Shanker, 1981 All.
Law 1982; Raj Kumar vs Union of India, [1968] SCR 857; Union of India vs Shri Gopal Chandra Misra & Ors., ; at p. 21 and Glossop vs Glossop, , Halsburys Law of England 4th Ed., Vol. 7, p. 316, para 536, relied on.
[260D G, 261G, 262G]
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